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AGREEMENT AND PLAN OF MERGER
AMONG
SPRINGS INDUSTRIES, INC.
FORT MILL A INC.
(A WHOLLY OWNED SUBSIDIARY OF SPRINGS INDUSTRIES, INC.)
VESTAR/CS HOLDING COMPANY, L.L.C.
AND
CLARK-S ACQUISITION CORPORATION
(A WHOLLY OWNED SUBSIDIARY OF VESTAR/CS HOLDING COMPANY, L.L.C.)
DATED AS OF
FEBRUARY 24, 1996
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AGREEMENT AND PLAN OF MERGER
AMONG
SPRINGS INDUSTRIES, INC.,
FORT MILL A INC. (A WHOLLY-OWNED SUBSIDIARY OF
SPRINGS INDUSTRIES, INC.), VESTAR/CS HOLDING COMPANY, L.L.C.
AND CLARK-S ACQUISITION CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF CLARK-S HOLDINGS, L.L.C.)
DATED AS OF FEBRUARY 24, 1996
TABLE OF CONTENTS
ARTICLE I THE MERGER
1.01 The Merger
(a) The Merger
(b) Effective Time
1.02 Surviving Corporation
(a) Certificate of Incorporation
(b) Bylaws
(c) Directors and Officers
1.03 The Closing
(a) Deliveries by Seller to Holdings
(b) Deliveries by Holdings to Seller
(c) Actions of the Surviving Corporation
1.04 Conversion
(a) Conversion of Purchaser Common Stock
(b) Conversion of Fort Mill Common Stock
1.05 The Cash Election
(a) The Cash Election
(b) Consequences of Making the Cash Election
1.06 Adjustment of Cash Purchase Price or Cash Payment.
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER
2.01 Corporate Organization
2.02 Capital Stock
2.03 Ownership of Stock
2.04 Authorization, Etc.
2.05 Financial Statements
2.06 No Approvals or Conflicts
2.07 No Violation; Governmental Authorizations
2.08 Litigation
2.09 Title to Assets
2.10 Real Property
2.11 Undisclosed Liabilities
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2.12 Changes
2.13 Taxes
2.14 Employee Benefits Matters
2.15 Intellectual Property
2.16 Contracts
2.17 Environmental and Safety Matters
2.18 Labor Relations
2.19 Insurance
2.20 No Brokers' or Other Fees
2.21 Bank Accounts
2.22 Business of Fort Mill
2.23 Company Transfer
ARTICLE III REPRESENTATIONS AND WARRANTIES OF HOLDINGS
3.01 Organization
3.02 Authorization, Etc.
3.03 No Approvals or Conflicts
3.04 No Distribution
3.05 No Brokers' or Other Fees
3.06 Business of Holdings and Purchaser
3.07 Capitalization of Purchaser
ARTICLE IV CONDITIONS TO SELLER'S AND FORT MILL'S OBLIGATIONS
4.01 Representations and Warranties
4.02 Performance
4.03 Officer's Certificate
4.04 No Action
4.05 HSR Act
4.06 Payments
4.07 Capital Structure of Purchaser
4.08 Opinion of Counsel
4.09 Other Agreements
ARTICLE V CONDITIONS TO PURCHASER'S AND HOLDINGS' OBLIGATIONS
5.01 Representations and Warranties
5.02 Performance
5.03 Certificate
5.04 No Action
5.05 Consents
5.06 HSR Act
5.07 No Changes
5.08 Delivery of Shares
5.09 Resignation of Directors
5.10 Financing
5.11 Opinion of Counsel
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5.12 Real Property Matters
5.13 Indebtedness and Liens
5.14 Fort Mill Assets and Liabilities
5.15 Transition Agreements
ARTICLE VI COVENANTS AND AGREEMENTS
6.01 Conduct of Business
6.02 Access to Books and Records; Post-Closing Access
6.03 Filings and Consents
6.04 Tax Matters
(a) Liability of Seller for Pre-Closing Taxes
(b) Mutual Cooperation
(c) Certain Taxes
(d) Time of Payment
(e) Contests
(f) Resolution of Disagreements Between Seller and
Purchaser
(g) Tax Sharing Agreement
(h) No Changes
(i) Affiliated Group Membership
(j) Tax Benefits and Detriments
(k) Tax Returns
6.05 WARN Act
6.06 Employee Benefit Provisions
(a) Continuing Employees
(b) Continuation of Benefit Plans
(c) Defined Contribution Plan
(d) Medical and Dental - Active Employees
(e) Medical - Retired Employees
(f) Life and Disability Insurance
(g) Executive Compensation Arrangements
(h) Special Severance Pay Provisions
6.07 Supplemental Disclosure
6.08 Litigation
6.09 Covenant to Satisfy Conditions
6.10 Financing
6.11 Exclusivity
6.12 Confidentiality
6.13 Covenant Not to Compete
6.14 Perfection of Title
6.15 Intercompany Transactions
6.16 Expenses
6.17 Insurance
6.18 Further Assurances
6.19 Management Shares
6.20 Transfer of Assets and Liabilities
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6.21 Audited Financial Statements
6.22 Public Announcements
6.23 Transfer of Fort Mill's Assets and Liabilities
6.24 Cash Transactions
6.25 Delivery of Monthly Financial Statements
6.26 Transfer of Real Property
6.27 Transfer of Intellectual Property Rights
6.28 Medical Insurance
ARTICLE VII TERMINATION
7.01 Termination
7.02 Procedure and Effect of Termination
ARTICLE VIII INDEMNIFICATION
8.01 Indemnification
(a) Indemnification by Seller
(b) Indemnification by Purchaser
(c) Survival of Representations and Warranties
(d) Notice and Opportunity to Defend
8.02 Environmental Indemnification Procedures
ARTICLE IX MISCELLANEOUS
9.01 Defined Terms
9.02 Governing Law
9.03 Amendment
9.04 No Assignment
9.05 Waiver; Liability
9.06 Notices
9.07 Complete Agreement
9.08 Counterparts
9.09 Headings
9.10 Severability
9.11 Third Parties
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EXHIBITS
Exhibit 1.01(b) - Certificate of Merger
Exhibit 1.03(a)(ii) - Proceeds Sharing Provisions
Exhibit 1.03(a)(iii) - Securityholders Agreement
Exhibit 1.06(a)(1) - Closing Date Working Capital Schedule
Exhibit 1.06(a)(2) - Working Capital Projection
Exhibit 4.08 - Kirkland & Ellis Opinion
Exhibit 5.11 - Seller's General Counsel Opinion
Exhibit 5.15 - Transition Agreements
Exhibit 6.27 - Assignment
Exhibit A - Company's 1996 Approved Budget
SCHEDULES:
Schedule 1.06(a) Closing Date Working Capital Statement
Schedule 2.01 Disclosure Schedule
Schedule 2.02(c) Tech-Fab Partnership Interests
Schedule 2.02(d) Clark-Schwebel, Inc.'s Equity Interests in
Interglas and Asahi
Schedule 2.03 Encumbrances
Schedule 2.05 Financial Statements
Schedule 2.06 Approvals or Conflicts
Schedule 2.07 Compliance - Governmental Authorizations
Schedule 2.08 Litigation
Schedule 2.10(a) Owned Property
Schedule 2.10(b) Leased Property
Schedule 2.10(c) Condition of Property
Schedule 2.11(a) Undisclosed Liabilities - Clark-Schwebel,
Inc. or Subsidiaries
Schedule 2.11(b) Undisclosed Liabilities - Fort Mill
Schedule 2.11(c) Undisclosed Liabilities - Interglas and Asahi
Schedule 2.12 Changes
Schedule 2.13(b) Taxes
Schedule 2.13(c) Income Taxes
Schedule 2.14(a) Employee Plans
Schedule 2.14(b) Employee Pension Benefit Plan or
Multiemployer Plan
Schedule 2.14(c) Employee Plan Violations
Schedule 2.14(e) Employee Plan Liabilities
Schedule 2.14(f) Foreign Plans (Employee Benefits)
Schedule 2.14(g) Employee Plans - Claims
Schedule 2.15(a) Intellectual Property List
Schedule 2.15(b) Intellectual Property Rights, Title & Interest
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Schedule 2.15(c) Intellectual Property - Assignments
Schedule 2.16 Contracts
Schedule 2.17 Environmental and Safety Matters
Schedule 2.18 Labor Relations
Schedule 2.19 Insurance
Schedule 2.2 Brokers' or Other Fees (Seller)
Schedule 2.21 Bank Accounts
Schedule 2.23 Liabilities from Transfer of ABAEI
Schedule 3.05 Brokers' or Other Fees (Purchaser)
Schedule 3.07 Financing
Schedule 5.05 Consents
Schedule 5.13 Outstanding Capital Leases Indebtedness
Schedule 6.01(b) Books and Records
Schedule 6.01(l) Compensation Increases
Schedule 6.04(f) Accounting Firms
Schedule 6.06(a) Transferred Employees
Schedule 6.06(b) Purchaser's Medical Plan
Schedule 6.06(e) Purchaser's Retiree Medical Plan (List of
Covered Retirees)
Schedule 6.06(g) Deferred Compensation Amounts
Schedule 6.06(i) Special Severance Pay Provisions
Schedule 6.13(b) Employee List (Purchaser)
Schedule 6.14 Liens
Schedule 6.2 Liabilities
Schedule 6.26 Transfer of Real Property
Schedule 6.27 Intellectual Property Rights
Schedule 8.01(a)(iv)(A) Indemnification
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
February 24, 1996, is entered into by and among VESTAR/CS HOLDING COMPANY,
L.L.C., a Delaware limited liability company ("Holdings"), CLARK-S ACQUISITION
CORPORATION, a Delaware corporation (the "Purchaser"), SPRINGS INDUSTRIES,
INC., a South Carolina corporation (the "Seller"), and FORT MILL A INC., a
Delaware corporation ("Fort Mill"). Capitalized terms that are used in this
Agreement are defined in Section 9.01.
WHEREAS, Holdings and Seller desire that Purchaser merge with and into
Fort Mill, upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger.
(a) The Merger. On the terms and subject to the
conditions contained in this Agreement, Purchaser will merge with and into Fort
Mill with Fort Mill surviving the Merger (the "Surviving Corporation"). The
Merger shall have the effect set forth in the Delaware General Corporation Law.
The Surviving Corporation may, at any time after the Effective Time, take any
action (including executing and delivering any document) in the name and on
behalf of either Fort Mill or Purchaser in order to carry out and effectuate
the transactions contemplated by this Agreement.
(b) Effective Time. If Purchaser fails to make the Cash
Election pursuant to Section 1.05, the Merger shall become effective at the
time (the "Effective Time") Fort Mill and Purchaser file a certificate of
merger in the form attached hereto as Exhibit 1.01(b) (the "Certificate of
Merger") with the Secretary of State of the State of Delaware.
1.02 Surviving Corporation. If Purchaser fails to make the Cash
Election pursuant to Section 1.05:
(a) Certificate of Incorporation. The Certificate of
Merger shall amend and restate the certificate of incorporation of the
Surviving Corporation in its entirety at and as of the Effective Time to read
as set forth in Exhibit A to the Certificate of Merger (which is included in
Exhibit 1.01(b) hereto).
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(b) Bylaws. The bylaws of the Surviving Corporation
shall be amended and restated at and as of the Effective Time to read as did
the bylaws of Purchaser immediately prior to the Effective Time except that the
name of the Surviving Corporation will be "Clark-Schwebel Holdings, Inc."
(c) Directors and Officers. Except as otherwise provided
in the Securityholders Agreement, the directors and officers of the Purchaser
shall become the directors and officers of the Surviving Corporation at and as
of the Effective Time (retaining their respective positions and terms of
office).
1.03 The Closing. The closing (the "Closing") of the transactions
contemplated in this Agreement shall take place at the offices of Kirkland &
Ellis, 153 East 53rd Street, New York, New York, commencing at 9:00 a.m., local
time, as soon as practicable but no later than three business days following
the day on which the last to be fulfilled or waived of the conditions set forth
in Articles IV and V shall be fulfilled or waived in accordance herewith (or,
if contemplated to be satisfied simultaneous with the Closing, are capable of
being so satisfied), or at such other time, place and date as is agreed to in
writing by the parties hereto. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
(a) Deliveries by Seller to Holdings. At or prior to the
Closing, Seller shall deliver or cause to be delivered to Holdings the
following:
(i) if Purchaser makes the Cash
Election pursuant to Section 1.05, certificates evidencing the Shares,
which certificates shall be properly endorsed for transfer or
accompanied by duly executed stock powers, in either case executed in
blank or in favor of Purchaser and otherwise in a form acceptable for
transfer on the books of Fort Mill;
(ii) provided that Purchaser has not
made the Cash Election pursuant to Section 1.05, a counterpart of
Holdings' operating agreement (the "Operating Agreement") containing
provisions substantially in the form attached hereto as Exhibit
1.03(a)(ii) (the"Proceeds Sharing Provisions"), duly executed by
Seller;
(iii) provided that Purchaser has not
made the Cash Election pursuant to Section 1.05, a counterpart of the
securityholders agreement substantially in the form attached hereto as
Exhibit 1.03(a)(iii) (the "Securityholders Agreement"), duly executed
by Seller;
(iv) complete and correct copies of
the minute books containing the records of meetings of the
stockholders, the Boards of Directors, and any committees of the
Boards of Directors of Fort Mill and the Company;
(v) a certification pursuant to
Treasury Regulation Section 1.1445-2(b)(2) that Seller is not a
foreign person;
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(vi) certificates executed by the
Secretary or Assistant Secretary of each of Seller and Fort Mill
certifying as to resolutions of the Boards of Directors of Seller (on
its own behalf and as sole stockholder of Fort Mill) and Fort Mill, as
the case may be, authorizing the execution, delivery and consummation
of the transactions contemplated by this Agreement and the other
agreements to be entered into pursuant to this Agreement by Seller and
Fort Mill on the Closing Date, incumbency, and other corporate
matters; and
(vii) all other previously
undelivered documents required by this Agreement to be delivered by
Seller or Fort Mill to Purchaser or Holdings at or prior to the
Closing Date in connection with the transactions contemplated hereby.
(b) Deliveries by Holdings to Seller. At or prior to the
Closing, Holdings shall deliver or cause to be delivered to Seller the
following:
(i) if Purchaser makes the Cash
Election pursuant to Section 1.05, the Cash Purchase Price by wire
transfer of immediately available funds to an account designated by
Seller;
(ii) provided that Purchaser has not
made the Cash Election pursuant to Section 1.05, a counterpart of the
Operating Agreement containing the Proceeds Sharing Provisions duly
executed by Holdings;
(iii) provided that Purchaser has not
made the Cash Election pursuant to Section 1.05, a counterpart of the
Securityholders Agreement, duly executed by Holdings and Management;
(iv) certificates executed by the
Secretary or Assistant Secretary of each of Purchaser and Holdings,
certifying as to resolutions of the Boards of Directors of Purchaser
and Holdings (on its own behalf and as sole stockholder of Purchaser),
as the case may be, authorizing the execution, delivery and
consummation of this Agreement and the other agreements to be entered
into pursuant to this Agreement by Purchaser and Holdings with Seller
on the Closing Date, incumbency, and other corporate matters; and
(v) all other previously
undelivered documents required by this Agreement to be delivered by
Purchaser or Holdings to Seller at or prior to the Closing Date in
connection with the transactions contemplated hereby.
(c) Actions of the Surviving Corporation. At the
Closing, provided that Purchaser has not made the Cash Election pursuant to
Section 1.05, Fort Mill and Purchaser will file with the Secretary of State of
the State of Delaware the Certificate of Merger. At the Effective Time, the
Surviving Corporation shall (i) issue certificates representing the Holdings
Common and the Holdings Series B to Holdings, (ii) issue certificates
representing the Seller Common and the Seller Series A to Seller and deliver
the Cash Payment due pursuant to Section 1.04(b) by wire
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transfer of immediately available funds to an account designated by Seller, and
(iii) execute a counterpart of the Securityholders Agreement. In addition, at
the Effective Time, the Seller shall deliver certificates evidencing the
Shares, and Holdings shall deliver certificates evidencing all of the issued
and outstanding shares of Purchaser Common Stock, to the Surviving Corporation
for cancellation.
1.04 Conversion.
(a) Conversion of Purchaser Common Stock. At and as of
the Effective Time, all of the issued and outstanding shares of Purchaser
Common Stock shall be converted into the Holdings Common and the Holdings
Series B. No share of Purchaser Common Stock shall be deemed to be outstanding
or to have any rights other than those set forth in this Section 1.04(a) after
the Effective Time.
(b) Conversion of Fort Mill Common Stock. At and as of
the Effective Time, all of the Shares shall be converted into 2,000 shares of
Common Stock (the "Seller Common"), the right to receive $155,250,000 less the
amount of Indebtedness outstanding on the Closing Date under the capital leases
listed in Section 5.13 of the Disclosure Schedule (subject to adjustment as set
forth in Section 1.06) (the "Cash Payment") and 3,000 shares of Series A
Preferred Stock (which shares shall have an aggregate liquidation value of
$30,000,000); provided, however, that if the Closing does not occur on or prior
to April 15, 1996 all of the Shares in the aggregate shall be converted into an
additional 2.5 shares of Series A Preferred Stock (which shares shall have an
aggregate liquidation value of $25,000) per day for each day after April 15,
1996 until (and including) the Closing Date (the shares of Series A Preferred
Stock issuable pursuant to this Section 1.04(b) are referred to herein
collectively as the "Seller Series A"). No share of Fort Mill Common Stock
shall be deemed to be outstanding or to have any rights other than those set
forth in this Section 1.04(b) after the Effective Time.
1.05 The Cash Election.
(a) The Cash Election. At any time at least one business
day prior to the Closing Date, Purchaser may elect, in its sole discretion, to
pay $192,750,000 less the amount of Indebtedness outstanding under the capital
leases listed in Section 5.13 of the Disclosure Schedule in cash to Seller for
the Shares by delivering a notice in writing to Seller of such election (the
"Cash Election"). If Purchaser makes the Cash Election, on the Closing Date
and subject to the terms and conditions set forth in this Agreement, Seller
will sell, assign, transfer and deliver to Purchaser the Shares, free and clear
of all options, pledges, security interests, voting trusts or similar
arrangements, liens, charges or other encumbrances or restrictions
("Encumbrances"), other than the restrictions imposed by federal and state
securities laws, and in consideration of the sale, assignment, transfer and
delivery of the Shares, Purchaser will pay to Seller the Cash Purchase Price in
accordance with Section 1.03(b)(i).
(b) Consequences of Making the Cash Election. In the
event Purchaser makes the Cash Election, (i) Purchaser shall not merge with and
into Fort Mill, (ii) the parties shall not be bound by the Proceeds Sharing
Provisions, (iii) the parties shall not enter into the Securityholders
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Agreement, and (iv) any provision of this Agreement expressly conditioned or
dependent upon Purchaser failing to make the Cash Election shall be inoperative
and of no further force and effect without any further action on the part of
the parties hereto.
1.06 Adjustment of Cash Purchase Price or Cash Payment. The Cash
Purchase Price or the Cash Payment, as the case may be, shall be adjusted as
follows:
(a) Not later than 90 days after the Closing Date, Seller
shall prepare and deliver to Purchaser a schedule in the form attached hereto
as Exhibit 1.06(a)(1) (the "Closing Date Working Capital Statement") of
Seller's calculation of the Closing Working Capital Amount as of the Closing
Date and the amount payable by Seller to Purchaser, or by Purchaser to Seller,
as the case may be, pursuant to clause (c) of this Section 1.06. The parties
agree that (i) the Closing Date Working Capital Statement and each item therein
shall be prepared, except as otherwise provided in Section 1.06(a) of the
Disclosure Schedule, in accordance with generally accepted accounting
principles and consistent with past practice as to the computation and
determination of each such item as shown under the "Jan. '96" column in Exhibit
1.06(a)(2) (the "Working Capital Projection"); provided that to the extent that
the preparation of any item included in the Closing Date Working Capital
Statement consistent with past practice in accordance with the foregoing is
inconsistent with generally accepted accounting principles, then, except as
otherwise provided in Section 1.06(a) of the Disclosure Schedule, generally
accepted accounting principles shall govern as to such item, (ii) the amount of
inventory shown on the Closing Date Working Capital Statement under the heading
"Balance at Closing" shall be determined by physical count to be conducted by
Purchaser and its representatives and observed and tested by Seller and its
representatives, and shall be valued by Purchaser and its representatives in
the aggregate at the lower of "cost" or "market," with "cost" being determined
under the last-in-first-out method; provided that during the Objection Period
Seller may object to such physical count and valuation by Purchaser and its
representatives, and any such objection will be resolved in accordance with the
principles set forth in clause (b) of this Section 1.06, (iii) purchase
accounting resulting from the transactions contemplated by this Agreement shall
not be used in connection with the determination of the Closing Working Capital
Amount, and (iv) each liability which is included in Exhibit 1.06(a)(2) under
the heading "Jan. '96" will be included in the Closing Date Working Capital
Statement at its respective amount on the Closing Date regardless of whether
Seller assumes or is otherwise responsible for such liability.
(b) Purchaser shall have 30 business days after delivery
by Seller of the Closing Date Working Capital Statement (the "Objection
Period") to object to any item or items shown on the Closing Date Working
Capital Statement. During the Objection Period, Purchaser shall have access to
all work papers of Seller which were used in the preparation of the Closing
Date Working Capital Statement. If Purchaser does not object during the
Objection Period, the Closing Date Working Capital Statement received by
Purchaser shall be conclusive and binding on the parties hereto and may not be
challenged by any of them in any forum. If Purchaser does object during the
Objection Period, Seller shall have the right, without being prejudiced by the
fact that Seller prepared the Closing Date Working Capital Statement, for ten
business days after its receipt of Purchaser's objection, to deliver to
Purchaser a notice setting forth any additional items which Seller determines
to be subject to dispute. If Purchaser and Seller are unable to resolve any
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dispute with respect to the Closing Date Working Capital Statement within 30
business days after delivery by Purchaser of Purchaser's objections, the matter
or matters in dispute shall be submitted to such firm of Accountants, which has
not performed any material services since January 1, 1993 for either Seller or
Vestar or Vestar's Affiliates, as Purchaser and Seller may agree. If they
cannot so agree within fifteen (15) days, then such Accountant shall be
selected by lot from the Accountants listed in Section 6.04(f) of the
Disclosure Schedule. The Accountant selected shall be limited to determining a
value for those items on the Closing Date Working Capital Statement that are
disputed by Purchaser or Seller in accordance with this Section 1.06 and are
not resolved by agreement between Purchaser and Seller. The decision of such
Accountant as to the Closing Date Working Capital Statement shall be within the
range of the positions taken by the parties with respect to the disputed
matters, and such decision shall be conclusive and binding upon Seller and
Purchaser, and neither Purchaser nor Seller shall challenge the oher with
respect to such decision in any forum, and the fees and costs therefor shall be
borne by the parties in proportion to the difference between the Accountant's
decision and the respective positions taken by the parties.
(c) Within three business days after the later of the
expiration of the Objection Period and the date upon which any disputes are
resolved as provided above, an amount equal to (i) the absolute value of the
difference between the Estimated Working Capital Amount and the Closing Working
Capital Amount minus (ii) $1,000,000, plus interest on such amount accrued from
the Closing Date to the date of payment at the Prime Rate per annum, shall be
paid (x) by Purchaser to Seller, if the Closing Working Capital Amount is
greater than the Estimated Working Capital Amount or (y) by Seller to
Purchaser, if the Estimated Working Capital Amount is greater than the Closing
Working Capital Amount; provided, however, that, notwithstanding the foregoing,
unless the Closing Working Capital Amount is less than $49,000,000 or greater
than $51,000,000, there shall be no adjustment to the Cash Purchase Price or
the Cash Payment, as the case may be, pursuant to this Section 1.06.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Holdings and Purchaser as follows:
2.01 Corporate Organization. Each of Fort Mill, the Company and
the Subsidiaries (other than Tech-Fab) is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
Tech-Fab is a general partnership created under the laws of the State of New
York and is validly existing. Each of the United States Purchased Entities has
full corporate or partnership power, as applicable, and authority necessary to
own and lease its properties and assets and to carry on its business as now
being conducted. The Company is duly qualified or licensed to do business as a
foreign corporation and is in good standing in the jurisdictions in which the
ownership, use or occupancy of its properties or assets or the conduct of its
business requires such qualification. Section 2.01 of the Disclosure Schedule
relating to this Agreement (the "Disclosure Schedule") lists each Subsidiary,
its state of incorporation or formation, as applicable, and each jurisdiction
in which such Subsidiary is qualified to do business
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as a foreign corporation or partnership, as applicable. Section 2.01 of the
Disclosure Schedule sets forth complete and correct copies of (i) the
certificates of incorporation and all amendments thereto, and the by-laws as
presently in effect, of the Company, Fort Mill and the Subsidiaries (other than
Tech-Fab) and (ii) the partnership agreement and all amendments thereto of
Tech-Fab. Section 2.01 of the Disclosure Schedule lists the current directors
and officers, or other comparable persons, of each of the United States
Purchased Entities. Seller has made minute books containing the records of
meetings of the stockholders of the Company, and the Board of Directors, and
any committees of the Board of Directors, or other comparable records, of each
of the United States Purchased Entities, available to Purchaser for its
inspection. Except for the ownership interest or investment in the Company,
the Subsidiaries, Interglas and Asahi or as set forth in Section 2.01 of the
Disclosure Schedule, none of the United States Purchased Entities (a) owns,
directly or indirectly, any capital stock or other equity securities of any
corporation or has any direct or indirect equity or ownership interest in any
partnership, joint venture or other business, or (b) has any capital investment
in or any outstanding loan, advance or extension of credit to, and does not own
the securities of, any other Person (excluding (i) extensions of trade credit
to customers in the ordinary course of business, (ii) advances to Seller (none
of which will be outstanding on the Closing Date except to the extent permitted
by Section 6.15(b)), (iii) advances to employees in the ordinary course of
business, and (iv) endorsements of negotiable instruments in the ordinary
course of business, nor is any of them bound by any commitment or agreement to
do any of the foregoing).
2.02 Capital Stock.
(a) The authorized capital stock of Fort Mill consists of
1,000 shares of Fort Mill Common Stock, of which only the Shares are issued and
outstanding. There are no subscriptions, options, warrants, calls, rights,
contracts, commitments, understandings, restrictions or arrangements relating
to the issuance, sale, transfer or voting of any shares of Fort Mill Common
Stock, including any rights of conversion or exchange under any outstanding
securities or other instruments. The Shares have been validly issued and are
fully paid, nonassessable and free of preemptive rights.
(b) The authorized capital stock of the Company consists
of 10,000 shares of common stock, $1.00 par value per share (the "Company
Common Stock"), of which only 5,000 shares (the "Company Shares") are issued
and outstanding. The authorized capital stock of Clark-Schwebel Holding
Corporation consists of 100 shares of common stock, par value $10.00 per share
(the "Subsidiary Common Stock"), all of which are issued and outstanding (the
"Subsidiary Shares"). There are no subscriptions, options, warrants, calls,
rights, contracts, commitments, understandings, restrictions or arrangements
relating to the issuance, sale, transfer or voting of any shares of Company
Common Stock or any shares of Subsidiary Common Stock, including any rights of
conversion or exchange under any outstanding securities or other instruments.
Each of the Company Shares and the Subsidiary Shares have been validly issued
and are fully paid, nonassessable and free of preemptive rights.
(c) Section 2.02(c) of the Disclosure Schedule sets forth
the partnership interests of Tech-Fab that are issued and outstanding. There
are no subscriptions, options,
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warrants, calls, rights, contracts, commitments, understandings, restrictions
or arrangements relating to the issuance, sale, transfer or voting of any
partnership interest in Tech-Fab, including any rights of conversion or
exchange under any outstanding securities or other instruments.
(d) Section 2.02(d) of the Disclosure Schedule sets forth
the Company's ownership of equity interests and rights to acquire equity
interests in each of Interglas and Asahi and the percentage that such equity
interests and rights to acquire equity interests constitute in relation to all
of the issued and outstanding equity interests in Interglas or Asahi, as
applicable. Except as set forth in Section 2.02(d) of the Disclosure Schedule,
neither the Company, Seller nor Fort Mill holds, or, to the knowledge of Seller
or the Company Executives, no other party holds any subscriptions, options,
warrants, calls, or rights relating to the issuance, sale, transfer or voting
of any of the outstanding equity interests in Interglas or Asahi, including any
rights of conversion or exchange under any outstanding securities or other
instruments. Except as set forth in Section 2.02(d) of the Disclosure
Schedule, all of the outstanding equity interests of each of Interglas and
Asahi held by the Company have been validly issued and are fully paid and
nonassessable.
2.03 Ownership of Stock.
(a) The Shares are owned by Seller free and clear of all
Encumbrances, other than the restrictions imposed by federal and state
securities laws. If Purchaser makes the Cash Election pursuant to Section
1.05, upon the consummation of the transactions contemplated hereby, Purchaser
will acquire title to the Shares, free and clear of all Encumbrances, other
than the restrictions imposed by federal and state securities laws.
(b) The Company Shares are owned by Fort Mill free and
clear of all Encumbrances, other than the restrictions imposed by federal and
state securities laws. The Subsidiary Shares are owned by the Company free and
clear of all Encumbrances, other than the restrictions imposed by federal and
state securities laws.
(c) The partnership interests in Tech-Fab that are owned
by the Company are owned free and clear of all Encumbrances, other than the
restrictions imposed by federal and state securities laws.
(d) The equity interests and rights to acquire equity
interests owned by the Company in each of Interglas and Asahi are owned free
and clear of all Encumbrances, other than those set forth in Section 2.03 of
the Disclosure Schedule.
2.04 Authorization, Etc. Each of Seller and Fort Mill has full
corporate power and authority to execute and deliver this Agreement and the
documents and instruments contemplated hereby and to carry out the transactions
contemplated hereby and thereby. The execution and delivery by each of Seller
and Fort Mill of this Agreement and, prior to the Closing, the documents and
instruments contemplated hereby, and the consummation of the transactions
contemplated hereby and, prior to the Closing, thereby, have been or will be,
as the case may be, approved by all necessary corporate proceedings on the
part of Seller and Fort Mill, respectively. This Agreement constitutes a valid
and binding agreement of each of Seller and Fort Mill, enforceable against each
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of them in accordance with its terms, except that (i) the enforcement hereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
2.05 Financial Statements. Section 2.05 of the Disclosure Schedule
sets forth (a) the Audited Financials in draft form (the "Draft Audited
Financials"); and (b) the annual reports of Interglas as of June 30, 1995 and
1994, respectively, and the audited balance sheets of Asahi as of March 31,
1995 and 1994 and 1993, respectively, and the audited statements of operations
and cash flows of Asahi for the fiscal years then ended, and the unaudited
balance sheets of each of Interglas and Asahi as of December 31, 1995 (the
"Unaudited Balance Sheets") and the unaudited statements of income of Interglas
for the six month period then ended and the unaudited profit and loss statement
of Asahi for the calendar year then ended (collectively, the "Foreign
Financials"). The Draft Audited Financials fairly present the consolidated
financial position and operating results of Fort Mill at the dates and for the
periods covered thereby. To the knowledge of Seller or the Company Executives,
except as set forth in Section 2.05 of the Disclosure Schedule, the audited
Foreign Financials (including the notes thereto) have been prepared in
accordance with German (with respect to Interglas) and United States (with
respect to Asahi) generally accepted accounting principles applied on a
consistent basis throughout the periods covered thereby and fairly present the
financial position and operating results of each of Interglas and Asahi,
respectively, at the dates and for the periods covered thereby. To the
knowledge of Seller or the Company Executives, the unaudited Foreign Financials
have been prepared in accordance with German (with respect to Interglas) and
Japanese (with respect to Asahi) generally accepted accounting principles
applied on a consistent basis throughout the periods covered thereby, and such
unaudited Foreign Financials fairly present the financial position and
operating results of each of Interglas and Asahi, respectively, at the dates
and for the periods covered thereby; provided that such unaudited Foreign
Financials, to the knowledge of Seller or the Company Executives, are subject
to normal year-end adjustments and lack footnotes required for full disclosure
under the applicable generally accepted accounting principles. The Audited
Financials (including the notes thereto), when delivered in accordance with
Section 6.21, will have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered thereby and will fairly present the consolidated financial position and
operating results of Fort Mill at the dates and for the periods covered
thereby. The Monthly Financial Statements, when delivered in accordance with
Section 6.25, will, except as set forth in Section 2.05 of the Disclosure
Schedule, (i) have been prepared in a manner consistent with past practice and
(ii) fairly present the consolidated financial position and operating results
of the Company at the dates and for the periods covered thereby; provided that
the Monthly Financial Statements are subject to normal year-end adjustments and
lack footnotes required for full disclosure under generally accepted accounting
principles.
2.06 No Approvals or Conflicts. Except as set forth in Section
2.06 of the Disclosure Schedule, neither the execution and delivery by Seller
or Fort Mill of this Agreement, nor the consummation by Seller and Fort Mill of
the transactions contemplated hereby will (a) violate, conflict with or result
in a breach of any provision of the certificate of incorporation or bylaws or
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partnership documents, as applicable, of Seller or the Purchased Entities, (b)
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the creation of any Lien upon any of
the properties of Seller or the Purchased Entities under, or cause the
termination or modification of, or give any other Person the right to terminate
or modify, any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, lease, contract, agreement or other instrument to which any
of Seller or the Purchased Entities are parties or by which any of their
respective properties are bound, (c) violate any order, injunction, judgment,
ruling, Law applicable to Seller or the Purchased Entities or any of their
respective properties, or (d) except for applicable disclosure requirements of
the Securities Exchange Act, and the rules and regulations promulgated
thereunder, and filings under the HSR Act and the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware, require any
consent, approval or authorization of, or notice to, or declaration, filing or
registration with, any Governmental Body or other third party; provided,
however, that all of the foregoing representations in respect of Interglas and
Asahi are made by Seller only to the knowledge of the Seller or the Company
Executives.
2.07 No Violation; Governmental Authorizations. Except as set
forth in Section 2.07 of the Disclosure Schedule, the United States Purchased
Entities and, to the knowledge of Seller or the Company Executives, Interglas
and Asahi, have complied (except for prior incidents of non- compliance which
have been cured and for which no liability exists or will exist) and are in
compliance in all material respects with all Laws, orders, injunctions,
judgments, decrees or rulings of every Governmental Body applicable to the
Purchased Entities or their respective assets or properties. Except as set
forth in Section 2.07 of the Disclosure Schedule, the United States Purchased
Entities and, to the knowledge of Seller or the Company Executives, Interglas
and Asahi, have all material permits, licenses, approvals and other
governmental authorizations that they are required to have in order to own,
lease, occupy and use their respective properties and assets and to carry on
their respective businesses as such businesses are now being conducted and all
such permits, licenses, approvals and other governmental authorizations are
valid and in full force and effect.
2.08 Litigation. Except as set forth in Section 2.08 of the
Disclosure Schedule, there are no Actions pending or, to Seller's or the
Company Executives' knowledge, threatened against the United States Purchased
Entities or any of their respective assets or properties before any
Governmental Body which, if adversely determined, would reasonably be likely to
result in payments by the United States Purchased Entities in excess of
$100,000 or would be reasonably likely to have a material adverse effect on any
of the United States Purchased Entities. Section 2.08 of the Disclosure
Schedule lists each Action that has been settled by Fort Mill or the Company in
the last five years and that involved the payment of at least $100,000 by Fort
Mill or the Company in connection with such settlement. Except as set forth in
Section 2.08 of the Disclosure Schedule, to the knowledge of Seller or the
Company Executives, there are no Actions pending or threatened against
Interglas or Asahi which, if adversely determined, would be reasonably likely
to have a material adverse effect on Interglas or Asahi.
2.09 Title to Assets. Each of the Company and the Subsidiaries has
good and marketable title to all tangible personal properties and personal
assets owned by it (whether or not
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reflected on the Balance Sheet), free and clear of all Liens except for (i)
Liens which secure Indebtedness or obligations which are properly reflected on
the Balance Sheet (none of which will exist on the Closing Date) and (ii) Liens
arising as a matter of law in the ordinary course of business; provided that
such Lien is not incurred in connection with the incurrence of Indebtedness and
that the obligations secured by such Liens are not delinquent (or if
delinquent, are being contested in good faith by appropriate proceedings and
are reflected in appropriate reserves on the Balance Sheet). Each of the
Company and the Subsidiaries and, to the knowledge of Seller or the Company
Executives, Interglas and Asahi, has good and marketable title to, or has valid
leasehold interests in or rights to use, all material personal properties and
personal assets used in the conduct of its respective business.
2.10 Real Property; Leases.
(a) Section 2.10(a) of the Disclosure Schedule contains a
legal description of each parcel of real property that the Company or any
Subsidiary owns (the "Owned Property") and, except as set forth in Section
2.10(a) of the Disclosure Schedule, to the knowledge of Seller or the Company
Executives, such legal description describes such parcel fully and adequately,
the buildings and improvements are located within the boundary lines of the
described parcels of land, the Owned Property is not in violation of applicable
zoning laws and ordinances (and none of the properties or buildings or
improvements thereon are subject to "permitted non-conforming use" or
"permitted non-conforming structure" classifications), and the Owned Property
is not subject to any restriction for which any permits or licenses necessary
to the use thereof have not been obtained. Except as set forth in Section
2.10(a) of the Disclosure Schedule, with respect to each such parcel of Owned
Property (i) the Company or a Subsidiary, as appropriate, has good and
marketable fee simple title to such parcel of Owned Property, free and clear of
any Lien except for (A) installments of real estate taxes and special
assessments not yet due or payable and (B) Permitted Liens; (ii) there are no
pending or, to Seller's or the Company Executives' knowledge, threatened
condemnation proceedings relating to such parcel of Owned Property; and (iii)
there are no leases, subleases, licenses or other agreements granting to any
party or parties the right to use or occupy any portion of such parcel of Owned
Property.
(b) Section 2.10(b) of the Disclosure Schedule lists the
location of all real property leased or subleased to the Company or any
Subsidiary (the "Leased Property") and sets forth correct and complete copies
of the leases or subleases (including all amendments thereto to date) pursuant
to which the Company or any Subsidiary (as applicable, a "Tenant") leases any
Leased Property (the "Leases"). With respect to each such Lease, except as set
forth in Section 2.10(b) of the Disclosure Schedule: (i) the Lease is in full
force and effect and enforceable against the applicable landlord in accordance
with its terms; (ii) (A) the applicable Tenant is not, and, to Seller's or the
Company Executives' knowledge, no other party thereto is, in breach of or
default under such Lease in any material respect, (B) no event has occurred
which, with notice or lapse of time, would constitute such a material breach or
default by the applicable Tenant or permit termination, modification, or
acceleration thereunder by the other party thereto, and (C) no event has
occurred which, to Seller's or the Company Executives' knowledge, with notice
or lapse of time would constitute a material breach or default by the other
party thereto or would permit termination, modification or acceleration
thereunder by the applicable Tenant; (iii) the applicable
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Tenant has not assigned, transferred, conveyed, mortgaged, deeded in trust, or
encumbered its interest in the applicable Leased Property; and (iv) subject to
the terms of the applicable Lease, the interest of the applicable Tenant is
free and clear of all Liens other than Permitted Liens.
(c) Except as set forth in Section 2.10(c) of the
Disclosure Schedule, the Real Property (i) constitutes all real property owned,
leased or otherwise occupied or utilized by the Company or the Subsidiaries,
(ii) is, together with all improvements located thereon, in good operating
condition and repair (subject to normal wear and tear), and (iii) is sufficient
for the conduct of the business of the Company and the Subsidiaries as
presently conducted and, to the knowledge of Seller or the Company Executives,
has adequate facilities for utility supply, waste and storm water processing
and/or removal.
2.11 Undisclosed Liabilities.
(a) Except as set forth in Section 2.11(a) of the
Disclosure Schedule, neither the Company nor any of the Subsidiaries has any
liabilities or obligations (whether accrued, absolute, contingent or otherwise,
and whether known or unknown) and there is no Basis for any present or future
action, suit, proceeding, hearing, charge, complaint, claim or demand against
the Company or the Subsidiaries that would give rise to any liability or
obligation of the Company or the Subsidiaries, other than (i) liabilities and
obligations that are reflected, accrued or reserved for in the Balance Sheet,
(ii) liabilities and obligations incurred in the ordinary course of the
Company's or a Subsidiary's business and consistent with past practice since
the date of the Balance Sheet (none of which results from, arises out of,
relates to, is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement, or violation of law), and (iii)
contractual liabilities and obligations with respect to executory contracts of
the Company or a Subsidiary not required to be disclosed in financial
statements prepared in accordance with generally accepted accounting principles
which contracts are either (A) listed on the Disclosure Schedule or (B) not
listed on the Disclosure Schedule and not required by Section 2.10, 2.12, 2.13,
2.14, 2.15, 2.16 or 2.18 of this Agreement to be listed on the Disclosure
Schedule.
(b) Except as set forth in Section 2.11(b) of the
Disclosure Schedule, Fort Mill has no liabilities or obligations (whether
accrued, absolute, contingent or otherwise, and whether known or unknown) and
there is no Basis for any present or future action, suit, proceeding, hearing,
charge, complaint, claim or demand against Fort Mill that would give rise to
any liability or obligation of Fort Mill.
(c) Except as set forth in Section 2.11(c) of the
Disclosure Schedule, to the knowledge of Seller or the Company Executives,
neither Interglas nor Asahi has any liabilities or obligations (whether
accrued, absolute, contingent or otherwise, and whether known or unknown) and
there is no Basis for any present or future action, suit, proceeding, hearing,
charge, complaint, claim or demand against Interglas or Asahi that would give
rise to any liability or obligation of Interglas or Asahi, as applicable, other
than (i) liabilities and obligations that are reflected, accrued or reserved
for in the Unaudited Balance Sheets related to Interglas or Asahi, as
applicable, (ii) obligations incurred in the ordinary course of Interglas's or
Asahi's business, as applicable, and consistent with past practice since the
date of such Unaudited Balance Sheets (none of which
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results from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement, or violation of
law) and (iii) contractual liabilities and obligations with respect to
executory contracts of Interglas or Asahi, as applicable, not required to be
disclosed in financial statements prepared in accordance with generally
accepted accounting principles.
2.12 Changes. Except as set forth in Section 2.12 of the
Disclosure Schedule, since December 31, 1995, there has not been any material
adverse change in the assets, business, operations, financial condition,
operating results, or material business relationships of the Company or any of
the Subsidiaries or, to the knowledge of Seller or the Company Executives,
Interglas or Asahi. Without limiting the generality of the foregoing, since
December 31, 1995, except as set forth in Section 2.12 of the Disclosure
Schedule, pursuant to Exempt Contracts, or as otherwise consented to by
Purchaser after the date hereof, none of the Company or the Subsidiaries has,
and, with respect to clauses (g) and (i), Fort Mill has not:
(a) sold, leased, transferred, assigned or otherwise
disposed of any of its assets, tangible or intangible, other than sales in the
ordinary course of business and other than the sale of its interest in ABAEI
and the transfer of the sale proceeds therefrom to Seller;
(b) entered into any contract, lease, sublease, license,
or sublicense (other than purchase and sales orders in the ordinary course of
business) either involving more than $100,000 or outside the ordinary course of
business;
(c) committed to the acquisition or construction of any
property, plant or equipment, or entered into any agreement or commitment to
make any other capital expenditure, involving more than $100,000 individually
or $500,000 in the aggregate;
(d) created, incurred, assumed, or guaranteed any
Indebtedness either involving more than $100,000 in the aggregate or outside
the ordinary course of business;
(e) delayed or postponed (beyond its normal practice) the
payment of accounts payable and other liabilities or obligations or accelerated
(beyond its normal practice) the collection of accounts receivable or other
amounts owed to it;
(f) cancelled, compromised, waived, or released any
rights or claims (or series of related rights and claims) either involving more
than $100,000 in the aggregate or outside the ordinary course of business;
(g) declared, set aside, or paid any non-cash dividend or
distribution with respect to its capital stock or redeemed, purchased, or
otherwise acquired any of its capital stock, or granted or issued any options
relating to the issuance of capital stock (other than in connection with the
disposition of ABAEI);
(h) experienced any material damage, destruction, or loss
to any of its material properties or assets through the date hereof;
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(i) granted any increase outside the ordinary course of
business in the compensation of any of its officers, directors or employees who
are or will be on the payroll of any of the United States Purchased Entities,
or adopted any benefit plan or any retirement, deferred compensation, bonus,
fringe benefit, insurance or pension plan, program or arrangement or made any
loan or other credit accommodation to or for any such officer, employee or
director, or made an contribution to any benefit plan or any retirement,
deferred compensation or bonus program, plan or arrangement for the benefit of
any such employee, officer or director other than in the ordinary course of
business consistent with past practice or as required by the terms of such
program, plan or arrangement as in effect on the date hereof;
(j) mortgaged, pledged or otherwise encumbered any of its
respective assets; or
(k) made or entered into any agreement or understanding
to do any of the foregoing.
2.13 Taxes.
(a) The United States Purchased Entities have timely
filed all Tax Returns required to be filed by each of them, each such Tax
Return has been prepared in compliance with all applicable laws and
regulations, and all such Tax Returns are true, accurate and complete in all
material respects. Each Affiliated Group has timely filed all income Tax
Returns required to be filed in the United States with respect to each taxable
period during which any United States Purchased Entity was a member of the
Affiliated Group, each such income Tax Return has been prepared in compliance
with all applicable laws and regulations in all respects insofar as such income
Tax Returns relate to the United States Purchased Entities. All Taxes due and
payable by the United States Purchased Entities have been paid. All Taxes
(other than income Taxes for which Seller is liable and has agreed to indemnify
Purchaser pursuant to Section 6.04 of this Agreement) of any United States
Purchased Entity accrued but not yet due are accrued on the Balance Sheet. The
charges, accruals and reserves for Taxes (other than income Taxes for which
Seller is liable and has agreed to indemnify Purchaser pursuant to Section 6.04
of this Agreement) with respect to the United States Purchased Entities for any
period or portion thereof ending on or before the Closing Date reflected on the
Balance Sheet are adequate to cover such Taxes.
(b) Except as set forth in Section 2.13(b) of the
Disclosure Schedule:
(i) no United States Purchased Entity has
requested or been granted an extension of the time for filing any Tax Return
which has not yet been filed;
(ii) no United States Purchased Entity has
consented to extend to a date later than the date hereof the time in which any
Tax may be assessed or collected by any taxing authority;
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(iii) no deficiency or proposed adjustment which
has not been settled or otherwise resolved for any amount of Tax has been
proposed, asserted or assessed by any taxing authority against any United
States Purchased Entity;
(iv) there is no action, suit, taxing authority
proceeding or audit now in progress, pending or, to Seller's or the Company
Executives' knowledge, threatened against or with respect to any United States
Purchased Entity;
(v) to the Seller's or the Company's knowledge,
no taxing authority intends or has threatened to claim or assess any amount of
additional Taxes against any United States Purchased Entity;
(vi) since November 8, 1985, no claim has ever
been made by a taxing authority in a jurisdiction where any United States
Purchased Entity does not file Tax Returns that such United States Purchased
Entity is or may be subject to Taxes assessed by such jurisdiction;
(vii) no United States Purchased Entity has made
any election under Section 341(f) of the Code (or any corresponding provision
of state, local or foreign income Tax law);
(viii) there are no Liens for Taxes (other than for
current Taxes not yet due and payable) upon the assets of any United States
Purchased Entity;
(ix) no United States Purchased Entity will be
required (A) as a result of a change in method of accounting for a taxable
period ending on or prior to the Closing Date, to include any adjustment in
taxable income for any taxable period (or portion thereof) ending after the
Closing Date, or (B) as a result of any "closing agreement" (with respect to a
taxable period ending on or prior to the Closing Date) as described in Section
7121 of the Code (or any corresponding provision of state, local or foreign
income Tax law), to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date;
(x) for taxable years beginning on or after
November 8, 1985, no United States Purchased Entity has been a member of an
Affiliated Group other than one of which Seller was the common parent, or filed
or been included in a combined, consolidated or unitary income Tax Return,
other than one filed by Seller;
(xi) for taxable years beginning on or after
November 8, 1985, no United States Purchased Entity is a party to or bound by
any Tax allocation or Tax sharing agreement and no United States Purchased
Entity has a current or potential contractual obligation to indemnify any other
Person with respect to Taxes;
(xii) no United States Purchased Entity has made
any payments, or is or will become obligated (under any contract entered into
on or before the Closing Date) to make any
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payments, that will be non-deductible under Section 280G of the Code (or any
corresponding provision of state, local or foreign income Tax law);
(xiii) no United States Purchased Entity owns any
interest in Real Property in the State of New York or in any other jurisdiction
in which a Tax (other than a net income or franchise tax) is imposed on the
gain on a transfer of an interest in real property; and
(xiv) Purchaser will not be required to deduct and
withhold any amount pursuant to Section 1445(a) of the Code upon the execution
of the transactions contemplated by this Agreement.
(c) With respect to each United States Purchased Entity,
Section 2.13(c) of the Disclosure Schedule contains a list of states,
territories and jurisdictions (whether foreign or domestic) in which such
United States Purchased Entity is required to file Tax Returns relating to
Income Taxes of such United States Purchased Entity.
(d) Section 2.13(b) of the Disclosure Schedule states,
with respect to each taxable period of each United States Purchased Entity
beginning on or after January 1, 1990, (i) whether such taxable period has been
or is being audited by the relevant taxing authority and (ii) any issues (with
respect to any ongoing or past audit) which, to Seller's or the Company
Executives' knowledge, are still open, and an estimate of the amount of any
unsettled potential tax liability with respect to any such issue.
2.14 Employee Benefits Matters.
(a) Section 2.14(a) of the Disclosure Schedule lists or
describes: (i) each "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) maintained or contributed to since December 31, 1989 by
(or required to be maintained or contributed to by) (A) any of the United
States Purchased Entities, or (B) any Person that, together with any of the
United States Purchased Entities, is treated as a single employer under Section
414 of the Code (each such person or entity, an "ERISA Affiliate") for the
benefit of any employee of any of the United States Purchased Entities; and
(ii) each other plan, arrangement, policy or understanding (whether written or
oral) relating to retirement, deferred compensation, bonus, severance, fringe
benefits or any other employee benefits currently in effect or maintained or
contributed to by (or required to be maintained or contributed to by) any of
the United States Purchased Entities or any ERISA Affiliate for the benefit of
any present or former employee, consultant, officer or director of any of the
United States Purchased Entities. Each such item listed in Schedule 2.14(a) is
referred to herein as an "Employee Plan."
(b) Except as set forth in Section 2.14(b) of the
Disclosure Schedule, none of the United States Purchased Entities maintains,
contributes to, or has any liability with respect to (i) any "employee pension
benefit plan" (as such term is defined in Section 3(2) of ERISA) that is
subject to the requirements of Section 302 of ERISA or Section 412 of the Code,
or (ii) any "multiemployer plan" (as such term is defined in Section 3(37) of
ERISA). None of the United
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States Purchased Entities or any ERISA Affiliate is a party to any collective
bargaining agreement which pertains to the employees of any of the United
States Purchased Entities.
(c) Except as set forth in Section 2.14(c) of the
Disclosure Schedule, each Employee Plan that is intended to be qualified within
the meaning of Section 401 of the Code has received a determination letter to
that effect from the Internal Revenue Service (the "IRS"), and nothing material
has occurred since the date of such letter that cannot be cured within the
remedial amendment period provided by Section 401(b) of the Code which would
prevent any such Employee Plan from remaining so qualified. Except as set
forth in Schedule 2.14(c) of the Disclosure Schedule, each Employee Plan has
been maintained in all material respects in accordance with its terms and with
the applicable provisions of ERISA, the Code and any other applicable laws and
collective bargaining agreements.
(d) The Company has, with respect to each Employee Plan
that is currently maintained or contributed to by the Company or Seller, made
available to Purchaser complete and correct copies of, as applicable, (i) all
plan documents and amendments thereto and related trust agreements, (ii) the
most recent IRS determination letter, (iii) the Annual Report (Form 5500
Series) and accompanying schedules for the three (3) most recently completed
plan years, (iv) the current summary plan description, and (v) any financial
statements and actuarial valuations for the three (3) most recently completed
plan years.
(e) Except as set forth in Schedule 2.14(e) of the
Disclosure Schedule: (i) all contributions to and payments from any Employee
Plan that may have been required to be made in accordance with the terms of the
Employee Plan or ERISA or the Code have been timely made; (ii) neither the
United States Purchased Entities nor any ERISA Affiliate has incurred any
liability under Title IV of ERISA or to the Pension Benefit Guaranty
Corporation, and the United States Purchased Entities have no potential
liability under Title IV of ERISA; and (iii) neither the United States
Purchased Entities nor any other "disqualified person" (within the meaning of
Section 4975 of the Code) or any "party in interest" (within the meaning of
Section 3(14) of ERISA) has engaged in any "prohibited transaction" (within the
meaning of Section 4975 of the Code or Section 406 of ERISA) with respect to
any of the Employee Plans which could subject any of the Employee Plans, any of
the United States Purchased Entities or any officer, director or employee of
any of the foregoing to a material penalty or tax under Section 502(i) of ERISA
or Section 4975 of the Code.
(f) Except as set forth in Schedule 2.14(f) of the
Disclosure Schedule, neither the United States Purchased Entities nor any ERISA
Affiliate contributes to, maintains or sponsors or has any liability with
respect to any employee benefit plan, agreement or arrangement applicable to
employees of any of the United States Purchased Entities located outside the
United States (the "Foreign Plans"). Each Foreign Plan is in compliance in all
material respects with all laws applicable thereto and the respective
requirements of the governing documents of such Foreign Plan. There are no
pending actions, suits or claims (other than routine claims for benefits) with
respect to any Foreign Plan.
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(g) Except as set forth in Section 2.14(g) of the
Disclosure Schedule, there is no pending or, to Seller's or the Company
Executives' knowledge, threatened claim in respect of any of the Employee
Plans. The Purchased Entities and each ERISA Affiliate have complied with the
health care continuation requirements of Part 6 of Title I of ERISA so as not
to result in any loss of deduction for purposes of federal income taxes and so
as not to be liable for any tax under Section 4980B of the Code.
2.15 Intellectual Property.
(a) The Intellectual Property Rights comprise all of the
intellectual property rights necessary for the operation of the Company and the
Subsidiaries, as currently conducted. Section 2.15(a) of the Disclosure
Schedule sets forth a complete and correct list of all: (i) patented or
registered Intellectual Property Rights and pending patent applications or
other applications for registrations of Intellectual Property Rights owned or
filed by or on behalf of the Company or the Subsidiaries; (ii) trade names and
unregistered trademarks and service marks owned or used by the Company or the
Subsidiaries; (iii) unregistered copyrights, mask works and non-confidential
descriptions of trade secrets owned or used by the Company or the Subsidiaries
and material to the financial condition, operating results, assets, or
operations of the Company or the Subsidiaries; and (iv) licenses or similar
agreements or arrangements for the Intellectual Property Rights to which the
Company or the Subsidiaries is a party, either as licensee or licensor (correct
and complete copies of which, including all amendments thereto to date, have
been delivered to Purchaser).
(b) Except as set forth in Section 2.15(b) of the
Disclosure Schedule: (i) the Company and the Subsidiaries own and possess all
right, title and interest in and to, or have valid and enforceable license to
use, the Intellectual Property Rights necessary for the operation of the
Company and the Subsidiaries as currently conducted free and clear of all Liens
(other than Liens arising with respect to licenses); (ii) no claim by any third
party in writing or, to Seller's or the Company Executives' knowledge, orally,
contesting the validity, enforceability, use or ownership of any of the
Intellectual Property Rights has been made which is currently outstanding or,
to Seller's or the Company Executives' knowledge, is threatened; (iii) except
as otherwise provided in Section 2.15(c)(iv), the loss or expiration of any
material Intellectual Property Right or related group of Intellectual Property
Rights is not pending or, to Seller's or the Company's knowledge, reasonably
foreseeable or threatened; (iv) the Company and the Subsidiaries have not
received any notices of any unresolved infringement or misappropriation by, or
conflict with, any third party with respect to the Intellectual Property Rights
(including, without limitation, any demand or request that the Company or the
Subsidiaries license any rights from a third party); (v) to the knowledge of
the Seller or the Company Executives, the Company or the Subsidiaries have not
infringed, misappropriated or otherwise conflicted with any intellectual
property rights or other rights of any third parties and the Company or the
Subsidiaries are not aware of any infringement, misappropriation or conflict
which will occur as a result of the continued operation of the Company or the
Subsidiaries as currently conducted; and (vi) the Company or the Subsidiaries
have not agreed to indemnify any Person for or against any interference,
infringement, misappropriation or other conflict with respect to the
Intellectual Property Rights.
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(c) Except as set forth in Section 2.15(c) of the
Disclosure Schedule: (i) all of the Intellectual Property Rights are owned by,
or properly assigned or licensed to, the Company or the Subsidiaries; (ii) the
transactions contemplated by this Agreement will have no material adverse
effect on the right, title and interest in and to the Intellectual Property
Rights; (iii) to the knowledge of Seller or the Company Executives, the Company
and the Subsidiaries have taken all necessary and desirable action to maintain
and protect the Intellectual Property Rights so as to not materially adversely
affect the validity or enforceability of the Intellectual Property Rights; and
(iv) to Seller's or the Company Executives' knowledge, the owners of any
Intellectual Property Rights licensed to the Company and the Subsidiaries have
taken all necessary action to maintain and protect the Intellectual Property
Rights subject to such licenses.
2.16 Contracts. Section 2.16 of the Disclosure Schedule lists the
following written agreements (other than Exempt Contracts) to which the Company
and, with respect to clause (f) Interglas or Asahi, is a party or by which the
Company and, with respect to clause (f) Interglas or Asahi, or their respective
assets are bound:
(a) any lease or license of personal property from or to
third parties providing for lease or royalty payments in excess of $100,000 per
annum;
(b) any sales or purchase orders, distribution or other
agreement for the purchase or sale of raw materials, commodities, supplies,
goods, products, or other personal property or for the furnishing or receipt of
services which involves consideration of more than the sum of $100,000, in each
case outstanding as of February 20, 1996;
(c) any partnership or joint venture agreement;
(d) any indenture, mortgage, note, bond or other evidence
of Indebtedness, any credit or similar agreement under which the Company has
borrowed money or issued any note, bond, indenture or other evidence of
Indebtedness for more than $100,000 or under which the Company has imposed (or
may impose) a Lien on any of its respective assets, tangible or intangible;
(e) any confidentiality or noncompetition agreement
(other than those benefitting a United States Purchased Entity under which the
Company has no current or future obligations) or any agreement which restricts
a United States Purchased Entity from entering into any new or expanding any
existing line of business or any agreement which contains geographic
restrictions on their respective abilities to conduct business activities;
(f) any agreement with Seller or any of its Affiliates;
(g) any agreement under which the Company could have
liabilities or obligations after the Closing with any current or former
directors, officers, and employees in the nature of a collective bargaining
agreement (including without limitation any collective bargaining pursuant to
which any Employee Plan is maintained), an employment agreement, a consulting
agreement or a severance agreement;
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(h) any instrument or agreement whereby the Company
grants any other Person a power of attorney, guarantees the liabilities or
obligations of any other Person or indemnifies any other Person against loss or
liability;
(i) any agreement under which any of the United States
Purchased Entities could have liabilities or obligations in the future relating
to the acquisition or disposition of material assets by way of merger,
consolidation, purchase (other than purchase orders disclosed pursuant to
clause (b) of this Section 2.16), sale or otherwise, or granting to any Person
a right at such Person's option to purchase or acquire any material asset or
property, of the Company or any interest therein (not including dispositions of
inventory in the ordinary course of business);
(j) any agreement or commitment for the construction or
modification of any building, structure or other fixed asset, or for the
incurrence of any other capital expenditure involving amounts in excess of
$100,000;
(k) any agreement with any manufacturer's representative,
distributor or other independent sales agent that is not terminable by the
Company without penalty or payment of compensation on sixty days or less
notice;
(l) any agreement not otherwise required to be disclosed
pursuant to this Section 2.16 the consequences of a default or termination
would materially and adversely affect any United States Purchased Entity; and
(m) any agreement not otherwise required to be disclosed
pursuant to this Section 2.16 either involving consideration of more than
$100,000 or not entered into in the ordinary course of business.
Seller has made available to Purchaser a correct and complete copy of each
agreement listed in Section 2.16 of the Disclosure Schedule (as amended to
date), other than agreements disclosed pursuant to clause (b) of this Section
2.16, which Seller has made available to Purchaser only upon Purchaser's
request. Except as otherwise disclosed in Section 2.16 of the Disclosure
Schedule, each such agreement is in full force and effect and the Company is
not, and to Seller's or the Company Executives' knowledge, no other party
thereto is, in material breach or default, and no event has occurred which with
notice or lapse of time would constitute a material breach or default by the
Company, or, to the Seller's or the Company Executives' knowledge, by any other
party, or permit termination, modification, or acceleration by the Company, or,
to the Seller's or the Company Executives' knowledge, by any other party, under
such agreement. Except as set forth in Section 2.16 of the Disclosure
Schedule, the Company is not a party to any oral contract, agreement, or other
arrangement which, if reduced to written form, would be required to be listed
in Section 2.16 of the Disclosure Schedule under the terms of this Section 2.16.
2.17 Environmental and Safety Matters. Except as set forth in
Section 2.17 of the Disclosure Schedule, (i) the United States Purchased
Entities have complied in all material respects and are in compliance in all
material respects with all Environmental and Safety Requirements
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(including without limitation all permits and licenses required thereunder);
(ii) neither Seller nor any of the United States Purchased Entities has
received any oral or written notice of any violation of, or any liability
(contingent or otherwise) or corrective or remedial obligation under, any
Environmental and Safety Requirements pertaining to the Purchased Entities; and
(iii) neither Seller nor any United States Purchased Entity has transported or
arranged for the disposal of any hazardous material, substance, or waste, or
owned or operated any property or facility (and no such property or facility is
contaminated with hazardous materials, substances or wastes) so as to give rise
to liabilities under CERCLA, RCRA or any other Environmental and Safety
Requirements. Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any obligations for site
investigation or cleanup, or notification to or consent of government agencies
or third parties, pursuant to any so-called "transaction-triggered" or
"responsible property transfer" Environmental and Safety Requirements. No
Environmental Lien has attached to any property owned, leased or operated by
Seller (in relation to the United States Purchased Entities) or any United
States Purchased Entity. No facts or circumstances with respect to the past or
current operation or facilities of Seller, any United States Purchased Entity
or any predecessor or Affiliate thereof (including, without limitation any
onsite or offsite disposal or release of hazardous materials, substances or
wastes) would give rise to any liability or corrective or remedial obligation
under any Environmental and Safety Requirements with respect to the United
States Purchased Entities.
2.18 Labor Relations. Except as set forth in Section 2.18 of the
Disclosure Schedule, neither Seller nor any Affiliate of Seller (including the
United States Purchased Entities) is a party to any collective bargaining
agreement applicable to employees of any of the United States Purchased
Entities and no organizational effort is presently being made or, to Seller's
or the Company's knowledge, threatened by or on behalf of any labor union with
respect to any employees of the United States Purchased Entities. Except as
set forth in Section 2.18 of the Disclosure Schedule, the United States
Purchased Entities are in compliance in all material respects with all
applicable Laws respecting employment and employment practices, terms and
conditions of employment and wages and hours and are not engaged in any unfair
labor practice and there is no labor strike, dispute, slowdown or stoppage
actually pending or, to Seller's or the Company's knowledge, threatened,
against the United States Purchased Entities.
2.19 Insurance. Section 2.19 of the Disclosure Schedule lists all
insurance policies currently in effect to which the Company is a party covering
the properties, assets, employees or operations of the United States Purchased
Entities (including policies providing property, casualty, liability, or
workers' compensation coverage and bond and surety arrangements), and the
information set forth in Section 2.19 of the Disclosure Schedule, including the
name of the insurer, the name of the policyholder, the policy number, the
period of coverage, a general description of coverage and the amount of
coverage (including limits) with respect to each such policy is true and
correct. All such policies are in full force and effect.
2.20 No Brokers' or Other Fees. Except as set forth in Section
2.20 of the Disclosure Schedule, no broker, finder or investment banker is
entitled to any fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Seller or
any United States Purchased Entity.
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2.21 Bank Accounts. Section 2.21 of the Disclosure Schedule lists
the names and locations of all banks and other financial institutions with
which any United States Purchased Entity has an account (or to which deposits
are made on behalf of any United States Purchased Entity), in each case listing
the type of account maintained, the account number therefor, and the names of
all Persons authorized to draw thereupon or who have access thereto and lists
the locations of all safe deposit boxes used by any United States Purchased
Entity.
2.22 Business of Fort Mill. Fort Mill has no assets other than the
Company Shares, Fort Mill does not conduct, and has not conducted, any business
other than acting as sole stockholder of the Company or otherwise with respect
to the Company Shares.
2.23 Company Transfer. Except as set forth in Section 2.23 of the
Disclosure Schedule, the transfer of the Company's interest in ABAEI has been
consummated on terms that do not impose any liability or obligation on any
Purchased Entity (whether contingent or otherwise).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
Holdings represents and warrants to Seller as follows:
3.01 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Holdings is a limited liability company duly formed and in good standing under
the laws of the State of Delaware.
3.02 Authorization, Etc. Each of Purchaser and Holdings has full
corporate or other power and authority to execute and deliver this Agreement
and the documents and instruments contemplated hereby, and to carry out the
transactions contemplated hereby and thereby. Each of Purchaser and Holdings
has duly approved and authorized the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and, prior to the
Closing, each of Purchaser and Holdings will have duly approved and authorized
the documents and instruments contemplated hereby and the consummation of the
transactions contemplated thereby by all necessary corporate action. This
Agreement constitutes a valid and binding agreement of each of Purchaser and
Holdings, enforceable against each of Purchaser and Holdings in accordance with
its terms, except that (i) the enforcement hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
3.03 No Approvals or Conflicts. Neither the execution and delivery
by Purchaser or Holdings of this Agreement nor the consummation by Purchaser
and Holdings of the transactions
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contemplated hereby will (i) violate, conflict with or result in a breach of
any provision of the certificate of incorporation or by-laws of Purchaser, (ii)
violate, conflict with or result in a breach of any provision of, conflict with
or result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the creation of any Lien upon any of Purchaser's or Holdings'
properties under, or cause the termination or modification of, or give any
other Person the right to terminate or modify, any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, lease, contract,
agreement or other instrument to which either Holdings or Purchaser or any of
their respective properties may be bound, (iii) violate any order, injunction,
judgment, ruling, Law applicable to either Holdings or Purchaser or any of its
respective properties, or (iv) require any consent, approval or authorization
of, or notice to, or declaration, filing or registration with, any Governmental
Body or other third party other than filings under the HSR Act and the filing
of the Certificate of Merger with the Secretary of State of the State of
Delaware.
3.04 No Distribution. If Purchaser makes the Cash Election
pursuant to Section 1.05, the Shares will not be taken by Purchaser with a view
to the public distribution thereof, and will not be transferred except in a
transaction registered or exempt from registration under the Securities Act.
3.05 No Brokers' or Other Fees. Except as set forth in Section
3.05 of the Disclosure Schedule, no broker, finder or investment banker is
entitled to any fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Purchaser,
Holdings or Vestar.
3.06 Business of Holdings and Purchaser. Holdings does not own
directly or indirectly, or have any investment in any of the capital stock of,
or have any similar ownership interest in, any Person other than Purchaser.
Prior to the Effective Time, or, if Purchaser makes the Cash Election pursuant
to Section 1.05, immediately prior to the Closing, Purchaser will not own
directly or indirectly, or have any investment in any of the capital stock of,
or have any similar ownership interest in, any Person. Prior to the date
hereof, neither Purchaser nor Holdings have incurred any Indebtedness.
3.07 Capitalization of Purchaser. The authorized capital stock of
Purchaser consists of 1,000 shares of Purchaser Common Stock, of which only 100
shares are outstanding and which shares have been validly issued and are fully
paid, nonassessable and free of preemptive rights. There are no subscriptions,
options, warrants, calls, rights, contracts, commitments, understandings,
restrictions or arrangements relating to the issuance, sale, transfer or voting
of any shares of Purchaser Common Stock, including any rights of conversion or
exchange under any outstanding securities or other instruments. Section 3.07
of the Disclosure Schedule sets forth a description of the Financing and such
details with respect thereto as are available as of the date hereof.
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ARTICLE IV
CONDITIONS TO SELLER'S AND FORT MILL'S OBLIGATIONS
The obligations of Seller and Fort Mill to effect the Closing under
this Agreement are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions, unless waived in writing by Seller; provided
that no such waiver shall constitute a waiver of Seller's rights, or in any way
relieve Purchaser of any obligations, under Article VIII hereof.
4.01 Representations and Warranties. All of the material
representations and warranties made by Holdings in this Agreement or in any
written certificate delivered pursuant to this Agreement shall be true and
correct in all material respects on the Closing Date as though such
representations and warranties were made at and as of such date, except for
representations and warranties that expressly relate to a date earlier than the
Closing Date and other changes expressly permitted or contemplated by this
Agreement.
4.02 Performance. Purchaser and Holdings shall have performed and
complied in all material respects with all agreements, obligations and
conditions required by this Agreement to be so performed or complied with by
Purchaser and Holdings prior to the Closing and, if Purchaser fails to make the
Cash Election pursuant to Section 1.05, this Agreement shall have been approved
by Holdings, as sole stockholder of Purchaser, in accordance with Section 251
of the Delaware General Corporation Law.
4.03 Officer's Certificate. Holdings shall have delivered to
Seller a certificate, dated the Closing Date and executed by an executive
officer of Holdings, certifying that the conditions specified in Sections 4.01
and 4.02 (except for those conditions waived by Seller in writing) have been
fulfilled at or prior to the Closing Date.
4.04 No Action. No Action shall have been instituted (and be
pending) by any Governmental Body seeking to restrain and prohibit this
Agreement or the consummation of the transactions contemplated hereby. No
Order preventing the consummation of the sale of the Shares by Seller to
Purchaser shall be in effect.
4.05 HSR Act. The waiting period (including any extensions thereof
by reason of a request for additional information) relating to the notification
and report forms under the HSR Act filed by Purchaser (or its ultimate parent
entity) and Seller with respect to the transactions contemplated by this
Agreement shall have expired or been terminated.
4.06 Payments. If Purchaser makes the Cash Election pursuant to
Section 1.05, Purchaser shall have delivered to Seller the Cash Purchase Price
in accordance with the terms of this Agreement, or if Purchaser fails to make
the Cash Election, Purchaser or its Affiliate shall have received financing on
terms satisfactory to Holdings which is sufficient to consummate the
transactions contemplated by this Agreement and the lenders in respect of such
financing shall have indicated that all conditions to the funding of such
financing have been satisfied or waived (other than the condition that evidence
of the filing of the Certificate of Merger shall have been obtained).
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4.07 Capital Structure of Purchaser. If Purchaser has not made the
Cash Election pursuant to Section 1.05, (a) Holdings shall have invested at
least $25,000,000 in the equity of Purchaser, and (b) the total Indebtedness
incurred by Purchaser, the Surviving Corporation or the Company at Closing
pursuant to the Financing shall be approximately $140,000,000.
4.08 Opinion of Counsel. Seller shall have received an opinion of
Kirkland & Ellis addressed to Seller and Fort Mill and dated the Closing Date
with respect to the matters described in Exhibit 4.08 hereto in a form
reasonably acceptable to Seller.
4.09 Other Agreements. If Purchaser has not made the Cash Election
pursuant to Section 1.05, Holdings shall have entered into the Securityholders
Agreement and the Voting Trust Agreement, and Holdings and Vestar shall have
entered into the Operating Agreement (which shall include the Proceeds Sharing
Provisions).
ARTICLE V
CONDITIONS TO PURCHASER'S AND HOLDINGS' OBLIGATIONS
The obligations of Purchaser and Holdings to effect the Closing under
this Agreement are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions, unless waived in writing by Purchaser and
Holdings; provided that no such waiver shall constitute a waiver of the
Purchaser Indemnitees' rights, or in any way relieve Seller of any obligation,
under Article VIII hereof.
5.01 Representations and Warranties. All of the material
representations and warranties made by Seller in this Agreement or in any
written certificate delivered pursuant to this Agreement shall be true and
correct in all material respects on the Closing Date as though such
representations and warranties were made at and as of such date, except for
representations and warranties that expressly relate to a date earlier than the
Closing Date and other changes expressly permitted or contemplated by this
Agreement.
5.02 Performance. Seller and Fort Mill shall each have performed
and complied in all material respects with all agreements, obligations and
conditions required by this Agreement to be so performed or complied with by
Seller or Fort Mill prior to the Closing and, if Purchaser fails to make the
Cash Election pursuant to Section 1.05, this Agreement shall have been approved
by Springs, as sole stockholder of Fort Mill, in accordance with Section 251 of
the Delaware General Corporation Law.
5.03 Certificate. Seller shall have delivered to Purchaser and
Holdings a certificate, dated the Closing Date and executed by an executive
officer of Seller, certifying that the conditions specified in Sections 5.01
and 5.02 (except for those conditions waived by Purchaser and Holdings in
writing) have been fulfilled at or prior to the Closing Date.
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5.04 No Action. No Action shall have been instituted (and be
pending) by any Governmental Body seeking to restrain and prohibit this
Agreement or the consummation of the transactions contemplated hereby. No
Order preventing the consummation of the sale of the Shares by Seller to
Purchaser shall be in effect.
5.05 Consents. All consents and approvals (including those listed
in Section 5.05 of the Disclosure Schedule) required for the consummation of
the transactions contemplated by this Agreement or where the effect of the
failure to obtain any such consent or approval would result in the breach of a
material agreement that any Purchased Entity is a party to shall have been
given and delivered.
5.06 HSR Act. The waiting period (including any extensions thereof
by reason of a request for additional information) relating to the notification
and report forms under the HSR Act filed by Purchaser (or its ultimate parent
entity) and Seller with respect to the transactions contemplated by this
Agreement shall have expired or been terminated.
5.07 No Changes. Since December 31, 1995, there shall have been no
material adverse change in the financial condition, operating results,
business, business prospects or material business relationships of the Company,
the Subsidiaries, Interglas or Asahi (provided, however, that the transfer or
other disposition of ABAEI and any transfer in the compliance with Section 6.20
shall not constitute material adverse changes for purposes of this Section
5.07).
5.08 Delivery of Shares. If Purchaser makes the Cash Election
pursuant to Section 1.05, Seller shall have delivered to Purchaser the Shares.
5.09 Resignation of Directors. Seller shall have delivered to
Purchaser the written resignations of (a) all of the directors of Fort Mill and
the Company, effective as of the Closing Date, (b) all members of the Managing
Committee of Clark-Schwebel Tech-Fab Company, a New York general partnership
("Tech-Fab"), who were appointed by the Company, effective as of the Closing
Date, and (c) all of the directors of each of Interglas and Asahi who were
designated by the Company, effective as of the Closing Date.
5.10 Financing. Purchaser or its Affiliate shall have received
financing on terms satisfactory to Holdings which is sufficient to consummate
the transactions contemplated by this Agreement and to provide for the
operational needs of the Company (the "Financing").
5.11 Opinion of Counsel. Purchaser and Holdings shall have
received an opinion of each of Sutherland, Asbill and Brennan and Seller's
General Counsel addressed to Purchaser and Holdings and dated the Closing Date
with respect to the matters described in Exhibit 5.11 hereto in a form
reasonably acceptable to Purchaser and Holdings.
5.12 Real Property Matters.
(a) A title insurance company selected by Purchaser (the
"Title Company") shall be willing to insure at standard rates the Company's and
the applicable Subsidiaries' marketable
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title in and to the Owned Property in fee simple, and the mortgage lien of
Purchaser's (or its Affiliate's) lender on the Owned Property free and clear of
all Liens, defects, claims, leases or rights of possession (other than
Permitted Liens and the matters disclosed in Section 2.10(a) of the Disclosure
Schedule) including such endorsements and affirmative coverages as Purchaser
and lender shall reasonably require including without limitation non-imputation
endorsements. Seller shall cause the Company to provide all such affidavits
and indemnities as the Title Company reasonably shall require in order to
afford such coverages. The cost of such title insurance policies shall be paid
by Purchaser or, if the Closing is effected, the Company.
(b) Purchaser shall have received a survey of each Owned
Property in a form reasonably satisfactory to Purchaser's (or its Affiliate's)
lender and the Title Company and sufficient to provide standard survey coverage
over all survey related title exceptions on the policy of title insurance to be
obtained by Purchaser, certified to Purchaser, such lender and the Title
Company and showing no defects, encroachments or encumbrances other than the
matters disclosed in Section 2.10(a) of the Disclosure Schedule and Permitted
Liens. The cost of such surveys shall be paid by Purchaser.
(c) Purchaser shall have received from each landlord
under a Lease an estoppel in form and substance reasonably satisfactory to
Purchaser.
5.13 Indebtedness and Liens. As of the Closing, (a) all
outstanding Indebtedness (other than obligations related to capital leases set
forth in Section 5.13 of the Disclosure Schedule) of each of Fort Mill and the
Company shall have been paid in full, defeased in a manner that will not result
in any liability or obligation being imposed on the Company, Fort Mill or the
Surviving Corporation, or assumed by Seller, including without limitation the
Industrial Revenue Bond Obligation, and (b) all Liens on the capital stock or
other equity interests of the United States Purchased Entities and on all other
assets of the Company securing such Indebtedness shall have been released, and,
if required by Purchaser's (or its Affiliate's) lender, all public records
shall have been cleared of any such Liens. At the Closing, Seller shall cause
the Company to provide, or arrange to be provided to Purchaser, all releases
and other documents in form and substance reasonably satisfactory to Purchaser
either providing for, or if required by Purchaser's (or its Affiliate's)
lender, demonstrating the release (actual and of record) of such Liens.
5.14 Fort Mill Assets and Liabilities. Fort Mill shall have no
assets other than the Company Shares and no liabilities of any nature
whatsoever.
5.15 Transition Agreements. Seller shall have entered into
agreements with the Company containing the terms set forth in Exhibit 5.15
hereto.
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ARTICLE VI
COVENANTS AND AGREEMENTS
6.01 Conduct of Business. Seller covenants that, except (i) for
actions taken to implement this Agreement and the transactions contemplated
hereby, (ii) as disclosed in the Disclosure Schedule, (iii) for actions taken
pursuant to an Exempt Contract, or (iv) as consented to by Holdings, from and
after the date of this Agreement and until the Closing Date, Seller shall cause
the Company to, and shall use reasonable best efforts to cause the Subsidiaries
to, conduct their respective businesses only in the ordinary course of business
consistent with past practice, and, without limiting the foregoing, shall cause
the Company to, and shall use reasonable best efforts to cause the Subsidiaries
to (and with respect to clauses (c) and (d), Seller shall cause Fort Mill to):
(a) use commercially reasonable efforts consistent with
good business judgment and in accordance with the Company's practice during the
past five years to: (i) preserve intact the present business organization,
material licenses and operations of the Company and the Subsidiaries; (ii) keep
available the services of the material employees of the Company and the
Subsidiaries; and (iii) preserve the present relationships of the Company and
the Subsidiaries with customers, suppliers and other entities or Persons having
business dealings with the Company and the Subsidiaries;
(b) except as set forth in Section 6.01(b) of the
Disclosure Schedule, maintain the books and records of the Company and the
Subsidiaries in accordance with past practice;
(c) not issue, sell, pledge or dispose of, or agree to
issue, sell, pledge or dispose of, any shares of its capital stock, or grant or
issue, or agree to grant or issue, any options relating to the issuance thereof;
(d) not acquire any shares of their respective capital
stock in any transaction other than for cash, or declare any dividends with
respect to their respective shares of capital stock (other than cash dividends)
or make any non-cash distribution with respect to their respective capital
stock;
(e) except for sales of inventory in the ordinary course
of business consistent with past practice or other sales of assets in the
ordinary course of business consistent with past practice in arm's length
transactions, not sell, pledge, dispose of or encumber any of their respective
assets;
(f) except in the ordinary course of business consistent
with past practice, or as necessary or advisable under applicable Law, not make
or permit to be made any material amendment or termination of any contract
required to be listed in Section 2.16 of the Disclosure Schedule;
(g) not merge with or into, consolidate with or acquire
all or substantially all of the stock or assets of any other Person;
(h) except as contemplated in the Approved Budget, not
enter into any commitment, contract, lease, sublease, license, or sublicense
(or series of related commitments,
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contracts, leases, subleases, licenses, or sublicenses) either involving more
than $100,000 individually or $500,000 in the aggregate or outside the ordinary
course of business consistent with past practice;
(i) except as contemplated in the Approved Budget, not
commit to the acquisition or construction of any property, plant or equipment
in excess of $100,000 individually or $500,000 in the aggregate;
(j) not create, incur, assume, or guarantee any
indebtedness (including capital lease obligations) involving $100,000
individually or $350,000 in the aggregate or outside the ordinary course of
business consistent with past practice (other than pursuant to Section 6.20);
(k) not discharge or cancel any material claim or right
with respect to any Intellectual Property Rights;
(l) (i) not make or grant any increases in the
compensation or benefits payable or to become payable to (A) any of their
respective officers or directors who are or will be on the Company's payroll or
(B) other employees whose current salary exceeds $50,000 per year, (ii) adopt
any Employee Plan or any retirement, deferred compensation, bonus or material
fringe benefit plan or program or any bonus, insurance, pension or similar
arrangement (or make any loan or other credit accommodation) to or for any
officer, employee, or director or (iii) make any contribution to any Employee
Plan or any retirement, deferred compensation or bonus program, plan or
arrangement for the benefit of any employee, officer or director, other than in
the ordinary course of business consistent with past practice;
(m) not make or enter into any agreement or understanding
to do any of the foregoing; or
(n) except as otherwise contemplated or required hereby,
not enter into any transaction or perform any act which would result in any of
the representations and warranties contained in this Agreement not being true
and correct in any material respect at and as of the time immediately after the
occurrence of such transaction or act or on the Closing Date.
6.02 Access to Books and Records; Post-Closing Access.
(a) From the date hereof until the Closing, Seller shall
use reasonable efforts to make available all information (financial or
otherwise) reasonably requested by or on behalf of Purchaser or its financing
sources in connection with their due diligence review of the Purchased
Entities, including at all reasonable times and upon reasonable notice, access
to the books, records, facilities, properties, officers, key employees,
accountants and representatives of the Purchased Entities. Purchaser will use
commercially reasonable best efforts to assure that any disruption to the
business of the Purchased Entities is minimized in connection with due
diligence efforts by Purchaser and its Affiliates and their respective
representatives, and the Purchased Entities shall not be required to incur any
out-of-pocket travel expenses in connection with such due diligence without
Seller's prior consent. Seller shall designate one or more persons who shall
be responsible
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for handling all due diligence access requests, and Purchaser shall use its
commercially reasonable best efforts to notify Seller of the names of the
persons who will be making such requests. All requests for due diligence
information or access to assets or employees of the Purchased Entities by
Purchaser and its Affiliates or their respective representatives shall be
through Seller's designated representative or representatives. Purchaser shall
notify Seller in advance of the names of any third parties (including
prospective lenders and equity participants) to which Purchaser wishes to
furnish any Evaluation Material involving the Purchased Entities and shall use
commercially reasonable best efforts to cause any such third parties to execute
a confidentiality agreement substantially in the form of the Confidentiality
Agreement unless Seller waives such requirement in writing. Neither Purchaser
nor its representatives shall contact Interglas, Asahi, Clark-Schwebel Tech-Fab
Company, or their Affiliates or any of the Purchased Entities' customers or
suppliers regarding the transactions contemplated by this Agreement without the
prior consent of Seller; provided, however, Seller and Purchaser shall mutually
agree upon a schedule for Purchaser and its representatives to be afforded the
opportunity to make such contact; and, provided further, that no meeting with
the aforesaid entities shall be scheduled without the prior consent of Seller,
or conducted without the presence of a representative of Seller, without the
prior consent of Seller.
(b) Purchaser and Seller agree to retain for a period of
six years after the Closing Date any and all books and records relating to the
assets, liabilities and business of the Purchased Entities that exist on, or
existed prior to, the Closing Date and that are related to the transactions
contemplated hereby. In the event either party needs access to such books,
records, or accounting personnel of Purchaser and the Company for the purposes
of (i) responding to any inquiries of any Governmental Body, (ii) preparing Tax
Returns and financial statements, or (iii) any other similar business purpose
(including, without limitation, effecting a registration of any securities of
any Purchased Entity under the Securities Act or complying with the terms of
this Agreement), each party will allow authorized representatives of the other
party access to such books, records, and accounting personnel upon reasonable
notice during normal business hours for the sole purpose of obtaining
information for use as aforesaid and will permit the other party to make such
extracts and copies thereof as may be necessary and, if required for such
purpose, to have access to and possession of original documents.
6.03 Filings and Consents.
(a) As promptly as practicable after the date hereof,
Purchaser and Seller shall make, or shall cause to be made, such filings as may
be required pursuant to the HSR Act with respect to the consummation of the
transactions contemplated by this Agreement. Thereafter, Purchaser and Seller
will file or cause to be filed as promptly as practicable with the United
States Federal Trade Commission and the United States Department of Justice any
supplemental information that may be requested pursuant to the HSR Act. All
filings referred to in this Section 6.03 will comply in all material respects
with the requirements of the respective Laws pursuant to which they are made,
and all fees related to such filings shall be paid by Purchaser.
(b) Without limiting the generality or effect of Section
6.03(a), each party to this Agreement will (i) use reasonable best efforts to
comply as expeditiously as possibly with all
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lawful requests of Governmental Bodies for additional information and documents
pursuant to the HSR Act, (ii) not (A) unreasonably extend any waiting period
under the HSR Act or (B) enter into any agreement with any Governmental Body
not to consummate the transactions contemplated by this Agreement, except with
the prior written consent of the other parties, which consent shall not be
unreasonably withheld, and (iii) cooperate with the other party and use
reasonable best efforts to cause the lifting or removal of any temporary
restraining order, preliminary injunction or other Order that may be entered
into in connection with the transactions contemplated by this Agreement.
(c) As promptly as practicable, each of Seller and
Purchaser will make, or cause to be made, all filings with courts or other
Governmental Bodies, and Seller will apply in writing for, and use all
commercially reasonable efforts to obtain, all other third party approvals and
consents required to be made or obtained in order to effectuate the
transactions contemplated hereby. Each of Seller and Purchaser will co-operate
with the other in effecting the foregoing, and will deliver to the other copies
of all filings, approvals and consents made or obtained pursuant to this
Section 6.03.
6.04 Tax Matters.
(a) Liability of Seller for Pre-Closing Taxes. Seller
shall be liable for and shall indemnify Holdings, Purchaser and each of their
Affiliates for (i) all income Taxes, including, without limitation, any income
Taxes resulting from this Agreement, imposed on Seller and Seller's Affiliated
Group for all taxable years or periods, whether ending before or after the
Closing Date, (ii) all income Taxes imposed on the United States Purchased
Entities, or for which the United States Purchased Entities may otherwise be
responsible, for any taxable year or period of the United States Purchased
Entities that ends on or before the Closing Date, and (iii) with respect to any
taxable year of the United States Purchased Entities that begins before the
Closing Date and ends after the Closing Date, a portion of the income Taxes
imposed on the United States Purchased Entities, or for which the United States
Purchased Entities may otherwise be responsible, which relates to the portion
of such Taxable period (computed in accordance with Section 6.04(k)(ii) of this
Agreement) ending on the Closing Date. For purposes of the preceding sentence,
a Tax for which a United States Purchased Entity may otherwise be responsible
includes the liability of a United States Purchased Entity for the unpaid Taxes
of any Person (other than any United States Purchased Entity) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or
foreign Tax law), as transferee or successor, by contract, or otherwise,
accruing during the applicable period. Seller shall not be responsible for
Taxes imposed on any Purchased Entity and attributable (where applicable in
accordance with Section 6.04(k)(ii) of this Agreement) to periods or portions
thereof beginning after the Closing Date.
(b) Mutual Cooperation. As soon as practicable, but in
any event within 30 days after Seller's or Holdings' request, as the case may
be, Holdings shall or shall cause the United States Purchased Entities, as
applicable, to deliver to Seller or Seller shall deliver to Holdings, such
information and other data in the possession of Seller, Holdings, or the United
States Purchased Entities, as the case may be, relating to the Tax Returns and
Taxes of such United States Purchased Entity, including such information and
other data customarily required by
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Seller or Holdings, as the case may be, to cause the payment of all Taxes or to
permit the preparation of any Tax Returns for which it has responsibility or
liability or to respond to audits by any taxing authorities with respect to any
Tax Returns or Taxes for which it has any responsibility or liability under
this Agreement or otherwise or to otherwise enable Seller or Holdings, as the
case may be, to satisfy its accounting or Tax requirements, and shall make
available such knowledgeable employees of the United States Purchased Entities
or Seller, as the case may be, as Seller or Holdings may reasonably request.
For a period of seven years after the Closing Date, and, if at the expiration
thereof any tax audit or judicial proceeding is in progress or the applicable
statute of limitations has been extended, for such longer period as such audit
or judicial proceeding is in progress or such statutory period is extended,
Holdings shall, and shall cause the United States Purchased Entities to,
maintain and make available to Seller, on Seller's reasonable request, copies
of any and all information, books and records referred to in this Section
6.04(b). After such period, Holdings and the United States Purchased Entities
may dispose of such information, books and records, provided that prior to such
disposition Holdings shall give Seller a reasonable opportunity to take
possession of such information, books and records. Holdings and Seller further
agree, upon request, to use their reasonable best efforts to obtain any
certificate or other document from any Governmental Body or any other Person as
may be necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions contemplated
hereby), provided, however, that neither Holdings nor Seller nor any of their
Affiliates shall be required to obtain a ruling with respect to the tax
consequences of this transaction unless Seller and Holdings mutually agree
otherwise. Holdings and Seller further agree, upon request, to provide the
other party with all information that either party may be required to report
pursuant to Section 6043 of the Code and all Treasury Department Regulations
promulgated thereunder.
(c) Certain Taxes. All transfer, documentary, sales,
use, stamp, registration and other such Taxes and fees (including any penalties
and interest) imposed as a result of the transactions contemplated by this
Agreement (including any New York State Gains Tax, New York City Transfer Tax
and any similar tax imposed in other states or subdivisions), shall be paid by
Seller when due, and Seller will, at its own expense, file all necessary Tax
Returns and other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and, if required by
applicable law, Holdings will, and will cause its Affiliates to, join in the
execution of any such Tax Returns and other documentation.
(d) Time of Payment. Any payment pursuant to this
Section 6.04 shall be made not later than 30 days after receipt by Seller of
written notice from Holdings stating that Taxes for which Seller is responsible
have been paid by Holdings, any of its Affiliates, or (effective upon the
Closing) any United States Purchased Entity, and the amount thereof and of the
indemnity payment requested. Holdings shall make no payment with respect to
any claim, assessment or disputed amount referred to in subsection (e)(i) of
this Section 6.04 until the provisions of subsection (e) have been satisfied
with respect to such amount. Any payment required under this Section 6.04 and
not made when due shall bear interest at the rate per annum determined, from
time to time, under the provisions of Section 6621(a)(2) of the Code for each
day until paid.
(e) Contests.
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(i) Whenever any taxing authority asserts a
claim, makes an assessment or otherwise disputes or affects the Income Tax
reporting position of the United States Purchased Entities for periods prior to
the Closing Date or the amount of Taxes for which Seller is or may be liable
under this Agreement, Holdings shall, promptly upon receipt by Holdings or the
United States Purchased Entities of notice thereof, inform Seller, and Seller
shall have the right to control any resulting proceedings and to determine
whether and when to settle any such claim, assessment or dispute, to the extent
such proceedings or determinations affect the Income Tax reporting position of
the United States Purchased Entities for periods prior to the Closing Date or
the amount of Taxes for which Seller is liable under this Agreement; provided
that Seller shall consult in good faith with Holdings regarding any such audit,
proceeding or determination to the extent such audit, proceeding or
determination would reasonably be expected to affect Taxes for which the United
States Purchased Entities, Purchaser or Holdings is liable under this
Agreement; and, provided further, that, without the prior written consent of
Holdings (such consent not to be unreasonably withheld), (A) neither Seller nor
any of its Affiliates shall, unless otherwise required by Law, take any
position on any Tax Return or in any contest or proceeding relating to Taxes
after the Closing Date not in accordance with past custom and practice that
materially adversely affects the United States Purchased Entities, their
respective Tax attributes or Tax liability for a taxable period or portion
thereof beginning after the Closing Date, and (B) neither Seller nor any of its
Affiliates shall agree to any settlement in respect of any contest or
proceeding relating to Taxes (other than federal Income Taxes) after the
Closing Date not in accordance with past custom or practice which would
materially adversely affect the United States Purchased Entities, their
respective Tax attributes or Tax liability for a taxable period or portion
thereof beginning after the Closing Date.
(ii) Whenever any taxing authority asserts a
claim, makes an assessment or otherwise disputes the amount of Taxes for which
Purchaser or Holdings is liable under this Agreement, Seller shall, promptly
upon receiving notice thereof, inform Holdings. Holdings shall have the right
to control any resulting proceedings and to determine whether and when to
settle any such claim, assessment or dispute, but only to the extent such
proceedings affect the amount of Taxes for which Holdings is liable under this
Agreement; provided that Holdings shall consult in good faith with Seller
regarding any audits of Holdings' and the United States Purchased Entities's
Tax Returns to the extent such audits would reasonably be expected to affect
Taxes for which Seller is liable under this Agreement; provided further, that,
without the prior written consent of Seller (such consent not to be
unreasonably withheld), (A) neither Holdings nor any of its Affiliates shall,
unless otherwise required by Law, take any position on any Tax Return or in any
contest or proceeding relating to Taxes after the Closing Date not in
accordance with past custom and practice that materially adversely affects the
Tax liability of the United States Purchased Entities for the Pre- Closing
Portion of a taxable period beginning before and ending after the Closing Date,
and (B) neither Holdings nor any of its Affiliates shall agree to any
settlement in respect of any contest or proceeding relating to Taxes after the
date of this Agreement not in accordance with past custom or practice which
would materially adversely affect the Tax liability of the United States
Purchased Entities for the Pre-Closing Portion of a taxable period beginning
before and ending after the Closing Date. The "Pre-Closing Portion" of a
taxable period beginning before and
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ending after the Closing Date means the portion of such taxable period that
begins on the first day of such taxable period and ends on (and includes) the
Closing Date.
(f) Resolution of Disagreements Between Seller and
Purchaser. If Seller and Holdings disagree as to the amount for which each is
liable under this Section 6.04, Seller and Holdings shall promptly consult with
each other in an effort to resolve such dispute. If any such point of
disagreement cannot be resolved within fifteen (15) days of the date of
consultation, Seller and Holdings shall jointly select from the six major
independent certified public accounting firms in the United States (which are
listed in Section 6.04(f) of the Disclosure Schedule) (any such accounting firm
is referred to herein as an "Accountant"), an Accountant which has not
performed any material services since January 1, 1993, for either Seller or
Vestar or an Affiliate of Vestar, to act as an arbitrator to resolve all points
of disagreement concerning tax accounting matters with respect to this
Agreement. If the parties cannot agree on the selection of an Accountant within
fifteen (15) days, then such Accountant shall be selected by lot from the
Accountants listed in Section 6.04(f) of the Disclosure Schedule.
(g) Tax Sharing Agreement. Any Tax sharing agreement
between any Purchased Entity and any other Person (other than a Purchased
Entity) shall be terminated as of the Closing Date and will have no further
effect for any taxable year (whether the current year, a future year, or a past
year).
(h) No Changes. Without the prior written consent of
Holdings (which consent shall not be unreasonably withheld), neither Seller nor
any United States Purchased Entity shall (if not in accordance with the past
custom and practice of such United States Purchased Entity) make or change any
election, change an annual accounting period, adopt or change any accounting
method, file any amended Tax Return, enter into any closing agreement, settle
any Tax claim or assessment relating to such United States Purchased Entity,
surrender any right to claim a refund of Taxes, or take any other similar
action, or omit to take any action relating to the filing of any Tax Return or
the payment of any Tax, if such election, adoption, change, amendment,
agreement, settlement, surrender, or other action or omission would have the
effect of materially increasing the Tax liability (other than a liability for
which Seller is primarily responsible pursuant to this Section 6.04) or
materially decreasing any Tax benefit (including, without limitation, the basis
of any asset, any deduction, loss, any net operating loss or other carryover or
carryback, any credit, and any claim for refund) of any United States Purchased
Entity, Purchaser, Holdings or any Affiliate of Holdings for periods or
portions thereof beginning after the Closing Date.
(i) Affiliated Group Membership. Seller shall not take
any action or allow any action to be taken, including, without limitation, by
any United States Purchased Entity, which would cause any Purchased Entity that
is a member of Seller's Affiliated Group on the date of this Agreement to cease
being a member of Seller's Affiliated Group prior to the Closing.
(j) Tax Benefits and Detriments. If any income Tax
adjustment required solely as the result of an audit by a taxing authority of a
Tax period (or portion thereof) ending on or before the Closing Date results in
(A) any Tax benefit to the Company, any successor thereto or any Affiliate
thereof for any Taxable period (or portion thereof) beginning after the Closing
Date
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which would not, but for such adjustment, be available, Holdings shall pay, or
shall cause to be paid, to the Seller an amount equal to the actual Tax Savings
produced by such Tax benefit at the time such Tax Savings is realized by the
Company, any successor thereto or any Affiliate thereof, or (B) any Tax
detriment to the Company, any successor thereto or any Affiliate thereof for
any Taxable period (or portion thereof) beginning after the Closing Date which
would not, but for such adjustment, be incurred, Seller shall pay, or shall
cause to be paid, to Holdings an amount equal to the actual Tax Increase
produced by such Tax detriment at the time such Tax Increase is paid by the
Company, any successor thereto or any Affiliate thereof. "Tax Savings" means,
for any Tax period or portion thereof, the amount of the reduction in Taxes
paid to a taxing authority by the Company, any successor thereto or any
Affiliate thereof with respect to such Tax period or portion thereof as
compared to the Taxes that would have been paid to a taxing authority by the
Company, any successor thereto or any Affiliate thereof with respect to such
Tax period or portion thereof in the absence of the Tax benefit which produces
such Tax Savings. "Tax Increase" means, for any Taxable period or portion
thereof, the amount of the increase in Taxes paid to a taxing authority by the
Company, any successor thereto or any Affiliate thereof with respect to such
Tax period or portion thereof as compared to the Taxes that would have been
paid to a taxing authority by the Company, any successor thereto or any
Affiliate thereof with respect to such Tax period or portion thereof in the
absence of the Tax detriment which produces such Tax Increase.
(k) Tax Returns.
(i) Seller shall have responsibility for
preparing and filing any Tax Returns of Seller's Affiliated Group. Seller
shall prepare or cause to be prepared all separate income Tax Returns for the
United States Purchased Entities for all periods ending on or prior to the
Closing Date which are filed after the Closing Date. Each such income Tax
Return shall be prepared in accordance with the past custom and practice of the
applicable United States Purchased Entity. Seller shall submit each such
income Tax Return to Holdings at least 30 days prior to the applicable due date
(including any extensions thereof) prescribed by law for filing such income Tax
Return. Holdings shall file or cause to be filed each such income Tax Return
as prepared (subject to any changes mutually agreed by Holdings and Seller)
unless Holdings believes there is no reasonable basis for a position (an
"Objectionable Position") taken on any such income Tax Return; provided,
however, that Holdings shall nevertheless file such income Tax Return as
prepared (and modified pursuant to mutual agreement) if Holdings has received
from tax counsel to Seller an opinion stating that there is a reasonable basis
for such Objectionable Position.
(ii) Except as otherwise provided in Section
6.04(c), Holdings shall prepare or cause to be prepared and file or cause to be
filed any Tax Returns of the United States Purchased Entities for Tax periods
which begin before the Closing Date and end after the Closing Date. Seller
shall pay to Holdings within fifteen (15) days of the date on which Taxes are
paid with respect to such periods an amount equal to the portion of such Taxes
which relates to the portion of such Taxable period ending on the Closing Date
to the extent such Taxes are not reflected on the Closing Date Working Capital
Statement. For purposes of this Section, in the case of any Taxes that are
imposed on a periodic basis and are payable for a Taxable period that includes
(but does not end on) the Closing Date, the portion of such Tax which relates
to the portion of such Taxable period ending on the Closing Date shall (x) in
the case of any Taxes other
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than Taxes based upon or related to income or receipts, be deemed to be the
amount of such Tax for the entire Taxable period multiplied by a fraction the
numerator of which is the number of days in the Taxable period ending on the
Closing Date and the denominator of which is the number of days in the entire
Taxable period, and (y) in the case of any Tax based upon or related to income
or receipts be deemed equal to the amount which would be payable if the
relevant Taxable period ended on the Closing Date. For purposes of this
Section, in the case of any Tax credit relating to a Taxable period that begins
before and ends after the Closing Date, the portion of such Tax credit which
relates to the portion of such Taxable period ending on the Closing Date shall
be the amount which bears the same relationship to the total amount of such Tax
credit as the amount of Taxes described in (y) above bears to the total amount
of Taxes for such Taxable period. All determinations necessary to give effect
to the foregoing allocations shall be made and each Tax Return prepared
pursuant to this subsection 6.04(k)(ii) shall be prepared in a manner
consistent with prior practice of the applicable United States Purchased Entity
(unless Holdings and Seller agree otherwise).
6.05 WARN Act. Seller and Purchaser agree that for purposes of the
United States Worker Adjustment and Retraining Notification Act of 1989, as
amended (the "WARN Act"), the Closing Date shall be the "effective date" as
such term is used in the WARN Act. Purchaser agrees that it shall be
responsible for compliance with the WARN Act with respect to the United States
Purchased Entities for actions taken by the United States Purchased Entities
after the Closing.
6.06 Employee Benefit Provisions.
(a) Continuing Employees.
(i) Purchaser shall cause the Company to continue
to employ (A) the employees of the Company who are actively employed by the
Company on the Closing Date, and (B) any employees of the Company who on the
Closing Date are on an approved medical leave of absence, short-term disability
leave of absence, workers' compensation leave of absence, or absent pursuant to
the provisions of the Family and Medical Leave Act of 1993. All such employees
shall be referred to herein as "Continuing Employees."
(ii) At least 10 days prior to the Closing Date,
Seller shall provide to Purchaser a list of all employees of the Company who as
of the Closing Date are on a short-term disability leave of absence from the
Company, setting forth the name, title, compensation, monthly benefit amount,
date of hire, gender and date of commencement of short-term disability leave of
absence of each such employee.
(iii) Notwithstanding any other provision of this
Agreement, nothing in this Agreement shall limit Purchaser's or the Company's
ability to terminate the employment of any Continuing Employee at any time
following the Closing Date for any reason, including without cause.
(b) Continuation of Benefit Plans. For a period of 18
months after the Closing Date, Purchaser shall cause the Company to maintain
for the benefit of the Continuing Employees
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employee benefit plans, programs and arrangements substantially equivalent, in
the aggregate, to those employee benefit plans, programs and arrangements
listed at Section 6.06(b) of the Disclosure Schedule.
(c) Defined Contribution Plan.
(i) Effective as of the Closing Date, the Company
shall continue as a participating employer in the "Springs of Achievement
Partnership Plan" (the "Seller's Defined Contribution Plan"), and Seller shall
make any necessary amendment to the Seller's Defined Contribution Plan so that
the Company may continue as such a participating employer. Seller shall permit
the Company to remain as a participating employer under the Seller's Defined
Contribution Plan until the first day of the first month that immediately
follows the last day of the sixth month which follows the month in which the
Closing Date occurs (the "Transition Date").
(ii) No later than one month after the Transition
Date (but effective as of the Transition Date), Purchaser shall cause the
Company to adopt and maintain a defined contribution plan (the "Purchaser's
Defined Contribution Plan") intended to be qualified under Section 401(a) of
the Code that is substantially similar to the Seller's Defined Contribution
Plan, has features concerning the timing and method of distributions such that
a mandatory transfer from the Seller's Defined Contribution Plan to the
Purchaser's Defined Contribution Plan of account balances attributable to the
Continuing Employees will not cause a violation of Section 411(d)(6) of the
Code, and credits the Continuing Employees with all of their years of service
with Seller for all purposes under the Purchaser's Defined Contribution Plan.
As soon as practicable after the adoption of the Purchaser's Defined
Contribution Plan, Purchaser shall cause the Company to submit the Purchaser's
Defined Contribution Plan to the IRS for a favorable determination that the
Purchaser's Defined Contribution Plan is qualified under Section 401(a) of the
Code.
(iii) In accordance with the applicable provisions
of Section 414(l) of the Code, Seller shall cause the assets of the Seller's
Defined Contribution Plan attributable to the accounts of each Continuing
Employee who is employed by the Company on the date of transfer of the assets
(the "Transfer Date") (or the beneficiaries or alternate payee(s) of each
Continuing Employee) to be transferred by the trustee of the Seller's Defined
Contribution Plan to the trustee of the Purchaser's Defined Contribution Plan.
As of the valuation date under the Seller's Defined Contribution Plan that
immediately precedes such transfer, Seller shall cause the assets of the
Seller's Defined Contribution Plan attributable to such accounts that are
invested in stock of Seller to be reinvested in equivalent amounts of cash; and
the transfer of such assets from the Seller's Defined Contribution Plan to the
Purchaser's Defined Contribution Plan shall be made in cash. Except as
provided in the foregoing sentence, any transfer of assets from the Seller's
Defined Contribution Plan to the Purchaser's Defined Contribution Plan made
pursuant to the terms of this Agreement shall be in cash or in kind (except
that in all events any promissory notes or other evidences of indebtedness with
respect to outstanding loans made to Continuing Employees shall be transferred
to the Purchaser's Defined Contribution Plan), as mutually agreed by Seller and
Purchaser, or in cash if no such agreement is made, and shall be made as of and
as soon as practicable after a valuation date under the Seller's Defined
Contribution Plan occurring coincident with or immediately preceding the
Transition Date, or as of such later valuation date as may be
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mutually selected by Seller and Purchaser, but not before 30 days after Seller
and the Company shall have complied with any requirement to file IRS Forms
5310-A with the IRS. Such transfer shall account appropriately for earnings
during the period from the applicable valuation date to the Transfer Date.
(iv) From the Transition Date until the Transfer
Date, Purchaser shall cause the Company to make continuous payroll deductions
each pay period from the pay of each Continuing Employee who has a loan(s)
outstanding from the Seller's Defined Contribution Plan of amounts sufficient
to pay the installment payments of principal and interest on each such loan as
required by the promissory note or other evidence of indebtedness relating to
such loan. Such deducted amounts shall be paid by the Company to the Seller's
Defined Contribution Plan for a credit against such loan.
(v) On or prior to the Closing Date, Seller shall
cause the Company to make a contribution to the Seller's Defined Contribution
Plan of the amounts of (A) any salary reduction contributions and matching
contributions attributable to or payable on account of any Continuing Employee
under the terms of the Seller's Defined Contribution Plan for any time period
ending on the Closing Date, and (B) any profit sharing contributions
attributable to or payable on account of any Continuing Employee under the
terms of the Seller's Defined Contribution Plan for the calendar year ending on
December 31, 1995. In the event that any of the contributions described in the
preceding sentence cannot be made on or prior to the Closing Date, the amount
of such contributions shall be reflected on the Closing Date Working Capital
Statement and Purchaser shall cause the Company to make such contributions
after the Closing Date. The amount of the Company's minimum obligation (as
determined under the terms of the Seller's Defined Contribution Plan) with
respect to profit sharing contributions attributable to or payable on account
of the Continuing Employees for the period commencing on January 1, 1996 and
ending on the Closing Date shall be reflected on the Closing Date Working
Capital Statement.
(vi) Notwithstanding the foregoing, if Seller
shall determine that a transfer of the assets described in subparagraph (iii)
above represented by any insurance company guaranteed investment contract would
result in a loss of the contract rate of interest for any period during such
contract's stated term or the imposition of a penalty or market value
adjustment under any such contract, the assets represented by such contract
shall not be so transferred but shall be held under the Seller's Defined
Contribution Plan and administered pursuant to the terms thereof, as in effect
on the Closing Date, until the term of such contract shall end, at which time
the assets held thereunder on behalf of the Continuing Employees shall be
transferred to the Purchaser's Defined Contribution Plan. Seller shall take
any action necessary so that for purposes of computing the vested interest of
the Continuing Employees under the Seller's Defined Contribution Plan and for
purposes of determining when a Continuing Employee is entitled to a
distribution thereunder, employment by the Company after the Closing Date shall
be taken into account as if it were employment by Seller; and Seller shall take
no action which would cause any such contract to terminate under circumstances
which would result in a loss of the contract rate of interest for any period
during its stated term or the imposition of any penalty or market value
adjustment.
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(vii) Notwithstanding any other provision of this
Agreement, Seller shall be solely responsible for any liability incurred in
connection with the investigation of the Seller's Defined Contribution Plan by
the IRS as disclosed at Section 2.14(g) of the Disclosure Schedule, and neither
Purchaser nor the Company shall be required to accept any transfer of assets
from the Seller's Defined Contribution Plan unless Purchaser shall be satisfied
that the Seller's Defined Contribution Plan remains qualified under Section
401(a) of the Code as of the proposed Transfer Date.
(d) Medical and Dental - Active Employees.
(i) Effective as of the Transition Time, the
Continuing Employees shall cease being covered under the medical and dental
component of the "Comprehensive Health Care, Life and Disability Plan of
Springs Industries, Inc." and any other employee welfare benefit plan (as such
term is defined in Section 3(1) of ERISA) maintained by Seller that provides
similar benefits (collectively, the "Seller's Medical Plan") as sponsored and
maintained by Seller. Effective as of the Transition Time, the Continuing
Employees shall be covered by medical and dental plans established and
maintained in accordance with Section 6.06(b) (collectively, the "Purchaser's
Medical Plan").
(ii) Effective as of the Transition Time,
Purchaser shall cause the Company to assume all liabilities under the Seller's
Medical Plan for all claims whenever incurred by the Continuing Employees that
are submitted for payment to and received by the third party administrator of
the Purchaser's Medical Plan after the Closing Date. On and after the Closing
Date, Seller shall retain and have sole responsibility for (A) all liabilities,
obligations and commitments arising under Part 6 of Title I of ERISA and
Section 4980B of the Code relating to any "qualifying event" (as such term is
defined in Section 603 of ERISA) occurring with respect to any employee of the
Company at any time on or prior to the Closing Date, and (B) all liabilities
under the Seller's Medical Plan for all claims incurred by the Continuing
Employees that (1) were submitted for payment to and received by the third
party administrator of the Seller's Medical Plan on or prior to the Closing
Date, and (2) were not paid within ten days after receipt by such third party
administrator of all information necessary to process and pay the claims.
(iii) Notwithstanding any other provision of this
Agreement, for a period of 6 months following the Closing Date, Seller shall
provide to the Company such administrative and support services with respect to
the Purchaser's Medical Plan as are necessary to ensure the proper operation of
the Purchaser's Medical Plan and as are comparable to the administrative and
support services provided by Seller to the Company prior to the Closing Date in
connection with the Seller's Medical Plan. The cost of such administrative and
support services shall be paid by the Company at a rate that is equivalent to
the actual and reasonable cost of such services.
(e) Medical - Retired Employees.
(i) Effective as of the Transition Time, the
Continuing Employees shall cease being covered under the "Springs Industries,
Inc. Continued Medical Sharing Plan" and any other employee welfare benefit
plan (as such term is defined in Section 3(1) of ERISA) maintained
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by Seller that provides similar benefits (collectively, the "Seller's Retiree
Medical Plan") as sponsored and maintained by Seller. Effective as of the
Transition Time, the Continuing Employees shall be provided with retiree health
coverage established and maintained in accordance with Section 6.06(b) (the
"Purchaser's Retiree Medical Plan").
(ii) Effective as of the Transition Time,
Purchaser shall cause the Company to assume and have sole responsibility for
all liabilities, obligations and commitments for the post-retirement medical
coverage for the individuals who are listed at Section 6.06(e) of the
Disclosure Schedule in accordance with the terms of the Purchaser's Retiree
Medical Plan.
(iii) Notwithstanding any other provision of this
Agreement, for a period of 6 months following the Closing Date, Seller shall
provide to the Company such administrative and support services with respect to
the Purchaser's Retiree Medical Plan as are necessary to ensure the proper
operation of the Purchaser's Retiree Medical Plan and as are comparable to the
administrative and support services provided by Seller to the Company prior to
the Closing Date in connection with the Seller's Retiree Medical Plan. The
cost of such administrative and support services shall be paid by the Company
at a rate that is equivalent to the actual and reasonable cost of such services.
(f) Life and Disability Insurance.
(i) Effective as of the Transition Time, the
Continuing Employees shall cease being covered under the life and disability
components of the "Comprehensive Health Care, Life and Disability Plan of
Springs Industries, Inc.", the "Springs of Achievement Long Term Disability
Excess Plan", the "Long Term Disability Plan of Springs Industries, Inc. and
Affiliates" and under any other employee welfare benefit plan (as such term is
defined in Section 3(1) of ERISA) maintained by Seller that provides similar
benefits (collectively, the "Seller's Life and Disability Plan"). Effective as
of the Transition Time, the Continuing Employees shall be covered by life and
disability insurance plans established and maintained in accordance with
Section 6.06(b) (collectively, the "Purchaser's Life and Disability Plan").
(ii) Effective as of the Transition Time, except
as provided in subparagraph (iv) below, Purchaser shall cause the Company to
assume and have sole responsibility for the payment of (or, as applicable, the
reimbursement to a third party administrator or insurer of) any life and
disability benefits payable to (or on behalf of) all employees and former
employees of the Company who, as of the Closing Date, are receiving or entitled
to receive any benefits under the Seller's Life and Disability Plan in
accordance with the terms of the Purchaser's Life and Disability Plan.
(iii) Notwithstanding the terms of the Seller's
Life and Disability Plan or any other provision of this Agreement, no
contribution shall be required to be made by Purchaser or the Company to the
Seller's Life and Disability Plan as a result of the Company's withdrawal from
such plan in connection with the transactions contemplated by this Agreement.
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(iv) Notwithstanding any other provision of this
Agreement, on and after the Closing Date, Seller shall retain and have sole
responsibility for the payment of any long-term disability benefits payable
under the terms of the Seller's Life and Disability Plan to all employees and
former employees of the Company who are listed at Section 6.06(f)(iv) of the
Disclosure Schedule and Purchaser shall pay to Seller the amount of $99,000 on
the Closing Date. If subsequent to the Closing Date, Seller receives or is
entitled to receive any social security payment on account of any individual
listed at Section 6.06(f)(iv) of the Disclosure Schedule, Seller shall pay the
amount of any such social security payment to Purchaser in cash.
(g) Executive Compensation Arrangements.
(i) Purchaser shall be solely responsible for the
payment of (A) any and all amounts deferred pursuant to the "Springs
Industries, Inc. Deferred Compensation Plan" and the "Springs Industries, Inc.
Deferred Compensation Plan for Certain Employees" with respect to the
Continuing Employees (which amounts calculated as of December 31, 1995 are set
forth in Section 6.06(g)(i)(A) of the Disclosure Schedule), and (B) all amounts
vested (which amounts calculated as of December 31, 1995 are set forth in
Section 6.06(g)(i)(B) of the Disclosure Schedule) as of the Closing Date under
the "Contingent Compensation Plan of Springs Industries, Inc.," provided that
any such amounts are reflected on the Closing Date Working Capital Statement.
(ii) Seller shall be solely responsible for the
payment of any and all amounts deferred pursuant to the "Contingent
Compensation Plan of Springs Industries, Inc." that are not vested as of the
Closing Date (but determined as if such amounts are vested on the Closing
Date), the "Springs of Achievement Excess Benefits Partnership Plan," and any
other deferred compensation arrangements maintained by Seller or the Company
with respect to any Continuing Employee (except as otherwise provided in
subparagraph (i) above). Such amounts (calculated as of December 31, 1995)
shall be set forth at Section 6.06(g)(ii) of the Disclosure Schedule and
(except with respect to the "Contingent Compensation Plan of Springs
Industries, Inc.") shall be determined by immediately vesting all such
Continuing Employees in all benefits under such deferred compensation plans as
of the Closing Date, and Seller shall pay such amounts to the appropriate
Continuing Employees on the Closing Date or on such later date as may be
required under the terms of such plans.
(iii) Seller hereby agrees that any Continuing
Employee who is a participant in the "Springs Industries, Inc. 1991 Incentive
Stock Plan," the "Restated and Amended Springs Industries, Inc. Deferred Unit
Stock Plan," and any other stock option, stock purchase, stock ownership or
similar plan as may be maintained by Seller with respect to any Continuing
Employee (A) shall be immediately vested as of the Closing Date in any
restricted stock granted under such plan and shall receive a distribution of
such restricted stock on the Closing Date, (B) shall be immediately vested as
of the Closing Date in any deferred stock units granted under such plan and
shall receive distribution in cash of the amount of any dividends and interest
attributable to such deferred stock units and distribution in stock of such
deferred stock units on the Closing Date or on such later date as may be
required under the terms of such plan, (C) shall be immediately vested on the
Closing Date in any performance unit awards granted under such plan
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and shall receive distribution in cash and in stock of such performance unit
awards on the Closing Date or on such later date as may be required under the
terms of such plan, and (D) shall be immediately vested as of the Closing Date
in any stock option granted under such plan and shall be entitled to exercise
any such stock option for a period ending not later than 90 days following the
Closing Date. The stock options and other rights subject to the provisions of
this Section 6.06(g)(iii) and the amounts payable or exercisable pursuant
thereto (calculated as of December 31, 1995) are set forth at Section
6.06(g)(iii) of the Disclosure Schedule. Notwithstanding the foregoing, Seller
shall not be obligated to take any action under such plans which constitutes a
breach of contract with respect to any Continuing Employee, but Seller shall
remain solely responsible for any and all liabilities, obligations and
commitments arising under or attributable to such plans.
(iv) The Company shall be solely responsible for
the payment of any and all amounts payable to any Continuing Employee pursuant
to the terms of the "Springs Industries, Inc. Achievement Incentive Plan" for
any time period ending on or before December 30, 1995, and Seller shall cause
the Company to pay all such amounts prior to the Closing Date. The amounts
payable under such plan with respect to the Continuing Employees for the period
commencing on December 31, 1995 and ending on the Closing Date shall be
reflected on the Closing Date Working Capital Statement and shall be payable by
the Company.
(h) Special Severance Pay Provisions. Effective as of
the Transition Time, Purchaser shall cause the Company to provide a severance
pay plan for the individuals listed at Section 6.06(h) of the Disclosure
Schedule who have completed at least 15 years of service with the Company as of
the Closing Date that is identical to the severance pay plan maintained
pursuant to Section 6.06(b) except that, if such individual's employment with
the Company is terminated prior to the first anniversary of the Closing Date,
such individual shall receive payment under the terms of such plan in an amount
that is the greater of (A) the amount of base salary and pro-rated bonus that
would otherwise be payable from the date of termination of employment until the
first anniversary of the Closing Date, and (B) the amount otherwise payable
pursuant to the terms of such severance pay plan maintained pursuant to Section
6.06(b).
6.07 Supplemental Disclosure. From time to time prior to the
Closing and upon becoming aware of any such matter, condition or occurrence,
Seller will promptly disclose to Purchaser, and Purchaser will promptly
disclose to Seller, (i) any material development affecting the ability of such
party to consummate the transactions contemplated by this Agreement, (ii) any
matter, condition, occurrence or knowledge which, if existing or occurring at
the date of this Agreement, would have been required to be excepted from any
representation and warranty contained herein in order for such representation
or warranty to be true and correct on the date hereof or otherwise set forth or
described in their respective sections of the Disclosure Schedule or (iii) any
breach of any covenant or agreement contained in this Agreement of which such
party has knowledge. No disclosure by any party to this Agreement pursuant to
this Section 6.07, however, shall be deemed to amend or supplement this
Agreement (including the Disclosure Schedules hereto) or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant; provided,
however, that if, as a result of a matter, condition, occurrence or knowledge
of the type set forth in clause (ii) of this Section 6.07, the Closing
condition contained in either Section 4.01
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or Section 5.01 is incapable of being satisfied, then the disclosure in writing
of such matter, condition, occurrence or knowledge shall constitute an
amendment, effective as of the Closing, to the applicable section of the
Disclosure Schedule or, if the applicable representation or warranty does not
have an associated section of the Disclosure Schedule, such disclosure in
writing shall be deemed to be excepted from such representation and warranty,
effective as of the Closing and, notwithstanding the provisions of Article
VIII, no claim in respect of the matter so disclosed shall be entitled to
indemnity under Section 8.01(a)(i) (with respect to disclosures by Seller) or
Section 8.01(b)(i) (with respect to disclosures by Purchaser).
6.08 Litigation. Until the Closing, Seller shall promptly notify
Purchaser of any Actions that, to the knowledge of Seller or the Company are
commenced, made or threatened against Seller or the Purchased Entities that are
reasonably likely to have a material adverse effect on the financial condition,
operating results, business, business prospects, or material business
relationships of the Company, the Subsidiaries, Interglas or Asahi or impair
the ability of Seller or Fort Mill to perform its respective obligations under
this Agreement, and Purchaser shall promptly notify Seller of any Actions that,
to the knowledge of Purchaser, are commenced, made or threatened against
Purchaser that are reasonably likely to impair the ability of Purchaser to
perform its obligations under this Agreement.
6.09 Covenant to Satisfy Conditions. Each party agrees to use all
reasonable best efforts to insure that the conditions set forth in Article IV
and Article V hereof are satisfied, insofar as such matters are within the
control of such party, prior to March 31, 1996. Notwithstanding the foregoing,
if the Closing has not occurred by March 31, 1996, each party agrees to use all
reasonable best efforts to insure that the conditions set forth in Article IV
and Article V hereof are satisfied, insofar as such matters are within the
control of such party.
6.10 Financing. Until Purchaser makes the Cash Election pursuant
to Section 1.05, (a) Purchaser will timely provide Seller with copies of drafts
of all material agreements to be entered into between Purchaser and its
financing sources with respect to the Financing; (b) Purchaser will consult
with Seller with respect to such Financing and will keep Seller reasonably
informed of all material developments related to the Financing; and (c) Seller
and its counsel will be afforded a reasonable opportunity to make comments to
Purchaser with respect to the documents related to the Financing.
6.11 Exclusivity. Neither the Seller, Fort Mill nor the Company
will, and each will cause its respective officers, directors, agents or
Affiliates not to, (a) enter into any written or oral agreement or
understanding with any Person (other than Holdings or Purchaser) regarding a
sale of the Purchased Entities or any substantial part of their stock, or a
sale of any material assets (other than the sale of inventory in the ordinary
course of business consistent with past practice) or business of the Company
(other than pursuant to Section 6.24) or the Subsidiaries, or a merger,
consolidation, public offering, recapitalization or similar transaction
involving the Purchased Entities ("Another Transaction"); (b) enter into or
continue any negotiations or discussions with any Person (other than Holdings
or Purchaser) regarding the possibility of Another Transaction; or (c) provide
any non-public financial or other confidential or proprietary information
regarding the Purchased Entities (including this Agreement or any financial
information, projections, or
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proposals regarding the businesses of the Purchased Entities) to any Person
(other than to Holdings, Purchaser or their financing sources, and their
respective representatives) whom Seller, Fort Mill or the Company knows, or has
reason to believe, would have any interest in acquiring the capital stock,
assets or business of the Purchased Entities, or would disclose such
information to any such Person.
6.12 Confidentiality. Except as otherwise provided in Section
6.02, Seller will, and will cause its Affiliates to, treat and hold as
confidential all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and
following the Closing, deliver promptly to Purchaser or destroy, at the request
and option of Purchaser, all tangible embodiments (and all copies) of the
Confidential Information which are in its possession (other than those
documents which Seller reasonably requests to retain for a proper business
purpose that would not otherwise violate the terms of this Agreement). In the
event that Seller or its Affiliates are requested or required (by oral question
or request for information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process) to disclose any
Confidential Information, Seller will notify Purchaser promptly of the request
or requirement so that Purchaser may seek an appropriate protective order or
waive compliance with the provisions of this Section 6.12. If, in the absence
of a protective order or the receipt of a waiver hereunder, Seller or such
Affiliate are, on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, that Person may
disclose the Confidential Information to the tribunal; provided, however, that
the disclosing Person shall use reasonable efforts to obtain, at the request
and expense of Purchaser, an order or other assurance that confidential
treatment will be accorded to such portion of the Confidential Information
required to be disclosed as Purchaser shall designate. The foregoing
provisions shall not apply to any Confidential Information which is generally
available to the public immediately prior to the time of disclosure.
6.13 Covenant Not to Compete.
(a) During the Non-competition Term (as defined below),
Seller covenants that it shall not, either individually or as a partner, joint
venturer, agent, consultant, shareholder or equity owner of another Person, or
otherwise, directly or indirectly, (i) participate in, engage in, or have a
financial or management interest in any business operation of any enterprise if
such business operation engages in the business of designing, manufacturing or
marketing (1) industrial fiberglass fabric or (2) aramid fabric for use in the
ballistics, composites or reinforced plastics markets as conducted by the
Purchased Entities during the 12 months prior to Closing (for purposes of this
Section 6.13, the "Business") anywhere in the world (the "Non-competition
Area"); provided, however, that the Business shall not include the designing,
manufacturing or marketing of spun yarns with fiberglass cores or fabrics from
spun yarns with fiberglass cores, (ii) solicit any other Person to engage in
the Business in the Non-competition Area, or (iii) assist any other Person to
engage in the Business in the Non-competition Area, (such activities described
in clauses (i), (ii) and (iii) shall hereinafter collectively be referred to as
"Engaging in Competition"); provided, however, that the direct or indirect
ownership by Seller of an interest not constituting more than five percent (5%)
in the aggregate of the outstanding voting capital stock in a corporation whose
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shares are traded on a recognized stock exchange or in the over-the-counter
market shall not, of itself, constitute Engaging in Competition.
(b) Seller covenants, during the Non-competition Term,
(i) not to induce directly or indirectly any individual who is as of the date
hereof, or was during the twelve (12) months prior to the date hereof, an
employee of the Purchased Entities to leave the employ of the Purchased
Entities or Purchaser or to refuse the employ of Purchaser and (ii) not to
hire, without the consent of Purchaser, any of the persons listed in Section
6.13(b) of the Disclosure Schedule.
(c) "Non-competition Term" means a period beginning on
the Closing Date and continuing through and including the day before the fifth
anniversary of the Closing Date. If during any calendar month within the Non-
competition Term Seller is not in compliance with this Section 6.13, then
Purchaser shall be entitled, among other remedies, to compliance by Seller with
the terms of this Section 6.13 for an additional number of days that equals the
number of days during which such noncompliance occurred. The term
"Non-competition Term" shall also include this additional period.
(d) Seller hereby agrees that all restrictions in this
Section 6.13, including, without limitation, those relating to duration and the
restricted territory, are necessary and fundamental to the protection of the
Business of Purchaser, and are reasonable and valid, and all defenses to the
strict enforcement thereof by Purchaser are hereby waived by Seller.
6.14 Perfection of Title. From the date hereof until the Closing,
and except as otherwise provided in this Agreement, Seller shall cause the
Company to execute, deliver or record such instruments of transfer or
conveyance and take such other actions as may be necessary to vest in the
Company (legally and of record) title to all of its owned assets and shall
provide evidence satisfactory to Purchaser (and the Title Company, if
applicable) of satisfaction of all Indebtedness and obligations secured by the
Liens listed in Section 6.14 to the Disclosure Schedule.
6.15 Intercompany Transactions.
(a) Except as set forth in Section 6.15(a) of the
Disclosure Schedule, from the date hereof until the Closing, Seller shall cause
all intercompany accounts to be maintained in accordance with and consistent
with the past practices of Seller and its Affiliates in establishing and
calculating intercompany accounts with the Purchased Entities and in the
ordinary course of business. Except as set forth in Section 6.15(a) of the
Disclosure Schedule, no intercompany transactions shall be entered into except
in the ordinary course of business consistent with such past practice.
(b) Any intercompany accounts (both investments and
advances) between Seller, on the one hand, and the Purchased Entities, on the
other hand, existing as of the Closing Date shall be eliminated and forgiven in
all respects.
6.16 Expenses.
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(a) Seller shall pay and hold Purchaser and the United
States Purchased Entities harmless from all expenses incurred by the Purchased
Entities and Seller in connection with the negotiation and preparation of this
Agreement and the consummation and performance of the transactions contemplated
hereby, including, without limitation, all legal and accounting fees and
brokers' and finders' fees; provided, however, that, if the Closing occurs, the
Company shall reimburse Seller for fifty percent (50%) of the reasonable
accounting fees incurred by Seller in connection with the preparation of the
Audited Financials; and, provided further that, if the Closing fails to occur
(other than primarily as a result of a breach by Seller or Fort Mill of any
representation, warranty, covenant or agreement contained in this Agreement)
Purchaser shall reimburse Seller for fifty percent (50%) of the reasonable
accounting fees incurred by Seller in connection with the preparation of the
Audited Financials.
(b) Except as otherwise expressly provided in this
Agreement, Seller, on the one hand, and Purchaser, on the other hand, shall
bear its own direct and indirect expenses incurred in connection with the
negotiation and preparation of this Agreement and the consummation and
performance of the transactions contemplated hereby, including, without
limitation, all legal and accounting fees and brokers' and finders' fees;
provided that the foregoing shall not limit any party's right to include such
expenses in any claim for damages against any other party in breach of this
Agreement; and, provided further, if the Closing occurs, the Company will bear
any such expenses incurred by Purchaser or any of its equity owners (other than
Seller); and, provided further, that if Purchaser does not make the Cash
Election pursuant to Section 1.05, the Company shall bear no more than
$10,000,000 of such expenses.
6.17 Insurance. All insurance coverage and bonds listed in Section
2.19 of the Disclosure Schedule shall not be terminated, modified, amended or
otherwise adjusted unless such termination, modification, amendment or
adjustment shall not adversely affect any coverage of the United States
Purchased Entities for covered events (i.e., occurrences or claims, as
applicable) that have occurred (whether reported or unreported) prior to the
Closing Date. In addition, Seller will not, nor will it permit any of its
Affiliates to, take any action that would restrict the ability of the United
States Purchased Entities to assert or maintain, or recover in respect of,
claims under the policies listed in Section 2.19 of the Disclosure Schedule for
claims asserted or occurrences prior to the Closing Date, it being understood,
however, that, except as otherwise provided in Section 6.06, Purchaser and the
United States Purchased Entities, and not Seller or any of its Affiliates, will
be responsible to (i) directly pay third parties or reimburse Seller within 30
days for any and all costs incurred by Seller that will not be reimbursed to
Seller by the insurance company with respect to any claim relating to the
United States Purchased Entities, and (ii) pay any co-payment or self-insured
portion associated with any insured or self-insured claim (including any claim
under Seller's and the United States Purchased Entities' self-insured workers
compensation programs, whether paid directly or through a third party
administrator) relating to the United States Purchased Entities; provided,
however, that, notwithstanding the foregoing, any amount that is payable by an
insurance company (and not reimburseable to the insurance company by Seller) in
respect of an individual claim under any insurance policy listed in Section
2.19 of the Disclosure Schedule for covered events (i.e., occurrences or claims
prior to the Closing Date, as applicable) shall not be the responsibility of
Purchaser or its Affiliates. Seller shall cooperate with Purchaser,
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and the United States Purchased Entities after the Closing Date in the
processing of any insurance claims made by Purchaser and the United States
Purchased Entities after the Closing Date.
6.18 Further Assurances. From time to time after the Closing Date,
without further consideration, the parties will execute and deliver such
documents and take such actions as any other party may reasonably request in
order to more effectively consummate the transactions contemplated hereby and,
if Purchaser makes the Cash Election pursuant to Section 1.05, to vest in
Purchaser title to the Shares.
6.19 Management Shares. At the Closing, if Purchaser fails to make
the Cash Election pursuant to Section 1.05, the Surviving Corporation shall
issue to Management the Management Shares. If Purchaser makes the Cash
Election, Purchaser will provide Management with the opportunity to invest in
Purchaser in connection with the Closing.
6.20 Transfer of Assets and Liabilities. Prior to the Closing, the
assets and the liability accounts of the Company currently recorded on the
books of Seller and set forth in Section 6.20 of the Disclosure Schedule shall
be recorded on the books of the Company; provided however, that no asset or
liability account recorded on the books of Seller other than those set forth in
Section 6.20 of the Disclosure Schedule shall be recorded on the books of the
Company.
6.21 Audited Financial Statements. Prior to the Closing, Seller
shall prepare consolidated statements of financial position of Fort Mill as of
December 30, 1995 and December 31, 1994, and the related statements of income
and of cash flows for the fiscal years ended December 30, 1995, December 31,
1994, and January 1, 1994, in accordance with generally accepted accounting
principles and in accordance with SEC rules and regulations (including required
schedules) and Seller shall engage Deloitte & Touche to audit such statements
in accordance with generally accepted auditing standards (the "Audited
Financials"). The report of Deloitte & Touche on the Audited Financials shall
be without limitation as to the scope of the audit. Seller shall deliver the
Audited Financials and an unqualified and unmodified report of Deloitte &
Touche with respect thereto to Purchaser no later than seven days after the
date hereof. Seller shall use its reasonable best efforts to cause Deloitte &
Touche to (i) make its work papers in respect of its audit of the Audited
Financials available to Purchaser, and (ii) consent to the use of its report
with respect to the Audited Financials, and, with appropriate compensation,
prepare a similar report in respect of the Company and thereafter consent to
the use of such report.
6.22 Public Announcements. Prior to the Closing and except as may
otherwise be required by law (in which case the party proposing to issue such
publication or press release shall use reasonable efforts to consult in good
faith with the other party before issuing any such publication or press
release), the timing and content of all press releases and other public
announcements and all announcements by the parties to the customers, suppliers
or employees of the Company, the Subsidiaries, Interglas and Asahi relating to
the transactions contemplated by this Agreement shall be determined jointly by
Seller and Holdings.
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6.23 Transfer of Fort Mill's Assets and Liabilities. Seller and
Fort Mill shall take, or cause to be taken, all actions necessary to insure
that, on the Closing Date, Fort Mill has no assets other than the Company
Shares and no liabilities of any nature whatsoever.
6.24 Cash Transactions. Notwithstanding any provision of this
Agreement to the contrary, the parties agree that this Agreement shall not
prohibit the transfer of cash, via dividend or other distribution in respect of
the Shares or in accordance with Seller's normal cash management practices, by
or from any United States Purchased Entity to Seller prior to Closing, and that
no such transfer shall constitute a breach of any provision of this Agreement.
6.25 Delivery of Monthly Financial Statements. Prior to the
Closing, Seller shall deliver, or cause to be delivered, to Purchaser Monthly
Financial Statements for each fiscal month ending after the date of this
Agreement within three days after the date on which such Monthly Financial
Statements are prepared. Except as provided in Section 6.25 of the Disclosure
Schedule, all Monthly Financial Statements delivered pursuant to this Section
6.25 shall be prepared in a manner consistent with past practice.
6.26 Transfer of Real Property.
(a) Seller shall cause fee simple title to the property
described in Section 6.26 of the Disclosure Schedule to be conveyed to the
Company at or prior to the Closing, and all costs associated with such
conveyance shall be borne by the Seller.
(b) Prior to the Closing Date, Seller shall (i) assign,
and otherwise transfer to the Company all of its right, title and interest in
and to, the Lease dated July 12, 1989, between BFC Holding Company and Seller
relating to the property located at 14063 Borate Street, Santa Fe Springs,
California and (ii) cause the Company to obtain a lease from Norfolk Southern
Railway Company providing the Company with rights in respect of the
encroachments described in Section 2.10(a) of the Disclosure Schedule, which
Lease shall be on economic terms substantially similar (taking into account
inflation) to those set forth in that certain Lease effective as of May 1, 1985
between the Southern Railway Company and United Merchants & Manufacturing, Inc.
6.27 Transfer of Intellectual Property Rights. Prior to or at the
Closing, Seller shall transfer to the Company all of its right, title and
interest in and to any and all Intellectual Property Rights used primarily by
the Company, and Seller shall have executed and delivered the assignment set
forth in Exhibit 6.27 hereto.
6.28 Medical Insurance From and after the date hereof, Seller
shall provide, at its sole cost and expense, medical benefits comparable to
those provided under Seller's existing plan for the benefit of James E. Hendrix
irrespective of whether Mr. Hendrix is employed by the Company or Springs until
such time as Mr. Hendrix either becomes eligible for group medical coverage or
for Medicare.
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ARTICLE VII
TERMINATION
7.01 Termination. This Agreement may be terminated and abandoned
at any time prior to the Closing:
(a) by the mutual consent of Seller, Fort Mill, Holdings
and Purchaser;
(b) by Seller and Fort Mill, if Purchaser or Holdings has
breached in any material respect any material representation or warranty, or
any covenant or agreement contained in this Agreement, and such breach has not
been remedied within five business days after receipt of written notice from
Seller specifying such breach and demanding that such breach be remedied;
(c) by Purchaser and Holdings, if Seller or Fort Mill has
breached in any material respect any material representation or warranty, or
any covenant or agreement contained in this Agreement, and such breach has not
been remedied within five business days after receipt of written notice from
Holdings specifying such breach and demanding that such breach be remedied;
(d) by either Seller and Fort Mill or Purchaser and
Holdings, in the event the Closing has not occurred on or before April 26, 1996
(the "Cut-Off Date"), unless the failure of such consummation shall be due to a
breach of any representation or warranty made by the party seeking to terminate
this Agreement or the failure of such party to comply in all material respects
with the agreements and covenants contained herein to be performed by such
party on or before the Cut-Off Date;
(e) by either Seller and Fort Mill or Purchaser and
Holdings in the event any Governmental Body shall have issued an Order or taken
any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby and such Order or other action shall have
become final and nonappealable;
(f) by Purchaser and Holdings at any time prior to March
30, 1996 if the results of Purchaser's and its advisors' due diligence
investigations of each of Interglas and Asahi (including but not limited to
legal, environmental, financial and accounting due diligence investigations of
each of Interglas and Asahi) are not satisfactory to Purchaser in its sole
discretion; or
(g) by Purchaser and Holdings at any time prior to March
11, 1995 if Purchaser shall have received the Audited Financials in accordance
with Section 6.21 and such Audited Financials are different in any significant
respect from the Draft Audited Financials (other than due to the incorporation
of Purchaser's comments), or, if such Audited Financials are different in any
significant and adverse respect from the Draft Audited Financials, regardless
of whether such difference is due to the incorporation of Purchaser's comments;
provided, however if Seller fails to deliver the Audited Financials to
Purchaser on or before February 23, 1996, this termination right shall be
extended by one day for each day after February 23, 1996 that such Audited
Financials remain undelivered.
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7.02 Procedure and Effect of Termination. In the event of the
termination and abandonment of this Agreement by Seller or Purchaser pursuant
to Section 7.01 hereof, written notice thereof shall forthwith be given to the
other party. If the transactions contemplated by this Agreement are terminated
as provided herein, this Agreement shall become void and of no further force
and effect, except for the provisions of Section 6.16 relating to expenses and
Section 6.22 relating to publicity and except that such termination shall not
relieve any party then in breach of any representation, warranty, covenant or
agreement contained in this Agreement from liability in respect of such breach.
ARTICLE VIII
INDEMNIFICATION
8.01 Indemnification. Claims, obligations, liabilities, covenants
and representations with respect to income Taxes shall be governed solely by
the terms of Section 6.04 (and not this Section 8.01). Claims, obligations,
liabilities, covenants and representations with respect to all other Taxes
shall be governed by this Section 8.01.
(a) Indemnification by Seller. Subject to the limits set
forth in this Section 8.01, Seller agrees to indemnify, defend and hold
Holdings, Purchaser and the United States Purchased Entities, and their
respective officers, directors, agents and Affiliates (not including Seller)
(collectively, the "Purchaser Indemnitees"), harmless from and in respect of
any and all losses, damages, costs, fines, penalties, fees, lost profits of the
United States Purchased Entities, amounts paid in settlement and reasonable
expenses (including, without limitation, reasonable expenses of investigation,
attorney's fees, enforcement of this Agreement, defense fees, witness fees,
court costs and disbursements of counsel and other professionals)
(collectively,"Damages") that any of them may incur arising out of or due to
any of the following:
(i) the inaccuracy of any
representation or the breach of any warranty made by Seller, Fort Mill
or the Company in this Agreement or any certificate delivered pursuant
to this Agreement;
(ii) the breach of any covenant,
undertaking or agreement of Seller contained in this Agreement (other
than breaches of the representations and warranties contained in
Article II);
(iii) any liability or obligation
arising with respect to (A) any "employee benefit plan" (as such term
is defined in Section 3(3) of ERISA) at any time maintained or
contributed to by (or required to be maintained or contributed to by)
any ERISA Affiliate (excluding any liability or obligation relating to
employment with a United States Purchased Entity, unless such
liability or obligation is caused by an error or omission of any ERISA
Affiliate other than a United States Purchased Entity, and such
liability or obligation has not been expressly assumed by Purchaser
pursuant to Section
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6.06 of this Agreement), or (B) any "employee pension benefit plan"
(as such term is defined in Section 3(2) of ERISA) (including any
"multiemployer plan" (as such term is defined in Section 3(37) of
ERISA)) that is subject to the requirements of Section 302 of ERISA or
Section 412 of the Code at any time on or prior to the Closing Date
maintained or contributed to by (or required to be maintained or
contributed to by) the United States Purchased Entities or any ERISA
Affiliate;
(iv) (A) all matters set forth in
Section 8.01(a)(iv)(A) of the Disclosure Schedule (provided that
Seller shall have no obligation to indemnify Purchaser with respect to
any matter on such Schedule which is not designated with an asterisk
(*) unless Purchaser incurs an investigatory, corrective or remedial
obligation, or receives a third party claim, demand or notice, with
respect to such matter, and so notifies Seller in writing pursuant to
Section 8.02(c) hereof, within 10 years after the Closing Date (it
being understood and agreed that such 10 year limitation shall not
apply to matters designated with an asterisk on such Schedule)) and
(B) any offsite (i.e. at a location other than a property of facility
of the Purchased Entities) treatment, storage, disposal or management
of hazardous substances (or any arrangement for such offsite
treatment, storage, disposal or management) on or prior to the Closing
Date by or attributed to Seller or the United States Purchased
Entities (provided that Seller shall have no obligation to indemnify
Purchaser with respect to any such matter attributed to the United
States Purchased Entities (other than the matters set forth in Section
2.17 of the Disclosure Schedule under the heading "Superfund Sites")
unless Purchaser incurs an investigatory, corrective or remedial
obligation, or receives a third party claim, demand or notice, with
respect to such matter, and so notifies Seller in writing pursuant to
Section 8.02(c) hereof, within 20 years after the Closing Date (it
being understood and agreed that such 20 year limitation shall not
apply to the matters set forth in Section 2.17 of the Disclosure
Schedule under the heading "Superfund Sites"));
(v) any liability or obligation of
Fort Mill (A) related to the conduct of any business of any nature
whatsoever (other than in respect of it acting as sole shareholder of
the Company) at any time prior to the Closing or (B) imposed on Fort
Mill as the result of facts or circumstances (other than the ownership
of the Company Shares) existing prior to the Closing;
(vi) any liability or obligation
arising out of or resulting from the Company's prior ownership
interest in ABAEI or Clark Schwebel Distribution Corp.; and
(vii) any liability or obligation
resulting from the United States Purchased Entities' affiliation
(whether as a subsidiary, combined, consolidated or unitary group
member or otherwise) on or before the Closing Date with any other
Person (including, without limitation, Seller).
Purchaser's knowledge prior to the Closing of any inaccuracy or breach of any
representation, warranty or covenant made or to be performed by Seller, Fort
Mill or the Company under this
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Agreement shall not in any way limit or affect the Purchaser Indemnitees'
rights to indemnification under this Section 8.01(a) if the Closing occurs;
provided, however, that if Purchaser or the Company Executives have actual
knowledge prior to the Closing of facts and circumstances that would constitute
a breach of the representation and warranty contained in Section 2.11 stating
that there is no Basis for a specified consequence but which actual knowledge
would not constitute a breach of any other representation or warranty contained
in Section 2.11 or any other section of this Agreement, then the Purchaser
Indemnitees shall not be entitled to indemnification under this Section 8.01(a)
with respect to such breach. In addition, Purchaser agrees that it will not
conduct investigations of the matters set forth in Section 8.01(a)(iv)(A) of
the Disclosure Schedule for the purpose of triggering coverage under this
indemnity, however, Seller acknowledges that Purchaser may conduct any
environmental investigation which is, in the reasonable judgment of Purchaser,
consistent with prudent environmental management practices.
(b) Indemnification by Purchaser. Subject to the limits
set forth in this Section 8.01, Purchaser agrees to indemnify, defend and hold
Seller, its officers, directors, agents and Affiliates, harmless from and in
respect of any and all losses, damages, costs, fines, penalties, fees, lost
profits of Seller, amounts paid in settlement and reasonable expenses
(including, without limitation, reasonable expenses of investigation,
attorney's fees, enforcement of this Agreement, defense fees, witness fees,
court costs and disbursements of counsel and other professionals) that they may
incur arising out of or due to (i) any inaccuracy of any representation or the
breach of any warranty made by Holdings in this Agreement or in any certificate
delivered pursuant to this Agreement, (ii) the breach of any covenant,
undertaking or other agreement of Purchaser or Holdings contained in this
Agreement or (iii) the operations of the United States Purchased Entities after
the Closing Date to the extent they do not arise out of a breach of Seller's
representations and warranties in, or a default in the performance of any of
Seller's covenants under, this Agreement. Seller's knowledge prior to the
Closing of any inaccuracy or breach of any representation, warranty or covenant
made or to be performed by Purchaser under this Agreement shall not in any way
limit or affect Seller's right to indemnification under this Section 8.01(b) if
the Closing occurs.
(c) Survival of Representations and Warranties. The
several representations and warranties of the parties contained in this
Agreement or in any certificate delivered pursuant hereto will survive the
Closing Date and will remain in full force and effect thereafter until
twenty-four months after Closing; provided, however, that (i) the
representations and warranties contained in Sections 2.02, 2.03, 2.04, 2.06,
2.13, 2.20, 2.22, 3.02, 3.03, 3.04, and 3.05 shall survive indefinitely, (ii)
the representations and warranties contained in Section 2.17 shall survive for
five years, (iii) if Purchaser makes the Cash Election pursuant to Section
1.05, the representations and warranties contained in Sections 3.06 and 3.07
shall not survive the Closing Date, (iv) the representations and warranties
contained in Sections 2.07, 2.08 and 2.09, to the extent such representations
and warranties relate to Interglas or Asahi, shall not survive the Closing Date
and (v) the representations and warranties contained in Sections 2.05, 2.11(c)
and 2.12, to the extent such representations and warranties relate to the
knowledge of the Company Executives, shall not survive the Closing Date; and,
provided further, that all such representations or warranties that survive the
Closing Date shall survive beyond such period with respect to any inaccuracy
therein or breach thereof, notice of which shall have been duly given within
such
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applicable period in accordance with Section 8.01(d) or 8.02(c) hereof.
Anything to the contrary contained herein notwithstanding, the Purchaser
Indemnitees shall not be entitled to recover from Seller pursuant to Section
8.01(a)(i) of this Agreement (1) unless each claim for Damages pursuant to
Section 8.01(a)(i) resulting from a single inaccuracy or breach is for Damages
that Purchaser would be entitled to be indemnified for hereunder but for the
limitations contained in this sentence equal to or in excess of $100,000 (the
"Minimum Claim Amount"); provided that for purposes of this clause (1) all
claims for Damages arising out of the same facts or events resulting in such
inaccuracy or breach shall be treated as a single claim, and (2) unless and
until the total of all claims for Damages pursuant to Section 8.01(a)(i) that
satisfy the Minimum Claim Amount exceeds $1,500,000 (the "Basket") and then,
once the Basket has been exceeded, the Purchaser Indemnitees shall be entitled
to recover from Seller the amount by which all such claims included in the
Basket exceed in the aggregate $1,500,000; provided, however, that the
preceding limitations shall not apply to claims for Damages with respect to any
inaccuracy or breach of any representations and warranties set forth in
Sections 2.02, 2.03, 2.04, 2.06, 2.13 (to the extent relating to income Taxes),
2.20 or 2.22 of this Agreement or claims for Damages under clauses (ii), (iii),
(iv), (v), (vi) or (vii) of Section 8.01(a), regardless of whether such
indemnity obligations relate to matters covered by representations and
warranties that are subject to the limitations expressed in this sentence. For
purposes of Section 8.01(a)(i), any requirement in any representation or
warranty that an event or fact be material in order for such event or fact to
constitute a misrepresentation or breach of such representation or warranty
shall be ignored. The Minimum Claim Amount and the Basket shall also apply
with respect to Seller's claims for indemnification pursuant to Section
8.01(b)(i) in the same manner as described above: provided, however, that such
limitations shall not apply to claims for Damages with respect to any
inaccuracy or breach of any representations and warranties set forth in
Sections 3.02, 3.03, 3.04, 3.05, or 3.07 of this Agreement
(d) Notice and Opportunity to Defend.
(i) If there occurs an event which
a party asserts is an indemnifiable event pursuant to Section 8.01(a)
or 8.01(b), the party seeking indemnification shall notify the other
party or parties obligated to provide indemnification (the
"Indemnifying Party") promptly upon its determination to seek
indemnification; provided, however, that no delay on the part of the
party seeking indemnification in notifying the Indemnifying Party
shall relieve the Indemnifying Party from any liability or obligation
hereunder unless (and then solely to the extent that) the Indemnifying
Party was damaged by such delay.
(ii) If such event involves any
claim or the commencement of any action or proceeding by a third
person, the party seeking indemnification will give such Indemnifying
Party prompt written notice of such claim or the commencement of such
action or proceeding; provided, however, that the failure to provide
prompt notice as provided herein will relieve the Indemnifying Party
of its obligations hereunder only to the extent that the Indemnifying
Party was damaged by such delay. In case any such action shall be
brought against any party seeking indemnification and it shall notify
the Indemnifying Party of the commencement thereof, the Indemnifying
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Party shall be entitled to participate therein and may elect, within
fifteen (15) days of receiving such notice, to assume the defense
thereof, with counsel reasonably satisfactory to such party seeking
indemnification (provided that the Indemnifying Party shall only be
entitled to assume the defense of such action (A) to the extent that
the action seeks only money damages from, and not injunctive or other
equitable relief against, such party seeking indemnification, (B) if
the Indemnifying Party first acknowledges in writing to the party
seeking indemnification that the party seeking indemnification is
entitled to indemnification under this Section 8.01 with respect to
such matter, and (C) upon giving effect to the provisions of this
Section 8.01, the Indemnifying Party would be responsible for a
majority of the damages or liability in respect of such action) and,
after notice from the Indemnifying Party to such party seeking
indemnification of such election so to assume the defense thereof, the
Indemnifying Party shall not be liable to the party seeking
indemnification hereunder for any legal expenses of other counsel or
any other expenses subsequently incurred by such party in connection
with the defense thereof. The party seeking indemnification agrees to
cooperate fully with the Indemnifying Party and its counsel in the
defense against any such asserted liability. The party seeking
indemnification shall have the right to participate at its own expense
in the defense of such asserted liability. No settlement shall be
effected by the Indemnifying Party without the consent of the party
seeking indemnification (which consent shall not be unreasonably
withheld) unless, in connection with such settlement, the party
seeking indemnification is fully and unconditionally released from
such asserted liability (without any liability for payment) and the
settlement does not contain other terms or conditions that are adverse
to the interests of the party seeking indemnification. No settlement
shall be effected by a party seeking indemnification without the
consent of the Indemnifying Party, such consent not to be unreasonably
withheld, unless the party seeking indemnification would be liable for
at least fifty percent of any payments due pursuant to the terms of
such settlement.
8.02 Environmental Indemnification Procedures.
(a) Notwithstanding anything in this Agreement to the
contrary, the indemnification procedures in this Section 8.02 shall apply to
any claim for indemnification arising under Section 8.01(a)(iv) hereof and any
claims arising under Section 8.01(a)(i) hereof for indemnification with respect
to a breach of the representations and warranties set forth in Section 2.17
(collectively "Environmental Claims").
(b) Any Environmental Claim which is of the nature of a
third party claim shall also be governed by the procedures set forth in Section
8.01(d) hereof. In the event of any inconsistency between such procedures and
the procedures set forth in this Section 8.02, the procedures set forth in this
Section 8.02 shall govern.
(c) Purchaser shall notify the Indemnifying Party in
writing promptly after learning of the existence of any Environmental Claim,
which notice shall describe in reasonable detail the claim, the amount thereof
(if known and quantifiable), and a reasonably detailed description of the facts
giving rise to such claim; provided that the failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party of their
obligations hereunder except to
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the extent of (and only to the extent of) any actual prejudice to the
Indemnifying Party. Timely notice shall be deemed given, and the Indemnifying
Party shall be deemed to have assumed Principal Management under this Section
8.02, with respect to the matters so designated by an asterisk (*) on Schedule
8.01(a)(iv)(A) hereof. "Principal Management" means the authority to direct
the handling of the subject matter of the Environmental Claim, including,
without limitation, selection of consultants, contractors, experts or advisors;
evaluation, selection and implementation of remedial measures; and negotiations
with or challenges to any governmental agencies and third parties.
(d) Upon assertion of an Environmental Claim, the
Indemnifying Party shall be entitled to assume Principal Management of the
subject matter of the Environmental Claim. To assume Principal Management, the
Indemnifying Party must notify Purchaser within thirty days (or such other
period as the parties may agree to in writing or such shorter period as is
demanded due to exigent circumstances) of said notice that they intend to
assume Principal Management. To assume Principal Management, the Indemnifying
Party must also in such notice first acknowledge in writing its obligation to
indemnify Purchaser with respect to the Environmental Claim. In the event the
Indemnifying Party does not undertake Principal Management, Purchaser shall
assume Principal Management of the subject matter of the Environmental Claim.
(e) In the event an Indemnifying Party undertakes
Principal Management with respect to an Environmental Claim, Purchaser shall be
entitled, at its sole cost and expense, to reasonably participate in the
management of such Environmental Claim. Such participation shall include,
without limitation: (i) receiving copies of all reports, work plans and
analytical data submitted to governmental agencies, all notices or other
letters or documents received from governmental agencies, any other
documentation and correspondence materially bearing to the Environmental Claim,
and notices of material meetings; (ii) the opportunity to attend and
participate in such material meetings; (iii) the right of reasonable
consultation with the party exercising Principal Management; and (iv) the right
to approve any material action relating to the Environmental Claim (which
approval shall not be unreasonably withheld).
(f) In the event an Indemnifying Party undertakes
Principal Management with respect to any Environmental Claim, the Indemnifying
Party shall, upon reasonable notice to Purchaser, have reasonable access to the
relevant Purchased Entity property or facility. The Indemnifying Party shall
undertake all activities that it conducts or coordinates hereunder in a manner
which does not unreasonably interfere with the day-to-day operation of such
facility.
(g) The party undertaking Principal Management hereunder
for any matter shall manage the matter in good faith and in a responsible
manner, and any activities conducted in connection therewith shall be
undertaken promptly and concluded expeditiously using commercially reasonable
efforts, subject to the schedules and approvals required by the applicable
Governmental Authorities. The parties agree to reasonably cooperate with one
another in connection with addressing any Environmental Claim. Either party
may take such action as is reasonable under the circumstances to respond to an
actual or threatened emergency or imminent endangerment situation arising from
an Environmental Claim, and if such action is taken by the
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party that has not undertaken Principal Management for such Environmental Claim
hereunder, the costs of such action shall be included as part of the
Environmental Claim.
(h) The adequacy of any action with respect to an
Environmental Claim shall be evaluated using the following criteria. Such
action shall be deemed adequate for purposes of satisfying the obligations
hereunder to the extent such action:
(i) Attains compliance with
applicable Environmental and Safety Requirements, including without
limitation, all action levels or cleanup standards promulgated
thereunder, and any lawful order or directive of an appropriate
Governmental Authority;
(ii) Mitigates any significant risk
to human health or the environment; and
(iii) Does not interfere with
operations at the affected property or facility.
Without limiting the generality of the foregoing and solely with respect to any
matter set forth on Disclosure Schedule Section 8.01(a)(iv)(A), Seller's
obligation to conduct remedial or corrective action will be deemed satisfied
upon Seller's receipt of, and delivery to Purchaser of, written
determination(s) from all governmental agencies with jurisdiction over such
matter that no further action on the matter is required (which satisfaction
shall be subject to any conditions placed by such agencies on such
determinations and shall not limit Seller's obligation to indemnify Purchaser
for other Damages arising out of or due to such matters provided Purchaser
notifies Seller pursuant to Section 8.02(c) of an Environmental Claim with
respect to any such other Damages prior to the later of (i) 10 years after the
Closing Date and (ii) 5 years after Purchaser's receipt from Seller of the last
of such determinations).
(i) If, after the Indemnifying Party has elected to
assume Principal Management of an Environmental Claim, a dispute arises with
respect to the management, investigation or remediation of such Environmental
Claim, the parties agree to negotiate in good faith in an attempt to resolve
such dispute. In the event such dispute cannot be resolved within twenty days
of written notice of a dispute (or such shorter period as exigent circumstances
may warrant), the parties shall select within fourteen days thereafter (or such
shorter period as exigent circumstances may warrant) a mutually satisfactory
technical consultant, lawyer, or other person (the "Environmental Arbitrator"),
who shall review the information relevant to the dispute provided by the
parties. If an Environmental Arbitrator cannot be agreed upon within the
aforesaid period, the parties shall direct the Center for Public Resources, New
York, New York, to immediately provide a list of six potential arbitrators.
From the list provided, each part shall have the opportunity to strike one
name, and the Center for Public Resources shall appoint the Environmental
Arbitrator from the remaining names. The Environmental Arbitrator shall, and
within thirty days (or such shorter period as exigent circumstances may
warrant) render a decision binding upon the parties hereto (absent mutual
agreement of the parties to an alternate resolution) and the parties may
enforce any final determination of the Environmental Arbitrator in any court of
competent jurisdiction. There
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shall be no appeal from or reexamination of such final determination except for
fraud, perjury, evident partiality or misconduct by the Environmental
Arbitrator prejudicing the rights of any party, and to correct manifest errors.
Any fees charged by the Environmental Arbitrator shall be allocated as
determined by the Environmental Arbitrator between Purchaser and the
Indemnifying Party. In making its determination, the Environmental Arbitrator
shall be bound by the standards set forth in this Section 8.0.
ARTICLE IX
MISCELLANEOUS
9.01 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"ABAEI" means American Body Armor and Equipment, Inc.
"Accountant" has the meaning set forth in Section 6.04(f).
"Action" means any action, suit, or legal, administrative or
arbitral proceeding or investigation before or by any Governmental Body.
"Affiliate," as applied to any Person, means any other Person
directly or indirectly controlling, controlled by or under common control with
that Person.
"Affiliated Group" means an affiliated group as defined in
Section 1504 of the Code (or any analogous combined, consolidated or unitary
group defined under state, local or foreign income Tax law).
"Agreement" has the meaning set forth in the preface.
"Another Transaction" has the meaning set forth in Section
6.11.
"Approved Budget" means the Company's budget for 1996
(including the capital expenditure budget) which is attached hereto as Exhibit
A.
"Asahi" means Asahi-Schwebel Co., Ltd., a Japanese corporation.
"Audited Financials" has the meaning set forth in Section 6.21.
"Balance Sheet" means the unaudited consolidated statement of
financial position of Fort Mill as of December 30, 1995 included in the Draft
Audited Financials set forth in Section 2.05 of the Disclosure Schedule.
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"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that is, as of the date of
determination, the primary cause of any specified loss, injury or damage,
provided that such loss, injury or damage occurred on or prior to the date
hereof.
"Basket" has the meaning set forth in Section 8.01(c).
"Business" has the meaning set forth in Section 6.13(a).
"Cash Election" has the meaning set forth in Section 1.05(a).
"Cash Payment" has the meaning set forth in Section 1.04(b).
"Cash Purchase Price" means $192,750,000 less the amount of
Indebtedness outstanding on the Closing Date under the capital leases listed in
Section 5.13 of the Disclosure Schedule (subject to adjustment pursuant to
Section 1.06).
"Certificate of Merger" has the meaning set forth in Section
1.01(b).
"Closing" has the meaning set forth in Section 1.03.
"Closing Date" has the meaning set forth in Section 1.03.
"Closing Date Working Capital Statement" has the meaning set
forth in Section 1.06(a).
"Closing Working Capital Amount" means the amount shown next
to the line item for "Closing Working Capital Amount" on the Closing Date
Working Capital Statement under the heading "Balance at Closing" or such other
amount as is finally determined in accordance with the provisions of Section
1.06(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Surviving Corporation's common stock,
par value $.01 per share.
"Common Stock Equivalents" means rights, warrants, options,
convertible securities, or exchangeable securities, exercisable for convertible
into, directly or indirectly, Common Stock, whether at the time of issuance or
upon the passage of time or the occurrence of future events.
"Company" means Clark-Schwebel, Inc., a Delaware corporation.
"Company Common Stock" has the meaning set forth in Section
2.02(b).
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"Company Executives" means William Bennison, Donald Burnette
and Richard Wolfe.
"Company Shares" has the meaning set forth in Section 2.02(b).
"Confidential Information" means any confidential or
proprietary information regarding any of the Purchased Entities, their assets
or their operations which is not generally available to the public.
"Confidentiality Agreement" means the Confidentiality
Agreement dated March 18, 1995 between Seller and Vestar.
"Continuing Employees" has the meaning set forth in Section
6.06(a)(i).
"Cut-Off Date" has the meaning set forth in Section 7.01(d).
"Damages" has the meaning set forth in Section 8.01(a).
"Disclosure Schedule" has the meaning set forth in Section
2.01.
"Draft Audited Financials" has the meaning set forth in
Section 2.05(a).
"Effective Time" has the meaning set forth in Section 1.01(b).
"Employee Plan" has the meaning set forth in Section 2.14(a).
"Encumbrances" has the meaning set forth in Section 1.05(a).
"Engaging in Competition" has the meaning set forth in Section
6.13(a).
"Environmental and Safety Requirements" means all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law in each case
concerning worker health and safety and pollution or protection of the
environment, all as now in effect.
"Environmental Claims" has the meaning set forth in Section
8.02(a).
"Environmental Lien" means a Lien, either recorded or
unrecorded, in favor of any governmental entity, relating to any liability
arising under Environmental and Safety Requirements.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" has the meaning set forth in Section 2.14(a).
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"Estimated Working Capital Amount" means $50,000,000.
"Evaluation Material" has the meaning assigned to such term in
the Confidentiality Agreement.
"Exempt Contracts" means purchase orders entered into by the
Company in the ordinary course of business consistent with past practice (other
than purchase orders for yarn) and sales orders entered into by the Company in
the ordinary course of business consistent with past practice which involve
consideration of less than $500,000.
"Financing" has the meaning set forth in Section 5.10.
"Foreign Financials" has the meaning set forth in Section
2.05(b).
"Foreign Plans" has the meaning set forth in Section 2.14(f).
"Fort Mill" has the meaning set forth in the preface.
"Fort Mill Common Stock" means the common stock, par value
$1.00 per share, of Fort Mill.
"Fully-Diluted Common Stock" means, as of the close of
business on the Closing Date after giving effect to the transactions
contemplated by this Agreement, the number of shares of Common Stock
then-outstanding plus all shares of Common Stock issuable, whether at such time
or upon the passage of time or the occurrence of future events, upon the
exercise, conversion or exchange of all then-outstanding Common Stock
Equivalents.
"Governmental Body" means any government or political
subdivision thereof, whether federal, state, local or foreign, or any agency or
instrumentality of any such government or regulatory or political subdivision
thereof, or any federal, state or foreign court or arbitrator.
"Holdings" has the meaning set forth in the preface.
"Holdings Common" means 7,000 shares of Common Stock less the
Management Shares.
"Holdings Series B" means 1,000 shares of Series B Preferred
Stock.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Income Taxes" means all Taxes imposed on or measured by net
income, including any minimum tax or alternative minimum tax and franchise tax
based on income, and any interest, penalties or additions attributable to any
such Income Taxes.
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"Indebtedness" of any Person at any date means without
duplication (a) all indebtedness of such Person for borrowed money (including
without limitation accrued interest) or for the deferred purchase price of
property or services which, in accordance with generally accepted accounting
principles, would be required to be shown as a liability on the face of a
balance sheet of such Person on such date (other than trade liabilities,
accrued expenses and liabilities and deferred payments to employees or former
employees for services rendered, in each case to the extent incurred in the
ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all obligations of such Person
under capitalized lease obligations, (d) all obligations of such Person in
respect of bankers' acceptances issued or created for the account of such
Person, (e) all obligations of such Person in respect of letters of credit
issued for the account of such Person, (f) all guarantees of such Person of any
indebtedness or obligations of any other Person of the types referred to in the
preceding clauses (a) through (e), and (g) all indebtedness or obligations of
the types referred to in the preceding clauses (a) through (f) secured by any
Lien on any property owned by such Person to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
otherwise become liable for the payment thereof but excluding customer deposits
and interest payable thereon in the ordinary course of business.
"Indemnifying Party" has the meaning set forth in Section
8.01(d)(i).
"Industrial Revenue Bond Obligation" means the $5,850,000
Development Authority of White County Industrial Development Refunding Revenue
Bonds (Clark-Schwebel Fiber Glass Corporation Project) (Springs Industries,
Inc. - Guarantor), Series 1992.
"Intellectual Property Rights" means all of the following
owned by, issued to or licensed to or used by the Company or any of the
Subsidiaries and any and all corresponding rights that, now or hereafter, may
be secured throughout the world: (i) patents, patent applications, patent
disclosures and inventions (whether or not patentable and whether or not
reduced to practice) and any reissues, continuations, continuations-in-part,
revisions, extensions or reexaminations thereof; (ii) trademarks, service
marks, trade dress, logos, trade names and corporate names, together with all
goodwill associated therewith (including, but not by way of limitation, the use
of the current corporate name and trade name(s) listed in Section 2.15(a) of
the Disclosure Schedule and all translations, adaptations, derivations and
combinations of the foregoing); (iii) copyrights and copyrightable works; mask
works; and registrations, applications and renewals for any of the foregoing;
(iv) trade secrets and confidential information (including, but not by way of
limitation, ideas, formulae, compositions, know-how, manufacturing and
production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data, financial
and accounting data, business and marketing plans, and customer and supplier
lists and related information); (v) computer software (including, but not by
way of limitation, data, data bases and documentation); and (vi) all copies and
tangible embodiments of the foregoing (in whatever form or medium), in each
case including, but not by way of limitation, the items set forth in Section
2.15(a) of the Disclosure Schedule attached hereto.
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"Interglas" means CS Interglas AG, a German corporation.
"IRS" has the meaning set forth in Section 2.14(c).
"Law" means any law, statute, code, ordinance, rule,
regulation or other requirement of any Governmental Body.
"Leased Property" has the meaning set forth in Section 2.10(b).
"Leases" has the meaning set forth in Section 2.10(b).
"Lien" means any mortgage, pledge, lien, charge, security
interest, adverse claim, option, right, restriction on transfer or other
encumbrance of any nature.
"Management" means certain members of management of the
Purchased Entities as determined by Purchaser in its sole discretion.
"Management Shares" means the number of shares of Common Stock
and/or options to acquire a number of shares of Common Stock determined by
Purchaser in its sole discretion to be issuable to Management on the Closing
Date, which number of shares of Common Stock shall not constitute less than
12.5% nor more than 15% of the Fully-Diluted Common Stock.
"Minimum Claim Amount" has the meaning set forth in Section
8.01(c).
"Monthly Financial Statements" means, with respect to any
fiscal month, an unaudited balance sheet of the Company for such month and the
unaudited statement of operations of the Company for the number of months of
the fiscal year then-ended.
"Non-competition Area" has the meaning set forth in Section
6.13(a).
"Non-competition Term" has the meaning set forth in Section
6.13(c).
"Objection Period" has the meaning set forth in Section
1.06(b).
"Objectionable Position" has the meaning set forth in Section
6.04(k)(i).
"Operating Agreement" has the meaning set forth in Section
1.03(a)(ii).
"Order" means any order, judgment, injunction, award, decree
or writ of any Governmental Body.
"Owned Property" has the meaning set forth in Section 2.10(a).
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"Permitted Liens" means easements, covenants, conditions, and
restrictions, including any zoning or other governmentally established
restrictions or encumbrances which do not materially interfere with the present
conduct of the business of the Company and the Subsidiaries or the use,
occupancy, enjoyment or value of, or the marketability of title to the Real
Property.
"Person" means an individual, a partnership, a joint venture,
a corporation, an association, a joint stock company, a limited liability
company, a trust, an unincorporated organization or a government or any
department or agency or political subdivision thereof.
"Pre-Closing Portion" has the meaning set forth in Section
6.04(e).
"Prime Rate" means the base rate of interest that Purchaser's
lender charges its corporate customers, as publicly announced from time to time.
"Proceeds Sharing Provisions" has the meaning set forth in
Section 1.03(a)(ii).
"Purchased Entities" means Fort Mill, the Company, the
Subsidiaries, Interglas and Asahi.
"Purchaser" has the meaning set forth in the preface.
"Purchaser Common Stock" means the common stock, par value
$.01 per share, of Purchaser.
"Purchaser Indemnitees" has the meaning set forth in Section
8.01(a).
"Purchaser's Defined Contribution Plan" has the meaning set
forth in Section 6.06(c)(ii).
"Purchaser's Life and Disability Plan" has the meaning set
forth in Section 6.06(f)(i).
"Purchaser's Medical Plan" has the meaning set forth in
Section 6.06(d)(i).
"Purchaser's Retiree Medical Plan" has the meaning set forth
in Section 6.06(e)(i).
"Real Property" means the Owned Property and the Leased
Property.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.
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"Securityholders Agreement" has the meaning set forth in
Section 1.03(a)(iii).
"Seller" has the meaning set forth in the preface.
"Seller Common" has the meaning set forth in Section 1.04(b).
"Seller's Affiliated Group" means an Affiliated Group of which
Seller is or has been the common parent, and any analogous group under state,
local or foreign law which consists or consisted of Seller and an Affiliate of
Seller.
"Seller's Basic Disability Plan" has the meaning set forth in
Section 6.06(f)(i).
"Seller's Defined Contribution Plan" has the meaning set forth
in Section 6.06(c)(i).
"Seller's Excess Disability Plan" has the meaning set forth in
Section 6.06(f)(i).
"Seller's Life and Disability Plan" has the meaning set forth
in Section 6.06(f)(i).
"Seller's Medical Plan" has the meaning set forth in Section
6.06(d)(i).
"Seller's Retiree Medical Plan" has the meaning set forth in
Section 6.06(e)(i).
"Seller Series A" has the meaning set forth in Section 1.04(b).
"Series A Preferred Stock" means the Series A Preferred Stock,
par value $.01 per share, issued by the Surviving Corporation and having the
terms set forth in the Certificate of Designations.
"Series B Preferred Stock" means the Series B Preferred Stock,
par value $.01 per share, issued by the Surviving Corporation and having the
terms set forth in the Certificate of Designations.
"Shares" means 100 shares of Fort Mill Common Stock.
"Subsidiary" means any Person of which at least 50% of the
outstanding shares, partnership interests, or other equity interests having
ordinary voting power for the election of directors or comparable managers of
such Person are owned, directly or indirectly, by the Company, any one or more
Subsidiaries of the Company, or by the Company and one or more Subsidiaries of
the Company.
"Subsidiary Common Stock" has the meaning set forth in Section
2.02(b).
"Subsidiary Shares" has the meaning set forth in Section
2.02(b).
"Surviving Corporation" has the meaning set forth in Section
1.01(a).
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"Tax" means any (A) federal, state, local or foreign income,
gross receipts, franchise, estimated, alternative minimum, add-on minimum,
sales, use, transfer, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profit, environmental, customs,
duties, real property, personal property, capital stock, social security,
unemployment, disability, payroll, license, employee or other withholding, or
other tax, of any kind whatsoever, including any interest, penalties or
additions to tax or additional amounts in respect of the foregoing; (B)
liability of any Purchased Entity for the payment of any amounts of the type
described in clause (A) arising as a result of being (or ceasing to be) a
member of any Affiliated Group (or being included (or required to be included)
in any Tax Return relating thereto); and (C) liability of any Purchased Entity
for the payment of any amounts of the type described in clause (A) as a result
of any express or implied obligation to indemnify or otherwise assume or
succeed to the liability of any other Person.
"Tax Increase" has the meaning set forth in Section 6.04(j).
"Tax Returns" means returns, declarations, reports, claims for
refund, information returns or other documents (including any related or
supporting schedules, statements or information) filed or required to be filed
in connection with (i) the determination, assessment or collection of Taxes of
any party or (ii) the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"Tax Savings" has the meaning set forth in Section 6.04(j).
"Tech-Fab" has the meaning set forth in Section 5.09(b).
"Tenant" has the meaning set forth in Section 2.10(b).
"Title Company" has the meaning set forth in Section 5.12(a).
"Transfer Date" has the meaning set forth in Section
6.06(c)(iii).
"Transition Date" has the meaning set forth in Section
6.06(c)(i).
"Transition Time" means 12:01 a.m. on the day immediately
following the Closing Date.
"Unaudited Balance Sheets" has the meaning set forth in
Section 2.05(b).
"United States Purchased Entities" means Fort Mill, the
Company and the Subsidiaries.
"Vestar" means Vestar Equity Partners, L.P., a Delaware
limited partnership.
"WARN Act" has the meaning set forth in Section 6.05.
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"Working Capital Projection" has the meaning set forth in
Section 1.06(a).
9.02 Governing Law. This Agreement shall be construed under and
governed by the laws of the State of New York without regard to the conflicts
of laws provisions thereof.
9.03 Amendment. This Agreement may not be amended, modified or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
9.04 No Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other parties hereto; provided that
Purchaser may assign all of its rights and obligations hereunder to any
Affiliate of Purchaser without the consent of Seller or Fort Mill; and,
provided further, that Purchaser may assign any or all of its rights hereunder,
without the consent of Seller or Fort Mill (i) to any lender providing
financing to Purchaser or its Affiliates, and (ii) following the Closing, in
connection with any sale of all or substantially all of the assets, capital
stock or business of Purchaser (whether effected by sale, exchange, merger,
consolidation or other transaction).
9.05 Waiver; Liability. Any of the terms or conditions of this
Agreement which may be lawfully waived may be waived in writing at any time by
each party which is entitled to the benefits thereof. Any waiver of any of the
provisions of this Agreement by any party hereto shall be binding only if set
forth in an instrument in writing signed on behalf of such party. No failure
to enforce any provision of this Agreement shall be deemed to or shall
constitute a waiver of such provision and no waiver of any of the provisions of
this Agreement shall be deemed to or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver. None of the officers or directors of any of the parties to
this Agreement shall be personally liable for breaches of any representation,
warranty or covenant contained in this Agreement.
9.06 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given by delivery, by
telex, telecopier or by mail (registered or certified mail, postage prepaid,
return receipt requested) to the respective parties as follows:
If to Purchaser, Holdings or the Surviving Corporation:
Clark-S Acquisition Corporation
c/o Vestar Equity Partners
245 Park Avenue, 41st Floor
New York, New York 10167
(212) 808-4922 (telecopier)
(212) 949-6500 (telephone)
Attention: Sander M. Levy
with a copy to:
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Kirkland & Ellis
655 Fifteenth Street, N.W., Suite 1200
Washington, D.C. 20005
(202) 879-5200 (telecopier)
(202) 879-5040 (telephone)
Attention: Jack M. Feder, Esq.
If to Seller:
Springs Industries, Inc.
205 North White Street
Fort Mill, South Carolina 29715
(803) 547-3766 (telecopier)
(803) 547-3755 (telephone)
Attention: General Counsel
or to such other address as any party hereto may, from time to time, designate
in a written notice given in like manner.
9.07 Complete Agreement. This Agreement, the Confidentiality
Agreement (it being agreed that the Confidentiality Agreement shall be
terminated on and as of the Closing Date) and the other documents and writings
referred to herein, delivered pursuant hereto or executed and delivered
concurrent with the execution and delivery hereof, contain the entire
understanding of the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and
thereof. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
9.08 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
9.09 Headings. The headings contained in this Agreement are for
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
9.10 Severability. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
9.11 Third Parties. Except as specifically set forth or referred
to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or
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corporation, other than the parties hereto and their permitted successors or
assigns, any rights or remedies under or by reason of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of Seller, Fort Mill, Holdings, and
Purchaser have caused this Agreement and Plan of Merger to be executed by their
duly authorized officers as of the day and year first above written.
SPRINGS INDUSTRIES, INC.
By: /s/ Walter Y. Elisha
--------------------------------
Name: Walter Y. Elisha
Title: Chief Executive Officer
FORT MILL A INC.
By: /s/ Stephen P. Kelbley
--------------------------------
Name: Stephen P. Kelbley
Title: Chairman and President
CLARK-S ACQUISITION CORPORATION
By: /s/ Sander M. Levy
--------------------------------
Name: Sander M. Levy
Title: President
VESTAR/CS HOLDING COMPANY, L.L.C.
By: /s/ Sander M. Levy
--------------------------------
Name: Sander M. Levy
Title: CEO
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AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER
This Amendment No. 1 (this "Amendment") to the Agreement and Plan of
Merger dated as of February 24, 1996 (the "Agreement"), by and among Springs
Industries, Inc., a South Carolina corporation ("Seller"), Fort Mill A Inc., a
Delaware corporation ("Fort Mill"), Vestar/CS Holding Company, L.L.C., a
Delaware limited liability company ("Holdings"), and Clark-S Acquisition
Corporation, a Delaware corporation ("Purchaser") is entered into by the
parties to the Agreement as of April 16, 1996. Capitalized terms used but not
defined herein have the respective meanings set forth in the Agreement.
The parties to the Agreement desire to amend the Agreement in
accordance with Section 9.03 thereof in the manner specified below.
The parties hereto agree as follows:
1. Section 9.01 of the Agreement is hereby amended by adding the
following terms in the appropriate alphabetical order:
"'CS Holdings' means Clark-Schwebel Holdings, Inc., a Delaware
corporation."
"'CS Finance' means CS Finance of Delaware, a Delaware
corporation."
"'Gibraltar' means Gibraltar P.R., Inc., a Puerto Rico
corporation."
"'Gibraltar Receivable' means the obligation of Gibraltar to
the Company for payment in respect of merchandise sold by the Company to
Gibraltar, the outstanding balance of which was $3,264,135.89 as of March 31,
1996.
2. Section 2.05 of the Disclosure Schedule (Financial Statements)
is hereby amended by adding the following disclosure:
"The attached Draft Audited Financials of Fort Mill as of
December 31, 1995 do not reflect any write-down and/or write-off of the
Gibraltar Receivable."
3. Holdings hereby consents to the assignment of the Gibraltar
Receivable from the Company to Seller, and Seller hereby acknowledges and
agrees that the Gibraltar Receivable will be excluded from the Closing Date
Working Capital Statement.
4. Section 8.01(a) of the Agreement is hereby amended by:
(a) deleting the word "and" following the semi-colon at the end of
Section 8.01(a)(vi);
(b) deleting the period at the end of Section 8.01(a)(vii) and
substituting a semi-colon and the word "and" in its place; and
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(c) adding a new Section 8.01(a)(viii) to read in its entirety as
follows:
"(viii) any liability or obligation arising under U.S.
Bankruptcy Code Section 547, 548, 549 or 550 (or any similar state or
common law) to disgorge or repay to any party, including, without
limitation, Gibraltar or any receiver, conservator or trustee in
bankruptcy, any amounts paid to the Company, Seller or any of their
respective affiliates prior to the Closing by Gibraltar in respect of
merchandise sold to Gibraltar by the Company."
5. Section 8.01(c) of the Agreement is hereby amended by deleting
the second sentence of Section 8.01(c) and substituting in its place the
following sentence:
"Anything to the contrary contained herein notwithstanding,
the Purchaser Indemnitees shall not be entitled to recover from Seller
pursuant to Section 8.01(a)(i) or 8.01(a)(viii) of this Agreement (1)
unless each claim for Damages pursuant to either of such Sections
resulting from a single event, inaccuracy or breach is for Damages
that Purchaser would be entitled to be indemnified for hereunder but
for the limitations contained in this sentence equal to or in excess
of $100,000 (the "Minimum Claim Amount"); provided that for purposes
of this clause (1) all claims for Damages arising out of the same
facts or events resulting in such event, inaccuracy or breach shall be
treated as a single claim, and (2) unless and until the total of all
claims for Damages pursuant to either of such Sections that satisfy
the Minimum Claim Amount exceeds $1,500,000 (the "Basket") and then,
once the Basket has been exceeded, the Purchaser Indemnitees shall be
entitled to recover from Seller the amount by which all such claims
included in the Basket exceed in the aggregate $1,500,000; provided,
however, that the preceding limitations shall not apply to claims for
Damages with respect to any inaccuracy or breach of any
representations and warranties set forth in Sections 2.02, 2.03, 2.04,
2.06, 2.13 (to the extent relating to income Taxes), 2.20 or 2.22 of
this Agreement or claims for Damages under clauses (ii), (iii), (iv),
(v), (vi), or (vii) of Section 8.01(a), regardless of whether such
indemnity obligations relate to matters covered by representations and
warranties that are subject to the limitations expressed in this
sentence."
6. Section 3.06 of the Agreement is hereby amended to read in its
entirety as follows:
3.06 Business of Holdings, CS Holdings, Purchaser and CS
Finance. Prior to the Effective Time, or, if Purchaser makes the Cash
Election pursuant to Section 1.05, immediately prior to the Closing,
(a) Holdings will not own directly or indirectly, or have any
investment in any of the capital stock of, or have any similar
ownership interest in, any Person other than CS Holdings, Purchaser or
CS Finance; (b) CS Holdings will not own directly or indirectly, or
have any investment in any of the capital stock of, or have any
similar ownership interest in, any Person other than Purchaser or CS
Finance; (c) Purchaser will not own directly or indirectly, or have
any investment in any of the capital stock of, or have any similar
ownership interest in, any Person other than CS Finance; and (d) CS
Finance will not own directly or indirectly, or have any investment in
any of the capital
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stock of, or have any similar ownership interest in, any Person.
Prior to the date hereof, none of Holdings, CS Holdings, Purchaser or
CS Finance have incurred any Indebtedness.
7. Section 6.26 of the Disclosure Schedule is hereby amended by
adding the disclosure attached hereto as Schedule 1.
8. The parties hereto agree that the pieces, parcels and tracts
of land set forth in Section 6.26 of the Disclosure Schedule (the "Transferred
Real Estate") shall be included for all purposes of the Agreement as Owned
Property and otherwise as property and assets of the Company owned by the
Company prior to the Closing and that all representations and warranties made
by Seller with respect to the Transferred Real Estate shall be deemed to be
made as if the Company, and not Seller, owned such property prior to the date
of the Agreement (so that, for example, undisclosed environmental liabilities
in respect of the Transferred Real Estate would constitute a breach of the
representation set forth in Section 2.17 of the Agreement).
9. The parties hereto acknowledge that the Seller made a wire
transfer to pay payroll-related taxes on behalf of the Company in the amount of
$153,290 on April 16, 1996.
10. Each of Section 1.05(a) of the Agreement and the definition of
"Cash Purchase Price" in Section 9.01 of the Agreement is amended by
substituting the number $192,903,290 for the number $192,750,000.
11. Exhibit 1.06(a)(1) of the Agreement is amended by adding the
following line item as an adjustment: "subtract $153,290."
12. Page 5 of Exhibit 1.06(a)(2) to the Agreement is amended by
adding in the amounts to be excluded under the heading "Exclude": "Subtract
amount of $153,290."
13. Except to the extent expressly amended hereby, the Agreement
shall remain in full force and effect in accordance with its terms.
14. This Amendment may be executed in separate counterparts, each
of which will be deemed an original but all of which together will constitute
one and the same instrument.
15. This Agreement shall be construed under and governed by the
laws of the State of New York without regard to the conflicts of laws
provisions thereof.
16. The language used in this Amendment will be deemed to be the
language chosen by the Parties to express their mutual intent, and no rule of
strict construction will be applied against any Party.
* * * * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 1 to the Agreement and Plan of Merger as of the date first above written.
SPRINGS INDUSTRIES, INC.
By: /s/ Samuel J. Ilardo
--------------------------------
Title: Treasurer
-----------------------------
FORT MILL A INC.
By: /s/ Robert W. Sullivan
--------------------------------
Title: Vice President
-----------------------------
CLARK-S ACQUISITION CORPORATION
By: /s/ Sander M. Levy
--------------------------------
Title: President
-----------------------------
VESTAR/CS HOLDING COMPANY, L.L.C.
By: /s/ Sander M. Levy
--------------------------------
Title: Chief Executive Officer
-----------------------------
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SCHEDULE 1
BALLFIELD LEGAL DESCRIPTION
All that certain piece, parcel or tract of land situate, lying and being in the
County of Anderson, State of South Carolina, Varennes Township, and in School
District No. 5, containing 6.909 acres as shown on a plat of same made by R.D.
Garrison, RLS #3972, dated December 16, 1994, being more particularly described
as follows: BEGINNING at an iron pin corner on Lewis Street, said corner being
common with Lot No. 298 and running thence S 38-42-41 E 474.57 feet to an iron
pin corner; thence S 02-36-00 W 202.86 feet to an iron pin; thence North
78-50-00 W 817.50 feet to an iron pin corner, thence North 18-41-00 East 498.63
feet to an iron pin corner; thence South 60-25-11 East 48.60 feet to an iron
pin; thence South 50-03-11 East 48.50 feet to an iron pin; thence South
42-50-11 East 189.10 feet to an iron pin corner; thence North 47-09-49 East
200.00 feet to the beginning corner.
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