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EXHIBIT 10.3
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SECURITIES PURCHASE AGREEMENT
Dated as of August 28, 1997
By and Among
GULISTAN HOLDINGS INC.,
GULISTAN CARPET INC.,
and
JPS CARPET CORP.
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of August
28, 1997, by and among GULISTAN HOLDINGS INC., a Delaware corporation
("Holdings"), GULISTAN CARPET INC., a Delaware corporation (the "Purchaser"),
and JPS CARPET CORP., a Delaware corporation (the "Seller").
W I T N E S S E T H :
WHEREAS, the Seller is the holder of 5,000 shares of Series A
preferred stock, par value $0.01 per share, of Holdings evidenced by
certificate no. 101 (the "Stock"), which constitute all of the issued
outstanding Series A preferred shares of the capital stock of Holdings;
WHEREAS, the Seller is the holder of a promissory note issued by
Holdings in the original principal amount of $10,000,000 and made payable to
the order of Seller, dated November 16, 1995 (the "Note");
WHEREAS, the Seller is the holder of a warrant to purchase common
stock of Holdings dated November 16, 1995 (the "Warrant", collectively with the
Stock and the Note, the "Securities");
WHEREAS, the Seller desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Seller, the Securities pursuant to this
Agreement; and
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
PURCHASE OF SECURITIES
ss.1.1 Purchase of Securities Subject to the terms and conditions set
forth in this Agreement, the Purchaser agrees to purchase from the Seller and
the Seller agrees to sell, assign, transfer and deliver to the Purchaser the
Securities. The certificate representing the Stock shall be accompanied by a
stock power duly executed in blank by the Seller transferring the same to the
Purchaser with all necessary transfer tax and other revenue stamps, acquired at
the Seller's expense, affixed and canceled. The Seller agrees to cure any
deficiencies with respect to the endorsement of the certificate representing
the Stock owned by the Seller or with respect to the stock power accompanying
such certificate. The original Note, which shall have been duly endorsed by
Seller as payable to the order of Purchaser, without recourse to the Seller,
and the original Warrant shall be delivered to the Purchaser accompanied by a
warrant power duly executed by the Seller. The delivery by the Seller of the
Securities and the acceptance of such Securities by the Purchaser pursuant to
this Agreement shall constitute satisfaction or a waiver of all conditions with
respect to
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the sale, transfer, repayment, redemption or other disposition of such
Securities set forth in the Warrant, the Note, the Stockholders Agreement dated
as of November 16, 1995 by and among the Seller, Holdings and the Stockholders
listed therein, as amended (the "Stockholders Agreement"), or the Certificate
of Designations, Rights and Preferences of Series A Preferred Stock of Holdings
filed with the Secretary of State of the State of Delaware on November 14,
1995.
ss.1.2 Price. In full consideration for the sale by the Seller of the
Securities to the Purchaser, the Purchaser shall deliver at the Closing an
aggregate cash amount equal to $2,000,000 (the "Closing Payment") by wire
transfer in immediately available funds in accordance with wire instructions
provided by the Seller at least two days prior to the Closing.
ss.1.3 Closing. The consummation of the purchase and sale referred to
in Section 1.1 (the "Closing") shall take place at 10:00 A.M. on August 28,
1997.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
ss.2. Representations and Warranties of the Seller. The Seller
represents and warrants to the Purchaser as follows:
ss.2.1 Ownership of Securities. Except as set forth on Schedule 2.1,
the Seller is the lawful owner of the Stock, the Note and the Warrant, free and
clear of all liens, charges, encumbrances, restrictions and claims of every
kind and character ("Encumbrances"). The delivery to the Purchaser of the
Securities pursuant to the provisions of this Agreement will transfer to the
Purchaser good title thereto, free and clear of all Encumbrances.
ss.2.2 Authorization and Validity of Agreement. The Seller has the
requisite corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. This Agreement has been duly executed
and delivered by the Seller and, assuming the due execution of this Agreement
by the Purchaser, is a valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization and similar laws affecting the enforcement of creditors' rights
generally and to general equitable principles.
ss.2.3 Restrictive Documents. Except as set forth on Schedule 2.1, the
Seller is not subject to any mortgage, lien, lease, agreement, instrument,
order, law, rule, regulation, judgment or decree, or any other restriction of
any kind or character which would prevent consummation by the Seller of the
transactions contemplated by this Agreement.
ss.2.4 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of the Seller is, or will be, entitled to any commission or
broker's or finder's fees from the Purchaser, or
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from any Person controlling, controlled by or under common control with the
Purchaser, in connection with any of the transactions contemplated by this
Agreement.
ss.2.5 Third Party Consents: Government Approvals. Except as disclosed
on Schedule 2.1 attached hereto, no consents, approvals or waivers are required
of Seller in connection with the consummation of the transactions contemplated
by this Agreement.
ss.2.6 Bankruptcy Matters. None of the pendency of the bankruptcy case
of JPS Textile Group, Inc. ("JPST") under Chapter 11 of the United States
Bankruptcy Code (the "Chapter 11 Case") on the date hereof, the terms of the
plan of reorganization filed in the Chapter 11 Case on August 1, 1997, or any
order entered as of the date hereof by the court administering the Chapter 11
Case precludes consummation on the date hereof of the purchase and sale of the
Securities as provided in this Agreement or impairs the validity of said
transaction. As of the date hereof, Seller is not a debtor in the Chapter 11
Case and there is no motion pending in the Chapter 11 Case as of the date
hereof seeking to substantively consolidate Seller with JPST.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
ss.3. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Seller as follows:
ss.3.1 Authorization and Validity of Agreement. The Purchaser has the
requisite corporate power and authority to execute and deliver this Agreement
and perform its obligations hereunder. This Agreement has been duly executed
and delivered by the Purchaser and, assuming the due execution of this
Agreement by the Seller, is a valid and binding obligation of the Purchaser
enforceable against it in accordance with its terms, except to the extent that
its enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
ss.3.2 Restrictive Documents. The Purchaser is not subject to any
mortgage, lien, lease, agreement, instrument, order, law, rule, regulation,
judgment or decree, or any other restriction of any kind or character which
would prevent consummation by it of the transactions contemplated by this
Agreement.
ss.3.3 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of the Purchaser is, or will be, entitled to any commission or
broker's or finder's fees from the Seller, or from any person controlling,
controlled by or under common control with the Seller, in connection with any
of the transactions contemplated by this Agreement.
ss.3.4 Third Party Consents: Government Approvals. No consents,
approvals or waivers are required of Purchaser in connection with the
consummation of the transactions contemplated by
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this Agreement other than any such consents, approvals or waivers required in
connection with the financing referred to in Section 4.1(b) that have been
obtained on or prior to the date hereof.
ARTICLE IV
CONDITIONS TO THE PURCHASER'S OBLIGATIONS
ss.4.1 Conditions to the Purchaser's Obligations. The obligation of
the Purchaser to purchase the Securities contemplated by this Agreement are
conditioned upon satisfaction, at or prior to the Closing, of the following
conditions:
(a) Termination of Security Interests. All security interests,
liens, mortgages, claims or other Encumbrances of any kind in, to or
secured by any of the Securities shall be released.
(b) Financing. The Purchaser shall have received financial
accommodations reasonably acceptable to it enabling it to consummate the
transactions contemplated by this Agreement.
(c) Third Party Consents; Governmental Approvals. All consents,
approvals or waivers, if any, disclosed on Schedule 2.1 attached hereto or
required of Seller in connection with the consummation of the transactions
contemplated by this Agreement shall have been received.
ARTICLE V
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
ss.5.1 Survival of Representations. The representations and warranties
contained in this Agreement shall survive shall survive for eighteen months
from the date hereof.
ss.5.2 Indemnification.
(a) The Seller hereby agrees to indemnify and hold the Purchaser and
Holdings and their respective officers, directors, affiliates and agents, and
any successors thereto, harmless from damages, losses, costs or expenses
(including, without limitation, reasonable attorneys' and consultants' fees and
expenses) ("Damages") reasonably and actually incurred or suffered as a result
of or arising out of (i) the failure of any representation or warranty made by
the Seller in this Agreement to be true and correct as of the date hereof or
(ii) the breach of any covenant or agreement made or to be performed by the
Seller pursuant to this Agreement.
(b) The Purchaser hereby agrees to indemnify and hold the Seller
harmless from Damages incurred or suffered as a result of or arising out of (i)
the failure of any representation or warranty made by the Purchaser in this
Agreement to be true and correct as of the date hereof, or (ii) the breach of
any covenant or agreement made or to be performed by the Purchaser or Holdings
pursuant to this Agreement.
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(c) Absent fraud, the foregoing indemnification provisions shall be
the exclusive remedy for any breach of the covenants, obligations,
representations or warranties set forth in this Agreement.
ss.5.3 Indemnification Procedure.
(a) Any party seeking indemnification (the "Indemnified Party") from
any other party (the "Indemnifying Party") with respect to any claim, demand,
action, proceeding or other matter pursuant to this Agreement (the "Claim")
shall promptly notify the Indemnifying Party of the existence of the Claim,
setting forth in reasonable detail the facts and circumstances pertaining
thereto and the basis for the Indemnified Party's right to indemnification.
(b) If any third party shall notify any Indemnified Party with
respect to any matter which may give rise to a Claim for indemnification
against the Indemnifying Party under this Agreement, then the Indemnified
Party shall promptly notify the Indemnifying Party thereof; provided, however,
that no delay on the part of the Indemnified Party in notifying the
Indemnifying Party shall relieve the Indemnifying Party from any liability or
obligation hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is materially prejudiced by such failure to give notice. In the
event that any Indemnifying Party notifies the Indemnified Party within 30 days
after the Indemnified Party has given notice of the matter that the
Indemnifying Party would be required to indemnify the Indemnified Party in full
against any such Claim and is assuming the defense thereof:
(i) the Indemnifying Party will defend the Indemnified Party
against the matter with counsel of its choice reasonably satisfactory
to the Indemnified Party;
(ii) the Indemnified Party may retain separate co-counsel at
its sole cost and expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel (a)
to the extent the Indemnified Party concludes reasonably based upon
advice of counsel that a conflict of interest exists between the
Indemnified Party and Indemnifying Party or (b) the named parties to
any such action (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party and such Indemnified
Party shall have been advised by counsel that there may be one or more
legal defenses available to the Indemnified Party which are not
available to the Indemnifying Party, or available to the Indemnifying
Party, but the assertion of which would be adverse to the interest of
the Indemnified Party);
(iii) the Indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to the matter
without the written consent of the Indemnifying Party (not to be
withheld unreasonably); and
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(iv) the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement, without the written consent
of the Indemnified Party (not to be withheld unreasonably).
(c) If no Indemnifying Party notifies the Indemnified Party within
30 days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, then the Indemnified Party
may defend against, or enter into any settlement with respect to, the matter in
any manner it reasonably may deem appropriate, without prejudice to any of its
rights hereunder.
(d) The Indemnified Party shall be entitled to reimbursement of
reasonable expenses included in Damages with respect to any Claim (including,
without limitation, the cost of defense, preparation and investigation relating
to such Claim) as such expenses are incurred by the Indemnified Party.
ARTICLE VI
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ARTICLE VII
MISCELLANEOUS
ss.7.1 Expenses. The parties hereto shall pay their own expenses
relating to the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel and financial
advisers.
ss.7.2 Governing Law. THE INTERPRETATION AND CONSTRUCTION OF THIS
AGREEMENT, AND ALL MATTERS RELATING HERETO, SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS EXECUTED AND TO BE PERFORMED
SOLELY WITHIN SUCH STATE.
ss.7.3 Publicity. Except as otherwise required by law or pursuant to
the Plan, none of the parties hereto shall issue, prior to the Closing, any
press release or make any other public statement, in each case relating to,
connected with or arising out of this Agreement or the matters contained
herein, without obtaining the prior approval of the Seller, on the one hand,
and the Purchaser, on the other hand, to the contents and the manner of
presentation and publication thereof.
ss.7.4 Notices. Any notice or other communication required or
permitted under this Agreement shall be sufficiently given if delivered in
person or sent by telecopy or by registered or certified mail, postage prepaid,
addressed as follows: if to the Purchaser or Holdings, to Gulistan Carpet Inc.,
P.O. Box A, Highway 5, Aberdeen, North Carolina 28315 (Facsimile Number
910-944-
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6359)Attention: Executive Vice President and Chief Financial Officer, with a
copy to its counsel, Womble Carlyle Sandridge & Rice, PLLC, Suite 300, 25095
Meridian Parkway, Durham, North Carolina, 27713 (Facsimile Number (919)
484-2361), Attention: Deborah H. Hartzog, Esq.; and if to the Seller, to JPS
Textile Group, Inc. 555 N. Pleasantburg Drive, Suite 202, Greenville, South
Carolina 29607 (Facsimile Number (803) 271-9939), Attention: David H. Taylor,
with a copy to its counsel, Weil Gotshal & Manges, LLP, 767 Fifth Avenue, New
York, New York, 10153 (Facsimile Number (212) 310-8007), Attention: Simeon
Gold, Esq., or such other address or number as shall be furnished in writing by
any such party, and such notice or communication shall be deemed to have been
given as of the date so delivered, sent by facsimile or mailed.
ss.7.5 Parties in Interest. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by operation
of law and except as otherwise provided in Section 7.10. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and permitted assigns.
ss.7.6 Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
ss.7.7 Entire Agreement. This Agreement, including the other documents
referred to herein and therein which form a part hereof and thereof, contain
the entire understanding of the parties hereto with respect to the subject
matter contained herein and therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
ss.7.8 Amendments. This Agreement may not be changed orally, but only
by an agreement in writing signed by the Purchaser and the Seller.
ss.7.9 Severability. In case any provision in this Agreement, other
than Section 1.2, shall be held invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions hereof will
not in any way be affected or impaired thereby.
ss.7.10 Third Party Beneficiaries. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto, provided, however that
nothing herein shall prohibit the collateral assignment by Purchaser and
Holdings of their respective rights under this Agreement to Congress Financial
Corporation, a California corporation.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
SECURITIES PURCHASE AGREEMENT to be executed on its behalf by its respective
officer thereunto duly authorized, all as of the day and year first above
written.
GULISTAN HOLDINGS INC.
By: /s/ Charles E. Farrell
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Name: Charles E. Farrell
Title: Executive Vice President
GULISTAN CARPET INC.
By: /s/ Charles E. Farrell
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Name: Charles E. Farrell
Title: Executive Vice President
JPS CARPET CORP.
By: /s/ David H. Taylor
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Name: David H. Taylor
Title: Vice President
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SCHEDULE 2.1
Agreements creating liens, charges, encumbrances, etc. on the Securities:
(1) Fourth Amended and Restated Credit Agreement, dated as of June
24, 1994 (the "Credit Agreement"), among JPS Textile Group, Inc.,
JPS Converter and Industrial Corp., JPS Elastomerics Corp., the
financial institutions listed on the signature pages, Citibank, N.A.
and General Electric Capital Corporation.
The pledge of Securities created in connection with the Credit Agreement has
been released, as evidenced by the following document:
(2) Letter, dated August 25, 1997 from Citibank, N.A., General Electric
Capital Corporation, Heller Financial, Inc., The Bank of New York
Commercial Corporation and Nationsbank of Georgia, N.A., to JPS
Textile Group, Inc. and the Borrowing Subsidiaries defined therein.