<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 21, 1996
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
DURA AUTOMOTIVE SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 3465 38-2961431
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
4508 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
TELEPHONE: (612) 332-2335
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
DAVID R. BOVEE
DURA AUTOMOTIVE SYSTEMS, INC.
2791 RESEARCH DRIVE, ROCHESTER HILLS, MICHIGAN 48309
TELEPHONE: (810) 299-7500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
H. KURT VON MOLTKE DEWEY B. CRAWFORD
KIRKLAND & ELLIS GARDNER, CARTON & DOUGLAS
200 EAST RANDOLPH DRIVE 321 NORTH CLARK STREET
CHICAGO, ILLINOIS 60601 CHICAGO, ILLINOIS 60610
(312) 861-2000 (312) 245-8422
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED AMOUNT OF
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED OFFERING PRICE(1) FEE
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Class A Common Stock, par value $.01 per share.......... $49,680,000 $17,131
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a).
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC.
Cross Reference Sheet Pursuant to Item 501(b) of Regulation S-K Showing
Location in Prospectus of Information Required by Items of Part I of Form S-1.
<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM NUMBER
AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
---------------------------------- ---------------------------------
<C> <S> <C>
1. Forepart of the Registration
Statement and Outside Front Outside Front Cover Page of Registration
Cover Page of Prospectus...... Statement; Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus..... Inside Front Cover Page of Prospectus;
Outside Back Cover Page of Prospectus;
Additional Information
3. Summary Information and Risk
Factors....................... Prospectus Summary; Risk Factors
4. Use of Proceeds................ Prospectus Summary; Use of Proceeds;
Management's Discussion and Analysis of
Results of Operations and Financial
Condition
5. Determination of Offering Outside Front Cover Page of Prospectus;
Price......................... Underwriting
6. Dilution....................... Dilution
7. Selling Security Holders....... Inapplicable
8. Plan of Distribution........... Outside Front Cover Page of Prospectus;
Underwriting
9. Description of Securities to be Prospectus Summary; Dividend Policy;
Registered.................... Description of Capital Stock
10. Interests of Named Experts and
Counsel....................... Legal Matters
11. Information with Respect to the Outside Front Cover Page of Prospectus;
Registrant.................... Prospectus Summary; Risk Factors; The
Company; Use of Proceeds; Dividend Policy;
Dilution; Capitalization; Selected
Consolidated Financial Data; Management's
Discussion and Analysis of Results of
Operations and Financial Condition;
Business; Management; Principal
Stockholders; Certain Transactions;
Description of Capital Stock; Shares
Eligible for Future Sale
12. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities................... Inapplicable
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 21, 1996
PROSPECTUS
, 1996
2,700,000 SHARES
DURA AUTOMOTIVE SYSTEMS, INC.
CLASS A COMMON STOCK
All of the shares of Class A Common Stock, par value $.01 per share ("Class A
Common Stock") offered hereby are being sold by Dura Automotive Systems, Inc.
(the "Company").
Prior to this offering, there has been no public market for other Class A
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $14.00 and $16.00 per share. See "Underwriting"
for information relating to the factors considered in determining the initial
public offering price.
Application will be made for quotation of the Class A Common Stock on the
Nasdaq National Market under the symbol "DRRA."
Upon completion of the offering contemplated hereby, the Company will have
2,700,000 shares of Class A Common Stock and 4,998,254 shares of Class B Common
Stock outstanding. The Company's Class A Common Stock and Class B Common Stock
are substantially identical except with respect to voting power and conversion
rights. The Class A Common Stock is entitled to one vote per share and the
Class B Common Stock is entitled to ten votes per share. The Class B Common
Stock is generally non-transferable and is convertible at the option of the
holder into Class A Common Stock on a share-for-share basis. The Class A Common
Stock and Class B Common Stock will generally vote together as a single class
on all matters submitted to a vote of stockholders. See "Description of Capital
Stock."
SEE "RISK FACTORS" BEGINNING ON PAGE 8 OF THIS PROSPECTUS FOR INFORMATION
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS
TO THE DISCOUNTS AND TO THE
PUBLIC COMMISSIONS(1) COMPANY(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share...................................... $ $ $
Total(3)....................................... $ $ $
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</TABLE>
(1) See "Underwriting" for indemnification arrangements with the Underwriters.
(2) Before deducting estimated expenses of $600,000 which will be paid by the
Company.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
405,000 additional shares at the Price to the Public, less Underwriting
Discounts and Commissions, solely to cover over-allotments, if any. If such
option is exercised in full, the total Price to the Public, Underwriting
Discounts and Commissions and Proceeds to the Company will be $ , $
and $ , respectively. See "Underwriting."
The shares offered hereby are offered by the several Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that
certificates for the shares will be ready for delivery in New York, New York,
on or about , 1996.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO.
INCORPORATED
ROBERT W. BAIRD & CO.
INCORPORATED
<PAGE>
[PICTURES TO COME]
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A
COMMON STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING MAY BE EFFECTED ON THE NASDAQ
NATIONAL MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements, and
the related notes thereto, included elsewhere in this Prospectus. As used in
this Prospectus, unless the context otherwise requires, the term "Company"
includes Dura Automotive Systems, Inc. and all of its subsidiaries and its and
their respective predecessors and subsidiaries. Except as otherwise indicated,
(a) all information in this Prospectus assumes (i) that the over-allotment
option granted to the Underwriters is not exercised and (ii) that the
conversion of the Company's existing classes of common stock into shares of
Class B Common Stock and a 17.625 to 1 stock split thereof have occurred and
(b) the information presented herein on a pro forma basis gives effect to the
sale of the net assets of the Company's window regulator business (the "Window
Regulator Business") as if such sale had occurred on January 1, 1995. See "The
Recapitalization" and "The Company." The Class A Common Stock and Class B
Common Stock to be outstanding immediately after completion of the Offering are
collectively referred to herein as the "Common Stock."
THE COMPANY
Dura Automotive Systems, Inc. (the "Company") is a leading designer and
manufacturer of mechanical assemblies and integrated systems for the global
automotive industry. The Company believes that it is the largest supplier of
both parking brake mechanisms and parking brake cables to original equipment
manufacturers ("OEMs") in North America, with market shares of over 60% and
over 40%, respectively. The Company supplies both parking brake mechanisms and
cables, as well as complete parking brake systems, which consist of parking
brake mechanisms and the cables that connect the brake mechanism to the brake
drum. In addition, the Company designs and manufactures a variety of automotive
cables, latches, transmission shifter mechanisms and other mechanical
assemblies. The Company's products are sold to almost every major North
American automotive OEM, including Ford Motor Company ("Ford"), General Motors
Corp. ("GM") and Chrysler Corp. ("Chrysler"), as well as to foreign OEMs such
as Toyota Motor Corp. ("Toyota"). On a pro forma basis, the Company had
revenues of $239.6 million, operating income of $17.2 million and net income of
$7.6 million in 1995.
The Company has supplied parking brake components and automotive cables to
OEMs since 1961 and 1970, respectively, and was granted its first parking brake
patent in 1967. The Company has continually increased its design capabilities,
allowing it to capitalize on the desire of its customers to shift total design
responsibilities to their suppliers. The Company believes it is the only North
American supplier with the capability to design, manufacture and assemble a
complete parking brake system for its customers. As a result of the Company's
significant design, engineering and project management capabilities, the
Company has been designated as the only Full Service Supplier of parking brake
systems to Ford and is the largest supplier of such systems to GM. In 1995, the
Company estimates that it supplied approximately 78% and 93%, respectively, of
Ford's and GM's parking brake mechanism purchases and approximately 88% and
56%, respectively, of Ford's and GM's parking brake cable purchases.
On a pro forma basis, the Company's four largest customers, Ford, GM,
Chrysler and Toyota, accounted for approximately 50%, 37%, 6% and 5%,
respectively, of the Company's 1995 revenues. The Company manufactures products
for many of the most popular car, light truck, sport utility and mini-van
models, including eight of the top ten selling vehicles in the United States
for 1995: the Ford Taurus, Escort, Explorer, Ranger and F-Series pickups, GM
C/K pickups, Saturn and Toyota Camry. The Company is generally the sole
supplier of the parts it sells to OEMs and will ordinarily continue to supply
parts for a particular model for the life of the model, which usually ranges
from three to seven years.
The automotive components supply industry is undergoing significant
consolidation and globalization as OEMs seek to reduce their supplier base. An
important factor in this trend is the OEMs' awarding of sole-source contracts
to full-service suppliers that are capable of manufacturing products in
multiple geographic markets.
3
<PAGE>
The principal objective of the Company is to capitalize on this trend through
both internal development and strategic acquisitions. From an internal
perspective, the Company seeks to utilize its design, engineering and project
management capabilities, as well as its advanced product technology and high-
quality, low-cost manufacturing capabilities, to compete for new business. The
Company competes for new business early in the development of new models and in
the redesign of existing models. The Company has become a long-term preferred
supplier to its major customers and believes that this status provides it with
a strategic advantage in securing new business.
The Company also believes that the continuing trend toward supplier
consolidation provides attractive opportunities to acquire high-quality
companies. The Company's acquisition strategy focuses on identifying companies
whose acquisition will allow the Company to expand into new geographic markets,
add new customers, provide new product, manufacturing and service capabilities
or increase model penetration with existing customers.
The Company was formed by an investor group organized by Hidden Creek
Industries ("Hidden Creek") to acquire the Dura Automotive Hardware and
Mechanical Components divisions (the "Dura Divisions") from Wickes
Manufacturing Company ("Wickes"). Following this acquisition in November 1990,
Hidden Creek hired a new management team that implemented a series of strategic
changes designed to improve product quality and reduce manufacturing costs
through, among other things, the introduction of cellular manufacturing
methods, consolidation of manufacturing facilities, improvement in inventory
management and reduction of scrap. The Company also embarked upon a strategic
acquisition program. In August 1994, the Company combined its operations with
the automotive parking brake cable and lever business and light duty cable
business (the "Brake and Cable Business") of Alkin Co., formerly known as
Orscheln Co. ("Alkin"), which significantly expanded the Company's size and
capabilities. Since that acquisition, the Company has achieved significant cost
savings through the consolidation of manufacturing facilities, sales,
engineering and design functions and the reduction of administrative personnel.
The Company has substantially completed the integration of the Brake and Cable
Business and is now positioned to further expand its capabilities.
The Company's leadership team has an average of 20 years of experience in the
automotive supply industry and has a significant stake in the Company's
success. The Company's management team will beneficially own approximately 13%
of the Common Stock after the Offering. The Company plans to provide further
ownership-related incentives to other managers and salaried and hourly
employees through grants under its 1996 Key Employee Stock Option Plan (the
"Stock Option Plan") and participation in its Employee Stock Discount Purchase
Plan (the "Employee Stock Purchase Plan").
4
<PAGE>
THE OFFERING(1)
<TABLE>
<S> <C>
Class A Common Stock Offered by
the Company...................... 2,700,000 shares
Total Common Stock to be
Outstanding after the Offering:
Class A Common Stock............ 2,700,000 shares
Class B Common Stock............ 4,998,254 shares
----------------
Total (2)..................... 7,698,254 shares
Use of Proceeds................... The net proceeds to be received by the
Company from the Offering will be used to
repay certain outstanding indebtedness of
the Company. See "Use of Proceeds."
Voting Rights..................... Upon completion of the Offering, the
Company will have two classes of
outstanding Common Stock. The Class A
Common Stock and Class B Common Stock are
substantially identical, except with
respect to voting power and conversion
rights. Each holder of Class A Common Stock
is entitled to one vote per share and each
holder of Class B Common Stock is entitled
to ten votes per share, on all matters
submitted to a vote of stockholders. Except
as required by law or in the Company's
Amended and Restated Certificate of
Incorporation (the "Restated Certificate"),
holders of the Class A Common Stock and
Class B Common Stock vote together as a
single class. See "Risk Factors--Control by
Existing Stockholders" and "Description of
Capital Stock."
Proposed Nasdaq National Market
symbol........................... DRRA
</TABLE>
- --------------------
(1) Does not include the Underwriters' over-allotment option granted by the
Company for an aggregate of 405,000 shares of Class A Common Stock.
(2) Does not include 32,045 shares of Class B Common Stock reserved for
issuance upon the exercise of outstanding options as of May 31, 1996 or
1,200,000 shares reserved for issuance under the Company's Stock Option
Plan, Employee Stock Purchase Plan and the Company's Independent Director
Stock Option Plan (the "Director Option Plan"). See "Management."
5
<PAGE>
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------------- --------------------------
PRO FORMA PRO FORMA
1991 1992 1993 1994 1995 1995(2) 1995 1995(2) 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA(1):
Revenues............... $116,183 $125,412 $129,328 $189,675 $253,726 $239,598 $80,707 $66,579 $59,303
Gross profit........... 11,776 10,367 12,367 18,927 33,452 32,645 9,019 8,212 7,462
Operating income....... 1,876 2,824 3,587 7,875 17,560 17,172 5,607 5,219 3,336
Net income............. 238 415 1,118 2,580 10,126 7,602 2,442 2,449 1,347
Net income per common
and common equivalent
share(3).............. $ 2.03 $ 1.52 $ .50 $ .50 $ .27
======== ======== ======= ======= =======
Weighted average common
and common equivalent
shares
outstanding(3)........ 4,989 4,989 4,924 4,924 5,029
Net income per common
and common equivalent
share, as
adjusted(4)........... $ 1.54 $ 1.21 $ .38 $ .38 $ .23
======== ======== ======= ======= =======
Weighted average common
and common equivalent
shares outstanding, as
adjusted(4)........... 7,689 7,689 7,624 7,624 7,729
OTHER DATA:
Net cash provided by
(used in) operating
activities............ $ 2,575 $ 190 $ 3,724 $ (6,156) $ 13,138 $12,987 $ 3,418
Net cash provided by
(used in) investing
activities............ (4,961) (5,602) (2,951) (46,878) 11,428 (1,491) (1,679)
Net cash provided by
(used in) financing
activities............ 2,386 5,440 (787) 53,037 (22,851) (7,520) 340
EBITDA(5).............. 3,821 5,024 5,996 11,600 23,138 7,305 4,925
Depreciation and
amortization.......... 1,945 2,200 2,409 3,725 5,578 1,698 1,589
Capital expenditures,
net................... 1,650 2,066 2,951 5,406 6,116 1,134 1,446
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
--------------------
AS
ACTUAL ADJUSTED(4)
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital........................................... $ 16,554 $ 16,554
Total assets.............................................. 142,580 142,580
Long-term debt, net of current maturities................. 47,969 14,864
Total stockholders' investment............................ 29,034 66,099
</TABLE>
- --------------------
(1) In August 1994, the Company acquired the Brake and Cable Business of Alkin
for (i) 2,206,890 shares of Class B Common Stock, (ii) an option to
purchase up to 14,420 additional shares of Class B Common Stock and (iii)
cash consideration, net of assumed indebtedness, of approximately $40
million. The results of operations of the acquired business have been
included in the consolidated financial statements of the Company from
August 31, 1994, the date of acquisition. In April 1995, the Company sold
the net assets of its Window Regulator Business to Rockwell International
Corporation ("Rockwell") for $18.0 million in cash, resulting in a pretax
gain of $4.2 million. The results of operations of the Window Regulator
Business have been included in the consolidated financial statements of the
Company through April 2, 1995, the date of divestiture.
(2) The pro forma statements of operations data for the year ended December 31,
1995 and the three months ended March 31, 1995 give effect to the sale of
the Window Regulator Business as if such sale had occurred on January 1,
1995 and exclude the pretax gain recorded in connection with this
transaction.
(3) Gives effect to the recapitalization of the Common Stock, contingent upon
and to occur immediately prior to the consummation of the Offering. See
"The Recapitalization."
6
<PAGE>
(4) Adjusted to give effect to (i) the transactions described under "The
Recapitalization," and (ii) the issuance and sale by the Company of
2,700,000 shares of Class A Common Stock pursuant to the Offering (at an
assumed initial public offering price of $15.00 per share, the midpoint of
the range set forth on the cover hereof) and the application of the net
proceeds therefrom as described under "Use of Proceeds." Net income for the
year ended December 31, 1995 and the three-month period ended March 31,
1996 was increased by $1,704,000 and $426,000, respectively.
(5) "EBITDA" is operating income plus depreciation and amortization. EBITDA
does not represent and should not be considered as an alternative to net
income or cash flow from operations as determined by generally accepted
accounting principles.
7
<PAGE>
RISK FACTORS
This Prospectus contains forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those discussed in
this Prospectus as a result of the risk factors set forth below and the
matters set forth in the Prospectus generally. The Company cautions the
reader, however, that this list of factors may not be exhaustive. In analyzing
an investment in the Class A Common Stock, prospective investors should
carefully consider, together with the other matters referred to herein, the
risk factors described below.
RELIANCE ON MAJOR CUSTOMERS
On a pro forma basis, the Company's net sales to Ford and GM represented
approximately 50% and 37%, respectively, of the Company's revenues in 1995 and
approximately 41% and 41%, respectively, of the Company's revenues in 1994. In
addition, the Company's top four customers accounted for approximately 98% and
97% of the Company's revenues on a pro forma basis in 1995 and 1994,
respectively. Thus, the loss of Ford, GM or any of the Company's other
significant customers could have a material adverse effect on the Company. See
"Business." The contracts the Company has entered into with many of its
customers provide for supplying the customers' requirements for a particular
model, rather than for manufacturing a specific quantity of products.
Therefore, the loss of any one of such customers or a significant decrease in
demand for certain key models or group of related models sold by any of its
major customers could have a material adverse effect on the Company. The
Company is also involved in claims with Ford involving alleged failures of
certain self-adjust parking brakes originally manufactured by the Brake and
Cable Business of Alkin. Ford has maintained that the Company or Alkin is
responsible for all damages or liabilities incurred by Ford as a result of
these claims. As a result of these claims, it is possible that the Company's
relationship with Ford could be adversely affected. See "Business--Legal
Proceedings." There is substantial and continuing pressure from the major OEMs
to reduce costs, including the cost of products purchased from outside
suppliers such as the Company. Management believes that the Company's
manufacturing, design and engineering expertise and its ability to control
costs will allow the Company to remain competitive. If the Company were unable
to generate sufficient production cost savings in the future to offset price
reductions, the Company's gross margin could be adversely affected.
Substantially all of the hourly employees of North American OEMs are
represented by the United Automobile, Aerospace and Agricultural Implement
Workers of America (the "UAW") under similar collective bargaining agreements.
The collective bargaining agreements applicable to Ford and GM are both
scheduled to expire in September 1996. The failure of Ford, GM or any other
significant customer of the Company to reach agreement with the UAW relating
to the terms of a new agreement resulting in either a work stoppage or strike
at any of their production facilities could have a material adverse effect on
the Company. In March 1996, GM experienced a 17-day work stoppage due to a
labor dispute between GM and the UAW, which negatively impacted the Company's
results of operations for the first quarter of 1996. See "Management's
Discussion and Analysis of Results of Operations and Financial Condition."
INDUSTRY CYCLICALITY AND SEASONALITY
The automotive market is highly cyclical and is dependent on consumer
spending. Economic factors adversely affecting automotive production and
consumer spending could adversely impact the Company. In addition, the
Company's business is somewhat seasonal. The Company typically experiences
decreased revenues and operating income during the third calender quarter of
each year due to the impact of OEM plant shutdowns in July for vacations and
new model changeovers. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition--Quarterly Results of Operations and
Seasonality."
IMPORTANCE OF BUSINESS RELATED TO NEW AND REDESIGNED MODEL INTRODUCTIONS
The Company principally competes for new business both at the beginning of
the development of new models and upon the redesign of existing models by its
major customers. New model development generally begins two to five years
prior to the marketing of such models to the public. The failure of the
Company to obtain new business on new models or to retain or increase business
on redesigned existing models could adversely affect the Company.
8
<PAGE>
PRODUCT LIABILITY EXPOSURE
The Company faces an inherent business risk of exposure to product liability
claims in the event that the failure of its products results in personal
injury or death, and there can be no assurance that the Company will not
experience any material product liability losses in the future. In addition,
if any of the Company's products prove to be defective, the Company may be
required to participate in a recall involving such products. In late 1994,
Ford issued a recall of a series of manual-transmission Ford F-Series pickups
to repair the self-adjust parking brakes originally manufactured by the Brake
and Cable Business of Alkin. The Company's share of such costs, which was
fully reserved at the time of the acquisition of the Brake and Cable Business
from Alkin, has reached the full $6.0 million limit agreed to by the Company
and Ford. The types of alleged failures that prompted the F-Series recall have
also led to a number of claims and lawsuits filed against Ford. Currently, two
cases are pending directly against the Company or Alkin relating to personal
injury claims, and Ford has received over 400 claims (generally for property
damage) relating to alleged defects in the self-adjust parking brakes. Ford
has maintained that the Company or Alkin is responsible for all damages or
liabilities incurred by Ford as a result of these claims. The Company
maintains insurance against product liability claims, but there can be no
assurance that such coverage will be adequate for liabilities ultimately
incurred or that it will continue to be available on terms acceptable to the
Company. A successful claim brought against the Company in excess of available
insurance coverage or a requirement to participate in any product recall may
have a material adverse effect on the Company's results of operations or
financial condition. See "Business--Legal Proceedings."
INDUSTRY CONSOLIDATION; RISKS ASSOCIATED WITH FUTURE ACQUISITIONS
The automotive component supply industry has undergone, and is likely to
continue to experience, consolidation, as OEMs seek to reduce costs and reduce
their supplier base. The Company intends to actively pursue acquisition
targets that will allow the Company to expand into new geographic markets, add
new customers, provide new product, manufacturing and service capabilities or
increase model penetration with existing customers. There can be no assurance
that the Company will find attractive acquisition candidates or successfully
integrate acquired businesses into the Company's existing business. If the
expected synergies from such transactions do not materialize or the Company
fails to successfully integrate new businesses into its existing businesses,
the Company's results of operations could be adversely affected.
DEPENDENCE ON KEY PERSONNEL
The Company's continued success largely will depend on the efforts and
abilities of its executive officers and certain other key employees. The
Company currently does not have employment agreements with any of its
executive officers and other key employees. The Company's operations could be
adversely affected if, for any reason, such executive officers or key
employees do not remain with the Company. See "Management."
COMPETITION
The automotive component supply industry is highly competitive. Some of the
Company's competitors are companies, or divisions or subsidiaries of
companies, that are larger and have greater financial and other resources than
the Company. In addition, with respect to certain of its products, some of the
Company's competitors are divisions of its OEM customers. There can be no
assurance that the Company's products will be able to compete successfully
with the products of these other companies. See "Business--Competition."
IMPACT OF ENVIRONMENTAL REGULATION
The Company is subject to the requirements of federal, state and local
environmental and occupational health and safety laws and regulations. There
can be no assurance that the Company is at all times in complete compliance
with all such requirements. The Company has made and will continue to make
capital and other expenditures to comply with environmental requirements. If a
release of hazardous substances occurs on or from
9
<PAGE>
the Company's properties or any associated offsite disposal location, or if
contamination is discovered at any of the Company's current or former
properties, the Company may be held liable, and the amount of such liability
could be material. See "Business--Environmental Matters."
CONTROL BY EXISTING STOCKHOLDERS
Upon completion of the Offering, Onex U.S. Investments, Inc. (together with
its affiliates, "Onex"), Alkin and the other existing stockholders will
beneficially own all of the outstanding shares of Class B Common Stock. Each
share of Class B Common Stock has ten votes as compared to one vote for each
share of Class A Common Stock, and thus this amount will represent 94.9% of
the combined voting power of the outstanding Common Stock after the completion
of the Offering (94.2% if the Underwriters' over-allotment option is exercised
in full). In addition, all of the Company's existing stockholders have entered
into agreements to vote their shares for the election of directors designated
by certain of the existing stockholders. As a result of such stock ownership
and voting agreements, the existing stockholders will be able to control the
vote on all matters submitted to a vote of the holders of Common Stock,
including the election of Directors, amendments to the Restated Certificate
and the Amended and Restated By-laws (the "By-laws") and approval of
significant corporate transactions. See "Description of Capital Stock." Such
consolidation of voting power could also have the effect of delaying,
deterring or preventing a change in control of the Company that might be
otherwise beneficial to stockholders. See "Principal Stockholders."
DIVIDEND POLICY; RESTRICTIONS ON PAYMENT OF DIVIDENDS
The Company currently intends to retain earnings to support its growth
strategy and does not anticipate paying dividends in the foreseeable future.
As a holding company, the ability of the Company to pay dividends in the
future is dependent upon the receipt of dividends or other payments from its
principal operating subsidiary. The payment of dividends by such subsidiary to
the Company for the purpose of paying dividends to holders of Common Stock is
restricted by the Bank Credit Agreement (as defined). The Company expects that
the New Credit Agreement (as defined) will likewise restrict the payment of
dividends. See "Dividend Policy."
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
No prediction can be made as to the effect, if any, that future sales of
shares of Class A Common Stock or the availability of such shares for future
sale will have on the market price of the Class A Common Stock prevailing from
time to time. Sales of substantial amounts of Class A Common Stock, or the
perception that such sales could occur, could adversely affect prevailing
market prices for the Class A Common Stock. Upon consummation of the Offering,
the Company will have 7,698,254 shares of Common Stock issued and outstanding.
The shares of Class A Common Stock sold in the Offering will be freely
tradeable without restriction or further registration under the Securities Act
of 1933, as amended (the "Securities Act"), unless such shares are acquired by
an "affiliate" of the Company as that term is defined under Rule 144 under the
Securities Act ("Rule 144"). Other than the shares of Class A Common Stock
being offered hereby, the currently outstanding shares of Common Stock have
not been registered under the Securities Act and may not be sold unless they
are registered or unless an exemption from registration, such as the exemption
provided by Rule 144, is available. Subject to the expiration of certain 180-
day "lock up" agreements described herein, 4,854,317 shares of Class B Common
Stock convertible into shares of Class A Common Stock will be eligible for
sale beginning 90 days from the date of this Prospectus, subject to certain
limitations under Rule 144. Beginning 180 days after the date of this
Prospectus, the holders of an aggregate of 4,998,254 shares of Class B Common
Stock convertible into shares of Class A Common Stock will have certain rights
to register their shares of Class A Common Stock under the Securities Act at
the Company's expense. See "Shares Eligible for Future Sale."
ABSENCE OF PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the Offering, there has been no public market for the Class A
Common Stock, and there can be no assurance given as to the liquidity of the
trading market for the Class A Common Stock, that an active public
10
<PAGE>
market will develop for the Class A Common Stock or that the Class A Common
Stock will trade in the public market subsequent to the Offering at or above
the initial public offering price. If an active public market for the Class A
Common Stock does not develop, the market price and liquidity of the Class A
Common Stock may be materially adversely affected. The initial public offering
price of the Class A Common Stock will be determined by negotiations between
the Company and the Underwriters and may not be indicative of the market price
for the Class A Common Stock after the Offering. See "Underwriting." The
trading price of the Class A Common Stock could be subject to wide
fluctuations in response to variations in the Company's quarterly operating
results, changes in earnings estimates by analysts, conditions in the
Company's businesses or general market or economic conditions. In addition, in
recent years the stock market has experienced extreme price and volume
fluctuations. These fluctuations have had a substantial effect on the market
prices for many emerging growth companies, often unrelated to the operating
performance of the specific companies. Such market fluctuations could have a
material adverse effect on the market price for the Class A Common Stock.
ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER, BY-LAW AND STATUTORY PROVISIONS
Certain provisions of the Restated Certificate and the By-laws, to be
effective upon consummation of the Offering, may inhibit changes in control of
the Company not approved by the Company's Board of Directors (the "Board").
These provisions include (i) disparate voting rights per share between the
Class A Common Stock and the Class B Common Stock, (ii) a prohibition on
stockholder action through written consents, (iii) a requirement that special
meetings of stockholders be called only by the Board, (iv) advance notice
requirements for stockholder proposals and nominations, (v) limitations on the
ability of stockholders to amend, alter or repeal the By-laws and (vi) the
authority of the Board to issue without stockholder approval preferred stock
with such terms as the Board may determine. The Company will also be afforded
the protections of Section 203 of the Delaware General Corporation Law, which
could have similar effects. See "Description of Capital Stock."
11
<PAGE>
THE COMPANY
The Company is a holding company whose predecessor, MC Holding Corp.
("MCHC"), was formed by Hidden Creek, Onex, J2R Corporation ("J2R") and
certain others for the purpose of acquiring the Dura Divisions from Wickes in
November 1990. In August 1994, the Company entered into a transaction that
combined the operations of the Company's operating subsidiary, Dura Operating
Corp., with the Brake and Cable Business of Alkin. In April 1995, the Company
sold all of the assets and liabilities associated with the Window Regulator
Business to Rockwell for $18.0 million in cash, resulting in a pretax gain of
$4.2 million.
The Company was incorporated in Delaware in August 1994. The principal
executive offices of the Company are located at 4508 IDS Center, Minneapolis,
Minnesota 55402, and its telephone number is (612) 332-2335.
USE OF PROCEEDS
The estimated net proceeds to the Company from the sale of 2,700,000 shares
of Class A Common Stock in the Offering (at an assumed initial public offering
price of $15.00 per share), after deducting the estimated offering expenses
and the underwriting discounts, will be approximately $37 million. The Company
expects to use the net proceeds and $2.0 million of additional borrowings
under the revolving credit facility portion of the Credit Agreement dated as
of August 31, 1994, among the Company and certain commercial lending
institutions (the "Bank Credit Agreement"), to repay in full approximately $35
million of a term loan incurred by the Company under the Bank Credit Agreement
and $4.0 million to repay in full the Company's subordinated promissory notes
(the "Notes").
The term loan portion of the Bank Credit Agreement is due in quarterly
installments through June 30, 2001 and the revolving credit facility portion
expires on August 31, 2000. On March 31, 1996, the interest rates for
borrowings under the term loan and revolving credit facility were 6.8% and
6.5%, respectively.
The Notes mature on December 31, 2001 and bear interest at a fixed rate of
6.93% per annum. The Notes are held by Onex, J2R and Alkin. See "Certain
Transactions."
Following the completion of the Offering, the Company expects to enter into
a new bank credit agreement (the "New Credit Agreement"), providing for
borrowings of up to $50.0 million on more favorable pricing terms than the
Bank Credit Agreement. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition--Liquidity and Capital Resources."
DIVIDEND POLICY
The Company has not declared or paid any dividends on its Common Stock in
the past and currently intends to retain its earnings to support its growth
strategy and does not anticipate paying dividends in the foreseeable future.
As a holding company, the ability of the Company to pay dividends in the
future is dependent upon the receipt of dividends or other payments from its
subsidiaries. Any future payment of dividends is within the discretion of the
Board and will depend upon, among other factors, the capital requirements,
operating results and financial condition of the Company from time to time. In
addition, the Company expects that its ability to pay cash dividends will be
limited by the terms of its New Credit Agreement. See "Management's Discussion
and Analysis of Results of Operations and Financial Condition--Liquidity and
Capital Resources."
12
<PAGE>
THE RECAPITALIZATION
The Company currently has four classes of Common Stock outstanding.
Immediately prior to and contingent upon the Offering, the Company's four
classes of Common Stock will be converted into Class B Common Stock (the
"Recapitalization"). The Class A Common Stock being offered hereby and the
Class B Common Stock will be identical except with respect to voting and
conversion rights. Each share of Class A Common Stock is entitled to one vote
and each share of Class B Common Stock is entitled to ten votes. Except as
otherwise required by law or the Restated Certificate, the Class A Common
Stock and the Class B Common Stock will vote together as a single class on all
matters submitted to a vote of the stockholders, including the election of
Directors. In addition, the Class B Common Stock is convertible at any time at
the option of any holder thereof, and is mandatorily convertible upon any
transfer thereof (except to affiliates) and at any time that the MC
Stockholders and their affiliates, in the aggregate, do not hold at least 10%
of the total outstanding shares of Common Stock, into shares of Class A Common
Stock on a share-for-share basis. All of the Company's existing stockholders
will receive shares of Class B Common Stock in the Recapitalization. The
number of shares of Class B Common Stock that will be issued as a result of
the conversion of the Company's existing classes of Common Stock will be
determined according to the relative preference rankings of such existing
Common Stock and the initial public offering price of the Class A Common
Stock. See "Principal Stockholders."
13
<PAGE>
DILUTION
The net tangible book value (deficit) of the Company as of March 31, 1996 was
($15.0) million or $(2.99) per share based on 5,001,925 shares of Common Stock
outstanding after giving effect to the Recapitalization. After giving effect to
the sale of shares of Class A Common Stock and the application by the Company
of the net proceeds from the Offering (at an assumed initial public offering
price of $15.00 per share) as set forth under "Use of Proceeds," the pro forma
net tangible book value of the Company at March 31, 1996 would have been $22.1
million or $2.87 per share of Common Stock outstanding. This represents an
immediate dilution of $12.13 per share to purchasers of shares at the initial
public offering price.
The following table illustrates the per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $15.00
Deficit in net tangible book value per share before the
Offering (1)............................................. $(2.99)
Increase in net tangible book value per share attributable
to new investors 5.86
------
Pro forma net tangible book value per share after the
Offering................................................... 2.87
------
Dilution per share to new investors (2)..................... $12.13
======
</TABLE>
- ---------------------
(1) Net tangible book value (deficit) per share of Common Stock is determined
by dividing the Company's tangible net worth (tangible assets less
liabilities) at March 31, 1996 by the number of shares of Common Stock (of
all classes) that will be outstanding prior to the Offering and after
giving effect to the Recapitalization.
(2) Dilution is computed by subtracting pro forma net tangible book value per
share of Common Stock after the Offering from the assumed initial public
offering price per share.
The following table summarizes, on a pro forma basis at March 31, 1996, the
differences between the number of shares purchased from the Company, the total
consideration given and the average price per share paid by the existing
stockholders and by the new investors purchasing shares of Class A Common Stock
in the Offering.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------- ------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
<S> <C> <C> <C> <C> <C>
Current stockholders (1)....... 5,001,925 64.9% $13,575,964 25.1% $ 2.71
New investors.................. 2,700,000 35.1 40,500,000 74.9 15.00
--------- ----- ----------- -----
Total........................ 7,701,925 100.0% $54,075,964 100.0%
========= ===== =========== =====
</TABLE>
- ---------------------
(1) Excludes 32,045 shares of Class B Common Stock reserved for issuance upon
the exercise of options outstanding as of March 31, 1996. Such options
have an exercise price of $1.45 per share.
14
<PAGE>
CAPITALIZATION
The following table sets forth the actual consolidated capitalization of the
Company at March 31, 1996, and as adjusted to give effect to the
Recapitalization and the sale by the Company of the 2,700,000 shares of Class
A Common Stock in the Offering (assuming an initial public offering price of
$15.00 per share) and the application of the proceeds therefrom (after
deducting the underwriting discount and estimated expenses of the Offering) as
set forth under "Use of Proceeds." This table should be read in conjunction
with the consolidated financial statements and notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1996
--------------------------
ACTUAL AS ADJUSTED
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt:
Term loan........................................ $ 35,021 $ --
Revolving credit facility (1).................... 12,500 14,456
Subordinated promissory notes.................... 4,000 --
Other............................................ 591 591
Less: current maturities......................... (4,143) (183)
----------- -----------
Total long-term debt........................... 47,969 14,864
----------- -----------
Stockholders' investment:
Old Class A, Class A non-voting, Class B and
Class C Common Stock............................ 3 --
Preferred stock, $1 par value per share;
5,000,000 shares authorized; none issued or
outstanding..................................... -- --
New Class A Common Stock, $.01 par value per
share; 30,000,000 shares authorized; 2,700,000
shares issued and outstanding on an as adjusted
basis........................................... -- 27
New Class B Common Stock, $.01 par value per
share; 10,000,000 shares authorized; 5,001,925
shares issued and outstanding on an as adjusted
basis........................................... -- 50
Additional paid-in capital....................... 13,587 50,578
Retained earnings................................ 15,605 15,605
Common stock subscriptions receivable............ (161) (161)
----------- -----------
Total stockholders' investment................. 29,034 66,099
----------- -----------
Total capitalization......................... $ 77,003 $ 80,963
=========== ===========
</TABLE>
- ---------------------
(1) Following the closing of the Offering, and the application of the
proceeds therefrom as described under "Use of Proceeds," the New Credit
Agreement is expected to have maximum availability of $50.0 million.
15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data with
respect to the Company for each of the periods indicated. The selected
historical financial data for the Company for the years ended December 31,
1991 through 1995 have been derived from the Company's consolidated financial
statements which have been audited by Arthur Andersen LLP, independent public
accountants. The data as of and for the three months ended March 31, 1995 and
1996 have been derived from the Company's unaudited consolidated financial
statements which, in the opinion of the Company's management, contain all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of the financial condition and results of operations for these
periods. The results of operations for the three months ended March 31, 1996
are not necessarily indicative of the results that may be expected for the
entire year. The following pro forma consolidated financial data for the year
ended December 31, 1995 and the three months ended March 31, 1995, which give
effect to the sale of the Window Regulator Business as if such sale had
occurred on January 1, 1995, are presented for informational purposes only and
are not necessarily indicative of the results of the future operations of the
Company or the actual results that would have been achieved had the sale
occurred on such date. The selected historical and pro forma consolidated
financial data should be read in conjunction with "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and the
consolidated financial statements and notes thereto all included elsewhere
herein.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------------- --------------------------
PRO FORMA PRO FORMA
1991 1992 1993 1994 1995 1995(2) 1995 1995(2) 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA(1):
Revenues............... $116,183 $125,412 $129,328 $189,675 $253,726 $239,598 $80,707 $66,579 $59,303
Cost of sales.......... 104,407 115,045 116,961 170,748 220,274 206,953 71,688 58,367 51,841
-------- -------- -------- -------- -------- -------- ------- ------- -------
Gross profit........... 11,776 10,367 12,367 18,927 33,452 32,645 9,019 8,212 7,462
Selling, general and
administrative
expenses.............. 9,464 7,036 8,293 10,362 14,798 14,379 3,138 2,719 3,864
Amortization expense... 436 507 487 690 1,094 1,094 274 274 262
-------- -------- -------- -------- -------- -------- ------- ------- -------
Operating income....... 1,876 2,824 3,587 7,875 17,560 17,172 5,607 5,219 3,336
Interest expense, net.. 1,590 1,268 1,533 3,473 4,822 4,422 1,513 1,113 1,089
Other (income)
expense............... -- 500 -- -- (4,240) -- -- -- --
-------- -------- -------- -------- -------- -------- ------- ------- -------
Income before income
taxes................. 286 1,056 2,054 4,402 16,978 12,750 4,094 4,106 2,247
Provision for income
taxes................. 48 641 936 1,822 6,852 5,148 1,652 1,657 900
-------- -------- -------- -------- -------- -------- ------- ------- -------
Net income............. $ 238 $ 415 $ 1,118 $ 2,580 $ 10,126 $ 7,602 $ 2,442 $ 2,449 $ 1,347
======== ======== ======== ======== ======== ======== ======= ======= =======
Net income per common
and common equivalent
share (3)............. $ 2.03 $ 1.52 $ .50 $ .50 $ .27
======== ======== ======= ======= =======
Weighted average common
and common equivalent
shares outstanding
(3)................... 4,989 4,989 4,924 4,924 5,029
Income per common and
common equivalent
share, as adjusted
(4)................... $ 1.54 $ 1.21 $ .38 $ .38 $ .23
======== ======== ======= ======= =======
Weighted average common
and common equivalent
shares outstanding, as
adjusted (4).......... 7,689 7,689 7,624 7,624 7,729
OTHER DATA:
Net cash provided by
(used in) operating
activities............ $ 2,575 $ 190 $ 3,724 $ (6,156) $ 13,138 $12,987 $ 3,418
Net cash provided by
(used in) investing
activities............ (4,961) (5,602) (2,951) (46,878) 11,428 (1,491) (1,679)
Net cash provided by
(used in) financing
activities............ 2,386 5,440 (787) 53,037 (22,851) (7,520) 340
EBITDA (5)............. 3,821 5,024 5,996 11,600 23,138 7,305 4,925
Depreciation and
amortization.......... 1,945 2,200 2,409 3,725 5,578 1,698 1,589
Capital expenditures,
net................... 1,650 2,066 2,951 5,406 6,116 1,134 1,446
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1996
----------------------------------------- ---------------------
AS
1991 1992 1993 1994 1995 ACTUAL ADJUSTED (4)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
(AT END OF PERIOD):
Working capital........ $ 2,796 $ 3,801 $ 3,287 $ 18,631 $ 13,701 $ 16,554 $16,554
Total assets........... 51,520 56,213 52,823 159,133 140,531 142,580 142,580
Long-term debt,
net of current
maturities............ 12,823 18,242 16,792 70,112 46,639 47,969 14,864
Total stockholders'
investment............ 3,019 3,327 4,369 17,418 27,683 29,034 66,099
</TABLE>
- ---------------------
(1) In August 1994, the Company acquired the Brake and Cable Business from
Alkin for (i) 2,206,890 shares of Class B Common Stock, (ii) an option to
purchase up to 14,420 additional shares of Class B Common Stock and (iii)
cash consideration, net of assumed indebtedness, of approximately $40
million. The results of operations of the acquired business have been
included in the consolidated financial statements of the Company from
August 31, 1994, the date of acquisition. Separate statements of operations
and cash flows of the Brake and Cable Business (formerly the "Orscheln
Automotive Business Unit") have been included elsewhere herein for the year
ended December 31, 1993 and the eight-month period ended August 31, 1994.
In April 1995, the Company sold the Window Regulator Business to Rockwell
for $18.0 million in cash, resulting in a pretax gain of $4.2 million. The
results of operations of the Window Regulator Business have been included
in the consolidated financial statements of the Company through April 2,
1995, the date of divestiture.
(2) The pro forma statement of operations data for the year ended December 31,
1995 and the three-month period ended March 31, 1995 give effect to the
sale of the Window Regulator Business as if such sale had occurred on
January 1, 1995 and exclude the pretax gain recorded in connection with
this transaction.
(3) Gives effect to the Recapitalization, contingent upon and to occur
immediately prior to the consummation of the Offering. See "The
Recapitalization."
(4) Adjusted to give effect to (i) the Recapitalization, and (ii) the issuance
and sale by the Company of 2,700,000 shares of Class A Common Stock
pursuant to the Offering (at an assumed initial public offering price of
$15.00 per share) and the application of the net proceeds therefrom as
described under "Use of Proceeds." Net income for the year ended December
31, 1995 and the three months ended March 31, 1996 was increased by
$1,704,000 and $426,000, respectively.
(5) "EBITDA" is operating income plus depreciation and amortization. EBITDA
does not represent and should not be considered as an alternative to net
income or cash flow from operations as determined by generally accepted
accounting principles.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
GENERAL
The Company was organized to effect the acquisition of the Dura Divisions
from Wickes, which was completed in November 1990. In August 1994, the Company
completed the acquisition of the Brake and Cable Business from Alkin. In
connection with the acquisition of the Brake and Cable Business, the Company
entered into certain transition services agreements with Alkin pursuant to
which the Company currently receives data processing and payroll services from
Alkin. Each such agreement is terminable by either party upon 30 to 90 days
notice. The Company's payments to Alkin under such agreements were $1,788,000
in 1995, and the minimum commitment under such agreements will be
approximately $400,000 in 1996. The Company expects to terminate all such
service agreements during 1997 and is in the process of developing internal
replacement systems. In addition, the Company is party to a supply agreement
with Alkin through 1999 pursuant to which each party supplies certain items
necessary for the manufacture of the other party's products. The Company is
required to purchase such supplies from Alkin only so long as the supply terms
remain no less favorable than could be obtained from an independent third
party.
In order to focus on its higher margin products, the Company sold its Window
Regulator Business to Rockwell in April 1995 for $18.0 million in cash,
resulting in a pretax gain of $4.2 million. The results of operations of the
Window Regulator Business have been included in the consolidated financial
statements of the Company through the date of divestiture, April 2, 1995. The
unaudited pro forma data for the year ended December 31, 1995 and the three
months ended March 31, 1995 give effect to the sale of the Window Regulator
Business as if such sale had occurred on January 1, 1995.
The Company ordinarily begins working on products awarded for new or
redesigned models two to five years prior to the marketing of such models to
the public. During such period, the Company incurs (i) costs related to the
design and engineering of such product, (ii) costs related to the production
of the tools and dies used to manufacture the new product and (iii) start-up
costs associated with the initial production of such product. In general,
design and engineering costs are expensed in the period incurred unless they
are reimbursed by the customer, in which case they are capitalized and
amortized over the life of such product. Costs incurred in the production of
the tools and dies are generally capitalized and reimbursed by the customer
prior to production. Start-up costs, which are generally incurred 30 to 60
days immediately prior to and immediately after initial production, are
expensed as incurred.
The following table sets forth the percentage relationship of certain items
to revenues for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------------ ----------------------
PRO FORMA PRO FORMA
1993 1994 1995 1995 1995 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales........... 90.4 90.0 86.8 86.4 88.8 87.7 87.4
----- ----- ----- ----- ----- ----- -----
Gross profit........... 9.6 10.0 13.2 13.6 11.2 12.3 12.6
Selling, general and
administrative
expenses............... 6.4 5.4 5.9 6.0 3.9 4.1 6.5
Amortization expense.... 0.4 0.4 0.4 0.4 0.4 0.4 0.5
----- ----- ----- ----- ----- ----- -----
Operating income....... 2.8 4.2 6.9 7.2 6.9 7.8 5.6
Interest expense, net... 1.2 1.8 1.9 1.9 1.9 1.6 1.8
Gain on sale of Window
Regulator Business..... -- -- 1.7 -- -- -- --
----- ----- ----- ----- ----- ----- -----
Income before provision
for income taxes...... 1.6 2.4 6.7 5.3 5.0 6.2 3.8
Provision for income
taxes.................. 0.7 1.0 2.7 2.1 2.0 2.5 1.5
----- ----- ----- ----- ----- ----- -----
Net income ............ 0.9% 1.4% 4.0% 3.2% 3.0% 3.7% 2.3%
===== ===== ===== ===== ===== ===== =====
</TABLE>
18
<PAGE>
COMPARISON OF QUARTER ENDED MARCH 31, 1996 TO QUARTER ENDED MARCH 31, 1995
Revenues. Revenues for the first quarter of 1996 decreased by $21.4 million,
or 26.5%, to $59.3 million from $80.7 million in the same period of 1995. The
divestiture of the Window Regulator Business in April 1995 accounted for $14.1
million of the decrease. The remaining decrease was the result of the decline
in North American automotive production, including the effects of the 17-day
work stoppage at GM in the first quarter of 1996, which adversely impacted the
Company's operations. Total production of cars and light trucks in North
America decreased by approximately 10% in the first quarter of 1996 as
compared to the same period of 1995.
Cost of Sales. Cost of sales for the first quarter of 1996 decreased by
$19.8 million, or 27.7%, to $51.8 million from $71.7 million in the same
period of 1995. As a percentage of revenues, cost of sales decreased to 87.4%
in the first quarter of 1996 from 88.8% in the same period of 1995, resulting
in an improved gross margin of 12.6% from 11.2% the preceding year. The
improvement in gross margin is a result of the divestiture of the Window
Regulator Business, which had lower margins, and the Company's cost reduction
efforts, which included the expansion of more flexible cellular manufacturing
concepts and the closing of an underutilized manufacturing facility.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $0.8 million, or 23.1%, to $3.9 million
in the first quarter of 1996 from $3.1 million for the same period in 1995.
The increase was primarily a result of costs incurred as a result of providing
a greater level of design and engineering services to its customers, partially
offset by the sale of the Window Regulator Business. As a percentage of
revenues, selling, general and administrative expenses increased to 6.5% in
the first quarter of 1996 from 3.9% for the same period of 1995.
Amortization Expense. Amortization expense decreased to $262,000 in the
first quarter of 1996 from $274,000 for the same period in 1995. The
amortization expense results from goodwill related to the acquisitions of the
Dura Divisions and the Brake and Cable Business of Alkin in November 1990 and
August 1994, respectively.
Interest Expense. Interest expense for the three months ended March 31, 1996
decreased by $424,000, or 28.0%, to $1.1 million from $1.5 million for the
same period in 1995. The decrease was primarily the result of the repayment of
debt with the net proceeds from the sale of the Window Regulator Business in
April 1995.
Income Taxes. The effective income tax rate for the first quarter of 1996
was 40.1% compared to 40.4% for the same period in 1995. The effective income
tax rates were higher than federal statutory rates primarily as a result of
state income taxes and nondeductible goodwill amortization.
Net Income. As a result of the foregoing, net income decreased by $1.1
million, or 44.8%, to $1.3 million in the first quarter of 1996 from $2.4
million for the same period in 1995.
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994
Revenues. Revenues for 1995 increased by $64.0 million, or 33.8%, to $253.7
million from $189.7 million for 1994. This increase was primarily due to the
full year impact of the August 1994 acquisition of the Brake and Cable
Business of Alkin, which added approximately $100 million of revenues in 1995,
and the addition of approximately $12 million of incremental new business
relating to the liftgate and hood latches for the Ford Taurus/Sable, parking
brakes for the Toyota Avalon and the tailgate latch replacement program for
the Chrysler mini-van, all of which began production in the fourth quarter of
1994 or early 1995. This was partially offset by the April 1995 divestiture of
the Window Regulator Business, which had accounted for $62.1 million of
revenues in 1994 compared to $14.1 million in 1995.
Cost of Sales. Cost of sales for 1995 increased by $49.6 million, or 29.0%,
to $220.3 million from $170.7 million for 1994. As a percentage of revenues,
cost of sales decreased to 86.8% for 1995 from 90.0% for 1994, resulting in an
improved gross margin of 13.2% from 10.0% in the preceding year. The
improvement in gross
19
<PAGE>
margin was the result of (i) the divestiture of the Window Regulator Business,
which generated lower margins, (ii) the synergies resulting from consolidation
of the Brake and Cable Business of Alkin within the Company, (iii) the
integration of the Company's business, which included relocating production
activities and the closing of certain facilities, and (iv) the Company's
efforts to improve its production processes, including the implementation of
more flexible cellular manufacturing techniques. These improvements were
partially offset by launch costs associated with new liftgate and hood latch
business on the redesigned 1996 model year Ford Taurus/Sable and the tailgate
latch replacement for the Chrysler mini-van.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $4.4 million, or 42.8%, to $14.8 million
for 1995 from $10.4 million for 1994. The increased expenses were the result
of the full year impact of the acquisition of the Brake and Cable Business
from Alkin, as well as costs incurred in providing a greater level of design
and engineering services to the Company's customers. As a percentage of
revenues, selling, general and administrative expenses increased to 5.9% for
1995 from 5.4% for 1994, primarily a result of the increased costs incurred in
providing a greater level of design and engineering services to customers. The
increases were partially offset by reduced costs as a result of the sale of
the Window Regulator Business.
Amortization Expense. Amortization expense increased by $404,000, or 58.6%,
to $1.1 million for 1995 from $690,000 for 1994. The increase was the result
of the full year of amortization related to the acquisition of the Brake and
Cable Business from Alkin.
Interest Expense. Interest expense for 1995 increased by $1.3 million, or
38.8%, to $4.8 million from $3.5 million for 1994. The increase was the result
of increased borrowings in the fourth quarter of 1994 as a result of the
acquisition of the Brake and Cable Business from Alkin. Partially offsetting
this increase was a reduction from the repayment of borrowings upon the sale
of the Window Regulator Business in April 1995.
Other Income. Other income of $4.2 million for 1995 represents the pre-tax
gain on the sale of the Window Regulator Business. The Company received cash
proceeds of $18.0 million from the sale, which were used to reduce outstanding
indebtedness.
Income Taxes. The effective income tax rate for 1995 was 40.4% compared to
41.4% for 1994. The decrease is due principally to the lower percentage impact
of permanent differences on pretax income. The effective rates were higher
than federal statutory rates primarily as a result of state income taxes and
nondeductible goodwill amortization.
Net Income. As a result of the foregoing, net income increased by $7.5
million, to $10.1 million for 1995 from $2.6 million for 1994.
COMPARISON OF YEAR ENDED DECEMBER 31, 1994 TO YEAR ENDED DECEMBER 31, 1993
Revenues. Revenues for 1994 increased $60.4 million, or 46.7%, to $189.7
million from $129.3 million for 1993. Approximately $50 million of the
increase was the result of the August 1994 acquisition of the Brake and Cable
Business from Alkin. The remaining increase was the result of incremental
business that began production in 1994, including the GM Cavalier/Sunfire
transmission shifters and parking brakes, the Ford Continental hood latches,
the Toyota Avalon parking brakes and hood latches and the Chrysler Neon
parking brakes. The Company also benefited from the overall increase in North
American automotive production in 1994.
Cost of Sales. Cost of sales for 1994 increased by $53.7 million, or 46.0%,
to $170.7 million from $117.0 million for 1993. As a percentage of revenues,
cost of sales decreased slightly to 90.0% for 1994 from 90.4% for 1993,
resulting in an improved gross margin of 10.0% from 9.6% in the preceding
year. The improvement was a result of the Company's continuing cost reduction
initiatives and the improvement in fixed cost absorption from higher sales.
Additionally, the Company began to realize cost savings associated with its
integration efforts following the acquisition of the Brake and Cable Business
in the third quarter. These improvements were partially offset by increases in
the cost of certain raw materials used by the Company, including steel.
20
<PAGE>
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $2.1 million, or 24.9%, to $10.4 million
for 1994 compared to $8.3 million for 1993. The aggregate amount of selling,
general and administrative expenses increased in 1994 principally as a result
of incremental costs associated with the acquisition of the Brake and Cable
Business from Alkin. As a percentage of revenues, selling, general and
administrative expenses decreased to 5.4% for 1994 from 6.4% for 1993,
primarily due to the consolidation of Alkin's engineering, design and
administrative center into the Company's existing facility.
Amortization Expense. Amortization expense increased by $203,000, or 41.7%,
to $690,000 for 1994 from $487,000 for 1993. The increase was the result of
amortization of goodwill resulting from the August 1994 acquisition of the
Brake and Cable Business.
Interest Expense. Interest expense increased by $2.0 million, to $3.5
million for 1994 from $1.5 million for 1993. The increase is the result of
increased borrowings during 1994, primarily as a result of the indebtedness
incurred to finance the acquisition of the Brake and Cable Business.
Income Taxes. The effective income tax rate decreased to 41.4% for 1994 from
45.6% for 1993. The decrease is due principally to the lower percentage impact
of permanent differences on pretax income. The effective income tax rates were
higher than federal statutory rates primarily as a result of state income
taxes and nondeductible goodwill amortization.
Net Income. As a result of the foregoing, net income increased by $1.5
million, to $2.6 million in 1994 from $1.1 million in 1993.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
Net cash provided by (used in) operating activities was $13.1 million,
$(6.2) million and $3.7 million in 1995, 1994 and 1993, respectively. The
changes in cash provided by (used in) operating activities were primarily due
to changes in working capital and improvements in net income. During 1995, the
Company collected certain outstanding receivables related to Brake and Cable
Business pricing matters. This source of cash was offset by reductions in
accrued liabilities and other of $13.3 million, which were primarily due to
payments on product recalls and integration and acquisition obligations.
Net cash provided by operating activities was $3.4 million in the first
quarter of 1996 compared to $13.0 million in the first quarter of 1995. The
decrease in net cash provided by operating activities resulted primarily from
a net decrease of $1.1 million in net income and changes in working capital,
particularly a net increase in accounts receivable of $1.6 million in 1996 as
compared to a net decrease of $5.0 million in 1995. During the first quarter
of 1995, the Company collected certain outstanding receivables related to
Brake and Cable Business pricing matters.
Investing and Financing
On August 31, 1994, the Company completed the acquisition of the Brake and
Cable Business for (i) 2,206,890 shares of Class B Common Stock, (ii) an
option to purchase up to an additional 14,420 shares of Class B Common Stock
at an exercise price of $1.45 per share and (iii) cash consideration, net of
assumed indebtedness, of approximately $40 million. In addition to borrowings
under the Bank Credit Agreement, the Company financed a portion of the
acquisition of the Brake and Cable Business by borrowing $4.0 million from
certain stockholders of the Company, including Onex ($1.8 million), J2R ($0.2
million) and Alkin ($2.0 million). See "Certain Transactions."
21
<PAGE>
On April 2, 1995, the Company completed the sale of the Window Regulator
Business for net cash consideration of $18.0 million, resulting in a pretax
gain of $4.2 million.
The Bank Credit Agreement consists of a term loan, which matures on June 30,
2001, of approximately $35 million, and a revolving credit facility of $30.0
million (of which $7.8 million was outstanding as of March 31, 1996) which
expires on August 31, 2000. The Notes mature on December 31, 2001 and bear
interest at a fixed rate of 6.93% per annum. The Notes currently have an
outstanding balance of $4.0 million. The Company intends to use the proceeds
from the Offering, along with the additional $2.0 million borrowed under the
revolving credit facility, to repay the term loan and the Notes.
Based upon discussions with its principal lender, the Company expects that
the New Credit Agreement, which would replace the Bank Credit Agreement, will
provide for borrowings of up to $50.0 million and have a scheduled maturity in
2001. The Company anticipates the New Credit Agreement will be secured by all
assets of the Company and will generally contain less restrictive covenants
and better pricing terms than the Bank Credit Agreement. To date, no
definitive agreements have been executed and no assurance can be given that
the New Credit Agreement will be executed on such terms.
The Company's principal source of funds has been, and is anticipated to
continue to be, its cash flows from operations. During 1995, the Company
generated $16.5 million from operations before the effects of changes in
working capital compared to $7.8 million in 1994. The cash generated from
operations combined with the net proceeds of $18.0 million from the sale of
the Window Regulator Business were used to fund capital expenditures of $6.1
million and to reduce outstanding indebtedness by $22.9 million in 1995.
The Company estimates that it will fund approximately $8 million in capital
expenditures in each of 1996 and 1997. These capital expenditures will be used
primarily for the purchase of machinery and equipment to support new business
awards, as well as to finance continued cost reduction efforts.
The Company believes that funds available under the New Credit Agreement,
together with funds generated by the Company's operations, will provide the
Company with sufficient liquidity and capital resources for working capital,
capital expenditures and other needs. However, any significant acquisitions
may require additional debt or equity financing.
QUARTERLY RESULTS OF OPERATIONS AND SEASONALITY
The Company typically experiences decreased revenues and operating income
during the third calendar quarter of each year due to production shutdowns at
the automotive manufacturers for model changeovers and vacations. See Note 12
of Notes to Consolidated Financial Statements for unaudited quarterly
financial data.
EFFECTS OF INFLATION
Inflation generally affects the Company by increasing the interest expense
of floating rate indebtedness and by increasing the cost of labor, equipment
and raw materials. Management believes that inflation has had an effect on the
Company's business over the past 18 months due to rising labor costs and raw
material costs, primarily steel, although at a rate below the producer price
index. Although certain of the Company's customer contracts provide that
increases in the Company's cost of raw materials in certain circumstances may
be passed through to its customers, prevailing industry practices have not
allowed the Company to pass such costs on to its customers.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
During the first quarter of 1996, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of" which requires
companies to review long-lived assets and certain identifiable intangibles for
impairment whenever events or changes in circumstances indicate that the
carrying amount of such assets may
22
<PAGE>
not be recoverable. The adoption of SFAS No. 121 did not have a significant
impact on the financial condition or results of operations of the Company.
SFAS No. 123, "Accounting for Stock-Based Compensation" encourages, but does
not require, a fair value based method of accounting for employee stock
options, the sale of stock under the Company's Employee Stock Purchase Plan or
similar equity instruments. The Company has elected to continue to measure
compensation cost under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" as was previously required, and to
comply with pro forma disclosure of net income and earnings per share as if
the fair value based method of accounting had been applied.
23
<PAGE>
BUSINESS
GENERAL
The Company is a leading designer and manufacturer of mechanical assemblies
and integrated systems for the global automotive industry. The Company
believes that it is the largest supplier of both parking brake mechanisms and
parking brake cables to OEMs in North America, with market shares of over 60%
and over 40%, respectively. The Company supplies both parking brake mechanisms
and cables, as well as complete parking brake systems, which consist of
parking brake mechanisms and the cables that connect the brake mechanism to
the brake drum. In addition, the Company designs and manufactures a variety of
automotive cables, latches, transmission shifter mechanisms and other
mechanical assemblies. The Company's products are sold to almost every major
North American automotive OEM, including Ford, GM and Chrysler, as well as to
foreign OEMs such as Toyota. On a pro forma basis, the Company had revenues of
$239.6 million, operating income of $17.2 million and net income of $7.6
million in 1995.
The Company has supplied parking brake components and automotive cables to
OEMs since 1961 and 1970, respectively, and was granted its first parking
brake patent in 1967. The Company has continually increased its design
capabilities, allowing it to capitalize on the desire of its customers to
shift total design responsibilities to their suppliers. The Company believes
it is the only North American supplier with the capability to design,
manufacture and assemble a complete parking brake system for its customers. As
a result of the Company's significant design, engineering and project
management capabilities, the Company has been designated as the only Full
Service Supplier of parking brake systems to Ford and is the largest supplier
of such systems to GM. In 1995, the Company estimates that it supplied
approximately 78% and 93%, respectively, of Ford's and GM's parking brake
mechanism purchases and approximately 88% and 56%, respectively, of Ford's and
GM's parking brake cable purchases.
On a pro forma basis, the Company's four largest customers, Ford, GM,
Chrysler and Toyota, accounted for approximately 50%, 37%, 6% and 5%,
respectively, of the Company's 1995 revenues. The Company manufactures
products for many of the most popular car, light truck, sport utility and
mini-van models, including eight of the top ten selling vehicles in the United
States for 1995: the Ford Taurus, Escort, Explorer, Ranger and F-Series
pickups, GM C/K pickups, Saturn and Toyota Camry. The Company is generally the
sole supplier of the parts it sells to OEMs and will ordinarily continue to
supply parts for a particular model for the life of the model, which usually
ranges from three to seven years.
The Company was formed by an investor group organized by Hidden Creek to
acquire the Dura Divisions from Wickes. Following this acquisition in November
1990, Hidden Creek hired a new management team that implemented a series of
strategic changes designed to improve product quality and reduce manufacturing
costs through, among other things, the introduction of cellular manufacturing
methods, consolidation of manufacturing facilities, improvement in inventory
management and reduction of scrap. The Company also embarked upon a strategic
acquisition program. In August 1994, the Company combined its operations with
the Brake and Cable Business of Alkin, which significantly expanded the
Company's size and capabilities. Since that acquisition, the Company has
achieved significant cost savings through the consolidation of manufacturing
facilities, sales, engineering and design functions and the reduction of
administrative personnel. The Company has substantially completed the
integration of the Brake and Cable Business and is now positioned to further
expand its capabilities.
INDUSTRY TRENDS
The Company's performance and growth is directly related to certain trends
within the automotive market, including the consolidation of the component
supply industry, the growth of system sourcing and the increase in global
sourcing.
24
<PAGE>
Supplier Consolidation. During the 1980s, Ford, GM and Chrysler began to
reduce their supplier base in certain product segments, including mechanical
assemblies, awarding sole-source contracts to full-service suppliers. As a
result, OEMs currently work with a smaller number of full-service suppliers,
each of which supply a greater proportion of the total vehicle. These
requirements can best be met by suppliers with sufficient size and financial
resources to meet such demands. For full-service suppliers such as the
Company, the new environment provides an opportunity to grow by obtaining
business previously provided by other non-full service suppliers and by
acquiring suppliers that further enhance product, manufacturing and service
capabilities. OEMs rigorously evaluate suppliers on the basis of product
quality, cost control, reliability of delivery, product design capability,
financial strength, new technology implementation, quality and condition of
facilities and overall management. Suppliers that obtain superior ratings are
considered for sourcing new business; those that do not may continue their
existing contracts, but normally do not receive additional business. Although
these new supplier policies have already resulted in significant consolidation
of component suppliers in certain segments, the Company believes that
opportunities exist for further consolidation within the Company's segment.
This is particularly true in Europe which has many suppliers in this segment,
each with relatively small market share.
System Sourcing. OEMs increasingly seek suppliers capable of manufacturing
complete systems of a vehicle rather than suppliers who only produce the
separate parts that comprise a system. By outsourcing complete systems, OEMs
are able to reduce their costs associated with the design and integration of
different components and improve quality by enabling their suppliers to
assemble and test major portions of the vehicle prior to beginning production.
The Company has capitalized on this trend by designing its mechanisms and
cable systems to function together and by providing cable and mechanism
designs that are integrated into the design of the entire vehicle. The Company
believes it is the only North American supplier with the capability to design,
manufacture and assemble a complete parking brake system and a complete hood
latch system for its customers.
Global Sourcing. Regions such as Asia, Latin America and Eastern Europe are
expected to experience significant growth in vehicle demand over the next ten
years. OEMs are positioning themselves to reach these emerging markets in a
cost-effective manner by seeking to design and produce "world cars" which can
be designed in one vehicle center but produced and sold in many different
geographic markets, thereby allowing OEMs to reduce design costs and take full
advantage of low-cost manufacturing locations. OEMs increasingly are requiring
their suppliers to have the capability to design and manufacture their
products in different geographic markets.
The Company has formed, or is in the process of forming, strategic alliances
with other suppliers throughout the world, including in Europe, Latin America
and India, and is also exploring opportunities for affiliations in Asia. These
strategic alliances, which range from investments in other manufacturers to
informal understandings, should not only give the Company access to new
geographic markets and customers, but also the capability of offering
complementary products. The Company also has relocated technical personnel
resources to locations in which OEMs will develop "world cars." By
participating in the design of these vehicles and through implementation of
manufacturing processes near the international facilities of the OEMs, the
Company believes it can continue to develop its international presence.
BUSINESS STRATEGY
The principal objective of the Company is to capitalize on opportunities
created by the consolidation of the automotive mechanical assembly industry
and the growth of systems sourcing on a global basis through both internal
development and strategic acquisitions. The key elements of the Company's
strategy include:
Technical Design and Engineering Capabilities. The Company has maintained a
technological advantage through its investment in product development and
advanced engineering. The Company's Advanced Technology Group has developed
many innovative features utilized in the Company's products, including self-
adjust features in parking brakes and automotive cables, vacuum and electric
releasing parking brake mechanisms and selector brackets on transmission
shifters. The Company was the first to provide a brake cable with a ten-year-
life and will manufacture and assemble the industry's first plastic pedal for
the 1998 model year Chrysler
25
<PAGE>
Intrepid/Concorde parking brake. The Company also designed a combination
transmission shifter/four-wheel drive selector into a dual-function unit that
will be manufactured for the 1999 model year Chrysler Grand Cherokee. The
Company works with OEMs throughout the product development process from
concept vehicle and prototype development through the design and
implementation of manufacturing processes. The Company's computer-aided design
systems are compatible with its major customers, enabling the Company to
communicate design developments with customer engineers throughout the design
and development stage.
Efficient Manufacturing/Continuous Improvement Programs. Following the
acquisition of the Dura Divisions, new management implemented a series of
strategic changes designed to improve product quality and reduce manufacturing
costs through, among other things, the introduction of cellular manufacturing
methods, consolidation of manufacturing facilities, improvement in inventory
management and reduction of scrap. The Company has also achieved significant
cost savings subsequent to the acquisition of the Brake and Cable Business by
implementing similar improvements to its operations as well as through the
consolidation of manufacturing facilities and sales, engineering and design
functions and reduction of administrative personnel. As one example of the
efficiency improvements implemented by new management after the acquisition of
the Dura Divisions, the Company increased inventory turnover from five times
per year as of December 1990 to 18 times per year as of June 1994. In August
1994, the Company acquired the Brake and Cable Business of Alkin. Despite the
disproportionately higher level of inventories maintained in the Brake and
Cable Business, the Company further increased inventory turnover to over 19
times per year as of April 1996. The improvements implemented by management
can be further illustrated in the improved gross margin levels from 10.1% in
1991 to 12.6% for the three months ended March 31, 1996. The Company believes
it can continue to improve its manufacturing processes in the future.
Strategic Acquisitions. The Company believes that the continuing trend
toward supplier consolidation in certain product segments, together with
recent system and global sourcing trends, will provide attractive
opportunities to acquire high-quality companies whose acquisition will allow
the Company to expand into new geographic markets, add new customers, provide
new product, manufacturing and service capabilities or increase model
penetration with existing customers. The Company's acquisition of the Brake
and Cable Business from Alkin is a result of this initiative, providing
additional product capabilities such as automotive cables, enhanced system
capabilities including both mechanisms and cables and new customers such as
Nissan Motor Co. Ltd. The Company currently is targeting acquisitions that
will strengthen its ability to supply its products in Europe and other markets
outside of North America. In addition, the Company also is seeking to acquire
transmission shifter cable technology, which will further enhance the
Company's complete system capabilities. The Company is also focused on
expanding its product lines to include pedal boxes (gas, brake and clutch
pedal units) or other latching mechanisms. The Company is focusing on
automotive assemblies that utilize the Company's assembly and design
capabilities and, preferably, use attaching cables to capitalize on the
Company's system knowledge.
Expanding Customer Relationships. The Company has developed strong customer
relationships based on its long history of high-quality manufacturing,
significant investment in design and engineering capabilities, access to and
relationships with OEMs' engineering and purchasing personnel and ability to
produce complete systems. Strong customer relationships allow the Company to
identify business opportunities and react to customer needs in the early
stages of vehicle design and, therefore, maintain and increase its volume with
particular customers. The Company's strategy is to increase volume by
marketing a broader range of its products to existing customers and by
developing new products that complement its existing product lines. In
addition to its continuing strong relationships with Ford and GM, the Company
has developed a strong relationship with Toyota, which relationship has grown
substantially from limited model coverage in 1991 to a full range of Toyota
vehicles in 1995, including two models manufactured in Japan. The Company has
also experienced significant success at Chrysler in recent months, including
the award of business for the 1998 model year Intrepid/Concorde and the 1999
model year Grand Cherokee. These customer relationships are also expanding
outside the North American market as the Company supplies its products on a
global basis.
Management and Workforce Incentives. The Company's leadership team has an
average of 20 years of experience in the automotive supply industry and has a
significant stake in the Company's success. The
26
<PAGE>
Company's management team will beneficially own approximately 13% of the Common
Stock after the Offering. The Company plans to provide further ownership-
related incentives to other managers and salaried and hourly employees through
grants under the Stock Option Plan and participation in the Employee Stock
Purchase Plan. See "Management."
PRODUCTS
The Company's products consist primarily of parking brake systems,
transmission shifters, automotive cables and latches. The Company's product
offerings include foot and hand operated parking brakes; manual and automatic
floor mounted transmission shifters; parking brake, throttle, oil level, hood
release and fuel door cables; and primary, secondary and combination hood, deck
lid and tail gate latches. The Company offers parking brake and latch systems
(which consist of mechanisms and cables), allowing OEMs to capitalize on the
Company's expertise in manufacturing both components individually and as an
integrated system.
The following table sets forth the approximate composition by product
category of the Company's revenues on a pro forma basis for the last three
fiscal years:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
PRODUCT CATEGORY 1993 1994 1995
<S> <C> <C> <C>
Parking brakes................................... 52% 45% 40%
Automotive cables................................ -- 27 40
Latches.......................................... 14 9 7
Transmission shifters............................ 9 6 4
Other body hardware.............................. 25 13 9
------- ------- -------
Total.......................................... 100% 100% 100%
======= ======= =======
</TABLE>
CUSTOMERS AND MARKETING
The North American automotive market is dominated by Ford, GM and Chrysler,
with Japanese and foreign manufacturers capturing approximately 26% of the
market. The Company supplies its products primarily to Ford, GM, Chrysler and
Toyota.
The following is a summary of the Company's customers that accounted for at
least 3% of revenues in the past three fiscal years:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
PRO FORMA
CUSTOMER 1993 1994 1995 1995
<S> <C> <C> <C> <C>
Ford................................................ 46% 57% 52% 50%
GM.................................................. 35 29 35 37
Chrysler............................................ 14 9 6 6
Toyota.............................................. 3 3 5 5
Other............................................... 2 2 2 2
--- --- --- ---
Total............................................. 100% 100% 100% 100%
=== === === ===
</TABLE>
The Company's customers award contracts for a particular car model. Such
contracts range from one year to the life of the model, which is generally
three to seven years, and do not require the purchase by the customer of any
minimum number of parts. The Company also competes for new business to supply
parts for successor models and therefore runs the risk that the OEM will not
select the Company to produce parts on a successor model. Because the Company
supplies parts for a broad cross-section of both new and mature models, its
reliance on any particular model is minimized. The Company manufactures
products for many of the most popular car, light truck, sport utility and mini-
van models, including eight of the top ten selling vehicles in the United
States for 1995: the Ford Taurus, Escort, Explorer, Ranger and F-Series
pickups, GM C/K pickups, Saturn and Toyota Camry. Although not comprehensive,
the following table presents an overview of the major models for which the
Company has orders to supply products on current or new model vehicles:
27
<PAGE>
<TABLE>
<CAPTION>
CUSTOMER CAR MODELS TRUCK MODELS
<S> <C> <C>
Ford.............. Contour/Mystique/Mondeo, Aerostar, Bronco, Econoline,
Continental/Town Car, Mark/ Expedition,
Mark VIII, Taurus/Sable, Explorer/Mountaineer, F-
Thunderbird/Cougar Series, Ranger, Villager,
Windstar
GM................ Achieva/Grand Am, Century, Astro, Blazer/Jimmy, C/K
Corsica/Beretta, Corvette, Truck, Lumina/APV, S-10
Deville/Seville, Pick-up, Suburban
Firebird/Camaro, Lumina/Grand
Prix/Regal, Olds
98/Bonneville/Caprice/Riviera,
all Saturn models,
Sunfire/Cavalier
Chrysler.......... Intrepid/Concorde, Neon, Caravan, Dakota, Grand
Prowler, Viper Cherokee, Ram Van, Voyager
Toyota............ Avalon, Camry, Corolla, Lexus, Previa
Prizm
</TABLE>
Most of the parts the Company produces have a lead time of two to five years
from product development to production. Examples of recently awarded new
business include parking brakes and hood latches for Ford's 1999 model year
DEW98, parking brakes and parking brake cables for GM's 1999 model year GMT800
Truck, parking brakes, shifters and hood release cables for Chrysler's 1999
model year Grand Cherokee, parking brakes for Chrysler's 1998 model year
Intrepid/Concorde and parking brakes, hood latches and service brake pedals
for Toyota's 1997 model year Previa.
DESIGN AND ENGINEERING SUPPORT
The Company believes that engineering service and support are key factors in
successfully obtaining new business. The Company utilizes program management
with customer-dedicated program teams, which have full design, development,
test and commercial issues under the operational control of a single manager.
In addition, cross-functional teams are established for each new program to
ensure proper management from program conception through product launch.
Advanced technology development is used to maintain product and process
technology for the Company's products, with customers often included in the
product development teams.
The Company's Technical Center is located in Rochester Hills, Michigan,
which is near the development centers of each of the Company's top four
customers. A separate Advanced Technology Group has been established to
maintain the Company's position as a technology leader. The Advanced
Technology Group has developed many innovative features in the Company's
products, many of which features were developed in conjunction with the
Company's customers. The Company utilizes Computer Aided Designs ("CAD") in
the design process, which enables the Company to share data files with its
customers' compatible systems during the design stage, improving function, fit
and performance within the total vehicle. The Company also utilizes CAD links
with its manufacturing facilities to assure manufacturability and quality of
the designs through early involvement of the manufacturing engineers. The
Company has more than 100 patents granted or applied for.
MANUFACTURING
In manufacturing its products, the Company utilizes two different
manufacturing processes, one for mechanisms and one for cables that will
ultimately attach to such mechanisms, creating a system. The Company utilizes
flexible manufacturing cells in both the mechanism and cable assembly
processes. Manufacturing cells
28
<PAGE>
are clusters of individual manufacturing operations and work stations grouped
in a cylindrical configuration, with the operators placed centrally within the
configuration. This provides flexibility by allowing efficient changes to the
number of operations each operator performs. When compared to the more
traditional, less flexible assembly line process, cell manufacturing allows
the Company to maintain its production output consistently with its customers'
requirements and reduce the level of inventory.
Mechanical assemblies consist of between five and 50 individual components,
which are attached to form an integrated mechanism. The Company's assembly
operations are performed on either dedicated, high-volume, automated assembly
machines or on low capital-intensive, flexible, cell-oriented assembly units
capable of low or high volume production runs. The assembly operations
construct the final product through welding, staking and riveting the
component parts. A large portion of the component parts are purchased from
outside suppliers to the Company. However, the Company manufactures its own
stampings, which process consists of passing sheet metal through dies in a
stamping press to form the metal into three-dimensional parts. The Company
produces stamped parts using single-stage and progressive dies in presses,
ranging in size from 150 to 600 tons. Through cell teams, which stress
employee involvement, the Company's processes are continuously upgraded to
increase flexibility, improve operating safety and minimize changeover times
of the dies.
Cables are manufactured using a variety of processes, including plastic
injection molding, extrusion, wire flattening, spring making and zinc
diecasting. Wire is purchased from outside suppliers and then formed into
contra-twisted layers on tubular stranders and bunching machines to produce
19-wire stranded cable. Corrosion resistance is provided by a proprietary,
ceramic coating applied during the stranding process. The cable then is
plastic-coated by an extrusion process to provide a smooth, low coefficient
surface that results in high efficiency and durability. Conduit is then
produced by flattening and coiling wire, which is then extruded with a
protective coating. Proprietary strand and conduit cutting machines enable
efficient processing. Assembly operations are arranged in cells to minimize
inventory, improve quality, reduce scrap, improve productivity and enhance
employee involvement. The cables are assembled with various attachments and
end fittings that allow the customer to install the cables to the appropriate
mating mechanisms.
The Company utilizes frequent communication meetings at all levels of
manufacturing to provide training and instruction as well as to assure a
cohesive, focused effort toward common goals. The Company encourages employee
involvement in all production activity and views such involvement as a key
element toward the success of the Company. The Company also aggressively
pursues involvement from its suppliers, which is necessary to assure a
consistent flow of raw materials and components on a timely basis with
consistently high quality. The Company utilizes the component suppliers where
practical in the design and prototype stages of the new product development to
facilitate the most comprehensive, state-of-the-art designs available. The
Company has made substantial investments in manufacturing technology and
product design capability to support its products, including modern
manufacturing equipment, fineblanking, sophisticated computer-aided design
systems and highly-trained engineering personnel. These advanced capabilities
have helped to further reduce scrap rates, ensure superior product quality and
increase efficiency.
OEMs have established quality rating systems involving rigorous inspections
of suppliers' facilities and operations. OEMs' factory rating programs provide
a quantitative measure of a company's success in improving the quality of its
operations. The Company's facilities in Mancelona, Michigan; Hannibal (South)
and Brookfield, Missouri and Matamoros, Mexico were all certified as Ford Q-1
suppliers, and the Company's remaining plants were in the process of being so
certified, when the automotive industry adopted a quality rating system known
as QS-9000. The Company has completed three of the five phases toward QS-9000
Company-wide registration and expects to complete the remaining phases by the
end of 1996.
The Company's plants have been recognized by its customers with various
awards, such as the Chrysler Pentastar Award, GM Target for Excellence, Nummi
Delivery Performance Award, Isuzu Quality Achievement Award and Calsonic
Supplier of the Year Award.
29
<PAGE>
FACILITIES
The following table provides information regarding the Company's principal
facilities. All of the owned facilities are subject to liens under the Bank
Credit Agreement. The Company expects that all of the owned facilities will
likewise be subject to liens under the New Credit Agreement.
<TABLE>
<CAPTION>
SQUARE TYPE OF
LOCATION FOOTAGE INTEREST DESCRIPTION OF USE
<S> <C> <C> <C>
Mancelona, Michigan..................... 167,000 Owned Manufacturing
Moberly, Missouri....................... 165,000 Owned Manufacturing
East Jordan, Michigan................... 135,000 Owned Manufacturing
Hannibal, Missouri (South).............. 90,000 Owned Manufacturing
Rochester Hills, Michigan............... 65,000 Leased Product Development/
Operating Headquarters
Hannibal, Missouri (North).............. 64,000 Owned Manufacturing
Brookfield, Missouri.................... 51,000 Owned Manufacturing
Moberly, Missouri....................... 46,000 Leased Manufacturing
Matamoros, Mexico....................... 42,000 Owned Manufacturing
Minneapolis, Minnesota.................. 5,700 Leased Corporate Headquarters
</TABLE>
Management believes that substantially all of its property and equipment is
in good condition and that it has sufficient capacity to meet its current
manufacturing needs.
COMPETITION
The Company operates in a highly competitive environment. The number of the
Company's competitors has decreased due to the supplier consolidation
resulting from changing OEM policies. The Company currently estimates that it
has over 60% of the North American parking brake market. Its competitors for
parking brakes include Magna International Inc. and Atwood Industries Inc., a
division of Excel Corporation. The Company estimates it has over 40% of the
brake cable market. Dominion Controls Company is the Company's largest
competitor in brake cables. In the hood latch market, the Company estimates it
has approximately 20% of the market. Competitors in the hood latch market
include Magna International Inc. and the Inland Fisher Guide Division of GM.
In the North American shifter market, the Company believes its share is under
5%. The Company's largest competitors in the shifter market are Grand Haven
Stamped Products Co., Sparton Corp. and Atwood Industries Inc.
The Company principally competes for new business both at the beginning of
the development of new models and upon the redesign of existing models. New
model development generally begins two to five years before the marketing of
such models to the public. Once a producer has been designated to supply parts
for a new program, an OEM usually will continue to purchase those parts from
the designated producer for the life of the program, although not necessarily
for a redesign. Competitive factors in the market for the Company's products
include product quality and reliability, cost, timely delivery, technical
expertise and development capability, new product innovation and customer
service.
SUPPLIERS AND RAW MATERIALS
The principal raw materials purchased by the Company are steel, wire and
resin. The types of steel the Company purchases include hot and cold rolled,
galvanized, organically coated and aluminized steel. In general the wire used
by the Company is produced from steel with many of the same characteristics
with the exception that it has a higher carbon content. The Company utilizes
plastic resin to produce the protective coating for its cables. The Company
employs just-in-time manufacturing and sourcing systems enabling it to meet
customer requirements for faster deliveries while minimizing its need to carry
significant inventory levels. The Company has not experienced any significant
shortages of raw materials and normally does not carry inventories of raw
materials or finished products in excess of those reasonably required to meet
production and shipping schedules.
The Company typically negotiates blanket purchase orders or 12-month supply
agreements with integrated steel suppliers, mini-mills and service centers
that have demonstrated timely delivery, quality steel and
30
<PAGE>
competitive prices. These relationships allow the Company to order precise
quantities and types of steel for delivery on short notice, thereby permitting
the Company to maintain low inventories. In addition, the Company occasionally
must "spot buy" steel from service centers to meet unexpected customer demand,
engineering changes or new part tool trials.
Other raw materials purchased by the Company include dies, fasteners,
springs, rivets and rubber products, all of which are available from numerous
sources.
EMPLOYEES
As of March 31, 1996, the Company employed 2,513 persons, 430 of whom are
salaried and the balance of whom are paid on an hourly basis. Approximately
513 employees located at the Company's facilities in Matamoros, Mexico and
East Jordan and Mancelona, Michigan are currently covered by collective
bargaining agreements. The collective bargaining agreement at the Michigan
facilities is with the UAW and expires in December 2000. The collective
bargaining agreement at the Matamoros facility is with the Confederacion de
Trabajadores de Mexico and expires in August 1997. Although management
believes that the Company's relationship with its union employees at these
facilities is good, there can be no assurance that the Company will be able to
negotiate new agreements on favorable terms. In the event the Company is
unsuccessful in negotiating new agreements, these facilities could be subject
to work stoppages, which would have a material adverse effect on the
operations of the Company. The Company has not experienced any work stoppages
and considers its relations with its employees to be good.
ENVIRONMENTAL MATTERS
The Company is subject to the requirements of federal, state, and local
environmental and occupational health and safety laws and regulations. There
can be no assurance that the Company is at all times in complete compliance
with all such requirements. Although the Company has made and will continue to
make capital and other expenditures to comply with environmental requirements,
the Company does not expect to incur material capital expenditures for
environmental controls in 1996 or 1997. If a release of hazardous substances
occurs on or from the Company's properties or any associated offsite disposal
location, or if contamination is discovered at any of the Company's current or
former properties, the Company may be held liable for remediation costs and
expenses, and the amount of such liability could be material.
In 1995, the Michigan Department of Environmental Quality ("MDEQ") requested
that Wickes and the Company investigate environmental conditions at the
Company's Mancelona facility and at certain adjacent property retained by
Wickes. Wickes and the Company jointly completed the requested investigation
and, in January of 1996, submitted the results to MDEQ. The Company is
awaiting MDEQ's response to the sampling results. The Company could incur
additional costs to further investigate or conduct cleanup at the facility. In
1993, the Company received requests for information pursuant to CERCLA from
the U.S. EPA with respect to two landfill sites located in Toledo, Ohio. In
1994, the Company received a notice of potential liability under CERCLA from
the EPA with respect to one of the sites. The Company responded to the
requests and notice by explaining to the EPA that it had no involvement with
these sites, which apparently ceased operations prior to the formation of the
Company in 1990. The Company has received no further communications from the
EPA with respect to either site.
In connection with the Company's acquisition of certain assets from Wickes
in 1990, and subject to certain limitations, Wickes agreed to indemnify the
Company for environmental liabilities arising from the operation of the
acquired facilities prior to the acquisition. The Company and Wickes
subsequently agreed that the Company had provided Wickes with timely and
adequate notice with respect to the matters described in the immediately
preceding paragraph and that, subject to the limitations set forth in the
agreement, those matters are covered by the Wickes indemnification. There can
be no assurance, however, that all costs associated with such matters will
ultimately be reimbursed by Wickes. The Company does not currently believe
that any liability associated with the foregoing matters will have a material
adverse effect on its results of operations or financial condition.
31
<PAGE>
LEGAL PROCEEDINGS
The Company faces an inherent business risk of exposure to product liability
claims in the event that the failure of its products results in personal
injury or death, and there can be no assurance that the Company will not
experience any material product liability losses in the future. In addition,
if any Company-designed products prove to be defective, the Company may be
required to participate in a recall involving such products.
In late 1994, Ford issued a recall of a series of manual-transmission Ford
F-Series pick-ups to repair the self-adjust parking brakes originally
manufactured by the Brake and Cable Business of Alkin. Ford had received
several reports that the brakes failed. Pursuant to a letter agreement entered
into in connection with the acquisition of the Brake and Cable Business, the
Company agreed to reimburse Ford for up to $6.0 million of Ford's costs of the
recall. The Company has reimbursed Ford for the full amount under this
agreement. The Company is also involved in a product recall relating to the
same issue with respect to the Ford Contour/Mystique in Europe. The Company
has also agreed to pay 50% of the costs of that recall not to exceed $1.0
million, which payments totalled $0.4 million as of March 31, 1996.
The type of alleged failures that prompted the F-Series recalls have also
led to a number of claims and lawsuits filed against Ford and, in certain
instances, against the Company and/or Alkin. The Company may be subject to
claims brought directly against the Company by injured occupants of Ford
vehicles and to claims for contribution or indemnification asserted by Ford.
The agreement relating to the acquisition of the Brake and Cable Business
provided that the Company is liable for claims arising out of accidents that
take place on or after August 31, 1994 and that the Company will be liable for
other claims only to the extent any losses by Alkin relating to such claims
are not paid by Alkin's insurance policies (either because they are not over
the deductible amount, because Alkin's policy limits have been exceeded or
because they are not covered by Alkin's insurance policies for other reasons).
Two cases are currently pending directly against the Company or Alkin relating
to personal injury claims, and Ford has received over 400 claims (generally
for property damage) relating to alleged defects in the self-adjust parking
brakes. Ford has maintained that the Company or Alkin is responsible for all
damages or liabilities arising out of these claims. The Company disputes this
position. The Company has attempted to work together with Ford to address the
claims arising from the self-adjust parking brakes originally manufactured by
the Brake and Cable Business of Alkin and does not believe that these claims
have adversely affected its business relationship with Ford.
From time to time, in the ordinary course of its business, the Company
receives notice from a customer that a product may not be properly
functioning. For example, in November 1995, the Company was notified by
Chrysler that it had received reports of a number of parking brake failures in
manual transmission vehicles, particularly in Europe. The Company's
investigation of this matter remains in preliminary stages, and the Company
has had no further contacts from Chrysler regarding this matter. It is
possible that Chrysler could seek contribution from the Company for costs it
incurs if a recall were undertaken or for costs associated with possible
repairs.
In January 1996, the Company was served with a complaint alleging a wrongful
death as the result of injuries purportedly caused by a defectively-designed
manual release for an emergency brake on a 1990 Cadillac Fleetwood. The
lawsuit is in preliminary stages and has been referred to the Company's
insurance carrier.
In June 1996, the Company was served with a complaint alleging a wrongful
death as the result of injuries purportedly caused by a defectively designed
rear latch on a Chrysler mini-van. Chrysler and two other suppliers to
Chrysler were also named as defendants in the complaint. The lawsuit is in
preliminary stages and has been referred to the Company's insurance carrier.
In addition, Chrysler has agreed to assume the defense of, and to indemnify
the Company with respect to, this claim as long as the plaintiffs do not make
any claim alleging a manufacturing defect as it relates to the Company. There
can be no assurance that the plaintiffs will not make such an allegation.
The Company believes it maintains adequate insurance, including product
liability coverage, to cover the claims described above. The Company has also
established reserves in amounts it believes adequate to cover any adverse
judgments. However, any adverse judgment in excess of its insurance coverage
and such reserves could result in a material adverse effect on the Company.
32
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Directors and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
<S> <C> <C>
S.A. Johnson................... 56 Chairman and Director
Karl F. Storrie................ 58 President, Chief Executive Officer and
Director
David R. Bovee................. 46 Vice President, Chief Financial Officer and
Assistant Secretary
Joe A. Bubenzer................ 44 Senior Vice President
Robert R. Hibbs................ 34 Vice President and Director
David P. Klosterman............ 59 Vice President
John J. Knappenberger.......... 49 Vice President
Milton D. Kniss................ 48 Vice President
Craig L. Lamiman............... 41 Vice President
Scott D. Rued.................. 39 Vice President
Neil Anderson.................. 45 Director
W. H. Clement.................. 68 Director
James L. O'Loughlin............ 52 Director
William L. (Barry) Orscheln.... 45 Director
Eric J. Rosen.................. 35 Director
Barbara A. Westhues............ 35 Director
</TABLE>
S.A. (Tony) Johnson has served as Chairman and a Director of the Company
since November 1990. Mr. Johnson is the founder, Chief Executive Officer and
President of Hidden Creek, a private industrial management company based in
Minneapolis, Minnesota, which has provided certain management and other
services to the Company. Mr. Johnson is also the Managing Partner of J2R. Prior
to forming Hidden Creek, Mr. Johnson served from 1985 to 1989 as Chief
Operating Officer of Pentair, Inc., a diversified industrial company. From 1981
to 1985, Mr. Johnson was President and Chief Executive Officer of Onan Corp., a
diversified manufacturer of electrical generating equipment and engines for
commercial, defense and industrial markets. Mr. Johnson served as Chairman and
a director of Automotive Industries Holding, Inc. from May 1990 to August 1995.
Mr. Johnson is also Chairman and a director of Tower Automotive, Inc., a
manufacturer of engineered metal stamping and assemblies for the automotive
industry.
Karl F. Storrie has served as President, Chief Executive Officer and a
Director of the Company since March 1991. Prior to joining the Company and from
1986, Mr. Storrie was Group President of a number of aerospace manufacturing
companies owned by Coltec Industries, a multi-divisional public corporation.
Prior to becoming a Group President, Mr. Storrie was a Division President of
two aerospace design and manufacturing companies for Coltec Industries from
1981 to 1986. During his thirty-five year career, Mr. Storrie has held a
variety of positions in technical and operations management. Mr. Storrie is
also a director of Argo-Tech Corporation.
David R. Bovee has served as Vice President and Chief Financial Officer of
the Company since November 1990. Mr. Bovee also serves as Assistant Secretary
for the Company. Prior to joining the Company, Mr. Bovee served as Vice
President at Wickes in its Automotive Group from 1987 to 1990.
Joe A. Bubenzer has served as Vice President Sales/Engineering since joining
the Company in October 1993 and was named Senior Vice President in 1995. Prior
to joining the Company, Mr. Bubenzer filled various executive positions with
ITT Automotive, where he worked for six years, and, prior to such time, at GM,
where he worked for 14 years.
Robert R. Hibbs has served as a Director of the Company since August 1994 and
as Vice President since November 1990. Mr. Hibbs, a partner of J2R, has also
served as Vice President-Corporate Development of
33
<PAGE>
Hidden Creek since January 1994 and as its Director from April 1990 through
December 1993. Prior thereto, Mr. Hibbs worked in the corporate finance area
with Drexel Burnham Lambert in New York from 1988 to 1990. Mr. Hibbs is also
Chairman of the Audit Committee of the Board.
David P. Klosterman has served as Vice President of Advanced Technology
Development since September 1994. Mr. Klosterman served as Vice President of
Engineering for Orscheln since December 1991 and prior thereto served as
General Manager of Engineering for Orscheln since January 1979.
John J. Knappenberger has served as Vice President of Quality and Materials
of the Company since December 1995. Prior to joining the Company, Mr.
Knappenberger was Director of Quality for Carrier Corporation's North American
Operations from February 1992. From 1985 to 1991, Mr. Knappenberger was
employed by TRW Inc., beginning as Director of Quality in 1985 for the Steering
and Suspension Division and becoming Vice President, Quality for the Automotive
Sector in 1990.
Milton D. Kniss has served as Vice President of Operations of the Company
since January 1994. From April 1991 until January 1994, Mr. Kniss served as
Director of Michigan Operations for the Company. Mr. Kniss joined the
predecessor in 1981 as a Divisional Purchasing Manager, served as Plant Manager
of East Jordan, Michigan from 1982 until 1986, and Plant Manager of
Gordonsville, Tennessee until 1991.
Craig L. Lamiman has served as Vice President of the Company since August
1994. Prior to joining the Company, Mr. Lamiman served as Director of
Industrial Relations at United Technologies Corporation and President and CEO
of his own company in Connecticut. Mr. Lamiman served in several positions
while at Pepsico, Inc. from 1980 to 1988, the most recent being as Regional
Personnel Director for Pepsi-Cola International Limited (U.S.A.).
Scott D. Rued has served as Vice President of the Company since November
1990. Mr. Rued, a partner of J2R, has also served as Executive Vice President
and Chief Financial Officer of Hidden Creek since January 1994 and served as
its Vice President--Finance and Corporate Development from June 1989 through
1993. Mr. Rued has served as Vice President, Corporate Development and a
director of Tower Automotive, Inc. since April 1993. Mr. Rued served as Vice
President, Chief Financial Officer and a director of Automotive Industries,
Holding, Inc. from April 1990 to August 1995. Mr. Rued is also a director of
The Rottlund Company, Inc., a corporation engaged in the development and sale
of residential real estate.
Neil Anderson has served as a Director of the Company since August 1994. Mr.
Anderson has also served as Vice President of Finance for Orscheln Management
Co. since March 1991 and was named Senior Vice President of Finance in October
1995. Mr. Anderson has also served as a director for Analytical Bio Chemistry
Laboratories, Inc. since June 1995.
W. H. Clement has served as a Director of the Company since 1993. Mr. Clement
serves as a consultant to Hidden Creek. From 1975 until May 1994, Mr. Clement
served as Chief Executive Officer or as President of Automotive Industries
Holding, Inc. and its predecessor. Mr. Clement is also a director of F&M
National Corporation, a bank holding company, and Tower Automotive, Inc.
James L. O'Loughlin has served as a Director of the Company since August
1994. Mr. O'Loughlin has also served as Vice President and General Counsel to
Orscheln Management Co. since December 1987 and was named Senior Vice President
in October 1995.
William L. (Barry) Orscheln has served as a Director of the Company since
August 1994. Mr. Orscheln has also served as President of Alkin Co. (and its
predecessors) since March 1994, as President of Orscheln Farm and Home since
September 1995, as President of Orscheln Properties Co., L.L.C., since October
1994 and as President of Orscheln Management Co. since December 1987. Mr.
Orscheln has served as a director of UMB Bank since July 1989 and as a director
of Orscheln Management Co. since 1987.
34
<PAGE>
Eric J. Rosen has served as a Director of the Company since January 1994.
Mr. Rosen is Managing Director of Onex Investment Corp., a diversified
industrial corporation and an affiliate of Onex, and served as a Vice
President of Onex Investment Corp. from 1989 to February 1994. Prior thereto,
Mr. Rosen worked in the merchant banking group at Kidder, Peabody & Co.
Incorporated from 1987 to 1989. Mr. Rosen is also a director of Tower
Automotive, Inc.
Barbara A. Westhues has served as a Director of the Company since August
1994. Ms. Westhues has served on the Audit Committee since August 1994. Ms.
Westhues has also served as the Controller of Orscheln Management Co. since
December 1987 and was named Senior Vice President in October 1995.
The Company currently has nine Directors, all of whom were elected pursuant
to the terms of the Stockholders Agreement. Promptly following consummation of
the Offering, the Company intends to appoint two additional Directors who are
not otherwise affiliated with the Company or any of its stockholders. Such
nominees have not been selected as of the date hereof. Each Director is
elected to serve until the next annual meeting of stockholders or until a
successor is duly elected and qualified. Executive officers of the Company are
duly elected by the Board to serve until their respective successors are
elected and qualified. There are no family relationships between any of the
Directors or executive officers of the Company. The Company does not have any
employment agreements with any of its executive officers.
Certain of the Company's existing stockholders have entered into agreements
pursuant to which such stockholders have agreed to vote their shares of the
Company's voting stock for the election of directors designated by certain of
the existing stockholders. See "--Stockholders Agreement."
There are three Committees of the Board: the Executive Committee, the
Compensation Committee and the Audit Committee. The Executive Committee, which
is currently composed of Messrs. Johnson, Storrie and Orscheln, exercises the
powers of the Board of Directors during intervals between Board meetings and
acts as an advisory body to the Board by reviewing various matters prior to
their submission to the Board. The Compensation Committee, which is currently
composed of Messrs. Johnson and Orscheln, reviews and makes recommendations to
the Board of Directors regarding salaries, compensation and benefits of
executive officers and key employees of the Company and grants all options to
purchase Common Stock of the Company. The Audit Committee is currently
composed of Messrs. Hibbs, Clement, Anderson and Rosen and Ms. Westhues. Among
other duties, the Audit Committee reviews the internal and external financial
reporting of the Company, reviews the scope of the independent audit and
considers comments by the auditors regarding internal controls and accounting
procedures and management's response to these comments. The Company does not
have a nominating committee. The Company intends to appoint one of the new
independent directors to each of the Audit Committee and the Compensation
Committee.
DIRECTOR COMPENSATION
Directors who are not employees of the Company or any of its affiliates each
receive an annual fee of $14,400 for serving as a director of the Company. In
addition, each non-employee director receives $1,000 for each Board of
Directors meeting attended, $500 for each committee meeting attended and
reimbursement of out of pocket expenses incurred to attend such meetings.
EXECUTIVE COMPENSATION
The following table sets forth certain information for the Company's chief
executive officer and its four other most highly compensated executive
officers (the "Named Executive Officers") for 1995. The Named Executive
Officers did not exercise and were not granted any stock options in 1995 and
did not hold any stock options as of December 31, 1995.
35
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------
OTHER ANNUAL ALL OTHER
SALARY BONUS COMPENSATION COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($)(2) ($)(3)
<S> <C> <C> <C> <C> <C>
Karl F. Storrie............... 1995 $258,340 $260,000 $11,775 $3,600
President and Chief Executive
Officer
Joe A. Bubenzer............... 1995 157,333 120,000 8,322 2,616
Senior Vice President
David R. Bovee................ 1995 130,833 100,000 4,389 2,832
Vice President
Milton D. Kniss............... 1995 122,000 86,000 6,250 2,776
Vice President
Craig L. Lamiman.............. 1995 125,000 28,000 8,417 231
Vice President
</TABLE>
- ---------------------
(1) Includes amounts deferred by employees under the Company's 401(k) employee
savings plan.
(2) Includes the value of personal benefits and perquisites.
(3) Includes the dollar value of premiums paid by the Company for term life
insurance on behalf of the Named Executive Officers and the Company's
matching 401(k) contributions.
1996 KEY EMPLOYEE STOCK OPTION PLAN
Prior to consummation of the Offering, the Board and stockholders of the
Company will approve the Stock Option Plan. The Stock Option Plan will be
administered by a Compensation Committee (the "Committee") composed of non-
management members of the Board, who will be appointed by the Board. Certain
people who are full-time, salaried employees of the Company will be eligible
to participate in the Stock Option Plan (an "Employee Participant"). The
Committee will select the Employee Participants and determine the terms and
conditions of the options. The Stock Option Plan will provide for the issuance
of options to Employee Participants covering 600,000 shares of Class A Common
Stock of the Company, subject to certain adjustments reflecting changes in the
Company's capitalization.
Options granted under the Stock Option Plan may be either incentive stock
options ("ISOs") or such other forms of non-qualified stock options ("NQOs")
as the Committee may determine. ISOs are intended to qualify as "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"). The exercise price of (i) an ISO granted to
an individual who owns shares possessing more than 10% of the total combined
voting power of all classes of stock of the Company (a "10% Owner") will be at
least 110% of the fair market value of a share of common stock on the date of
grant and (ii) an ISO granted to an individual other than a 10% Owner and an
NQO will be at least 100% of the fair market value of a share of Common Stock
on the date of grant.
Options granted under the Stock Option Plan may be subject to time vesting
and certain other restrictions at the Committee's sole discretion. Subject to
certain exceptions, the right to exercise an option generally will terminate
at the earlier of (i) the first date on which the initial grantee of such
option is not employed by the Company for any reason other than termination
without cause, death or permanent disability or (ii) the expiration date of
the option. If the holder of an option dies or suffers a permanent disability
while still employed by the Company, the right to exercise all unexpired
installments of such option shall be accelerated and shall vest as of the
latest of the date of such death, the date of such permanent disability and
the date of the discovery of such permanent disability, and such option shall
be exercisable, subject to certain exceptions, for 90 days after such date. If
the holder of an option is terminated without cause, to the extent the option
has vested, such option will be exercisable for 30 days after such date.
36
<PAGE>
All outstanding options under the Stock Option Plan will terminate
immediately prior to consummation of a liquidation or dissolution of the
Company, unless otherwise provided by the Board. In the event of the sale of
all or substantially all of the assets of the Company or the merger of the
Company with another corporation, all restrictions on any outstanding options
will terminate and Employee Participants will be entitled to the full benefit
of their options immediately prior to the closing date of such sale or merger,
unless otherwise provided by the Board.
The Board generally will have the power and authority to amend the Stock
Option Plan at any time without approval of the Company's stockholders;
however, the Board may not amend the Stock Option Plan to materially alter the
plan eligibility requirements, number of shares issuable under the plan or
benefits to participants in the plan without the approval of the Company's
stockholders. No options have been granted under the Stock Option Plan to date.
EMPLOYEE STOCK DISCOUNT PURCHASE PLAN
The Employee Stock Purchase Plan will be approved by the Board and
stockholders prior to the consummation of the Offering. The Employee Stock
Purchase Plan will be established to give employees desiring to do so a
convenient means of purchasing shares of Common Stock through payroll
deductions. The Employee Stock Purchase Plan will provide an incentive to
participate by permitting purchases at a discounted price. The Company believes
that ownership of stock by employees will foster greater employee interest in
the success, growth and development of the Company.
Subject to certain restrictions, each employee of the Company will be
eligible to participate in the Employee Stock Purchase Plan if he or she has
been employed by the Company for more than one year. Participation will be
discretionary with each eligible employee. The Company will reserve 500,000
shares of Class A Common Stock for issuance in connection with the Employee
Stock Purchase Plan. Each eligible employee will be entitled to purchase a
maximum of 200 shares per year. Elections to participate and purchases of stock
will be made on a quarterly basis. Each participating employee contributes to
the Employee Stock Purchase Plan by choosing a payroll deduction in any
specified amount, with a minimum deduction of $10 per week. A participating
employee may increase or decrease the amount of his/her payroll deduction,
including a change to a zero deduction as of the beginning of any calendar
quarter. Elected contributions will be credited to participants' accounts at
the end of each calendar quarter. In addition, employees may make lump sum
contributions at the end of the year to enable them to purchase the maximum
number of shares available for purchase during the plan year.
Each participating employee's contributions will be used to purchase shares
for the employee's share account within 15 days after the last day of each
calendar quarter. The cost per share is 85% of the lower of the closing price
of the Company's Class A Common Stock on the Nasdaq National Market on the
first or the last day of the calendar quarter. The number of shares purchased
on each employee's behalf and deposited in his/her share account will be based
on the amount accumulated in such participant's cash account and the purchase
price for shares with respect to any calendar quarter. Shares purchased under
the Employee Stock Purchase Plan carry full rights to receive dividends
declared from time to time. Under the Employee Stock Purchase Plan any
dividends attributable to shares in the employee's share account will be
automatically used to purchase additional shares for such employee's share
account. Share distributions and share splits will be credited to the
participating employee's share account as of the record date and effective
date, respectively. A participating employee will have full ownership of all
shares in his/her share account and may withdraw them for sale or otherwise by
written request to the Committee following the close of each calendar quarter.
Subject to applicable federal securities and tax laws, the Board of Directors
will have the right to amend or to terminate the Employee Stock Purchase Plan.
Amendments to the Employee Stock Purchase Plan will not affect a participating
employee's right to the benefit of the contributions made by such employee
prior to the date of any such amendment. In the event the Employee Stock
Purchase Plan is terminated, the Committee will be required to distribute all
shares held in each participating employee's share account plus an amount of
cash equal to the balance in each participating employee's cash account.
37
<PAGE>
INDEPENDENT DIRECTOR STOCK OPTION PLAN
The Director Option Plan will be approved by the Board and stockholders
prior to the consummation of the Offering. The Director Option Plan will be
established to encourage stock ownership by certain Directors of the Company
and to provide those individuals with an additional incentive to manage the
Company and to provide a form of compensation that will attract and retain
highly qualified individuals as members of the Board. The Director Option Plan
will provide for the issuance of options to independent Directors, as defined,
covering 100,000 shares of Class A Common Stock of the Company, subject to
certain adjustments reflecting changes in the Company's capitalization.
The terms of each option granted under the Director Option Plan may not
exceed ten years from the date of grant. The option price for each option must
equal 100% of the fair market value of the Company's Class A Common Stock on
the date the option is granted. In general, no option may be exercised in
whole or in part prior to the expiration of at least six months from the date
of grant of the option. In consideration of the grant of an option, an
optionee is required to agree to continue to serve as a director of the
Company for the lesser of 12 months from the date the option is granted or for
the remainder of the optionee's term as a Director of the Company.
Notwithstanding this requirement, nothing contained in the Director Option
Plan or any agreement to be executed pursuant to the Director Option Plan will
obligate the Company, its Board or its stockholders to retain an optionee as a
Director of the Company. No options have been granted under the Director
Option Plan to date.
STOCKHOLDERS AGREEMENT
On August 31, 1994, the Company, Onex, J2R, Alkin and certain individuals
named therein (including members of the Company's management) entered into a
Stockholders Agreement (as amended, the "Stockholders Agreement").
Concurrently with the Offering, the Stockholders Agreement will be amended and
restated to require all the parties thereto to vote their shares of Common
Stock and take any other action necessary to ensure the Board will be
comprised of eleven persons, seven of whom, including the two independent
directors, shall be designated by Onex, J2R and certain stockholders
affiliated with Hidden Creek (collectively, the "MC Stockholders") and four of
whom shall be designated by Alkin (the "Alkin Stockholders"). The voting
provision terminates automatically when the Alkin Stockholders cease to own at
least 20% of the outstanding Common Stock. The Stockholders Agreement also
contains provisions granting the parties thereto certain tag-along rights
allowing them to sell their shares in any private sales of Common Stock
initiated by the other parties to the Stockholders Agreement. The Stockholders
Agreement also provides that the affirmative vote of two-thirds of the Board
is required to issue any Preferred Stock (as defined below) of the Company.
The Stockholders Agreement also binds subsequent transferees who have acquired
their shares in private sales from the parties to the Stockholders Agreement.
Subject to certain exemptions, each of Alkin, Onex, J2R and the MC
Stockholders have agreed not to compete with the business of the Company for a
period of five years after the date of the original Stockholders Agreement and
Onex, J2R, the MC Stockholders and the Company have agreed not to compete with
the business of Alkin during that period. J2R, Onex and Messrs. Johnson, Rued
and Hibbs have also entered into an agreement requiring the parties to vote
their shares of Common Stock as directed by Onex, and providing Onex with
certain first offer rights in connection with private sales of Common Stock.
38
<PAGE>
CERTAIN TRANSACTIONS
On August 31, 1994, MCHC, Alkin and all of the existing stockholders of MCHC
entered into an agreement whereby stockholders of MCHC contributed all shares
of MCHC common stock to the Company in return for shares of Class A Common
Stock. Alkin contributed the Brake and Cable Business to the Company in return
for (i) 2,206,890 shares of Class B Common Stock, (ii) an option to purchase
up to an additional 14,420 shares of Class B Common Stock at an exercise price
of $1.45 per share and (iii) cash consideration, net of assumed indebtedness,
of approximately $40 million. In addition to borrowings under the Bank Credit
Agreement, in financing such transaction, the Company borrowed an aggregate of
$4.0 million, evidenced by the Notes, from certain stockholders of the
Company, including Onex ($1.8 million), J2R ($0.2 million) and Alkin ($2.0
million). See "Use of Proceeds."
In connection with the acquisition of the Brake and Cable Business, the
Company entered into agreements with Alkin whereby the Company receives
services related to data processing, payroll, personnel administration and
other administrative matters. Amounts paid under these agreements were
$570,000 in 1994, $1,788,000 in 1995 and $75,000 in the three-month period
ended March 31, 1996. In addition, the Company and Alkin agreed to supply each
other's operations with certain items necessary for the manufacture of their
respective products. These supply agreements are for periods of up to five
years and are at terms which the Company believes are not less favorable than
could be obtained from an independent party.
In November 1990, the Company's predecessor entered into a Management
Agreement with Hidden Creek, an affiliate of the Company. On August 31, 1994,
the Company and Hidden Creek entered into a new Management Agreement, and the
prior agreement was terminated. Pursuant to the Management Agreements, Hidden
Creek has provided strategic direction, management and financial and
administrative services to the Company. In exchange for such services, the
Company has paid monthly management fees to Hidden Creek. Total management
fees under such agreements were approximately $500,000 for 1993, $554,000 for
1994 and $733,000 for 1995. Although the current Management Agreement will be
terminated upon completion of the Offering, certain officers and employees of
Hidden Creek will continue to provide services to the Company. A portion of
the salaries and expenses of the Hidden Creek officers and employees will be
allocated to the Company. The Company also paid to Hidden Creek fees of
approximately $500,000 in connection with the acquisition of the Brake and
Cable Business from Alkin and fees of approximately $250,000 in connection
with the sale of the Window Regulator Business to Rockwell.
On June 26, 1995, the Company sold an aggregate of 78,819 shares of Class B
Common Stock to certain management employees at a purchase price of $2.69 per
share and 70,500 shares of Class B Common Stock to certain management
employees at a purchase price of $1.96 per share, pursuant to agreements
entered into in May 1995 and August 1994, respectively. In connection
therewith, Messrs. Klosterman, Kniss and Lamiman, each an executive officer of
the Company, purchased 35,250, 8,812 and 35,250 shares, respectively. In
connection with such sale, the Company loaned funds to finance up to half of
the purchase price for such shares at an interest rate equal to the base rate
of the Company's senior lender plus 1.5% (9.75% at March 31, 1996) and a
scheduled maturity on the earlier of (i) June 26, 2000 or (ii) the date such
employee sells such shares.
On April 19, 1996, the Company repurchased 3,671 shares of Class B Common
Stock for $4.46 per share.
The Company has granted registration rights to certain of its existing
stockholders, including Onex, J2R, Alkin and Messrs. Johnson, Storrie,
Bubenzer, Bovee, Kniss, Klosterman and Lamiman. See "Shares Eligible for
Future Sale--Registration Agreement."
39
<PAGE>
PRINCIPAL STOCKHOLDERS
The Company currently has four classes of Common Stock outstanding.
Immediately prior to and contingent upon the Offering, the Company's four
classes of Common Stock will be converted into Class B Common Stock. The Class
A Common Stock being offered hereby and the Class B Common Stock will be
substantially identical except with respect to voting and conversion rights.
Each share of Class A Common Stock is entitled to one vote and each share of
Class B Common Stock is entitled to ten votes. Except as otherwise required by
law or by the Restated Certificate, the Class A Common Stock and the Class B
Common Stock will vote together as a single class on all matters submitted to
a vote of the stockholders, including the election of Directors. In addition,
the Class B Common Stock is convertible at any time at the option of the
holder thereof, and is mandatorily convertible upon any transfer thereof
(except to affiliates) and at any time that the MC Stockholders and their
affiliates, in the aggregate, do not hold at least 10% of the total
outstanding shares of Common Stock, into shares of Class A Common Stock on a
share-for-share basis. All of the Company's existing stockholders will receive
shares of Class B Common Stock in the Recapitalization. The number of shares
of Class B Common Stock that will be issued as a result of the conversion of
the Company's existing classes of Common Stock will be determined according to
the relative preference rankings of such existing Common Stock and the initial
public offering price of the Class A Common Stock.
The table below sets forth certain information regarding the equity
ownership of the Company as of May 31, 1996 and immediately following the
Offering (in each case giving effect to the Recapitalization at an assumed
initial public offering price of $15.00 per share), by (i) each person or
entity known to the Company who beneficially owns five percent or more of the
Common Stock of the Company, (ii) each Director and Named Executive Officer
and (iii) all Directors and executive officers of the Company as a group.
Unless otherwise stated, each of the persons named in the table has sole
voting and investment power with respect to the securities beneficially owned
by it or him as set forth opposite its or his name. Beneficial ownership of
the Common Stock listed in the table has been determined in accordance with
the applicable rules and regulations promulgated under the Exchange Act. The
actual number of shares to be issued to each existing stockholder in the
Recapitalization is subject to change based upon changes in the assumed
initial public offering price.
<TABLE>
<CAPTION>
COMMON STOCK OWNED COMMON STOCK OWNED
PRIOR TO THE OFFERING AFTER THE OFFERING
------------------------- -------------------------------------------
NUMBER PERCENTAGE NUMBER PERCENTAGE
OF SHARES OF SHARES OF SHARES OF SHARES
OF CLASS A OF CLASS A OF CLASS B OF CLASS B
NUMBER PERCENTAGE COMMON COMMON COMMON COMMON
NAME AND ADDRESS OF SHARES OF SHARES STOCK STOCK STOCK STOCK
<S> <C> <C> <C> <C> <C> <C>
Onex U.S. Investments
(1)(2)................. 1,793,833 35.9% -- -- 1,793,833 35.9%
Alkin Co. (2)(3)........ 2,221,310 44.3 -- -- 2,221,310 44.3
J2R Corporation (2)(4).. 409,291 8.2 -- -- 409,291 8.2
S. A. Johnson (2)(4).... 468,959 9.4 -- -- 468,959 9.4
Karl F. Storrie (2)..... 139,531 2.8 -- -- 139,531 2.8
David R. Bovee (2)...... 41,308 * -- -- 41,308 *
Joe A. Bubenzer (2)..... 35,814 * -- -- 35,814 *
Robert R. Hibbs (2)(5).. 432,240 8.6 -- -- 432,240 8.6
David P. Klosterman
(2).................... 35,250 * -- -- 35,250 *
John J. Knappenberger... -- -- -- -- -- --
Milton D. Kniss (2)..... 17,992 * -- -- 17,992 *
Craig L. Lamiman (2).... 35,250 * -- -- 35,250 *
Neil Anderson (2)(3).... 2,221,310 44.3 -- -- 2,221,310 44.3
W. H. Clement (2)....... -- -- -- -- -- --
James L. O'Loughlin
(2)(3)................. 2,221,310 44.3 -- -- 2,221,310 44.3
William L. Orscheln
(2)(3)................. 2,221,310 44.3 -- -- 2,221,310 44.3
Eric J. Rosen (1)(2).... 1,793,833 35.9 -- -- 1,793,833 35.9
Scott D. Rued (2)(6).... 455,189 9.1 -- -- 455,189 9.1
Barbara A. Westhues
(2)(3)................. 2,221,310 44.3 -- -- 2,221,310 44.3
All Directors and
executive officers as a
group
(16 persons)........... 4,858,094 96.9 -- -- 4,858,094 96.9
</TABLE>
- ---------------------
*Less than one percent.
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<PAGE>
(1) Reflects shares of Class B Common Stock held by Onex U.S. Investments,
Inc., which has shared voting power over 2,791,364 shares of Common Stock
(see footnote (2)) and sole dispositive power over 1,793,833 shares of
Class B Common Stock. Mr. Rosen, a Director of the Company, is Managing
Director of Onex Investment Corp. and disclaims beneficial ownership of
all shares of Common Stock owned by Onex U.S. Investments, Inc. Onex U.S.
Investments, Inc. and Onex Investment Corp. are both wholly owned
subsidiaries of Onex Corporation. The address for Onex U.S. Investments,
Inc. and Mr. Rosen is c/o Onex Investment Corp., 712 Fifth Avenue, 40th
Floor, New York, New York 10019.
(2) Onex, J2R, Messrs. Johnson, Storrie, Bovee, Bubenzer, Hibbs, Klosterman,
Kniss, Lamiman, Clement, Rosen and Rued and certain of the Company's other
existing stockholders have entered into agreements pursuant to which such
stockholders agreed to vote their shares of Common Stock in the same
manner as Onex votes its shares on all matters presented to the Company's
stockholders for a vote and, to the extent permitted by law, granted to
Onex a proxy to effectuate such agreement. As a result, Onex will have
voting control of approximately 53.0% of the Common Stock following the
completion of the Offering (52.6% if the Underwriters' over-allotment
option is exercised in full). All of the Company's existing stockholders,
including Alkin, have entered into an agreement providing for the election
of the Board. As a result, such stockholders will collectively have voting
control over 94.9% of the Common Stock following the completion of the
Offering (94.2% if the Underwriters' over-allotment option is exercised in
full).
(3) Includes 14,420 shares issuable upon the exercise of a currently
exercisable option issued to Alkin in connection with the Company's
acquisition of the Brake and Cable Business. Alkin has granted each of
Messrs. Anderson and O'Loughlin and Ms. Westhues options to acquire 13,218
shares of the Class B Common Stock owned by Alkin. Messrs. Anderson,
O'Loughlin and Orscheln and Ms. Westhues are officers of Alkin and, other
than Mr. Orscheln, each disclaims beneficial ownership of the shares owned
by Alkin other than the shares subject to each of their outstanding
options. The address for Alkin is 2000 U.S. Highway 63 South, Moberly,
Missouri 65270, and the address of each such individual is c/o Alkin at
the same address.
(4) Includes 409,291 shares owned by J2R, of which Mr. Johnson is Managing
Partner, and 59,668 shares owned by Mr. Johnson. The address for Mr.
Johnson and J2R is c/o Dura Automotive Systems, Inc., 4508 IDS Center,
Minneapolis, Minnesota 55402.
(5) Includes 409,291 shares owned by J2R, of which Mr. Hibbs is a partner, and
22,949 shares owned by Mr. Hibbs. Mr. Hibbs disclaims beneficial ownership
of the shares owned by J2R. The address for Mr. Hibbs is c/o Dura
Automotive Systems, Inc., 4508 IDS Center, Minneapolis, Minnesota 55402.
(6) Includes 409,291 shares owned by J2R, of which Mr. Rued is a partner, and
45,898 shares owned by Mr. Rued. Mr. Rued disclaims beneficial ownership
of the shares owned by J2R. The address for Mr. Rued is c/o Dura
Automotive Systems, Inc., 4508 IDS Center, Minneapolis, Minnesota 55402.
41
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL MATTERS
The Company currently has four classes of Common Stock outstanding.
Immediately prior to and contingent upon the Offering, the Company's four
classes of Common Stock will be converted into Class B Common Stock. All of
the Company's existing stockholders will receive shares of Class B Common
Stock in the Recapitalization. The number of shares of Class B Common Stock
that will be issued as a result of the conversion of the Company's existing
classes of Common Stock will be determined according to the relative
preference rankings of such existing Common Stock and the initial public
offering price of the Class A Common Stock.
At the time of the Offering, after giving effect to the Recapitalization,
the total amount of authorized capital stock of the Company will consist of
30,000,000 shares of Class A Common Stock, par value $0.01 per share,
10,000,000 shares of Class B Common Stock, par value $0.01 per share and
5,000,000 shares of Preferred Stock, par value $1.00 per share (the "Preferred
Stock"). Giving effect to the Recapitalization and upon completion of the
Offering, 2,700,000 shares of Class A Common Stock, 4,998,254 shares of Class
B Common Stock and no shares of Preferred Stock will be issued and
outstanding. The discussion herein describes the Company's capital stock, the
Restated Certificate and By-laws as anticipated to be in effect upon
consummation of the Offering. The following summary of certain provisions of
the Company's capital stock describes all material provisions of, but does not
purport to be complete and is subject to, and qualified in its entirety by,
the Restated Certificate and the By-laws of the Company that are included as
exhibits to the Registration Statement of which this Prospectus forms a part
and by the provisions of applicable law. As of May 31, 1996 (without giving
effect to the Recapitalization), the Company had 283,589 shares of Common
Stock outstanding held by 35 holders of record.
The Restated Certificate and By-laws will contain certain provisions that
are intended to enhance the likelihood of continuity and stability in the
composition of the Board and which may have the effect of delaying, deferring
or preventing a future takeover or change in control of the Company unless
such takeover or change in control is approved by the Board.
CLASS A COMMON STOCK
The shares of Class A Common Stock being offered by the Company will be,
upon payment therefor, validly issued, fully paid and nonassessable. Subject
to the prior rights of the holders of any Preferred Stock, the holders of
outstanding shares of Class A Common Stock will be entitled to receive
dividends out of assets legally available therefor at such time and in such
amounts as the Board may from time to time determine. See "Dividend Policy."
The shares of Class A Common Stock will not be convertible and the holders
thereof will have no preemptive or subscription rights to purchase any
securities of the Company. Upon liquidation, dissolution or winding up of the
Company, the holders of Class A Common Stock will be entitled to receive pro
rata the assets of the Company which are legally available for distribution,
after payment of all debts and other liabilities and subject to the prior
rights of any holders of Preferred Stock then outstanding. Each outstanding
share of Class A Common Stock will be entitled to one vote on all matters
submitted to a vote of stockholders. Except as otherwise required by law or
the Restated Certificate, the Class A Common Stock and Class B Common Stock
will vote together on all matters submitted to a vote of the stockholders,
including the election of Directors.
Application will be made for quotation of the Class A Common Stock on the
Nasdaq National Market under the symbol "DRRA."
CLASS B COMMON STOCK
The issued and outstanding shares of Class B Common Stock generally will
have identical rights to those of the Class A Common Stock except with respect
to voting power and conversion rights. Each share of Class B Common Stock will
be entitled to ten votes on all matters submitted to a vote of stockholders,
as compared to
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<PAGE>
one vote for each share of Class A Common Stock. Class B Common Stock will be
convertible at the option of the holder, and mandatorily convertible upon any
transfer thereof (except to affiliates) and at any time that the MC
Stockholders and their affiliates, in the aggregate, do not beneficially own
at least 10% of the total outstanding shares of Common Stock, into Class A
Common Stock on a share-for-share basis. The Class B Common Stock will not be
registered under the Securities Act and will not be listed for trading on any
national securities exchange or on the Nasdaq National Market.
PREFERRED STOCK
The Board may, without further action by the Company's stockholders, from
time to time, direct the issuance of shares of Preferred Stock in series and
may, at the time of issuance, determine the rights, preferences and
limitations of each series. Satisfaction of any dividend preferences of
outstanding shares of Preferred Stock would reduce the amount of funds
available for the payment of dividends on shares of Common Stock. Holders of
shares of Preferred Stock may be entitled to receive a preference payment in
the event of any liquidation, dissolution or winding-up of the Company before
any payment is made to the holders of shares of Common Stock. Under certain
circumstances, the issuance of shares of Preferred Stock may render more
difficult or tend to discourage a merger, tender offer or proxy contest, the
assumption of control by a holder of a large block of the Company's securities
or the removal of incumbent management. Upon the affirmative vote of a
majority of the total number of Directors then in office, the Board, without
stockholder approval, may issue shares of Preferred Stock with voting and
conversion rights which could adversely affect the holders of shares of Common
Stock. Upon consummation of the Offering, there will be no shares of Preferred
Stock outstanding, and the Company has no present intention to issue any
shares of Preferred Stock. The Stockholders Agreement provides that the
affirmative vote of two-thirds of the Board is required to issue any Preferred
Stock.
CERTAIN PROVISIONS OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
AND BY-LAWS
The Restated Certificate will provide that stockholder action can be taken
only at an annual or special meeting of stockholders and cannot be taken by
written consent in lieu of a meeting. The Restated Certificate and the By-laws
will provide that, except as otherwise required by law, special meetings of
the stockholders can only be called by the Chairman of the Board or the
President of the Company, or pursuant to a resolution adopted by a majority of
the Board. Stockholders will not be permitted to call a special meeting or to
require the Board to call a special meeting.
The By-laws will establish an advance notice procedure for stockholder
proposals to be brought before an annual meeting of stockholders of the
Company, including proposed nominations of persons for election to the Board.
Stockholders at an annual meeting may only consider proposals or nominations
specified in the notice of meeting or brought before the meeting by or at the
direction of the Board or by a stockholder who was a stockholder of record on
the record date for the meeting, who is entitled to vote at the meeting and
who has given to the Company's Secretary timely written notice, in proper
form, of the stockholder's intention to bring that business before the
meeting. Although the By-laws will not give the Board the power to approve or
disapprove stockholder nominations of candidates or proposals regarding other
business to be conducted at a special or annual meeting, the By-laws may have
the effect of precluding the conduct of certain business at a meeting if the
proper procedures are not followed or may discourage or defer a potential
acquiror from conducting a solicitation of proxies to elect its own slate of
Directors or otherwise attempting to obtain control of the Company.
The Restated Certificate and By-laws will provide that the affirmative vote
of holders of at least 80% of the total votes eligible to be cast in the
election of Directors will be required to amend, alter, change or repeal
certain of their provisions. This requirement of a super-majority vote to
approve amendments to the Restated Certificate and By-laws could enable a
minority of the Company's stockholders to exercise veto power over any such
amendments. In addition, the Class B Common Stock has ten votes, as compared
to one vote for each share of
43
<PAGE>
Class A Common Stock, on all matters, including the election of Directors, to
come before the stockholders. By virtue of such stock ownership, the holder of
the Class B Common Stock will be able to control the vote on all matters
submitted to a vote of the holders of Common Stock, including the election of
Directors, amendments to the Restated Certificate and By-laws and approval of
significant corporate transactions. Such concentration of ownership could also
have the effect of delaying, deterring or preventing a change in control of the
Company that might otherwise be beneficial to stockholders. See "Risk Factors--
Controlling Stockholder."
CERTAIN PROVISIONS OF DELAWARE LAW
Following the consummation of the Offering, the Company will be subject to
the "business combination" provisions of the Delaware General Corporation Law.
In general, such provisions prohibit a publicly held Delaware corporation from
engaging in various "business combination" transactions with any "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an "interested stockholder," unless (i) the transaction
is approved by the Board of Directors prior to the date the "interested
stockholder" obtained such status, (ii) upon consummation of the transaction
which resulted in the stockholder becoming an "interested stockholder," the
"interested stockholder," owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced, excluding for
purposes of determining the number of shares outstanding those shares owned by
(a) persons who are directors and also officers and (b) employee stock plans in
which employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or
exchange offer, or (iii) on or subsequent to such date the "business
combination" is approved by the board of directors and authorized at an annual
or special meeting of stockholders by the affirmative vote of at least 66 2/3%
of the outstanding voting stock which is not owned by the "interested
stockholder." A "business combination" is defined to include mergers, asset
sales and other transactions resulting in financial benefit to a stockholder.
In general, an "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
a corporation's voting stock. The statute could prohibit or delay mergers or
other takeover or change in control attempts with respect to the Company and,
accordingly, may discourage attempts to acquire the Company.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Restated Certificate will limit the liability of Directors to the fullest
extent permitted by the Delaware General Corporation Law. In addition, the
Restated Certificate will provide that the Company shall indemnify Directors
and officers of the Company to the fullest extent permitted by such law. The
Company anticipates entering into indemnification agreements with its current
Directors and executive officers prior to the completion of the Offering.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Class A Common Stock will be Firstar
Trust Company.
44
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to the Offering there has been no market for the Common Stock of the
Company. The Company can make no predictions as to the effect, if any, that
sales of shares or the availability of shares for sale will have on the market
price prevailing from time to time. Nevertheless, sales of significant amounts
of the Class A Common Stock in the public market, or the perception that such
sales may occur, could adversely affect prevailing market prices. See "Risk
Factors--Shares Eligible for Future Sale."
Upon completion of the Offering, the Company expects to have 7,698,254
shares of Common Stock outstanding. Of these shares, the 2,700,000 shares of
Class A Common Stock sold in the Offering (3,105,000 shares if the
Underwriters' over-allotment option is exercised in full) will be freely
tradeable without restriction under the Securities Act, except for any such
shares which may be acquired by an "affiliate" of the Company (an "Affiliate")
as that term is defined in Rule 144 under the Securities Act, which shares
will be subject to the resale limitations of Rule 144. The remaining
outstanding shares of Common Stock held by existing stockholders upon
completion of the Offering will be "restricted securities" (as that phrase is
defined in Rule 144) and may not be resold in the absence of registration
under the Securities Act or pursuant to exemptions from such registration,
including among others, the exemptions provided by Rule 144 under the
Securities Act.
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, if a period of at least two years has elapsed
since the later of the date the restricted securities were acquired from the
Company and the date they were acquired from an Affiliate, then the holder of
such restricted securities (including an Affiliate) is entitled to sell a
number of shares within any three-month period that does not exceed the
greater of 1% of the then outstanding shares of the Class A Common Stock
(approximately 27,000 shares immediately after the Offering) or the average
weekly reported volume of trading of the Class A Common Stock on the Nasdaq
National Market during the four calendar weeks preceding such sale. The holder
may only sell such shares through unsolicited brokers' transactions. Sales
under Rule 144 are also subject to certain requirements pertaining to the
manner of such sales, notices of such sales and the availability of current
public information concerning the Company. Affiliates may sell shares not
constituting restricted shares in accordance with the foregoing volume
limitations and other requirements but without regard to the two-year holding
period. Under Rule 144(k), if a period of at least three years has elapsed
between the later of the date restricted securities were acquired from the
Company and the date they were acquired from an Affiliate, as applicable, a
holder of such restricted securities who is not an Affiliate at the time of
the sale and has not been an Affiliate for at least three months prior to the
sale would be entitled to sell the shares immediately without regard to the
volume limitations and other conditions described above. In June 1995, the
Commission proposed reducing the two and three-year holding period under Rule
144 described above to one and two years, respectively.
Without giving effect to the contractual restrictions described below,
4,854,317 shares of Class A Common Stock (represented by currently outstanding
shares of Class B Common Stock) will be eligible for sale in the public market
under Rule 144, subject to the volume limitations and the other conditions
described above, 90 days after the date of this Prospectus.
The Company and certain of its existing stockholders, who in aggregate own
4,998,254 shares of Common Stock, will agree that, for a period of 180 days
after the date of this Prospectus, they will not, without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation, offer, sell,
contract to sell or otherwise dispose of any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
other than sales of Class A Common Stock under the Underwriting Agreement (as
defined) or the issuance of shares of Class A Common Stock upon the exercise
of outstanding options.
REGISTRATION AGREEMENT
The Company, Onex, J2R, Alkin and the management stockholders named therein
(the "Management Stockholders") are parties to a registration agreement (the
"Registration Agreement") dated August 31, 1994. Under the Registration
Agreement, the holders of a majority of shares of Common Stock held by Onex,
J2R and
45
<PAGE>
the Management Stockholders, as a group, or the holders of a majority of
shares of Common Stock held by Alkin, each have the right at any time, subject
to certain conditions, to require the Company to register any and all of their
shares of Common Stock under the Securities Act on Form S-1 (a "Long-Form
Registration") on four occasions at the Company's expense and on Form S-2 or
Form S-3 (a "Short-Form Registration") on an unlimited number of occasions at
the Company's expense. The Company is not required, however, to effect any
such Long-Form Registration or Short-Form Registration within six months after
the effective date of a prior demand registration or a registration in which
the holders of registrable securities were given piggyback rights with no
cutbacks and may postpone the filing of such registration for up to six months
if the holders of a majority of the registrable securities agree that such a
registration would likely have a material adverse effect on the Company. In
addition, such parties are entitled to request the inclusion of any Common
Stock subject to the Registration Agreement in any registration statement at
the Company's expense whenever the Company proposed to register any of its
securities under the Securities Act, subject to certain conditions. In
connection with all registrations, the Company has agreed to indemnify all
holders of registerable securities against certain liabilities, including
liabilities under the Securities Act. Beginning 180 days after the date of the
Prospectus, the holders of an aggregate of 4,998,254 shares of Common Stock
will have registration rights pursuant to the Registration Agreement.
46
<PAGE>
UNDERWRITING
The Underwriters named below (the "Underwriters") for whom Donaldson, Lufkin
& Jenrette Securities Corporation, Morgan Stanley & Co. Incorporated and Robert
W. Baird & Co. Incorporated are acting as representatives (the
"Representatives"), have severally agreed, subject to the terms and conditions
of an underwriting agreement (the "Underwriting Agreement"), to purchase from
the Company the respective number of shares of Class A Common Stock set forth
opposite their names below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF CLASS A
UNDERWRITER COMMON STOCK
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation........
Morgan Stanley & Co. Incorporated..........................
Robert W. Baird & Co. Incorporated.........................
---------
Total.............................................. 2,700,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of the Class A Common
Stock offered hereby are subject to approval of certain legal matters by
counsel and to certain other conditions. The Underwriters are obligated to take
and pay for all the shares of the Class A Common Stock if any are taken.
The Representatives have advised the Company that the Underwriters propose to
offer the shares of the Class A Common Stock in part directly to the public
initially at the public offering price set forth on the cover page of this
Prospectus and in part to certain dealers at such price less a concession not
in excess of $ per share; that the Underwriters may allow, and such dealers
may reallow, a concession not in excess of $ per share on sales to other
dealers; and that after the initial public offering, the public offering price
and other selling terms may be changed by the Representatives. The Underwriters
have informed the Company that they do not intend to confirm sales to any
accounts over which they exercise discretionary authority.
The Company has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus, to purchase up to an aggregate of
405,000 additional shares of Class A Common Stock at the initial public
offering price less underwriting discounts and commissions. The Underwriters
may exercise such option only for the purpose of covering over-allotments, if
any, incurred in connection with the sales of Class A Common Stock offered
hereby. To the extent that the Underwriters exercise such option, each
Underwriter will become obligated, subject to certain conditions, to purchase
the same percentage of such additional shares as the number of other shares to
be purchased by that Underwriter bears to the total number of shares set forth
on the cover page of this Prospectus.
The Company and certain of its existing stockholders, who own an aggregate of
4,998,254 shares of Common Stock, have agreed prior to the consummation of the
offering with the Underwriters, not to offer, sell, contract to sell, grant any
other option to purchase or otherwise dispose of any shares of the Common Stock
or any securities convertible into or exercisable for, or warrants, rights or
options to acquire, shares of Common Stock for a period of 180 days without the
prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation,
other than sales of Class A Common Stock under the Underwriting Agreement or
the issuance of shares of Class A Common Stock upon the exercise of outstanding
options.
47
<PAGE>
The Company and its principal operating subsidiary have agreed to indemnify
the Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that they may be required to make
in respect thereof.
The initial public offering price for the shares of Class A Common Stock will
be determined through negotiations between the Company and the Representatives.
Among the factors to be considered in such negotiations are the future
prospects of the Company and its industry in general, the experience of
management, the demand for similar securities of companies considered
comparable to the Company, the prevailing conditions in the equity securities
market and other relevant factors. There can be no assurance that an active
trading market will develop for the shares of Class A Common Stock or that the
shares of Class A Common Stock will trade in the public market subsequent to
the Offering at or above the initial offering price.
LEGAL MATTERS
The validity of the Class A Common Stock being offered hereby will be passed
upon for the Company by Kirkland & Ellis (a partnership which includes
professional corporations), Chicago, Illinois, and for the Underwriters by
Gardner, Carton & Douglas, Chicago, Illinois.
EXPERTS
The audited financial statements included in this Prospectus and elsewhere in
the Registration Statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form S-
1 under the Securities Act with respect to the Class A Common Stock being
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement and the exhibits and schedules thereto, certain
items of which are omitted in accordance with the rules and regulations of the
Commission. Statements contained in this Prospectus concerning the provisions
of documents filed with the Registration Statement as exhibits are necessarily
summaries of such documents, and each such statement is qualified in its
entirety by reference to the copy of the applicable document filed as an
exhibit to the Registration Statement. The Registration Statement can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; at its Chicago
Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511; and at its New York Regional Office, Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material can be obtained from
the public reference section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the prescribed rates. For further
information pertaining to the Company and the Common Stock being offered
hereby, reference is made to the Registration Statement, including the exhibits
thereto and the financial statements, notes and schedules filed as a part
thereof.
As a result of the Offering, the Company will become subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). So long as the Company is subject to the periodic
reporting requirements of the Exchange Act, it will continue to furnish the
reports and other information required thereby to the Commission. The Company
intends to furnish holders of the Class A Common Stock with annual reports
containing, among other information, audited financial statements certified by
an independent public accounting firm and quarterly reports containing
unaudited condensed financial information for the first three quarters of each
fiscal year. The Company also intends to furnish such other reports as it may
determine or as may be required by law.
48
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
DURA AUTOMOTIVE SYSTEMS, INC.
Report of Independent Public Accountants................................ F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995 and March
31, 1996 (unaudited)................................................... F-3
Consolidated Statements of Operations for the years ended December 31,
1993, 1994 and 1995 and for the three months ended March 31, 1995 and
1996 (unaudited)....................................................... F-4
Consolidated Statements of Stockholders' Investment for the years ended
December 31, 1993, 1994 and 1995 and for the three months ended March
31, 1996 (unaudited)................................................... F-5
Consolidated Statements of Cash Flows for the years ended December 31,
1993, 1994 and 1995 and for the three months ended March 31, 1995 and
1996 (unaudited)....................................................... F-6
Notes to Consolidated Financial Statements.............................. F-7
ORSCHELN AUTOMOTIVE BUSINESS UNIT
Report of Independent Public Accountants................................ F-20
Statements of Operations for the year ended December 25, 1993 and the
eight-month period ended August 31, 1994............................... F-21
Statements of Cash Flows for the year ended December 25, 1993 and the
eight-month period ended August 31, 1994............................... F-22
Notes to Financial Statements........................................... F-23
</TABLE>
F-1
<PAGE>
After the recapitalization and stock split discussed in Notes 10 and 11 to Dura
Automotive Systems, Inc.'s consolidated financial statements are effected, we
expect to be in a position to render the following audit report.
ARTHUR ANDERSEN LLP
June 20, 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Dura Automotive Systems, Inc.
We have audited the accompanying consolidated balance sheets of Dura
Automotive Systems, Inc. (a Delaware corporation--See Note 1 of Notes to
Consolidated Financial Statements) and Subsidiaries as of December 31, 1994 and
1995 and the related consolidated statements of operations, stockholders'
investment and cash flows for each of the three years in the period ended
December 31, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Dura Automotive Systems, Inc.
and Subsidiaries as of December 31, 1994 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
Minneapolis, Minnesota,
January 26, 1996
(except for the matters
discussed in Notes 10 and 11
for which the date is
July , 1996)
F-2
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ MARCH 31,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................... $ 17 $ 1,732 $ 3,811
Accounts receivable, net...................... 46,762 34,990 36,607
Inventories................................... 16,348 11,916 12,162
Other current assets.......................... 9,922 10,661 9,172
-------- -------- --------
Total current assets....................... 73,049 59,299 61,752
-------- -------- --------
Property, Plant and Equipment:
Land and buildings............................ 10,665 9,333 9,536
Machinery and equipment....................... 35,681 34,889 35,157
Construction in progress...................... 4,538 2,731 3,706
Less--Accumulated depreciation................ (8,175) (10,246) (11,573)
-------- -------- --------
Net property, plant and equipment.......... 42,709 36,707 36,826
-------- -------- --------
Other Assets:
Goodwill...................................... 40,287 42,388 41,894
Other......................................... 5,219 5,362 5,595
Less--Accumulated amortization................ (2,131) (3,225) (3,487)
-------- -------- --------
Total other assets......................... 43,375 44,525 44,002
-------- -------- --------
$159,133 $140,531 $142,580
======== ======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts payable.............................. $ 27,353 $ 24,865 $ 24,192
Accrued liabilities........................... 22,411 15,596 16,863
Current maturities of long-term debt.......... 4,654 5,137 4,143
-------- -------- --------
Total current liabilities.................. 54,418 45,598 45,198
Long-Term Debt, net of current maturities...... 70,112 46,639 47,969
Other Noncurrent Liabilities................... 17,185 20,611 20,379
-------- -------- --------
Commitments and Contingencies (Notes 4, 7, 8
and 9)
Stockholders' Investment:
Preferred stock, par value $1; 5,000,000
shares authorized;
none issued or outstanding................... -- -- --
Common stock, Class A; par value $.01;
30,000,000 shares authorized; none issued or
outstanding.................................. -- -- --
Common stock, Class B; par value $.01;
10,000,000 shares authorized; 4,904,186,
5,007,307 and 5,001,925 shares issued and
outstanding.................................. 49 50 50
Additional paid-in capital.................... 13,368 13,563 13,540
Retained earnings............................. 4,132 14,258 15,605
Common stock subscriptions receivable......... (131) (188) (161)
-------- -------- --------
Total stockholders' investment............. 17,418 27,683 29,034
-------- -------- --------
$159,133 $140,531 $142,580
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------- -------------------
1993 1994 1995 1995 1996
-------- -------- -------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues....................... $129,328 $189,675 $253,726 $ 80,707 $ 59,303
Cost of sales.................. 116,961 170,748 220,274 71,688 51,841
-------- -------- -------- --------- ---------
Gross profit.................. 12,367 18,927 33,452 9,019 7,462
Selling, general and
administrative expenses....... 8,293 10,362 14,798 3,138 3,864
Amortization expense........... 487 690 1,094 274 262
-------- -------- -------- --------- ---------
Operating income.............. 3,587 7,875 17,560 5,607 3,336
Interest expense............... 1,533 3,473 4,822 1,513 1,089
Gain on sale of window
regulator business............ -- -- 4,240 -- --
-------- -------- -------- --------- ---------
Income before income taxes.... 2,054 4,402 16,978 4,094 2,247
Provision for income taxes..... 936 1,822 6,852 1,652 900
-------- -------- -------- --------- ---------
Net income.................... $ 1,118 $ 2,580 $ 10,126 $ 2,442 $ 1,347
======== ======== ======== ========= =========
Net income per common and
common
equivalent share.............. $ 2.03 $ .50 $ .27
======== ========= =========
Weighted average common and
common equivalent shares
outstanding................... 4,989 4,924 5,029
======== ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------
CLASS A CLASS B ADDITIONAL COMMON STOCK
------------- ----------------- PAID-IN RETAINED SUBSCRIPTIONS
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS RECEIVABLE TOTAL
------ ------ --------- ------ ---------- -------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31,
1992................... -- -- 2,764,907 $28 $ 2,979 $ 434 $(114) $ 3,327
Repurchase of common
stock, net............ -- -- (64,701) (1) (86) -- 11 (76)
Net income............. -- -- -- -- -- 1,118 -- 1,118
--- --- --------- --- ------- ------- ----- -------
BALANCE, December 31,
1993................... -- -- 2,700,206 27 2,893 1,552 (103) 4,369
Repurchase of common
stock, net............ -- -- (2,910) -- (3) -- (28) (31)
Issuance of common
stock for
acquisition........... -- -- 2,206,890 22 10,478 -- -- 10,500
Net income............. -- -- -- -- -- 2,580 -- 2,580
--- --- --------- --- ------- ------- ----- -------
BALANCE, December 31,
1994................... -- -- 4,904,186 49 13,368 4,132 (131) 17,418
Repurchase of common
stock, net............ -- -- (46,204) -- (155) -- 19 (136)
Issuance of common
stock................. -- -- 149,325 1 350 -- (76) 275
Net income............. -- -- -- -- -- 10,126 -- 10,126
--- --- --------- --- ------- ------- ----- -------
BALANCE, December 31,
1995................... -- -- 5,007,307 50 13,563 14,258 (188) 27,683
Repurchase of common
stock, net
(unaudited)........... -- -- (5,382) -- (23) -- 27 4
Net income
(unaudited)........... -- -- -- -- -- 1,347 -- 1,347
--- --- --------- --- ------- ------- ----- -------
BALANCE, March 31, 1996
(unaudited)............ -- -- 5,001,925 $50 $13,540 $15,605 $(161) $29,034
=== === ========= === ======= ======= ===== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------- --------------------
1993 1994 1995 1995 1996
------- -------- -------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating activities:
Net income................. $ 1,118 $ 2,580 $ 10,126 $ 2,442 $ 1,347
Adjustments required to
reconcile net income to
net cash provided by (used
in) operating activities--
Depreciation and
amortization............ 2,409 3,725 5,578 1,698 1,589
Deferred income tax
provision............... 681 1,507 5,067 1,348 494
Gain on sale of window
regulator business...... -- -- (4,240) -- --
Change in other operating
items:
Accounts receivable,
net.................... 5,505 (6,997) 11,772 5,028 (1,617)
Inventories............. 900 1,821 2,167 (2,570) (246)
Other current assets.... (3,183) (3,261) (1,405) (178) 1,489
Accounts payable........ 3,962 (6,813) (2,656) 3,445 (904)
Accrued liabilities and
other.................. (7,668) 1,282 (13,271) 1,774 1,266
------- -------- -------- --------- ---------
Net cash provided by
(used in) operating
activities............ 3,724 (6,156) 13,138 12,987 3,418
------- -------- -------- --------- ---------
Investing activities:
Capital expenditures, net.. (2,951) (5,406) (6,116) (1,134) (1,446)
Acquisition, net........... -- (39,428) -- -- --
Sale of window regulator
business, net............. -- -- 18,006 -- --
Other, net................. -- (2,044) (462) (357) (233)
------- -------- -------- --------- ---------
Net cash provided by
(used in) investing
activities............ (2,951) (46,878) 11,428 (1,491) (1,679)
------- -------- -------- --------- ---------
Financing activities:
Change in revolving credit
facility, net............. (150) 8,075 (10,250) (6,500) 2,750
Proceeds from issuance of
debt...................... -- 66,500 -- -- --
Repayments of debt......... (1,300) (22,660) (12,740) (1,020) (2,414)
Sale (repurchase) of common
stock, net................ (87) (3) 139 -- 4
Proceeds from notes payable
to stockholders........... 750 1,125 -- -- --
------- -------- -------- --------- ---------
Net cash provided by
(used in) financing
activities............ (787) 53,037 (22,851) (7,520) 340
------- -------- -------- --------- ---------
Net change in cash and
cash equivalents...... (14) 3 1,715 3,976 2,079
Cash and cash equivalents,
beginning of period........ 28 14 17 17 1,732
------- -------- -------- --------- ---------
Cash and cash equivalents,
end of period.............. $ 14 $ 17 $ 1,732 $ 3,993 $ 3,811
======= ======== ======== ========= =========
Supplemental cash flow
information:
Cash paid for--
Interest.................. $ 1,504 $ 2,781 $ 4,822 $ 1,513 $ 1,089
======= ======== ======== ========= =========
Income taxes.............. $ 245 $ 145 $ 2,261 $ 175 $ 250
======= ======== ======== ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION:
The consolidated financial statements include the accounts of Dura
Automotive Systems, Inc. (Systems or Parent; formerly Dura Automotive Holding,
Inc.) and its subsidiaries, Dura Operating Corp. (formerly Dura Automotive
Systems, Inc.) and Dura de Mexico S.A. de C.V. (a Mexican corporation),
collectively referred to as Dura or the Company. Dura designs and manufactures
mechanical assembly systems, components and hardware for use in the automotive
industry. Dura has eight manufacturing facilities located in Michigan,
Missouri and Mexico.
2. SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of Systems and
its subsidiaries. All significant intercompany accounts and transactions have
been eliminated in consolidation.
FISCAL YEAR:
The Company has adopted a 52-/53-week fiscal year. For presentation
purposes, the Company uses December 31 as the fiscal year end.
USE OF ESTIMATES:
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Ultimate results could differ from those
estimates.
CASH EQUIVALENTS:
Cash equivalents consist of money market instruments with original
maturities of three months or less and are stated at cost which approximates
fair value.
INVENTORIES:
Inventories are valued at the lower of first-in, first-out (FIFO) cost or
market.
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------- MARCH 31,
1994 1995 1996
------- ------- -----------
<S> <C> <C> <C> <C>
Raw materials................................... $ 6,762 $ 5,841 $ 5,162
Work in process................................. 7,220 3,883 4,008
Finished goods.................................. 2,366 2,192 2,992
------- ------- -------
$16,348 $11,916 $12,162
======= ======= =======
</TABLE>
Effective December 31, 1995, the Company adopted the FIFO method of
inventory valuation for all locations. Prior to that date, the Company used
the last-in, first-out (LIFO) method of inventory valuation for certain
locations. The effect of this change in accounting method, if it had been
retroactively reflected in the accompanying consolidated financial statements,
would not have been material to the Company's consolidated financial position
or results of operations.
F-7
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
OTHER CURRENT ASSETS:
Other current assets consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------- MARCH 31,
1994 1995 1996
------ ------- ---------
<S> <C> <C> <C>
Excess of cost over billings on uncompleted
tooling projects............................... $8,851 $ 8,653 $6,521
Prepaid expenses................................ 762 1,699 2,342
Deferred tooling and design costs............... 309 309 309
------ ------- ------
$9,922 $10,661 $9,172
====== ======= ======
</TABLE>
Excess of cost over billings on uncompleted tooling projects represents
costs incurred by the Company in the development of new tooling used in the
manufacture of the Company's products. Once customer approval is obtained for
the manufacture of a new product, the Company is reimbursed by its customers
for the cost of the tooling, at which time the tooling becomes the property of
the customer. Generally, reimbursement is received before production of the
related part commences. Certain costs will be reimbursed as the related
product is sold through an incremental increase in each product's unit selling
price. At December 31, 1995 and March 31, 1996, deferred tooling and design
costs of $2,128,000 and $2,246,000 were included in other assets, as this
realization is expected to occur beyond the current operating period.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment acquired in connection with the acquisition
discussed in Note 3 are stated at fair value as of the acquisition date.
Additions to property, plant and equipment are stated at cost. For financial
reporting purposes, depreciation is provided on the straight-line method over
the following estimated useful lives:
<TABLE>
<S> <C>
Buildings...................... 30 years
Machinery and equipment........ 3 to 20 years
</TABLE>
Accelerated depreciation methods are used for tax reporting purposes.
Maintenance and repairs are charged to expense as incurred. Major
betterments and improvements which extend the useful life of the item are
capitalized and depreciated. The cost and accumulated depreciation of
property, plant and equipment retired or otherwise disposed of are removed
from the related accounts and any residual values are charged or credited to
income.
OTHER ASSETS:
Goodwill represents the excess of the purchase price over the fair value of
the net assets acquired and is being amortized on a straight-line basis over a
40-year period from the date of the related acquisition. Other assets
principally consist of transaction costs, representing costs incurred related
to the acquisitions and are being amortized over five to seven years. The
Company periodically evaluates whether events and circumstances have occurred
which may affect the estimated useful life or the recoverability of the
remaining balance of its goodwill.
F-8
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
ACCRUED LIABILITIES:
Accrued liabilities consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------- MARCH 31,
1994 1995 1996
------- ------- ---------
<S> <C> <C> <C>
Compensation and Benefits.......................... $ 3,681 $ 4,256 $ 3,948
Medical Insurance.................................. 2,904 4,016 4,550
Product Warranty................................... 7,000 1,125 1,125
Interest........................................... 641 763 535
Other.............................................. 8,185 5,436 6,705
------- ------- -------
$22,411 $15,596 $16,863
======= ======= =======
</TABLE>
OTHER NONCURRENT LIABILITIES:
Other noncurrent liabilities consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------- MARCH 31,
1994 1995 1996
------- ------- ---------
<S> <C> <C> <C>
Legal and environmental............................ $ 1,600 $ 8,568 $ 8,504
Post-retirement medical benefits................... 5,404 5,724 5,828
Accrued pension liability.......................... 1,697 1,782 1,821
Other.............................................. 8,484 4,537 4,226
------- ------- -------
$17,185 $20,611 $20,379
======= ======= =======
</TABLE>
INCOME TAXES:
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," which
requires recognition of deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial statement
and tax bases of assets and liabilities using currently enacted tax rates.
COMMON STOCK:
As discussed in Note 3, the stockholders of MC Holding Corp. (MCHC)
contributed all shares of MCHC to Systems in return for shares of Systems
common stock. As a result of the related-party nature of this
recapitalization, the accompanying consolidated financial statements are
presented as though this transaction had occurred as of the beginning of the
earliest period presented. During 1995, the Company sold 149,325 shares of
Class A common stock to certain employees for approximately $351,000.
The holder of each share of Class A, B and C common stock outstanding is
entitled to one vote per share. The holders of Class B and C common stock have
specific allocation arrangements with respect to certain dividends and
distributions from Systems. The holders of Class A common stock have no voting
rights with respect to matters of Systems, except as otherwise required by
law.
F-9
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE:
Net income per common and common equivalent share is computed by dividing
net income by the weighted average number of shares of common and common stock
equivalent shares outstanding during each period, and, pursuant to Securities
and Exchange Commission rules, common stock issued and common stock options
granted within one year immediately preceding the offering date at prices
below the proposed offering price have been reflected in the net income per
share calculation as if they had been outstanding for all periods presented.
Common stock issued and common stock options granted within one year
immediately preceding the initial public offering of common stock, discussed
in Note 11, at prices below the public offering price have been reflected in
the net income per share calculation as if they had been outstanding for all
periods presented.
INTERIM FINANCIAL INFORMATION (UNAUDITED):
The accompanying consolidated balance sheet as of March 31, 1996, and the
consolidated statements of operations, stockholders' investment and cash flows
for the three-month periods ended March 31, 1995 and 1996, are unaudited. In
the opinion of management, such consolidated financial statements include all
adjustments, consisting solely of normal recurring adjustments, necessary for
a fair presentation of results for these interim periods. The results of
operations for the three-month period ended March 31, 1996 are not necessarily
indicative of results to be expected for the entire year.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
During the first quarter of 1996, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of" which requires
companies to review long-lived assets and certain identifiable intangibles for
impairment whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. The adoption of SFAS
No. 121 did not have a significant impact on the financial condition or
results of operations of the Company.
SFAS No. 123, "Accounting for Stock-Based Compensation" encourages, but does
not require, a fair value based method of accounting for employee stock
options, the sale of stock under the Company's employee stock purchase plan or
similar equity instruments. The Company has elected to continue to measure
compensation cost under Accounting Principles Board Opinion No. 25 (APB No.
25), "Accounting for Stock Issued to Employees" as was previously required,
and to comply with pro forma disclosure of net income and earnings per share
as if the fair value based method of accounting had been applied.
F-10
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. ACQUISITION AND DIVESTITURE:
ACQUISITION:
On August 31, 1994, MCHC, Orscheln Co. (Orscheln), a manufacturer of parking
brake cables and levers and light duty cables, and certain stockholders of
MCHC entered into an agreement whereby stockholders of MCHC contributed all
shares of MCHC common stock to Systems in return for shares of Systems common
stock. Orscheln transferred certain assets and liabilities to Systems in
return for 2,206,890 shares of Systems common stock, an option to purchase up
to 14,420 additional shares of Systems Class A common stock at an exercise
price of $1.45 per share and cash consideration, net of assumed indebtedness,
of approximately $40 million.
The acquisition of Orscheln was accounted for as a purchase. Accordingly,
the assets acquired and liabilities assumed have been recorded at fair value
as of the date of the acquisition. The purchase price in excess of the fair
value of the net assets acquired is included in goodwill in the accompanying
consolidated balance sheets. During 1995, the Company adjusted goodwill by
approximately $7 million, primarily due to certain purchase contingencies. The
results of operations of the acquired business have been included in the
accompanying consolidated financial statements from August 31, 1994, the date
of acquisition.
DIVESTITURE:
On April 2, 1995, the Company sold the net assets of its window regulator
business to Rockwell International Corporation for approximately $18 million
in cash, resulting in a pretax gain of approximately $4.2 million. The results
of operations of the window regulator business have been included in the
accompanying consolidated financial statements through April 2, 1995, the date
of divestiture.
Following are the unaudited pro forma results of operations for the years
ended December 31, 1994 and 1995 and the three months ended March 31, 1995 as
if the aforementioned acquisition and divestiture had occurred at the
beginning of the respective period. The following unaudited pro forma
financial information does not purport to represent what the Company's
consolidated results of operations would actually have been if such
transactions in fact had occurred at such date or to project the Company's
results of future operations (in thousands):
<TABLE>
<CAPTION>
PRO FORMA RESULTS FOR THE PRO FORMA RESULTS
YEARS ENDED DECEMBER 31, FOR THE THREE
------------------------- MONTHS ENDED
1994 1995 MARCH 31, 1995
------------ ------------ -----------------
<S> <C> <C> <C>
Revenues....................... $ 231,509 $ 239,598 $ 66,579
============ ============ ========
Operating income............... $ 12,787 $ 17,172 $ 5,219
============ ============ ========
Net income..................... $ 6,045 $ 7,602 $ 2,449
============ ============ ========
Net income per common and
common equivalent share....... $ 1.76 $ 1.52 $ .50
============ ============ ========
</TABLE>
F-11
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. DEBT:
Debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------- MARCH 31,
1994 1995 1996
------- ------- ---------
<S> <C> <C> <C> <C>
Term loan, principal and interest due in
quarterly installments through June 30,
2001, interest at the lender's prevailing
reference rate plus up to 0.50% or the
Eurodollar rate plus 0.75% to 1.75% at the
discretion of the Company (6.94% to 8.5%
at December 31, 1995 and 6.8% to 8.25% at
March 31, 1996)........................... $50,000 $37,408 $35,021
Revolving credit facility, due August 31,
2000, interest at the lender's prevailing
reference rate plus up to 0.50% or the
Eurodollar rate plus 0.75% to 1.75% at the
discretion of the Company (6.81% to 8.5%
at December 31, 1995 and 6.5% to 8.25% at
March 31, 1996)........................... 20,000 9,750 12,500
Subordinated promissory notes, payable to
stockholders, due December 31, 2001,
interest due semiannually at 6.93%........ 4,000 4,000 4,000
Other...................................... 766 618 591
------- ------- -------
74,766 51,776 52,112
Less--Current maturities................... (4,654) (5,137) (4,143)
------- ------- -------
$70,112 $46,639 $47,969
======= ======= =======
</TABLE>
Future maturities of long-term debt as of December 31, 1995 are as follows
(in thousands):
<TABLE>
<S> <C>
1996............................. $ 5,137
1997............................. 5,652
1998............................. 5,831
1999............................. 8,023
2000............................. 15,390
Thereafter....................... 11,743
-------
$51,776
=======
</TABLE>
The revolving credit facility provides for borrowings of up to $30 million
and is collateralized by substantially all assets of the Company. Borrowings
are limited to eligible accounts receivable, inventories and tooling work in
process, as defined. The borrowing base limit was $30 million at December 31,
1995 and March 31, 1996. The weighted average interest rate for borrowings
under the revolving credit facility was 8.3 percent for the year ended
December 31, 1994, 8.8 percent for the year ended December 31, 1995 and 7.0
percent for the three months ended March 31, 1996.
The term loan and revolving credit facility contain various restrictive
covenants which, among other matters, require the Company to maintain certain
financial ratios, as defined. The agreement also limits additional
indebtedness, capital expenditures and cash dividends. The Company was in
compliance with all such covenants as of December 31, 1995 and March 31, 1996.
In September 1994, the Company entered into an Interest Expense Limitation
Agreement (Cap Agreement) and an Interest Rate Swap Agreement (Swap Agreement)
related to its term loan and revolving credit facility.
F-12
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Cap Agreement has a notional amount of $10 million, provides for payment
to the Company to offset interest expense, in the event the quoted LIBOR rate
exceeds 7.0%, and expires March 30, 1997. The Swap Agreement has a decreasing
notional amount of $20 million at inception, decreasing to $8.6 million at its
September 30, 1999 expiration. The Swap Agreement exchanges the variable
interest rate under the term loan and revolving credit facility described
above for a fixed rate of 6.95% on the notional amount, as defined. Fees paid
under the Cap and Swap Agreements are being amortized over the period of the
related term loan and revolving credit facility. The impact of the Cap and
Swap Agreements were not material to the Company.
The Company issued subordinated promissory notes to certain stockholders of
Systems in connection with the acquisition discussed in Note 3. Proceeds from
the notes were used to pay a portion of the purchase price. The notes are
unsecured.
The Company also has outstanding letters of credit totaling $600,000 at
December 31, 1995 and $1,310,000 at March 31, 1996 for the benefit of its
insurance companies related to workers' compensation coverage.
5. INCOME TAXES:
The provision for income taxes consisted of the following (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------------------ ----------------
1993 1994 1995 1995 1996
--------------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Current.............................. $ 255 $ 315 $ 1,785 $ 304 $ 406
Deferred............................. 681 1,507 5,067 1,348 494
------ -------- -------- -------- ------
Total................................ $ 936 $ 1,822 $ 6,852 $ 1,652 $ 900
====== ======== ======== ======== ======
</TABLE>
A reconciliation of the provision for income taxes at the statutory rates to
the reported income tax provision is as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------------------ ----------------
1993 1994 1995 1995 1996
--------------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Federal provision at statutory
rates............................. $ 698 $ 1,497 $ 5,898 $ 1,432 $ 786
Amortization of non-deductible
goodwill.......................... 70 115 255 65 70
State taxes, net of federal
benefit........................... 168 210 685 155 67
Other, net......................... -- -- 14 -- (23)
------ -------- -------- -------- ------
Total.............................. $ 936 $ 1,822 $ 6,852 $ 1,652 $ 900
====== ======== ======== ======== ======
</TABLE>
The benefit from the utilization of preacquisition net deferred income tax
assets has been reflected as a reduction of goodwill in the accompanying
consolidated financial statements. As of December 31, 1995 and March 31, 1996,
the Company had remaining acquired net operating loss and alternative minimum
tax credit carryforwards for income tax reporting purposes of approximately $2
million. The Company will record further reductions in goodwill to the extent
such carryforwards are realized in future periods.
F-13
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
As of December 31, 1994 and 1995 and March 31, 1996, the Company had
provided a valuation allowance for its net deferred income taxes, as their
realization is not assured. A summary of deferred tax assets (liabilities) is
as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ MARCH 31,
1994 1995 1996
-------- -------- ---------
<S> <C> <C> <C>
Accrued legal and insurance costs............ $ 4,368 $ 5,387 $ 5,468
Accrued integration reserves................. 2,825 2,078 1,986
Depreciation and property basis differences.. (1,306) (1,459) (1,571)
Net operating loss and alternative minimum
tax credit carryforwards.................... 1,836 1,375 1,375
Accrued compensation costs................... 767 868 1,017
Deferred research and development costs...... (515) (833) (907)
Postretirement benefit obligations........... 570 668 683
Inventory.................................... 441 344 373
Other reserves and accruals not deductible
for tax purposes............................ 3,039 1,805 2,357
Valuation allowance.......................... (12,025) (10,233) (10,781)
-------- -------- --------
Net deferred income taxes.................... $ -- $ -- $ --
======== ======== ========
</TABLE>
6. MAJOR CUSTOMERS:
The Company sells directly to each of the three major North American
automobile manufacturers and to certain automobile manufacturers operating in
Europe. Following is a summary of customers that accounted for a significant
percentage of consolidated revenues:
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
-------------- ---------------
1993 1994 1995 1995 1996
---- ---- ---- ------- -------
<S> <C> <C> <C> <C> <C>
Ford.......................................... 46% 57% 52% 58% 48%
GM............................................ 35 29 35 31 35
Chrysler...................................... 14 9 6 6 10
Toyota........................................ -- 3 5 3 5
--- --- --- ------- -------
95% 98% 98% 98% 98%
=== === === ======= =======
</TABLE>
As of December 31, 1994 and 1995 and March 31, 1996, receivables from these
customers represented 92%, 91% and 96% of total accounts receivable.
The Company had export sales of $30,138,000 in 1993, $36,343,000 in 1994,
$34,807,000 in 1995 and $10,860,000 for the three months ended March 31, 1996.
7. MANAGEMENT AGREEMENT:
Under the terms of a management agreement, the Company paid Hidden Creek
Industries (HCI), an affiliate of the Company, monthly management fees for
certain administrative services. Total management fees of approximately
$500,000 for the year ended December 31, 1993, $554,000 for the year ended
December 31, 1994, $733,000 for the year ended December 31, 1995, $150,000 for
the three months ended March 31, 1995 and $250,000 for the three months ended
March 31, 1996 are included in selling, general and administrative expenses in
the accompanying consolidated statements of operations. In addition, the
Company paid fees to HCI of approximately $500,000 in connection with the
acquisition and $250,000 in connection with the divestiture discussed in Note
3.
F-14
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. EMPLOYEE BENEFIT PLANS:
PENSION PLANS:
The Company sponsors two defined benefit pension plans which cover certain
employees. The Company's policy is to make annual contributions to the plans
to fund the normal cost and the unfunded frozen initial liability over 11.5
years.
Net pension expense consisted of the following (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Service cost-benefits
earned during the year... $ 388 $ 394 $ 413
Interest cost on projected
benefit obligation....... 194 242 277
Return on plan assets..... (73) (116) (150)
Net amortization and
deferral................. 26 26 26
------- -------- --------
Net pension expense..... $ 535 $ 546 $ 566
======= ======== ========
</TABLE>
Pursuant to Statement of Financial Accounting Standards No. 87, "Employers'
Accounting for Pensions," the Company has recorded deferred pension costs of
$246,000, $220,000 and $194,000 at December 31, 1993, 1994 and 1995 related to
the minimum pension liability, which are classified as other assets in the
accompanying consolidated balance sheets.
The funded status of the Company's plans is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1994 1995
------ ------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation............................... $1,369 $2,164
====== ======
Accumulated benefit obligation.......................... $2,115 $2,855
====== ======
Projected benefit obligation............................ $3,473 $3,987
Plan assets at fair value................................. 1,704 2,305
------ ------
Projected benefit obligation in excess of plan assets... 1,769 1,682
Unrecognized net loss..................................... (201) (18)
Prior service cost........................................ (220) (194)
Adjustment to recognize minimum liability................. 349 312
------ ------
Accrued pension costs................................... $1,697 $1,782
====== ======
</TABLE>
The accumulated and projected benefit obligations were determined using an
assumed discount rate of 8% at December 31, 1994 and 7.5% at December 31,
1995. The assumed long-term rate of return on assets was 8% at December 31,
1994 and 7.5% at December 31, 1995. Plan assets consist principally of common
stock, fixed income securities and guaranteed investment contracts.
RETIREMENT SAVINGS PLANS:
The Company sponsors employee retirement savings plans which allow qualified
employees to provide for their retirement on a tax-deferred basis. In
accordance with the terms of the retirement savings plans, the Company is
required to match certain of the participants' contributions and/or provide
employer contributions
F-15
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
based on the Company's performance. Such matching contributions totaled
$95,000, $419,000 and $976,000 during fiscal 1993, 1994 and 1995 and $264,000
and $295,000 for the three months ended March 31, 1995 and 1996.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:
The Company has various postretirement medical benefit plans for certain
employee groups and has recorded a liability for its estimated obligations
under these plans.
Net periodic postretirement benefit cost is as follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Service cost-benefits earned during the year...... $ 45 $ 54 $ 74
Interest cost on projected benefit obligation..... 424 529 679
Net amortization and deferral..................... -- 93 124
-------- -------- --------
Net periodic postretirement benefit cost........ $ 469 $ 676 $ 877
======== ======== ========
</TABLE>
The funded status of the Company's plans is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1994 1995
------- -------
<S> <C> <C>
Accumulated benefit obligation......................... $ 7,527 $ 7,738
Plan assets at fair value.............................. -- --
------- -------
Projected benefit obligation in excess of plan
assets.............................................. 7,527 7,738
Unrecognized net loss.................................. (2,123) (2,014)
------- -------
Accrued postretirement benefits...................... $ 5,404 $ 5,724
======= =======
</TABLE>
For measurement purposes, a 9% annual rate of increase for the healthcare
cost trend was assumed for 1995. The rate was assumed to decrease 1% annually
to 5% at 2000 and remain level thereafter. Increasing the assumed healthcare
cost trend assumption by one percentage point would increase the accumulated
postretirement benefit obligation by approximately $491,000 and the net
periodic postretirement expense by approximately $46,000 for the year ended
December 31, 1995.
9. COMMITMENTS AND CONTINGENCIES:
ORSCHELN SERVICE AND SUPPLY AGREEMENTS:
In connection with the acquisition discussed in Note 3, the Company entered
into agreements with Orscheln whereby the Company is to receive services
related to data processing, payroll and personnel administration, and other
administrative matters. Amounts paid under these service agreements were
$570,000 and $1,788,000 for the years ended December 31, 1994 and 1995 and
$75,000 for the three months ended March 31, 1996. Future minimum commitments
under the service agreements are approximately $400,000 in 1996. In addition,
the Company and Orscheln have mutually agreed to supply each other's
operations with certain items necessary for the manufacture of their products.
These supply agreements are for periods of up to five years and are at terms
which the Company believes are no less favorable than could be obtained from
an independent party.
F-16
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
LEASES:
The Company leases office and manufacturing space and certain equipment
under operating lease agreements which require it to pay maintenance,
insurance, taxes and other expenses in addition to annual rentals. Future
annual rental commitments at December 31, 1995 under these operating leases
are as follows (in thousands):
<TABLE>
<CAPTION>
AMOUNT
YEAR ------
<S> <C>
1996................................................................ $1,091
1997................................................................ 689
1998................................................................ 534
1999................................................................ 401
2000................................................................ 423
Thereafter.......................................................... 1,569
------
$4,707
======
</TABLE>
STOCK PURCHASE PLAN:
The Company maintains a plan which allows for the sale of shares of the
Company's Class B common stock, either directly or through the granting of
options to certain employees. Eligible employees and the terms of such sales
or options are as determined by the Company's board of directors. During 1994,
1995 and the three months ended March 31, 1996, the Company sold 42,070,
149,325 and 0 shares of its common stock to management and repurchased 44,980,
46,204 and 5,382 shares of its common stock from management at estimated fair
market value, as determined under the terms of this plan.
STOCK OPTIONS:
During 1993, MCHC issued an option to purchase 17,625 shares of Class B
common stock to an outside consultant who can exercise the options at any time
while still associated with the Company for up to ten years, at a price of
$1.45 per share. In connection with the acquisition discussed in Note 3, this
option was exchanged for an option to purchase 17,625 shares of Systems common
stock at terms similar to those discussed above.
As discussed in Note 3, an option to purchase up to 14,420 shares of Systems
Class B common stock, at a price of $1.45 per share, was granted to Orscheln
in connection with the acquisition. The option is exercisable for up to ten
years or the date of exercise of the option discussed above, which ever occurs
earlier.
PRODUCT WARRANTY:
In connection with the acquisition discussed in Note 3, the Company agreed
to assume the liability for two potential product recalls by a customer,
related to two parking brake systems manufactured by Orscheln. The customer
has agreed to limit the liability of the Company in connection with the
potential recalls to $7 million. In fiscal 1994, the Company recorded a
reserve for its full obligation related to the liability associated with these
recalls in the accounting for the purchase of Orscheln. In addition, the
Company has agreed to indemnify Orscheln for certain product liability claims
associated with the recalled parking brake systems. Based upon claims
initiated against the customer and/or Orscheln to date and an estimate of
claims to be initiated, the Company has established reserves that it believes
are adequate to cover any potential future liabilities.
LITIGATION:
The Company is party to certain claims arising in the ordinary course of
business. In the opinion of management, based upon the advice of legal
counsel, the outcomes of such claims will not materially affect the Company's
current or future financial position or results of operations.
F-17
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
ENVIRONMENTAL MATTERS:
Due to the nature of its business, the Company may, from time to time, be
exposed to potential liabilities to clean up environmental contaminants. The
Company has been named as one of four potentially responsible parties related
to groundwater contamination in East Jordan, Michigan, that was in existence
at the date of the Company's formation. The Company has provided reserves
which management believes are adequate to cover any exposure related to this
matter, and the Company's former owners have agreed to indemnify the Company
for any costs in excess of the provided reserves.
10. RECAPITALIZATION:
In connection with the Offering discussed in Note 11, the Company's board of
directors and stockholders have approved a 17.625 for 1 stock split and
approved a recapitalization pursuant to which the shares of the Company's
Class A, B and C common stock were converted into shares of new Class B Common
Stock. The allocation of shares of Common Stock among existing stockholders
was in accordance with the resolutions of the Company's stockholders
containing conversion ratios which were arrived at by applying an established
formula based upon the stockholders' initial capital contributions, relative
preference ranking and the initial public offering price of the Common Stock.
The Company's board of directors and stockholders also approved an increase in
the number of authorized shares to 30,000,000 Class A common shares and
10,000,000 Class B common shares. These actions were contingent upon and
occurred immediately prior to the Offering. The accompanying consolidated
financial statements have been retroactively restated to give effect to the
stock split.
11. INITIAL PUBLIC OFFERING AND STOCK OPTION AND PURCHASE PLANS:
INITIAL PUBLIC OFFERING:
On June 21, 1996, the Company's board of directors approved the filing of a
Form S-1 Registration Statement with the Securities and Exchange Commission
for the sale of 2,700,000 shares of the Company's Class A common stock to the
public (the Offering).
The Company intends to use the proceeds of the Offering to repay
indebtedness.
STOCK OPTION PLAN:
In May 1996, the Company's board of directors approved an employee stock
option plan that provides for the issuance of options to acquire up to 600,000
shares of the Company's Class A common stock. The exercise price of the
options will be at least 100% of the fair market value of the Company's Class
A common stock at the time of the issuance of options.
EMPLOYEE STOCK PURCHASE PLAN:
In May 1996, the Company's board of directors approved an employee stock
discount purchase plan that reserves 500,000 shares of the Company's Class A
common stock for sale to employees at discounted purchase prices, subject to
certain limitations. The cost per share under this plan will be 85% of the
market value of the Company's Class A common stock, as defined.
INDEPENDENT DIRECTOR STOCK OPTION PLAN:
In May 1996, the Company's board of directors approved an independent
director stock option plan that provides for the issuance of options to
acquire up to 100,000 shares of the Company's Class A common stock. The
exercise price of the options will be at least 100% of the fair market value
of the Company's Class A common stock at the time of the issuance of the
options.
F-18
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. QUARTERLY FINANCIAL DATA (UNAUDITED):
The following is a condensed summary of actual quarterly results of
operations for 1994 and 1995 (in thousands except per share amounts):
<TABLE>
<CAPTION>
NET INCOME
PER COMMON
AND COMMON
GROSS OPERATING EQUIVALENT
REVENUES PROFIT INCOME NET INCOME SHARE
-------- ------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1994:
First........................ $ 33,881 $ 2,381 $ 513 $ 64 $ .02
Second....................... 37,732 3,558 1,305 455 .17
Third........................ 43,973 3,836 1,393 210 .06
Fourth....................... 74,089 9,152 4,664 1,851 .38
-------- ------- ------- -------
$189,675 $18,927 $ 7,875 $ 2,580 $ .75
======== ======= ======= =======
1995:
First........................ $ 80,707 $ 9,019 $ 5,607 $ 2,442 $ .50
Second....................... 62,159 9,117 5,236 4,984 1.00
Third........................ 51,426 5,568 1,833 417 .08
Fourth....................... 59,434 9,748 4,884 2,283 .45
-------- ------- ------- ------- -----
$253,726 $33,452 $17,560 $10,126 $2.03
======== ======= ======= ======= =====
</TABLE>
The sum of net income per common and common equivalent share for each of the
fiscal 1994 quarters does not agree with the total per share for the year due
to the timing of the Offering and its effects on the computation of weighted
average number of shares outstanding.
F-19
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Orscheln Co.:
We have audited the accompanying statements of operations and cash flows of
Orscheln Automotive Business Unit (an operating unit of Orscheln Co.--see Note
1 of Notes to Financial Statements) for the year ended December 31, 1993 and
the eight-month period ended August 31, 1994. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, Orscheln Automotive Business Unit's results of
operations and its cash flows for the year ended December 31, 1993 and the
eight-month period ended August 31, 1994, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Kansas City, Missouri,
May 20, 1996
F-20
<PAGE>
ORSCHELN AUTOMOTIVE BUSINESS UNIT
(AN OPERATING UNIT OF ORSCHELN CO.)
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
EIGHT-MONTH
PERIOD
YEAR ENDED ENDED
DECEMBER 31, AUGUST 31,
1993 1994
------------ -----------
<S> <C> <C>
Revenues (Notes 2 and 3)............................... $132,873 $104,816
Cost of sales.......................................... 125,183 93,220
-------- --------
Gross profit......................................... 7,690 11,596
Selling, general and administrative expenses........... 10,492 6,979
-------- --------
Operating income (loss).............................. (2,802) 4,617
Interest expense (Notes 3 and 4)....................... (1,167) (1,113)
Other expense, net..................................... (245) --
-------- --------
Net income (loss).................................... $ (4,214) $ 3,504
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE>
ORSCHELN AUTOMOTIVE BUSINESS UNIT
(AN OPERATING UNIT OF ORSCHELN CO.)
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
EIGHT-MONTH
PERIOD
YEAR ENDED ENDED
DECEMBER 31, AUGUST 31,
1993 1994
------------ -----------
<S> <C> <C>
Operating Activities:
Net income (loss)................................... $(4,214) $ 3,504
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities--
Depreciation and amortization..................... 4,744 2,782
Change in operating items:
Accounts receivable, net........................ (2,731) (4,222)
Receivables from affiliates..................... (826) 655
Unbilled customer tooling....................... (496) 1,597
Inventories..................................... (595) 2,471
Other assets.................................... 312 157
Accounts payable and accrued liabilities........ 2,092 1,849
------- --------
Net cash provided by (used in) operating
activities................................... (1,714) 8,793
------- --------
Investing Activities:
Capital expenditures, net........................... (7,533) (2,601)
Increase in pooled investments...................... -- (8,503)
------- --------
Net cash used in investing activities......... (7,533) (11,104)
------- --------
Financing Activities:
Principal payments on long-term debt................ (4,449) (2,328)
Proceeds from issuance of long-term debt............ 13,500 --
Increase (decrease) in line of credit............... (1,750) 3,450
Increase in affiliate notes payable................. 1,949 1,190
------- --------
Net cash provided by financing activities..... 9,250 2,312
------- --------
Net increase in cash and cash equivalents..... 3 1
Cash and Cash Equivalents, beginning of period........ 7 10
------- --------
Cash and Cash Equivalents, end of period.............. $ 10 $ 11
======= ========
Supplemental Disclosure--
Cash paid for interest.............................. $ 1,099 $ 1,043
======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-22
<PAGE>
ORSCHELN AUTOMOTIVE BUSINESS UNIT
(AN OPERATING UNIT OF ORSCHELN CO.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993 AND AUGUST 31, 1994
1. ORGANIZATION AND BASIS OF PRESENTATION:
Orscheln Automotive Business Unit (the Company) is an operating unit of
Orscheln Co., a Delaware corporation. The Company's principal operations
include the manufacture and marketing of mechanical control assemblies and
component parts to North American original equipment manufacturers of
automotive vehicles, after market distributors and first tier suppliers to
automotive manufacturers.
On August 31, 1994, Orscheln Co. entered into an agreement whereby
stockholders of MC Holding Corp. (MCHC) contributed all shares of MCHC common
stock to Dura Automotive Holding, Inc. (Dura) in return for shares of Dura
common stock. Orscheln Co. transferred certain assets and liabilities of the
Company to Dura in return for 125,214 shares of Dura common stock, an option
to purchase up to 818.18 additional shares of Dura common stock and cash
consideration, net of assumed indebtedness, of approximately $40 million.
In February 1996, Orscheln Co. changed its name to Alkin Co.
2. SIGNIFICANT ACCOUNTING POLICIES:
Fiscal Year:
The Company has adopted a 52-/53-week fiscal year. For presentation
purposes, the Company uses December 31 as the fiscal year end.
Use of Estimates:
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Ultimate results could differ from those estimates.
Inventories:
Inventories are valued at the lower of cost or market. The last-in, first-
out (LIFO) method of determining costs is used. Cost includes material, labor
and manufacturing overhead required in the production of the Company's
products. During 1994, inventory quantities were reduced, which resulted in a
liquidation of LIFO quantities recorded at lower costs prevailing in prior
years as compared to the cost of 1994 purchases. The effect was not material
to the results of operations for 1994.
Property, Plant and Equipment:
Property, plant and equipment are stated at cost. Predominately all
depreciation is computed using the straight-line method over the following
estimated useful lives:
<TABLE>
<S> <C>
Buildings and improvements.................................. 3 to 20 years
Machinery and equipment..................................... 3 to 10 years
Office furniture and fixtures............................... 3 to 10 years
Vehicles.................................................... 3 to 5 years
</TABLE>
Income Taxes:
The Company is an operating unit of Orscheln Co., a subchapter S corporation
as defined under the Internal Revenue Code. Under S status, the taxable income
or loss of Orscheln Co. is included in the taxable income of its stockholders.
F-23
<PAGE>
ORSCHELN AUTOMOTIVE BUSINESS UNIT
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Research and Development:
Research and development expenses were approximately $1,986,000 and
$1,212,000 for the year ended December 31, 1993 and the eight-month period
ended August 31, 1994, respectively, and were charged to expense as incurred.
Major Customers:
The Company sells directly to two major North American automobile
manufacturers. Sales to these customers for the year ended December 31, 1993
and the eight-month period ended August 31, 1994, accounted for a significant
percentage of revenue.
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C>
Ford.......................... 66% 62%
General Motors................ 28 32
--- ---
94% 94%
=== ===
</TABLE>
Statements of Cash Flows:
Cash equivalents consist of money market instruments with original
maturities of three months or less and are stated at cost which approximates
fair value.
3. TRANSACTIONS WITH AFFILIATES:
The Company has transactions with stockholders and companies that are
affiliated through common ownership and management. A summary of significant,
related-party transactions not disclosed elsewhere in the financial statements
or notes is as follows:
Interest Expense:
Interest expense incurred on notes payable to affiliates was approximately
$403,000 and $327,000 for the year ended December 31, 1993 and for the eight-
month period ended August 31, 1994, and respectively.
Payments to Affiliated Companies
Significant payments to affiliated companies for the year ended December 31,
1993 and the eight-month period ended August 31, 1994, were as follows:
. Orscheln Management Co. provides administrative, management, payroll,
human resources and other services to the Company, for which the Company
paid $4,496,000 for the year ended December 31, 1993 and $3,097,000 for
the eight-month period ended August 31, 1994.
. Computerized Business Systems, Inc., provides data processing services
to the Company, for which the Company paid $1,099,000 for the year ended
December 31, 1993 and $1,151,000 for the eight-month period ended August
31, 1994.
. Suratco Products Co. supplies the Company with component parts, for
which the Company paid $1,811,000 for the year ended December 31, 1993
and $0 for the eight-month period ended August 31, 1994.
. Utility Air, Inc., provides air transportation services and other travel
services to the Company, for which the Company paid $850,000 for the
year ended December 31, 1993 and $424,000 for the eight-month period
ended August 31, 1994.
F-24
<PAGE>
ORSCHELN AUTOMOTIVE BUSINESS UNIT
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
. American Third Century Co. provides risk-management services and sells
insurance to the Company, for which the Company paid $560,000 for the
year ended December 31, 1993 and $386,000 for the eight-month period
ended August 31, 1994.
. The Company paid Orscheln Industries Health Plan Trust $2,928,000 for
the year ended December 31, 1993 and $1,967,000 for the eight-month
period ended August 31, 1994.
. The Company made payments to other affiliated companies of $906,000 for
the year ended December 31, 1993 and $511,000 for the eight-month period
ended August 31, 1994. These payments were primarily for building
improvements, employee payroll deductions, production tooling and
miscellaneous transportation costs.
Sales to Affiliates
Sales to affiliated companies were $3,859,000 for the year ended December
31, 1993 and $2,000,000 for the eight-month period ended August 31, 1994.
4. NOTES PAYABLE:
The Company has a bank line of credit and a term loan with an institutional
lender that bears interest at the prime rate and notes payable and capitalized
lease obligations which bear interest at rates ranging from 5 percent to 10.85
percent.
<TABLE>
<CAPTION>
DECEMBER 31, AUGUST 31,
1993 1994
------------ ----------
(IN THOUSANDS)
<S> <C> <C>
10.85% unsecured note payable, payable in monthly
installments of principal and interest of $33,000
through February 1994................................ $ 64 $ --
6% capitalized lease obligation secured by lease
improvements, interest payable semiannually and
principal payable annually in amounts varying from
$60,000 to $80,000 through September 30, 1996........ 230 230
5% unsecured notes payable to a municipality payable
in monthly installments of principal and interest of
less than $1,000 maturing in March 1996 and November
2000................................................. 73 64
5% notes payable to a state agency secured by a deed
of trust, payable in monthly installments of
principal and interest varying form $2,000 to $3,000
maturing August 1997 through August 2002............. 340 308
5% subordinated note payable to a municipality,
secured by a deed of trust payable in monthly
installments of principal and interest of $3,000
beginning February 1995 through February 2005........ 270 270
Unsecured note payable to an institutional lender,
payable in equal monthly principal installments of
$278,000 through July 1996 plus interest at prime
(7.75% at August 31, 1994)........................... 9,167 6,944
------- ------
10,144 7,816
Less--Current maturities.............................. 3,535 3,485
------- ------
Total............................................. $ 6,609 $4,331
======= ======
</TABLE>
F-25
<PAGE>
ORSCHELN AUTOMOTIVE BUSINESS UNIT
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
5. LEASES:
The Company leases certain equipment and facilities under operating leases
which expire through 1998. Rental expense was $525,000 and $374,000 for the
year ended December 31, 1993 and the eight-month period ended August 31, 1994,
respectively. Future minimum lease payments for noncancelable leases as of
August 31, 1994, are as follows (in thousands):
<TABLE>
<S> <C>
1995................................ $171
1996................................ 160
1997................................ 118
1998................................ 100
----
$549
====
</TABLE>
6. EMPLOYEE BENEFIT PLAN:
The Company participates in the Orscheln Industries Retirement Program, a
defined contribution plan (the Plan). Employees who have completed one year of
service may participate in the Plan. Participants may contribute 1 percent to
15 percent of their gross earnings and the Company is required to match 50
percent of the contribution up to 2 percent of gross earnings. The Company
contributes an additional 3 percent of the participant's gross earnings to
those employees who have completed two years or more of service.
Company contributions to the Plan were approximately $880,000 and $675,000
during the year ended December 31, 1993 and the eight-month period ended
August 31, 1994, respectively.
7. PRO FORMA FINANCIAL INFORMATION (UNAUDITED):
The unaudited pro forma financial information is provided to show the
significant effects on the historical financial information had the Company
operated as a C corporation throughout all periods presented. Income taxes
have been computed at the federal statutory rate of 34 percent.
<TABLE>
<CAPTION>
EIGHT-MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1993 AUGUST 31, 1994
----------------- ---------------
(IN THOUSANDS)
<S> <C> <C>
Unaudited pro forma information--
Income (loss) before provision for
income taxes....................... $(4,214) $3,504
Provision for income taxes.......... -- 1,191
------- ------
Net income (loss)................. $(4,214) $2,313
======= ======
</TABLE>
F-26
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDER-
WRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITA-
TION OF AN OFFER TO BUY THE SHARES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING THE OF-
FER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 8
The Company.............................................................. 12
Use of Proceeds.......................................................... 12
Dividend Policy.......................................................... 12
The Recapitalization..................................................... 13
Dilution................................................................. 14
Capitalization........................................................... 15
Selected Consolidated Financial Data..................................... 16
Management's Discussion and Analysis of Results of Operations and
Financial Condition..................................................... 18
Business................................................................. 24
Management............................................................... 33
Certain Transactions..................................................... 39
Principal Stockholders................................................... 40
Description of Capital Stock............................................. 42
Shares Eligible for Future Sale.......................................... 45
Underwriting............................................................. 47
Legal Matters............................................................ 48
Experts.................................................................. 48
Additional Information................................................... 48
Index to Financial Statements............................................ F-1
</TABLE>
------------
UNTIL , 1996 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING), ALL DEAL-
ERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK, WHETHER OR NOT PARTIC-
IPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING
AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2,700,000 SHARES
DURA AUTOMOTIVE
SYSTEMS, INC.
CLASS A COMMON STOCK
----------------
PROSPECTUS
----------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO.
INCORPORATED
ROBERT W. BAIRD & CO.
INCORPORATED
, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is a statement of the expenses of the issuance and
distribution of the securities being registered other than underwriting
compensation, all of which are estimates with the exception of the Securities
and Exchange Commission fee and the National Association of Securities Dealers
fee and all of which will be paid by the Company:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. $17,131
National Association of Securities Dealers, Inc. fee............. 5,468
Nasdaq National Market listing fee............................... 20,525
Blue sky fees and expenses (including attorneys' fees and
expenses)....................................................... *
Printing and engraving expenses.................................. *
Transfer agent's fees and expenses............................... *
Accounting fees and expenses..................................... *
Legal fees and expenses.......................................... *
Miscellaneous expenses........................................... *
-------
Total.......................................................... $ *
=======
</TABLE>
- ---------------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is incorporated under the laws of the State of Delaware. Section
145 of the General Corporation Law of the State of Delaware ("Section 145")
provides that a Delaware corporation may indemnify any persons who are, or are
threatened to be made, parties to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation), by reason of
the fact that such person was an officer, director, employee or agent of
another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action
or proceeding, had no reasonable cause to believe that his conduct was
illegal. A Delaware corporation may indemnify any persons who are, or are
threatened to be made, a party to any threatened, pending or completed action
or suit by or in the right of the corporation by reason of the fact that such
person was a director, officer, employee or agent of such corporation, or is
or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or enterprise. The indemnification
may include expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection with the defense or settlement of such
action or suit, provided such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best
interests except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which such officer or director has actually
and reasonably incurred.
The Company's Restated Certificate will provide for the indemnification of
directors and officers of the Company to the fullest extent permitted by
Section 145.
In that regard, the Restated Certificate will provide that the Company shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, administrative or investigative (other than action by or in the right
of the corporation) by reason of the fact that he is or was a director or
officer of the Company, or is or was serving at the request of the Company as
a director, officer or member of another corporation, partnership, joint
venture, trust or other
II-1
<PAGE>
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of such corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Indemnification in connection with an action or suit by or in the right of
such corporation to procure a judgment in its favor will be limited to payment
of expenses (including attorneys' fees) actually and reasonably incurred in
connection with the defense or settlement of such an action or suit except
that no such indemnification may be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the indemnifying
corporation unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall determine
that, despite the adjudication of liability but in consideration of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
The Company has in effect insurance policies covering all of the Company's
directors and officers in certain instances where by law they may not be
indemnified by the Company.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since its incorporation in August 1994, the Company has not sold any
securities not registered under the Securities Act, except as follows:
(i) On August 31, 1994 and in connection with its initial capitalization,
after giving effect to the Recapitalization (as defined in the Prospectus),
the Company issued an aggregate of 494,185 shares of Class A Common Stock,
1,762,500 shares of Class B Common Stock and 440,625 shares of Class C
Common Stock to the former stockholders of MC Holding Corp. ("MCHC") in
exchange for all of their outstanding MCHC common stock. Concurrently, the
Company issued 2,206,890 shares of Class B Common Stock together with an
option to purchase 14,420 shares of Class A Common Stock to Alkin Co. as
partial consideration for its Brake and Cable Business (as defined in the
Prospectus).
(ii) On June 26, 1995, after giving effect to the Recapitalization, the
Company sold an aggregate of 78,819 shares of its Class B Common Stock to
certain employees of the Company at a price equal to $2.69 per share and
70,500 shares of its Class B Common Stock to certain employees of the
Company at a price equal to $1.96 per share, pursuant to agreements entered
into in May 1995 and August 1994, respectively.
The sale and issuances of the securities listed above in paragraphs (i) and
(ii) were deemed to be exempt from registration under the Securities Act by
virtue of Section 4(2) thereof and Regulation D promulgated thereunder as
transactions not involving a public offering.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
1* Form of Underwriting Agreement
3.1* Amended and Restated Certificate of Incorporation of the Company
3.2* Amended and Restated By-laws of the Company
4.1 Stockholders Agreement, dated as of August 31, 1994, by and among
the Company, Onex U.S. Investments, Inc., J2R, Alkin, the HCI
Stockholders (as defined therein) and the Management
Stockholders (as defined therein)
4.2 Amendment to Stockholders Agreement, dated May 17, 1995, by and
between the Company, Onex DHC LLC, J2R, Alkin, the HCI
Stockholders (as defined therein) and the Management
Stockholders (as defined therein)
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
4.3 Registration Agreement, dated as of August 31, 1994, among the
Company, Alkin and the MC Stockholders (as defined therein)
4.4 Amendment to Registration Agreement, dated May 17, 1995, by and
between the Company, the MC Stockholders (as defined therein) and
Alkin
4.5 Investor Stockholder Agreement, dated as of August 31, 1994, by and
among the Company, Onex U.S. Investments, Inc., J2R and certain
other stockholders party thereto
5 Opinion and Consent of Kirkland & Ellis
10.1 Joint Venture Agreement, dated as of August 31, 1994, by and among
the Company, Alkin, MCHC, Onex and J2R. The Company agrees to
furnish supplementally to the Commission a copy of any omitted
schedule or exhibit to the Agreement upon request by the Commission.
10.2 Management Contribution Agreement, dated as of August 31, 1994, by
and among the Company, Kim B. Clark and the Management Stockholders
(as defined therein)
10.3 Management Agreement, dated as of August 31, 1994, by and between
Hidden Creek and Dura Operating Corp. (formerly known as Dura
Automotive Systems, Inc.) ("Dura Operating")
10.4 Stock Option Agreement, dated as of August 31, 1994, between the
Company and Alkin
10.5 Stock Option Agreement, dated as of August 31, 1994, between the
Company and Kim B. Clark
10.6 Subordinated Promissory Note, dated August 31, 1994, of the Company
in the amount of $2,000,000 in favor of Alkin
10.7 Subordinated Promissory Note, dated August 31, 1994, of MCHC in the
amount of $1,800,000 in favor of Onex Ohio Holdings, Inc.
10.8 Subordinated Promissory Note, dated August 31, 1994, of MCHC in the
amount of $200,000 in favor of J2R
10.9* Credit Agreement, dated as of August 31, 1994, among Dura Operating,
certain commercial lending institutions, The Bank of Nova Scotia,
Comerica Bank, The Chase Manhattan Bank and Continental Bank
10.10* Security Agreement, dated as of August 31, 1994, between Dura
Operating and Continental Bank, as agent
10.11* Pledge Agreement, dated as of August 31, 1994, entered into by Dura
Operating in favor of Continental Bank, as agent
10.12* Guaranty, dated August 31, 1994, by Dura de Mexico S.A. de C.V.
("Dura Mexico") in favor of the Agents, the Co-Agents and the
Lenders (each as defined therein)
10.13* Accounts Receivable Pledge Agreement, dated as of August 31, 1994, by
and between Continental Bank, as agent, and Dura Mexico
10.14* Corporate Guaranty, dated August 31, 1994, by MCHC in favor of the
Agent, Co-Agents and Lenders (each as defined therein)
10.15* Pledge Agreement, dated as of August 31, 1994, by MCHC in favor of
Continental Bank, as agent
10.16 Letter Agreement, dated August 25, 1994, between the Company and Ford
10.17 Promissory Note, dated December 31, 1991, of Karl F. Storrie in favor
of Continental Bank, as agent
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
10.18 Asset Purchase Agreement, dated March 23, 1995, by and among Dura
Operating, the Company and Rockwell International Corporation. The
Company agrees to furnish supplementally to the Commission a copy of
any omitted schedule or exhibit to the Agreement upon request by the
Commission.
10.19 Subscription Agreement, dated as of June 26, 1995, by and between the
Company and the persons listed on the signature pages thereto
10.20 Subscription Agreement, dated as of June 26, 1995, by and between the
Company, David P. Klosterman and Craig L. Lamiman
10.21 Letter Agreement, dated November 9, 1995, between the Company and
John J. Knappenberger
10.22 Lease, entered into as of January 5, 1988, between the City of
Moberly, Missouri and Alkin
10.23 Net Lease, made as of March 16, 1995, by and between First Industrial
Financing Partnership, L.P. ("First Industrial") and Dura Operating
10.24 First Addendum to Net Lease, dated April 24, 1995, between First
Industrial and Dura Operating
10.25 Lease of Office Space, dated June 14, 1991, between 80 South Eighth
Street Limited Partnership ("Eighth Street") and Hidden Creek
10.26 Amendment and Renewal of Lease, made as of April 30, 1993, by and
between Eighth Street and Hidden Creek
10.27* 1996 Key Employee Stock Option Plan
10.28* Independent Director Stock Option Plan
10.29* Employee Stock Discount Purchase Plan
21 Subsidiaries of the Company
23.1 Consent of Arthur Andersen LLP, Minneapolis, Minnesota
23.2 Consent of Arthur Andersen LLP, Kansas City, Missouri
23.3 Consent of Kirkland & Ellis (included in Exhibit 5)
24 Powers of Attorney (included in signature page)
27* Financial Data Schedule
</TABLE>
- ---------------------
*To be filed by amendment.
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions, are inapplicable or not material, or the information
called for thereby is otherwise included in the financial statements and
therefore has been omitted.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes to provide to the underwriter
at closing specified in the underwriting agreement certificates in such
denominations and registered in such names as requested by the underwriter to
permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ROCHESTER HILLS, STATE
OF MICHIGAN ON JUNE 21, 1996.
Dura Automotive Systems, Inc.
/s/ Karl F. Storrie
By: _________________________________
KARL F. STORRIE
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Karl F. Storrie, David R. Bovee and S.A. Johnson
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and all capacities (including his capacity as a director
and/or officer of Dura Automotive Systems, Inc.), to sign any or all amendments
(including post-effective amendments) to this registration statement, or any
registration statement relating to this offering that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
* * * *
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED:
SIGNATURE CAPACITY DATE
/s/ Karl F. Storrie President, Chief Executive June 21,
_________________________________ Officer and Director 1996
KARL F. STORRIE (principal executive officer)
/s/ David R. Bovee Vice President and Chief June 21,
_________________________________ Financial Officer (principal 1996
DAVID R. BOVEE financial officer)
/s/ S.A. Johnson Chairman of the Board and June 21,
_________________________________ Director 1996
S.A. JOHNSON
/s/ Robert R. Hibbs Vice President and Director June 21,
_________________________________ 1996
ROBERT R. HIBBS
II-6
<PAGE>
SIGNATURE CAPACITY DATE
/s/ Neil Anderson Director June 21,
_________________________________ 1996
NEIL ANDERSON
/s/ W. H. Clement Director June 21,
_________________________________ 1996
W. H. CLEMENT
/s/ James O'Loughlin Director June 21,
_________________________________ 1996
JAMES O'LOUGHLIN
/s/ William L. Orscheln Director June 21,
_________________________________ 1996
WILLIAM L. ORSCHELN
/s/ Eric J. Rosen Director June 21,
_________________________________ 1996
ERIC J. ROSEN
/s/ Barbara A. Westhues Director June 21,
_________________________________ 1996
BARBARA A. WESTHUES
II-7
<PAGE>
EXHIBIT 4.1
================================================================================
STOCKHOLDERS AGREEMENT
DURA AUTOMOTIVE HOLDING, INC.
August 31, 1994
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I
Certain Definitions
-------------------
<TABLE>
<CAPTION>
<S> <C>
1.1 Certain Definitions................................................. 3
"Affiliate"......................................................... 3
"Ancillary Agreements".............................................. 3
"Board"............................................................. 3
"Business Day"...................................................... 3
"Closing Date"...................................................... 3
"Co-Investment Agreement"........................................... 3
"Common Stock"...................................................... 3
"Company"........................................................... 4
"control"........................................................... 4
"Credit Agreement".................................................. 4
"executive officer"................................................. 4
"Family Group"...................................................... 4
"Five Percent Owner"................................................ 4
"HCI"............................................................... 4
"Indebtedness"...................................................... 4
"Independent Third Party"........................................... 5
"Long-Term Debt".................................................... 5
"Managementholder".................................................. 5
"MC Director"....................................................... 5
"MC Stockholders"................................................... 5
"MC Stockholders Agreement"......................................... 5
"Orscheln".......................................................... 5
"Orscheln Director"................................................. 5
"Orscheln Family"................................................... 5
"Orscheln Stockholders"............................................. 6
"Permitted Transferee".............................................. 6
"Person"............................................................ 6
"Public Offering"................................................... 6
"Public Sale"....................................................... 6
"Qualified Public Offering"......................................... 6
"Sale of the Company"............................................... 6
"Securities Act".................................................... 6
"Shares"............................................................ 6
"Stockholders"...................................................... 6
"Subsidiary"........................................................ 7
"Supermajority Approval"............................................ 7
ARTICLE II
Boards and Voting for Directors
2.1 Boards of Directors and Committees................................. 7
</TABLE>
-i-
<PAGE>
<TABLE>
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<S> <C>
2.2 Orscheln Option To Require Cumulative Voting........................ 9
ARTICLE III
Covenants and Other Agreements
3.1 Negative Covenants.................................................. 10
3.2 By-laws............................................................. 13
3.3 Maintenance of Books and Records.................................... 13
3.4 Financial Information............................................... 14
3.5 Inspection Rights................................................... 15
3.6 Accountants......................................................... 15
ARTICLE IV
Restrictions on Transfer of Shares
4.1 Transfer of Shares Generally........................................ 16
4.2 First Offer Right................................................... 17
4.3 Permitted Transfers................................................. 19
4.4 Termination......................................................... 20
ARTICLE V
Tag-Along and Drag-Along Rights
5.1 Tag-Along Right..................................................... 20
5.2 Drag-Along Right.................................................... 21
5.3 Representations and Warranties on a
Disposition or Sale of the Company................................. 23
5.4 Exceptions to Tag-Along Right....................................... 23
5.5 Exception to Tag-Along and Drag-Along
Rights............................................................. 23
ARTICLE VI
Transfers by Management Stockholders
6.1 Transfers in Accordance with this Agreement......................... 24
6.2 Registration of Transfers........................................... 24
6.3 Restrictions on Transfer............................................ 24
6.4 Pledge of Common Stock as Security.................................. 24
6.5 Sales to be Free of Encumbrances.................................... 24
6.6 Closing of Sale of Managementholder's Stock......................... 25
6.7 Sale Upon Cessation of Employment When the
Company Is Not a Public Company.................................... 26
6.8 Sale Upon Cessation of Employment When the
Company is a Public Company........................................ 27
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
6.9 Defined Terms and Expressions....................................... 28
(a) "Book Value Per Share"......................................... 28
(b) "Permanent Disability"......................................... 29
(c) "Retirement"................................................... 29
(d) "termination by the Company or one of its
Subsidiaries without cause".................................. 29
(e) "termination by the Company or one of its Subsidiaries"........ 29
6.10 Sale Upon Default of Indebtedness................................... 29
6.11 Closing............................................................. 29
6.12 Existing Pledge Agreements.......................................... 30
6.13 Voting of Managementholders' Shares................................. 30
ARTICLE VII
Limited Pre-Emptive Rights
7.1 Pre-Emptive Rights.................................................. 31
7.2 No Additional Pre-Emptive Rights.................................... 32
7.3 Termination......................................................... 32
ARTICLE VIII
Transfers of Common Stock and
Appointment of Proxy
8.1 Transfers in Accordance with Agreement.............................. 33
8.2 Legending of Share Certificates..................................... 33
8.3 Default of Delivery................................................. 34
8.4 Distributions upon Sale of the Company.............................. 35
ARTICLE IX
Noncompete Agreement
9.1 Noncompete with Business of Company................................. 35
9.2 Noncompete with Business of GPD..................................... 36
ARTICLE X
Miscellaneous
10.1 Management Representatives.......................................... 37
10.2 Acknowledgement..................................................... 37
10.3 Notices............................................................. 37
10.4 Extended Meanings................................................... 39
10.5 Captions............................................................ 39
10.6 Applicable Law...................................................... 39
10.7 Severability........................................................ 39
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
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<S> <C>
10.8 Currency. . . . . . . . . . . . . . . . . . . 40
10.9 Successors and Assigns. . . . . . . . . . . . 40
10.10 Amendment and Waiver. . . . . . . . . . . . . 40
10.11 Remedies. . . . . . . . . . . . . . . . . . . 40
10.12 Counterparts. . . . . . . . . . . . . . . . . 40
10.13 Complete Agreement. . . . . . . . . . . . . . 41
10.14 Arbitration . . . . . . . . . . . . . . . . . 41
LIST OF EXHIBITS
----------------
Exhibit A -- Joint Venture Agreement
Exhibit B -- Certificate of Incorporation
Exhibit C -- By-Laws
Exhibit D -- Registration Agreement
Exhibit E -- Management Agreement
Exhibit F -- Management Contribution Agreement
</TABLE>
-iv-
<PAGE>
STOCKHOLDERS AGREEMENT
----------------------
DATED as of the 31st day of August, 1994,
BY AND AMONG:
DURA AUTOMOTIVE HOLDING, INC., a Delaware corporation (the "Company");
- and -
ONEX U.S. INVESTMENTS, INC., an Ontario corporation ("Onex");
- and -
J2R CORPORATION, a Delaware corporation ("J2R");
- and -
ORSCHELN CO., a Delaware corporation ("Orscheln");
- and -
Each of the persons listed on Schedule I to this Agreement (the "HCI
Stockholders");
- and -
Each of the persons listed on Schedule II to this Agreement (the
"Management Stockholders");
- and -
Such other stockholders of the Company as may, from time to time, become
parties to this Agreement in accordance with the provisions hereof.
WHEREAS:
A. The issued and outstanding capital stock of the Company consists of:
(i) 153,252.56 shares of Class A Common Stock, par value $.01 per share
(the "Class A Common");
(ii) 100,000.00 shares of Class B Common Stock, par value $.01 per share
(the "Class B Common"); and
<PAGE>
(iii) 25,000.00 shares of Class C Common Stock, par value $.01 per share
(the "Class C Common").
The Class A Common, Class B and Class C Common have the rights and
preferences set forth in the Company's Certificate of Incorporation, a true and
complete copy of which is attached hereto as Exhibit B.
B. Pursuant to a Joint Venture Agreement (the "Joint Venture
Agreement"), dated as of August 31, 1994 among the Company, Orscheln, Onex, J2R
and MC Holding Corp., a Delaware corporation ("MC Holding"), a true and complete
copy of which is attached hereto as Exhibit A, and a Management Contribution
Agreement (the "Management Contribution Agreement"), dated as of August 31,
1994, among the Company, the HCI Stockholders, the Management Stockholders and
Kim B. Clark, a true and complete copy of which is attached hereto as Exhibit F,
Orscheln has contributed certain assets to the Company in exchange for
125,213.65 shares of Class A Common and an option (the "Orscheln Option") to
purchase 818.18 shares of Class A Common, and the MC Stockholders have
collectively contributed all of the outstanding capital stock of MC Holding and
all outstanding options to purchase capital stock of MC Holding to the Company
in exchange for an aggregate of 28,038.91 shares of Class A Common, 100,000.00
shares of Class B Common and 25,000.00 shares of Class C Common and an option to
purchase 1,000.00 shares of Class A Common. After giving effect to the
transactions contemplated by the Joint Venture Agreement and the Management
Contribution Agreement, the Stockholders collectively own all of the issued and
outstanding Common Stock and all outstanding options to purchase Common Stock.
C. After giving effect to the transactions contemplated by the Joint
Venture Agreement and the Management Contribution Agreement, the Company is the
beneficial and record owner of all issued and outstanding shares of the capital
stock of MC Holding, and MC Holding is the beneficial and record owner of all
issued and outstanding shares of the capital stock of Dura Automotive Systems,
Inc., a Delaware corporation ("DASI") formerly named Dura Mechanical Components,
Inc.
D. The Company, Onex, J2R, Orscheln, each of the HCI Stockholders and
each of the Management Stockholders are parties to a registration agreement (the
"Registration Agreement"), dated as of the date hereof, a true and complete copy
of which is attached hereto as Exhibit D.
E. In order to provide for the stability of the ownership of the
Company and the management and operation of
-2-
<PAGE>
the Company, MC Holding and DASI, the parties wish to enter into this Agreement.
F. Certain capitalized terms used and not otherwise defined in this
Agreement are defined in Article I of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
ARTICLE I
Certain Definitions
-------------------
1.1 Certain Definitions. When used in this Agreement the following
capitalized terms shall have the respective meanings shown:
"Affiliate" means, with respect to any Person, any of (a) a director or
executive officer of such Person, and (b) any other Person that, directly or
indirectly, controls or is controlled by or is under common control with such
Person.
"Ancillary Agreements" means the agreements described or included in
Schedule 5.5 to the Joint Venture Agreement.
"Board" means the board of directors or other governing body of a Person.
"Business Day" means any day which is neither a Saturday nor a Sunday nor a
legal holiday on which banks are authorized or required to be closed in Chicago,
Illinois or New York, New York.
"Closing Date" means the date on which the transactions contemplated by
the Joint Venture Agreement shall be consummated.
"Co-Investment Agreement" means the Co-Investment Agreement, dated as of
March 30, 1990, between Onex and J2R, as amended from time to time.
"Common Stock" means (i) the Class A Common, the Class B Common, the Class
C Common of the Company, (ii) any Class A Common issued or issuable upon
exercise of any options issued by the Company (including, without limitation,
the Orscheln Option) and (iii) any equity securities issued or issuable by the
Company with respect to the
-3-
<PAGE>
securities referred to in clauses (i) and (ii) hereof in connection with any
stock split, stock dividend, combination of shares, recapitalization, merger,
consolidation or other reorganization.
"Company" includes any successor to the Company resulting from any merger,
consolidation or other reorganization of or including the Company.
"control" (including with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities
or by contract or agency or otherwise.
"Credit Agreement" means that certain agreement by and among Continental
Bank, as agent, certain other banks and the Company and/or its Subsidiaries,
and, subject to the requirements of Section 3.1(m) hereof, any extensions,
modifications, amendments, renewals or refinancings thereof.
"executive officer," when used with respect to a Person, means the Chairman
of the Board, President, any officer in charge of a principal business function
or any manager reporting to the President of such Person if a corporation, or an
individual performing a similar function in the case of Persons other than
corporations.
"Family Group" means a Stockholder's spouse, parents, siblings and
descendants (whether natural or adopted) and any trust solely for the benefit of
the Stockholder and/or the Stockholder's spouse, parents, siblings and/or
descendants.
"Five Percent Owner" means any Person owning of record or beneficially more
than five percent of the Common Stock of the Company of any class at the time
outstanding.
"HCI" means Hidden Creek Industries, a New York general partnership, and
any successor thereto.
"Indebtedness" means all indebtedness for borrowed money (including
purchase money obligations other than accounts payable and accrued expenses
arising in the ordinary course of business), all indebtedness under revolving
credit arrangements, all capitalized lease obligations (as determined in
accordance with generally accepted accounting principles, consistently applied),
and all guarantees of any of the foregoing.
-4-
<PAGE>
"Independent Third Party" means any Person who, immediately prior to the
contemplated transaction, is neither an Affiliate of the Company nor a Five
Percent Owner, is not controlling, controlled by or under common control with
any Five Percent Owner and is not the spouse or descendent (by birth or
adoption) of any Five Percent Owner or a trust for the benefit of any Five
Percent Owner and/or such other Persons.
"Long-Term Debt" means all Indebtedness other than borrowings which by
their terms mature one year or less from the date of creation or incurrence
thereof and are not renewable or extendible at the option of the debtor to a
date more than one year from the date of creation or incurrence thereof.
"Managementholder" means each Management Stock holder and each Permitted
Transferee of a Management Stockholder who acquires Shares in a Transfer
permitted by Section 4.3.
"MC Director" means a member of the Board of the Company designated by the
MC Stockholders pursuant to Section 2.1(a)(ii)(A).
"MC Stockholders" means, collectively, Onex and J2R (and any successor or
successors to the foregoing resulting from any merger, consolidation,
liquidation, dissolution or other reorganization of the foregoing) and the HCI
Stockholders and the Management Stockholders (and, in each case, their Permitted
Transferees).
"MC Stockholders Agreement" means the Stockholders Agreement dated as of
the date hereof among Onex, J2R and the HCI Stockholders.
"Orscheln" includes any successor or successors to Orscheln resulting from
any merger, consolidation or other reorganization of or including Orscheln or
any liquidation, dissolution or winding-up of Orscheln.
"Orscheln Director" means a member of the Board of the Company designated
by the Orscheln Stockholders pursuant to Section 2.1(a)(ii)(B).
"Orscheln Family" includes G. A. Orscheln, D. W. Orscheln, their spouses,
any descendant of either of them or their spouses, any Person owned or
controlled by any of the foregoing and any Permitted Transferee of any of the
foregoing.
-5-
<PAGE>
"Orscheln Stockholders" means, collectively, Orscheln and its Permitted
Transferees.
"Permitted Transferee" means a transferee in a Transfer of Shares permitted
under Section 4.3(a).
"Person" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
"Public Offering" means an underwritten firm commitment public offering
and sale of shares of Common Stock pursuant to an effective registration
statement under the Securities Act.
"Public Sale" means any sale of Common Stock to the public pursuant to an
offering registered under the Securities Act or to the public through a broker,
dealer or market maker pursuant to the provisions of Rule 144 (or any similar
provision hereafter in force) adopted under the Securities Act.
"Qualified Public Offering" means the sale in an underwritten firm
commitment public offering registered under the Securities Act of at least 20%
of the shares of Common Stock outstanding determined on a fully-diluted basis,
following which Common Stock is listed for trading on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ National Market System.
"Sale of the Company" means the sale of the Company to an Independent Third
Party or a group of Independent Third Parties pursuant to which such party or
parties acquire (i) capital stock of the Company possessing the voting power to
elect a majority of the Company's Board (whether by merger, consolidation,
recapitalization, reorganization or sale of a majority of the Company's
outstanding Common Stock and Common Stock equivalents) or (ii) all or
substantially all of the Company's consolidated assets.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Shares" means any shares of Common Stock.
"Stockholders" means the holders of Common Stock of the Company who are
bound by and subject to this Agreement.
-6-
<PAGE>
"Subsidiary" means any corporation or other Person of which the shares of
stock or other interests having a majority of the general voting power in
electing the Board are, at the time as of which any determination is being made,
owned or controlled by the Company either directly or indirectly.
"Supermajority Approval" of any matter, with respect to any Person, means
the approval of such matter (a) at a meeting of the Board of such Person by at
least two-thirds of the members of the Board of such Person then in office or
(b) without a meeting of such Board pursuant to written consent executed by all
of the members of the Board of such Person then in office.
ARTICLE II
Boards and Voting for Directors
-------------------------------
2.1 Boards of Directors and Committees.
(a) From and after the Closing Date and for so long as the provisions of
this Section 2.1 remain in effect, each Stockholder will vote all of the Common
Stock owned by such Stockholder and will take, and will cause any Persons
controlled by it to take, all other necessary or desirable actions within its
control (whether in its capacity as a stockholder, director, member of a
committee or officer of the Company or otherwise), and the Company will take all
necessary or desirable action within its control, in order to cause:
(i) (A) the authorized number of members of the Board of the Company to
be established at nine and (B) the authorized number of members of the Board
of each Subsidiary to be established at an odd number not less than five nor
more than nine;
(ii) the election to the applicable Board of:
(A) five members designated by the holders of a majority of the
Shares held by the MC Stockholders in the case of the Company and the
minimum number of authorized members necessary to constitute a majority of
the entire Board in the case of Subsidiaries (by written notice to the
Company or the applicable Subsidiary, which shall furnish copies of such
notice to Orscheln); and
-7-
<PAGE>
(B) four members designated by the holders of a majority of the
Shares held by the Orscheln Stockholders in the case of the Company and a
number equal to the total number of authorized members minus the number of
members that the holders of a majority of the Shares held by the MC
Stockholders are entitled to designate under clause (A) above in the case
of Subsidiaries (by written notice to the Company or the applicable
Subsidiary, which shall furnish copies of such notice to each of the MC
Stockholders); and
(iii) at the written request of the holders of a majority of the Shares
held by the MC Stockholders, the removal from the applicable Board (with or
without cause) of any member designated by the holders of a majority of the
Shares held by the MC Stockholders, but only upon such written request and
under no other circumstances;
(iv) at the written request of the holders of a majority of the Shares
held by the Orscheln Stockholders, the removal from the applicable Board
(with or without cause) of any member designated by the holders of a majority
of the Shares held by the Orscheln Stockholders, but only upon such written
request and under no other circumstances;
(v) in the event that any member of a Board designated by the holders of
a majority of the Shares held by the MC Stockholders or the holders of a
majority of the Shares held by the Orscheln Stockholders for any reason ceases
to serve as such member before the expiration of his or her term of office,
the resulting vacancy on the applicable Board to be filled by a member
designated by the holders of a majority of the Shares held by the MC
Stockholders or the holders of a majority of the Shares held by the Orscheln
Stockholders, as the case may be, as provided herein.
(b) If the holders of a majority of the Shares held by the MC
Stockholders or the holders of a majority of the Shares held by the Orscheln
Stockholders, as the case may be, shall fail to designate a member to fill a
vacancy pursuant to the terms of this Article II within 30 days after such
vacancy occurs, or if the right of the holders of a majority of the Shares held
by the MC Stockholders or the holders of a majority of the Shares held by the
Orscheln Stockholders, as the case may be, shall be terminated pursuant to
Section 2.1(e), the election of a person to such vacancy shall be accomplished
in accordance with the
-8-
<PAGE>
Company's or the applicable Subsidiary's By-laws or other governing instruments
and applicable law; provided that if, in the case of a failure to designate a
member, the holders of a majority of the Shares held by the MC Stockholders or
the holders of a majority of the Shares held by the Orscheln Stockholders, as
the case may be, shall subsequently designate a member, such designee will
replace the person elected.
(c) The Company shall pay the reasonable out-of-pocket expenses incurred
by each member of a Board in connection with attending the meetings of such
Board or any committee thereof. In addition, the members of the Board of the
Company who are not officers or employees of the Company or its Subsidiaries
shall receive such compensation from the Company for such service as may be
determined from time to time by Supermajority Approval of the applicable Board.
(d) The audit committee of the Company shall consist of five members
elected or appointed from time to time by the Board of the Company, at least two
of whom shall be Orscheln Directors. If any Subsidiary establishes an audit
committee, such audit committee shall consist of five members elected or
appointed from time to time by the Board of such Subsidiary, at least two of
whom shall be Orscheln Directors. The audit committee of the Company shall,
among other things, have the responsibility to review and approve all federal,
state and local income and franchise tax returns prior to the filing thereof by
the Company or any subsidiary.
(e) The provisions of this Section 2.1 will terminate automatically and
be of no further force and effect, unless earlier terminated by amendment of
this Agreement, on the date on which the Orscheln Stockholders cease to own in
the aggregate at least 20% of the outstanding shares of Common Stock.
2.2 Orscheln Option To Require Cumulative Voting. So long as the
Orscheln Stockholders shall own in the aggregate at least 20% of the outstanding
shares of Common Stock, and irrespective of whether the Company shall be
preparing or shall plan or intend to undertake a Public Offering, Orscheln shall
have the option in its discretion, by notice to the other Stockholders, to
require the Company to adopt cumulative voting. If Orscheln exercises such
option, all of the Stockholders hereby covenant and agree that they will
forthwith vote in favor of, and will cause the members of the Board of the
Company designated by them to vote in favor of, an amendment to the Company's
Certificate of Incorporation prepared by Orscheln's counsel (which shall be
reason-
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ably satisfactory to the MC Stockholders' counsel) which will provide that at
all elections of directors of the Company, each holder of Common Stock shall be
entitled to as many votes as shall equal the number of votes such holder would
be entitled to cast for the election of directors with respect to such holder's
shares multiplied by the number of directors to be elected, and such holder may
cast all of such votes for a single director or may distribute them among the
number to be voted for, or for any two or more of them as such holder may see
fit. Any such amendment so adopted shall not be further amended or repealed
unless approved by the affirmative vote or written consent of the holders of at
least eighty percent (80%) of the shares of Common Stock at the time
outstanding, or such lesser percentage as Orscheln, in its sole discretion,
shall specify.
ARTICLE III
Covenants and Other Agreements
------------------------------
3.1 Negative Covenants. Without Supermajority Approval, and
irrespective of whether stockholder approval has been obtained or is required,
the Company shall not, and the Company shall not permit any Subsidiary to:
(a) Enter into any material transaction with any of its officers,
directors or employees, any Stockholder or any other Affiliate of the Company,
including, without limitation, the purchase, sale or exchange of any property,
the rendering of any service or the payment of any compensation, provided that
the foregoing shall not (i) apply to actions taken pursuant to the terms of
the Joint Venture Agreement or the Ancillary Agreements, (ii) prohibit any
action expressly permitted by this Agreement to be taken without Supermajority
Approval, (iii) preclude the payment of a management and advisory fee to HCI
pursuant to the Management Agreement, dated as of the date hereof, by and
between DASI and HCI, a true and complete copy of which is attached hereto as
Exhibit E, of $600,000 plus reasonable out-of-pocket expenses for the first
year after the Closing Date (provided that any payments to HCI under the
Management Agreement in subsequent years shall be subject to Supermajority
Approval), (iv) preclude the payment by DASI to HCI of a closing fee in the
amount of $500,000 before or at the Closing the transactions contemplated by
the Joint Venture Agreement and (v) preclude the payment of reasonable
compensation consistent with the other terms
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and provisions of this Agreement to officers and employees of the Company who
(x) are Management Stockholders or (y) are not also directors, officers,
employees or Affiliates of any Stockholder.
(b) Declare or pay any dividends or make any distributions upon any of
its equity securities, except for dividends by a wholly-owned Subsidiary to its
parent corporation.
(c) Directly or indirectly redeem, purchase or otherwise acquire any of
the Company's equity securities (including, without limitation, warrants,
options and other rights to acquire equity securities), except for repurchases
of Common Stock from employees of the Company and its Subsidiaries upon
termination of employment pursuant to Article VI below.
(d) Undertake any Public Offering, or authorize, issue or enter into any
agreement providing for the issuance (contingent or otherwise) of any equity
securities (or any securities convertible into or exchangeable for any equity
securities), other than issuances of Common Stock upon the exercise of options
outstanding on the date hereof and issuances of Common Stock to employees of the
Company and its Subsidiaries in an aggregate amount not exceeding the number of
Shares repurchased after the Closing Date as permitted under Section 3.1(c)
above (as adjusted for stock splits, stock dividends or other reclassifications
or recapitalizations after the date hereof), provided that the form of agreement
to be signed by such employees shall have been approved by Supermajority
Approval.
(e) Merge or consolidate with any Person other than any merger or
consolidation of a wholly-owned Subsidiary with or into the Company or another
wholly-owned Subsidiary.
(f) Sell, lease or otherwise dispose of a significant portion of the
consolidated assets of the Company and its Subsidiaries in any transaction or
series of related transactions.
(g) Liquidate or dissolve, other than the liquidation or dissolution of
a wholly-owned Subsidiary into the Company or another wholly-owned Subsidiary.
(h) Acquire any interest in any business (whether by a purchase of
assets, purchase of stock, merger or otherwise) or enter into a joint venture.
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(i) Enter into the ownership, active management or operation of any
business other than the Business as defined in Section 9.1.
(j) Amend, modify or repeal any provision of its Certificate of
Incorporation or By-Laws or other comparable governing instruments, except as
provided in Section 2.2.
(k) Approve any annual capital or operating budget if the aggregate
capital expenditures proposed to be made pursuant thereto exceed $15 million on
a consolidated basis for the fiscal year covered by such budget.
(l) Hire, terminate, enter into any material employment agreement with
or amend any material employment agreement with any executive officer of the
Company or any Subsidiary.
(m) Create, incur, assume or suffer to exist any Long-Term Debt other
than (1) Indebtedness under the Credit Agreement, (2) other Long-Term Debt
(including in connection with any capital expenditures) not exceeding in the
aggregate $2,000,000 outstanding at any time on a consolidated basis and (3)
Indebtedness outstanding as of the Closing Date.
(n) Change its independent accounting firm.
(o) Make any extraordinary payments to its employees other than payments
made in accordance with established policy of MC Holding or DASI or any policy
of Orscheln in effect prior to the Closing Date (including, without limitation,
established compensation and benefit programs, payments in accordance with
Section 3.1(c) and payments pursuant to agreements approved in accordance with
Section 3.1(d)).
(p) File a voluntary petition under any bankruptcy, insolvency,
reorganization or similar law, consent to any petition under any such law filed
against the Company or any Subsidiary by its creditors, consent to an
application for a receiver, trustee, custodian or similar official for the
Company or any Subsidiary, acknowledge in writing its inability to pay its debts
as they become due, or make an assignment for the benefit of its creditors.
(q) Elect directors of any Subsidiary.
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(r) Pay any compensation to any director of the Company for service in
such capacity.
3.2 By-laws. The By-laws of the Company and each of its Subsidiaries
shall at all times provide, to the extent permitted by law, that:
(a) notice of every meeting of the Board of the Company or such
Subsidiary shall be given to each member of the Board not less than three days
prior to the meeting;
(b) a special meeting of the Board of the Company or such Subsidiary may
be called, to be held at the registered office of the Company, by holders of
at least 10% of the Company's outstanding Common Stock, upon at least 10 days'
notice, stating the purpose of the meeting and proposing an agenda therefor;
(c) any member of the Board of the Company or such Subsidiary may
require the Company or such Subsidiary, by notice given not less than 10 days
in advance of any regularly scheduled meeting of such Board, to include in the
business to be discussed at the meeting any one or more proposals submitted by
such member;
(d) members of the Board or any committee thereof may participate in
meetings by telephone;
(e) members of the Board or any committee thereof may take action by
unanimous written consent;
(f) notice of any meeting may be waived by any member of the Board or
any committee thereof;
(g) at least one MC Director and one Orscheln Director must be present
at any meeting of the Board for a quorum to exist; and
(h) except for matters which require Supermajority Approval, the act of
a majority of the members present at any meeting of the Board at which a
quorum is present shall be the act of the Board.
The initial By-laws of the Company are attached hereto as Exhibit C.
3.3 Maintenance of Books and Records. The Company shall, and shall
cause each Subsidiary to, maintain its accounting and financial records so as to
permit the
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preparation of the Company's consolidated financial statements in accordance
with generally accepted accounting principles consistently applied, except as
may be otherwise approved by Supermajority Approval.
3.4 Financial Information. The Company shall furnish to each
Stockholder the following:
(a) as soon as available, and in any event within 120 days after the end
of each fiscal year of the Company, a copy of the audited consolidated
financial statements of the Company and its Subsidiaries reported on by Arthur
Andersen & Co. or another firm of independent certified public accountants
selected by Supermajority Approval of the Board of the Company, including a
consolidated balance sheet of the Company and its Subsidiaries as at the end
of such fiscal year and consolidated statements of income and cash flows of
the Company and its Subsidiaries for such fiscal year, and stating in
comparative form the figures as of the end of and for the previous fiscal
year, accompanied by a report thereon containing an opinion by such
independent certified public accountants that such consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied, except as may be otherwise noted;
(b) as promptly as practicable, and in any event within 45 days after
the end of each fiscal quarter of the Company, a copy of its unaudited
consolidated financial statements prepared by the Company, including a
consolidated balance sheet of the Company and its Subsidiaries as at the end
of such fiscal quarter and consolidated statements of income and cash flows of
the Company and its Subsidiaries for such fiscal quarter, and stating in
comparative form the figures as of the end of and for the corresponding fiscal
quarter in the previous fiscal year, in all cases prepared in accordance with
generally accepted accounting principles consistently applied, except as may
be otherwise noted; and
(c) copies of all press releases issued by the Company.
Except as otherwise required by law or judicial order or decree or by any
governmental agency or authority, each Stockholder entitled to receive
information regarding the Company and its Subsidiaries pursuant to this Section
3.4 shall maintain the confidentiality of all nonpublic
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information obtained by it hereunder which the Company has designated as
proprietary or confidential in nature; provided that any such Stockholder may
disclose such information to the extent required by law or court order; provided
that if any Stockholder believes it is required by law to disclose any such
information such Stockholder shall notify the Company and, if requested by the
Company, such Stockholder shall use reasonable efforts to obtain a protective
order with respect to such information and ensure that only the information
required to be disclosed is actually disclosed.
3.5 Inspection Rights. So long as any of Onex, J2R or Orscheln shall be
and remain a Stockholder, the Company shall permit any representatives
designated by any of them, upon reasonable notice and during normal business
hours, to (i) visit and inspect any of the properties of the Company and its
Subsidiaries, (ii) examine the corporate, financial and other records of the
Company and its Subsidiaries and make copies thereof or extracts therefrom and
(iii) discuss the affairs, finances and accounts of any such entities with the
directors, executive officers, key employees and independent accountants of the
Company and its Subsidiaries.
3.6 Accountants. The Company shall retain the firm of Arthur Andersen
& Co. as independent accountants for the Company and its Subsidiaries, unless
and until changed pursuant to Section 3.1(n).
3.7 Credit Agreement Availability. The Company shall cause DASI to
maintain the ability to borrow under the Credit Agreement an amount equal to at
least (i) $6 million minus (ii) the aggregate amount, if any, previously paid by
or on behalf of DASI to Ford Motor Company in satisfaction the Ford Recall
Liability (as defined in the Credit Agreement) until the earliest of (x) the
date that Ford Motor Company shall have agreed that all Ford Recall Liability
has been satisfied in full, (y) the date the Company and MC Holding shall have
paid in full the Subordinated Promissory Notes (as defined in the Credit
Agreement), or (z) the date this provision is terminated by Supermajority
Approval.
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ARTICLE IV
Restrictions on Transfer of Shares
----------------------------------
4.1 Transfer of Shares Generally. No Stockholder shall sell, transfer,
assign, pledge, exchange or otherwise dispose of (a "Transfer") any interest in
any Shares, except pursuant to Section 4.2 below and except pursuant to (i) any
Transfer by Orscheln or its Permitted Transferees between or among Orscheln and
any member of the Orscheln Family who has delivered to the Company, prior to
such Transfer, an agreement in writing to be bound by all of the provisions of
this Agreement, (ii) any Transfer by Onex or its Permitted Transferees to any
Affiliate or Permitted Transferee of Onex who has delivered to the Company,
prior to such Transfer, an agreement in writing to be bound by all of the
provisions of this Agreement, or any pledge by Onex, as security for
indebtedness, to any bank or other financial institution which has executed and
delivered to the Company, prior to such pledge, a written agreement satisfactory
to the Company acknowledging that such pledge is subject to the terms and
provisions of this Agreement, (iii) any Transfer by J2R or its Permitted
Transferees to any Affiliate or Permitted Transferee of J2R or any HCI
Stockholder who has delivered to the Company, prior to such Transfer, an
agreement in writing to be bound by all of the provisions of this Agreement, or
any pledge by J2R, as security for indebtedness, to any bank or other financial
institution which has executed and delivered to the Company, prior to such
pledge, a written agreement satisfactory to the Company acknowledging that such
pledge is subject to the terms and provisions of this Agreement, (iv) any
Transfer by an MC Stockholder or its Permitted Transferees to any other MC
Stockholder or its Permitted Transferees, (v) any Transfer by a Management-
holder or a Permitted Transferee of a Managementholder to the Company, Onex or
an Affiliate of Onex upon termination of employment with the Company or any
Subsidiary or to another management employee of the Company or any Subsidiary in
a Transfer permitted under Article VI hereof (provided that such management
employee has delivered to the Company, prior to such Transfer, an agreement in
writing to be bound by all of the provisions of this Agreement), (vi) a Public
Offering, (vii) a Transfer permitted by Article V or (viii) a Transfer by a
Managementholder pursuant to a pledge permitted by Article VI (clauses (i)
through (viii) of this Section 4.1 being hereinafter referred to as "Exempt
Transfers"); provided that neither Onex nor J2R shall Transfer any Shares except
in compliance with the terms of the Co-Investment Agreement, unless Onex and J2R
waive any such compliance. Each Stockholder agrees not to consummate any
Transfer pursuant to the provisions of Section 4.2 until
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passage of at least the minimum number of days required by Section 4.2 after the
delivery of such Stockholder's Offer Notice (as hereinafter defined), unless the
parties to the Transfer have been finally determined pursuant to Section 4.2
prior to the expiration of such period.
4.2 First Offer Right.
(a) In addition to Exempt Transfers permitted by Section 4.1, a Stockholder
may Transfer an interest in Shares by complying with this Section 4.2. At least
15 days prior to making any Transfer of any Shares (other than pursuant to
Section 4.1), the transferring Stockholder (the "Transferring Stockholder") will
deliver a written notice (the "Offer Notice") (i) in the case of a proposed
Transfer by Orscheln, a member of the Orscheln Family and/or a Permitted
Transferee of Orscheln, to Onex and (ii) in the case of a proposed Transfer by
an MC Stockholder, to Orscheln or its stockholders. The Offer Notice will
disclose the proposed number and class of Shares (the "Subject Shares") to be
transferred and, in reasonable detail, the proposed terms and conditions of the
Transfer.
(b) In the case of a proposed Transfer (other than an Exempt Transfer
pursuant to Section 4.1) by Orscheln, a member of the Orscheln Family and/or a
Permitted Transferee of Orscheln pursuant to this Section 4.2, Onex may elect to
purchase all (but not less than all) of the Subject Shares at the price in cash
and on the terms specified therein by delivering written notice of such
election, together with written evidence sufficient to demonstrate that it can
finance the purchase, to the Transferring Stockholder as soon as practicable,
but in any event within 15 days after delivery of the Offer Notice. If Onex has
elected to purchase the Subject Shares from the Transferring Stockholder, the
Transfer of such shares will be consummated as soon as practicable after the
delivery of the election notice, but in any event within 45 days after delivery
of the Offer Notice (the "Orscheln Consummation Period"). If Onex elects to
purchase the Subject Shares but fails to consummate the purchase within the 45-
day Orscheln Consummation Period, the Transferring Stockholder may, within 180
days after the later of 15 days after delivery of the Offer Notice or the
expiration of the 45-day Orscheln Consummation Period, Transfer such Subject
Shares to one or more third parties at a price in cash and on other terms no
more favorable to the transferees than offered in the Offer Notice; provided
that prior to such Transfer, such transferees shall have agreed in writing to
be bound by the provisions of this Agreement and shall have delivered such
agreement to the Company; and provided further that such
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Transfer shall be subject to the provisions of Article V hereof. Any Subject
Shares not transferred within such 180-day period will be subject to the
provisions of this Article IV upon subsequent transfer and the Transferring
Stockholder will not be entitled to deliver another Offer Notice for 90 days
after the Transferring Stockholder has again become subject to this Article IV.
Onex may assign all or any portion of its rights under this Section 4.2 to any
of its Affiliates. Nothing herein will relieve Onex or any of its Affiliates
from liability for failing to purchase any Subject Shares which it has elected
but failed to purchase.
(c) In the case of a proposed Transfer (other than an Exempt Transfer
pursuant to Section 4.1) by an MC Stockholder, Orscheln may elect to purchase
all (but not less than all) of the Subject Shares at the price in cash and on
the terms specified therein by delivering written notice of such election,
together with written evidence sufficient to demonstrate that it can finance the
purchase, to the Transferring Stockholder as soon as practicable, but in any
event within 15 days after delivery of the Offer Notice. If Orscheln has elected
to purchase the Subject Shares from the Transferring Stockholder, the Transfer
of such shares will be consummated as soon as practicable after the delivery of
the election notice, but in any event within 45 days after delivery of the Offer
Notice (the "MC Consummation Period"). If Orscheln elects to purchase the
Subject Shares but fails to consummate the purchase within the 45-day MC
Consummation Period, the Transferring Stockholder may, within 180 days after the
later of 15 days after delivery of the Offer Notice or the expiration of the 45-
day MC Consummation Period, Transfer such Subject Shares to one or more third
parties at a price in cash and on other terms no more favorable to the
transferees than offered in Offer Notice; provided that prior to such Transfer,
such transferees shall have agreed in writing to be bound by the provisions of
this Agreement and shall have delivered such agreement to the Company. Any
Subject Shares not transferred within such 180-day period will be subject to
the provisions of this Article IV upon subsequent transfer and the Transferring
Stockholder will not be entitled to deliver another Offer Notice for 90 days
after the Transferring Stockholder has again become subject to this Article IV.
Nothing herein will relieve Orscheln from liability for failing to purchase any
Subject Shares which it has elected but failed to purchase.
(d) In case any proposed Transfer pursuant to Section 4.2(b) or (c) is for
consideration other than cash, the Offer Notice shall specify the fair market
value thereof. If the party receiving such notice shall disagree
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with the fair market value specified, it shall notify the Transferring
Stockholder within 15 days after the delivery of the Offer Notice, and the Offer
Notice shall not be deemed to have been delivered until such dispute shall have
been resolved.
(e) At least 15 days prior to the consummation of a Transfer pursuant to
Section 4.2(b) or (c) where none of Orscheln, Onex nor Onex's Affiliates is a
transferee (such 15-day period referred to herein as the "Exercise Period"), the
Transferring Stockholder will deliver a notice to Onex, J2R and Orscheln stating
the identity of the proposed transferee. In the event that such proposed
transferee is a competitor (or an Affiliate of a competitor) of Onex, an
Affiliate of Onex, J2R, an Affiliate of J2R, Orscheln, an Affiliate of Orscheln,
the Company or its Subsidiaries, Onex, J2R and Orscheln may, by delivery to the
Transferring Stockholder, during the Exercise Period, of a notice that it
objects to such transferee, in which case the Transferring Stockholder shall not
proceed with any further steps relating to the offer made by such transferee,
shall not complete the transfer of the Subject Shares to such transferee and the
offer so made shall no longer be considered an offer for the purposes of this
Section 4.2. No Person will be deemed to be a competitor of Onex, an Affiliate
of Onex, J2R, an Affiliate of J2R, Orscheln, an Affiliate of Orscheln, the
Company or its Subsidiaries solely by reason of the engagement by such Person
in financing or investment activities.
4.3 Permitted Transfers.
(a) The restrictions contained in Sections 4.1 and 4.2 and in Article V
shall not apply with respect to any Transfer of Shares by any Stockholder (i)
pursuant to applicable laws of descent and distribution or to or among such
Stockholder's Family Group or (ii) to or among its Affiliates; provided that the
restrictions contained in this Article IV and in Article V shall continue to be
applicable to the Shares after any such Transfer; and provided further that the
transferees of such Shares shall have agreed in writing to be bound by the
provisions of this Agreement affecting the Shares so transferred and shall have
delivered such agreement to the Company.
(b) In the case of any Transfer pursuant to Section 4.3(a)(ii) above, a
transferee may at any time, and shall forthwith in the event that such
transferee ceases to be an Affiliate of the transferor, transfer back to such
transferee all of the Shares held by it.
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4.4 Termination. The provisions of this Article IV will terminate
automatically and be of no further force and effect upon the consummation of a
Qualified Public Offering.
ARTICLE V
Tag-Along and Drag-Along Rights
-------------------------------
5.1 Tag-Along Right.
(a) Except as provided in Section 5.4, if at any time any Stockholder
proposes to Transfer any or all of its Shares pursuant to Section 4.2 to any
Person other than Orscheln and such Transfer would result in a Sale of the
Company (a "Disposition"), the transferring holder (the "Transferring
Stockholder") shall, at least 20 days prior to the consummation of the
Disposition, give notice (a "Disposition Notice") to the other Stockholders
describing the terms and conditions of the Disposition in reasonable detail,
including the proposed price per share, the method of payment, the anticipated
closing date and the identity of the proposed purchaser, and stating that each
of such other Stockholders may elect to participate in such Disposition at a
price per share consistent with the rights and preferences of the Common Stock
set forth in the Company's Certificate of Incorporation and on other terms and
conditions no less favorable than those applicable to the Transferring
Stockholder.
(b) The election pursuant to Section 5.1(a) shall be exercised by notice to
the Transferring Stockholder given within the time period specified in the
Disposition Notice, which time period shall not be less than 10 days after such
Disposition Notice is given. If a Stockholder gives notice of its election to
sell, it shall be obligated to sell the Common Stock specified in its notice
upon the terms and subject to the conditions specified in Section 5.1(a) to the
proposed purchaser, conditional upon the closing of the Disposition.
(c) If the purchaser pursuant to the Disposition has specified a limited
number of shares of Common Stock which it is willing to purchase in the
aggregate, each of the Stockholders shall have the right to sell to the
purchaser up to that number of shares of Common Stock owned by such Stockholder
which is in the same proportion to its total ownership of Common Stock as the
number of shares of the Common Stock being sold by all Stockholders to such
purchaser is to the total ownership of Common Stock of all
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Stockholders electing to participate in such sale.
(d) If any Stockholder does not elect to sell the full number of shares of
Common Stock which it is entitled to sell pursuant to this Section 5.1, or if
the aggregate number of shares of Common Stock which the Stockholders are
entitled to sell is less than the number of shares of Common Stock which the
purchaser is willing to purchase, the remaining Stockholders shall be entitled
to sell additional shares of Common Stock pro rata (as described in Section
5.1(c) above) to the number of shares of Common Stock owned by each of them to
make up the aggregate number of shares of Common Stock the purchaser is willing
to purchase.
(e) The provisions of this Section 5.1 shall terminate automatically and be
of no further force and effect upon the consummation of a Qualified Public
Offering.
5.2 Drag-Along Right.
(a) If Onex approves a Sale of the Company and in connection therewith
enters into an agreement to sell all or substantially all of its and its
Affiliates' Common Stock pursuant to such sale (the "Approved Sale"), each MC
Stockholder will consent to and raise no objections to the Approved Sale of the
Company and (i) if the Approved Sale of the Company is structured as a sale of
stock, each MC Stockholder will agree to sell all of its Common Stock and rights
to acquire Common Stock on the terms and conditions approved by Onex, (ii) if
the Approved Sale of the Company is structured as a merger, consolidation or
other reorganization, each MC Stockholder will vote in favor thereof (to the
extent it is entitled to vote) and will not exercise any dissenters' rights of
appraisal it may have under Delaware law, and (iii) if the Approved Sale of the
Company is structured as a sale of all or substantially all of the Company's
consolidated assets, each MC Stockholder will vote in favor thereof (to the
extent it is entitled to vote); provided that any Sale of the Company described
in clause (ii) and (iii) above is subject to Supermajority Approval under
Section 3.1 and any Sale of the Company described in clause (i) above is subject
to the rights of Orscheln under Article IV and Section 5.1 of this Agreement.
Each MC Stockholder will use its best efforts to cooperate in the Approved Sale
of the Company and will take all necessary and desirable actions in connection
with the consummation of the Approved Sale of the Company as are reasonably
requested by Onex, including, but not limited to, the provision of
representations and warranties or indemnifications; provided that no MC
Stockholder shall be required to incur any out-of-pocket expenses in connection
with such Approved Sale of the
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Company which are not reimbursed by the Company; and provided further that no
such MC Stockholder shall be required to provide representations and warranties
or indemnification in connection with any Approved Sale of the Company which
would result in an aggregate liability in excess of such holder's proceeds from
such Approved Sale of the Company.
(b) The obligations of the MC Stockholders with respect to the Approved
Sale of the Company are also subject to the satisfaction of the following
conditions: (i) upon the consummation of the Approved Sale of the Company, all
of the holders of each class of Common Stock will receive the same form and
amount of consideration for their Common Stock as all other holders of the same
class of Common Stock, or if any Stockholders are given an option as to the form
and amount of consideration to be received, all holders of the same class of
Common Stock will be given the same option; and (ii) the price per share of
Common Stock will be payable in cash or publicly-traded securities and will be
on terms consistent with the rights and preferences set forth in the Company's
Certificate of Incorporation.
(c) If Onex or its Affiliates enters into any negotiation or transaction
for which Rule 506 (or any similar rule then in effect) promulgated by the
Securities and Exchange Commission may be available with respect to such
negotiation or transaction (including a merger, consolidation or other
reorganization), the MC Stockholders will, at the request of Onex, and to the
extent required to comply with Rule 501, appoint a purchaser representative (as
such term is defined in Rule 501) reasonably acceptable to Onex. If any MC
Stockholder appoints the purchaser representative designated by Onex, the
Company will pay the fees of such purchaser representative, but if any such
holder declines to appoint the purchaser representative designated by Onex, such
holder will appoint another purchaser representative (reasonably acceptable to
Onex), and such holder will be responsible for the fees of the purchaser
representative so appointed.
(d) If at any time an offer is made to acquire substantially all of the
assets of the Company, which offer must be approved by a resolution of the
stockholders, each MC Stockholder shall vote all of the Common Stock held by it,
in respect of such offer, in the same manner as the Common Stock held by Onex is
voted.
(e) The provisions of this Section 5.2 shall terminate automatically and be
of no further force and effect upon the consummation of a Qualified Public
Offering.
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5.3 Representations and Warranties on a Disposition or Sale of the
Company. In connection with any Disposition or Approved Sale of the Company in
which Common Stock is to be sold by a Stockholder, if a designee of such
Stockholder is at the time of such a Disposition or Approved Sale of the Company
an MC Director, Onex may require such Stockholder to enter into agreements with
the purchaser representing and warranting that, except as specifically disclosed
to the purchaser in writing, such Stockholder, at the time of the closing of the
Disposition or Approved Sale of the Company, does not have actual knowledge
(which actual knowledge shall be limited solely to the actual knowledge of such
Stockholder's designee director(s)) that any representation or warranty made by
the Company or any other stockholder in connection with the Disposition or
Approved Sale of the Company was untrue in any material respect when made or is
untrue in any material respect as of the closing. The liability of the selling
Stockholder under such representation and warranty shall be several (and not
joint or joint and several with the Company and any other stockholder) and shall
be limited to the amount which it receives from the sale of its Common Stock in
connection with the Disposition or Approved Sale of the Company and shall be pro
rata in accordance with the number of shares of Common Stock sold by such
Stockholder in relation to the Common Stock being sold by all stockholders as
part of the Disposition or Approved Sale of the Company.
5.4 Exceptions to Tag-Along Right.
(a) Section 5.1 shall not apply to any sale as part of a Public Offering of
Common Stock.
(b) Section 5.1 shall not apply to any Transfer by a Stockholder of Common
Stock pursuant to exercise of a tag-along right with respect to a Transfer of
Common Stock by any other Stockholder or to any Common Stock transferred
pursuant to a drag-along right exercised by Onex.
5.5 Exception to Tag-Along and Drag-Along Rights. Notwithstanding anything
herein to the contrary, as between Onex and its Permitted Transferees and J2R
and its Permitted Transferees, the provisions of Article V of this Agreement
shall not apply to any Transfer and the provisions of the Co-Investment
Agreement shall govern any such Transfer.
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ARTICLE VI
Transfers by Management Stockholders
------------------------------------
6.1 Transfers in Accordance with this Agreement. Each Managementholder
agrees that the Shares held by such Managementholder will not be transferred in
violation of this Article VI, the Securities Act, or any other applicable law.
6.2 Registration of Transfers. The Company may refuse to register any
transfer by the registered holder of Shares held by a Managementholder in its
transfer books if such transfer is not in accordance with this Article VI, the
other provisions of this Agreement, the Securities Act, or any other applicable
law.
6.3 Restrictions on Transfer. Except as expressly provided in Articles V
and VI of this Agreement, Shares held by a Managementholder may not be
transferred (including, without limitation, pursuant to Article IV) without the
consent of Onex. A Managementholder's Shares may be transferred only in a sale
for cash or cash plus assumption of indebtedness in accordance with this Article
VI or in accordance with the provisions of Article IV or Article V of this
Agreement. Any purported transfer in any manner contrary to the terms of this
Agreement shall be void.
6.4 Pledge of Common Stock as Security. The Managementholder's Shares may
be pledged to the Company or to a bank or other bona fide financial institution
(a "secured party") acting at arm's length with any Managementholder and
approved by the Company, as security for indebtedness incurred solely to finance
up to one-half of the purchase price paid by such Managementholder for his
Shares (or any refinancing of indebtedness incurred to purchase the shares of
capital stock of MC Holding held by such Managementholder immediately prior to
the Closing Date), on condition that such secured party executes and delivers to
the Company a written agreement satisfactory to the Company that such pledge is
subject to the terms of this Agreement if so requested by the Company.
6.5 Sales to be Free of Encumbrances.
(a) In connection with any sale of Managementholder's Shares pursuant to
this Agreement, the Management holder shall discharge any indebtedness referred
to in Section 6.4 and deliver the Managementholder's Shares being
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sold free and clear of any claim, mortgage, charge, pledge, lien, security
interest or other encumbrance of any kind.
(b) If the Managementholder fails to comply with Section 6.5(a), the
purchaser may withhold from the purchase price for the Managementholder's Shares
an amount equal to the indebtedness secured by any such claim, mortgage, charge,
pledge, lien, security interest or other encumbrance or, if the amount of such
indebtedness is not known by the purchaser, an amount equal to the purchaser's
good faith estimate thereof, and shall pay such withheld amount to the person to
whom such indebtedness is owed. Any such payment of such withheld amount shall
discharge the purchaser's obligation to make payment for the purchased shares to
the extent of such withheld amount.
6.6 Closing of Sale of Managementholder's Stock.
(a) At the closing of any sale of Managementholder's Shares pursuant to
this Article VI, the Managementholder selling Shares shall deliver to the
purchaser the share certificates and other instruments representing such
Managementholder's Shares, together with stock powers and other instruments
transferring such shares, duly endorsed for transfer and free and clear of any
claim, mortgage, charge, pledge, lien, security interest or encumbrance of any
kind, and the purchaser shall deliver to the Managementholder the consideration
payable upon closing. If Section 6.7(b) is applicable to the sale and the
purchaser is other than the Company or Onex, the purchaser shall also deliver to
the Managementholder an undertaking to pay the increased purchase price for the
Managementholder's Shares in accordance with Section 6.7(b) in the events
therein described, as if such purchaser were a party to this Agreement.
(b) Each Managementholder irrevocably constitutes and appoints the
Secretary from time to time of the Company (the "Secretary") as his attorney and
agent authorized, in his name and on his behalf, to execute and deliver (i) all
such assignments, transfers, deeds and instruments as may be necessary to
effectively transfer the Shares being transferred to the purchaser on the books
of the Company and (ii) any other document required under Section 6.6(a) to be
delivered by him at closing. Such appointment and power of attorney, being
coupled with an interest, shall not be revoked by the insolvency, bankruptcy,
death or incapacity of the Managementholder and the Managementholder hereby
agrees to ratify and confirm any act taken by the Secretary on his behalf
hereunder and agrees that the receipt of the
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Secretary as attorney shall be a good discharge to the Managementholder.
(c) The Secretary of the Company (or another officer designated by the
Company's Board to act in his stead) shall, at all times, hold the certificates
representing all Managementholder's Shares. The Secretary or such other officer
shall hold such certificates in safekeeping to the order of the registered
holder of the Shares represented by the certificates (but subject to the terms
of this Agreement); provided that, upon being satisfied that a lender reasonably
requires possession of any certificate for the purposes of an arrangement
permitted by Section 6.4, the Secretary may release the certificate to the
lender upon receipt of an irrevocable direction from the registered holder to
the lender to return the certificates to the Secretary if the registered holder
would otherwise be entitled to the return of the certificates.
(d) Nothing in this Section 6.6 is intended to limit any other remedy
available to a purchaser of a Managementholder's Shares.
6.7 Sale Upon Cessation of Employment When the Company Is Not a Public
Company.
(a) If a Managementholder ceases to be employed in a full-time capacity by
the Company or its Subsidiaries for any reason (including but not limited to
such Managementholder's voluntary termination, termination by the Company or one
of its Subsidiaries with or without cause, or such Managementholder's death,
Permanent Disability or Retirement) prior to the time the Company consummates a
Public Offering, the Company (or, if Onex so elects, Onex or one of its
Affiliates) shall purchase, and the Managementholders shall sell, all of the
Shares owned by such Managementholder. The purchase price payable per share in
any sale of Shares pursuant to this Section 6.7 shall be equal to Book Value Per
Share.
(b) If the Company effects a Public Offering of securities of the same
class as the Managementholder's Shares purchased pursuant to this Section 6.7
within six months after the closing of such purchase, the purchase price per
share shall be increased by an amount equal to the excess, if any, of the public
offering price per share pursuant to such Public Offering (after deduction of
any applicable underwriters' commissions or discounts and expenses of such
offering on a per share basis) over the Book Value Per Share used in calculating
the original purchase price.
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(c) The purchase price for Shares purchased pursuant to this Section 6.7
shall be paid 100% in cash at the closing of such purchase.
(d) If so required by a selling Managementholder, the Company shall deliver
a copy of the balance sheet on which the determination of Book Value Per Share
was based and, in reasonable detail, a calculation of the purchase price payable
to the selling Managementholder. The selling Managementholder, upon request,
shall also receive a copy of a letter from the auditors of the Company to the
effect that they have reviewed the calculation of the purchase price payable,
and that nothing has come to their attention that caused them to believe that
such calculation was not in accordance with this Article VI. If the Company
delivers the balance sheet, calculation and letter, the determination of the
purchase price payable set forth therein shall be conclusive and binding on all
parties.
(e) If a Managementholder acquires any Common Stock following the
termination of his employment with the Company and its Subsidiaries through the
exercise of any option pursuant to the terms of a plan for the benefit of
management employees of the Company and its Subsidiaries, the Company (or, if
Onex so elects, Onex or one of its Affiliates) shall purchase, and the
Managementholder shall sell, all such Common Stock at a purchase price of 100%
of Book Value Per Share.
6.8 Sale Upon Cessation of Employment When the Company is a Public Company.
Notwithstanding Section 6.7, if a Managementholder ceases to be employed in
a full-time capacity by the Company and its Subsidiaries for any reason
(including but not limited to the Managementholder's voluntary termination,
termination by the Company or one of its Subsidiaries, with or without cause, or
the Managementholder's death, Permanent Disability or Retirement) after the
Company has completed a Public Offering, the Managementholder shall be entitled
to sell his Shares through the facilities of any securities exchange on which
the Common Stock is then listed or quoted on the NASDAQ system or
over-the-counter market; provided such sales are made in the normal course and
in a manner which complies with applicable securities laws and regulations and
stock exchange rules; and provided further that no more than one-half of his
Shares may be sold prior to the first anniversary of such termination of
employment. Notwithstanding the previous sentence, (a) in the event of the
death of the Managementholder, his executors or administrators shall not be
restricted as to the proportion of his
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Shares that may be sold during the year following termination of employment, (b)
in the event of the termination of his employment by reason of his Permanent
Disability, the Managementholder shall not be restricted as to the proportion of
his Shares that may be sold during the year following termination of
employment, and (c) in the event of the Retirement of the Managementholder, up
to 75% of his Shares may be sold during the year following termination of
employment.
6.9 Defined Terms and Expressions. As used in this Article VI:
(a) "Book Value Per Share" as of any date means the sum of (i) the quotient
obtained by dividing (A) the consolidated common stockholders' equity of MC
Holding and its subsidiaries as of the Closing Date immediately prior to the
closing of the transactions contemplated by the Joint Venture Agreement and the
Management Contribution Agreement, determined in accordance with generally
accepted accounting principles in effect in the United States on the Closing
Date, by (B) the number of shares of common stock of MC Holding outstanding on
the Closing Date and (ii) the quotient obtained by dividing (A) an amount (which
may be negative) equal to (1) the consolidated common stockholders' equity of
the Company and its Subsidiaries as of the later of the Closing Date and the end
of the fiscal quarter immediately preceding the date of the event that required
the purchase and sale pursuant to Article VI, determined in accordance with
generally accepted accounting principles in effect in the United States on the
Closing Date, minus (2) the consolidated common stockholders' equity of the
Company and its Subsidiaries as of the Closing Date immediately after giving
effect to the transactions contemplated by the Joint Venture Agreement and the
Management Contribution Agreement, determined in accordance with generally
accepted accounting principles in effect in the United States on the Closing
Date, by (B) the number of shares of Common Stock outstanding on such date. In
making calculations for purposes of clauses (i) and (ii) it shall be assumed
that all options and rights to purchase shares of common stock and securities
convertible or exchangeable into common stock outstanding on the date as of
which the calculation is being made had been exercised or converted to the
extent that the exercise price or conversion price (expressed in terms of
principal amount of debt or liquidation preference in the case of shares) does
not exceed Book Value Per Share (determined without regard to this sentence) and
any purchase price for shares of common stock payable upon such exercise had
been paid. The determination of Book Value Per Share shall be based upon the
audited (in the case
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of the end of a fiscal year or the Closing Date) or unaudited (in the case of
the end of any of the first three quarters of a fiscal year) consolidated
balance sheet of the Company and its Subsidiaries or MC Holding and its
subsidiaries, as the case may be, as at the end of the fiscal quarter or the
Closing Date in question. Notwithstanding the foregoing, Book Value Per Share
shall be equitably adjusted by the Company's Board if a stock dividend,
recapitalization or other material event occurs outside of the ordinary course
of business after the end of such fiscal quarter and before the closing of the
sale in respect of which the determination is being made.
(b) "Permanent Disability" means the inability of a Managementholder to
fulfill his duties as an employee of the Company and its Subsidiaries as a
result of illness, accident or physical or mental disability either for a period
of six consecutive months or for any 180 days in any 365-day period.
(c) "Retirement" means retirement of a Managementholder in accordance with
the retirement policy provided for in the Company's and its Subsidiaries'
employment policies in effect from time to time.
(d) "termination by the Company or one of its Subsidiaries without cause"
shall mean termination by the Company or one of its Subsidiaries on grounds
other than gross or continued neglect of duty, serious and wilful misconduct,
theft, embezzlement, fraud, breach of fiduciary duty or other like cause.
(e) "termination by the Company or one of its Subsidiaries" shall include a
refusal by the Company or one of its Subsidiaries to renew an employment
contract at the end of its stated term.
6.10 Sale Upon Default of Indebtedness. If a Managementholder defaults on
any indebtedness referred to in Section 6.4, the Company (or, if Onex so elects,
Onex or one of its Affiliates) shall have the option to purchase the Shares held
by such Managementholder at a purchase price per share determined in accordance
with Section 6.7(a) exercisable by notice (for purposes of this Section, a
"Notice") to such Managementholder.
6.11 Closing.
(a) The closing of any purchase and sale of Shares pursuant to exercise by
the Company, Onex or an Affiliate of Onex of a right, or fulfillment of an obli-
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gation, under this Article VI shall be held at the registered office of the
Company at a date and time designated by the purchaser, but in any event not
later than 60 days (or, in the case of a purchase and sale pursuant to Section
6.7(e), 120 days) after the date of receipt of the Notice, cessation of
employment or date of acquisition of Common Stock following termination of
employment referred to in Section 6.7(e), as the case may be.
(b) Any Shares purchased by Onex, the Company or an Affiliate of Onex,
pursuant to the exercise of a right, or fulfillment of an obligation, under this
Article IV shall be free and clear of all liens, charges, encumbrances or
restrictions, except for restrictions imposed by this Agreement (other than this
Article VI) where such Shares are purchased by Onex or an Affiliate of Onex.
6.12 Existing Pledge Agreements. Certain of the Management Stockholders are
parties to separate Management Stock Pledge Agreements with MC Holding pursuant
to which such Management Stockholders pledged their MC Holding common stock to
MC Holding (collectively, the "Pledge Agreements"). Each Management Stockholder
who is a party to a Pledge Agreement hereby reaffirms his or her obligations
thereunder and agrees that (i) such Pledge Agreement shall remain in full force
and effect and (ii) all of such Management Stockholder's Common Stock shall be
subject to such Pledge Agreement as if it were common stock of MC Holding.
6.13 Voting of Managementholders' Shares. Each Managementholder shall at
all times vote his Shares in the same manner as the Shares held by Onex are
voted, in the election of directors and on all other matters which are submitted
to a vote (or consent in lieu of voting) of the Company's stockholders, and for
this purpose shall execute and deliver to Onex (or its designees) proxies to
vote such Managementholder's Shares in the same manner as the Shares held by
Onex are voted. To the extent permitted by law, each Managementholder, by his
execution of this Agreement, irrevocably constitutes and appoints the person who
is at any time the president of Onex his proxy to vote all of his
Managementholder's Shares at any meeting of stockholders of the Company, or to
give consent in lieu of voting, on any matter which is submitted for a vote or
consent to the stockholders, provided that such Managementholder's Shares are
voted or consent is given with respect to them in the same manner as the Shares
held by Onex. Notwithstanding anything contained in this Section 6.13, no
Managementholder's Shares shall, except with the express consent of such
Managementholder, be voted in favor of any resolution the effect of which will
be to change such Management-
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holder's Shares or Onex's Shares, or convert or exchange such Managementholder's
Shares or Onex Shares into or for different securities, unless in every such
case the Managementholder's Shares and the Onex Shares are thereby changed
identically or converted into or exchanged for the same type of securities in
proportion to their respective holdings of Common Stock, in each case on terms
consistent with the rights and preferences set forth in the Company's
Certificate of Incorporation as is reasonably determined by Onex.
ARTICLE VII
Limited Pre-Emptive Rights
--------------------------
7.1 Pre-Emptive Rights.
(a) Until the Company consummates a Qualified Public Offering, the Company
shall not issue any shares of stock that have a right to participate generally
in dividends or the distribution of assets upon liquidation, dissolution or
the winding up of the Company ("Participating Securities"), any shares of Common
Stock or any securities possessing voting power with respect to the election of
directors of the Company ("Voting Securities"), or any securities containing
options or rights to acquire any shares of Participating Securities, Common
Stock or Voting Securities or any securities exchangeable into Participating
Securities, Voting Securities or Common Stock (other than a dividend on any
outstanding Common Stock or Participating Securities) (collectively, "Offered
Securities") to any Person (other than to employees of the Company or its
Subsidiaries) unless the Company shall have first offered such Offered
Securities pro rata to all Stockholders other than Managementholders, on the
same terms and conditions, pursuant to an offer (the "Offer"), at a price per
Offered Security determined by the Company's Board. The Offer shall specify the
number of Offered Securities proposed to be issued by the Company, the price per
Offered Security and shall limit the time within which the Offer, if not
accepted, will be deemed to be declined (which time shall be not less than 20
days nor more than 40 days after the date of the Offer). Each such Stockholder
shall then have the right, exercisable by notice to the Company within the time
period specified in the Offer, to purchase its "Pro Rata Share" of the Offered
Securities at the price per Offered Security referred to in the Offer. As used
in this Section 7.1 the term "Pro Rata Share" shall mean the product of (i) the
total number of Offered Securities referred to in the Offer and (ii) a fraction,
the numerator of which is the
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number of shares of Common Stock held by such Stockholder on the date the Offer
is made and the denominator of which is the aggregate number of the Company's
shares of Common Stock owned by such Stockholders (in each case, assuming the
conversion, exchange or exercise of all securities convertible into or
exchangeable or exercisable for Common Stock).
(b) If any Offered Securities shall not be capable of being offered to or
being divided among such Stockholders in proportion to their holdings of Common
Stock at the date of the Offer without division into fractions, the same shall
be offered to or divided among such Stockholders as nearly as may be in
proportion to the number of shares of Common Stock held by them respectively at
the date of the Offer without division into fractions, as may be determined in
good faith by the Company's Board.
(c) The closing of a purchase and sale pursuant to this Section 7.1 shall
be held at the registered office of the Company on the date specified in the
Offer, which date shall be not less than 15 or more than 30 days after the time
at which the Offer, if not accepted, will be deemed to be declined.
(d) If any Stockholder does not elect to purchase the full number of
Offered Securities which it is entitled to purchase pursuant to this Section
7.1, the balance shall be offered first to Orscheln (in the case of Offered
Securities not purchased by Orscheln) and to the MC Stock holders (in the case
of Offered Securities not purchased by MC Stockholders) and then pro rata to the
remaining Stockholders that did elect to purchase their full entitlement at the
same price per Offered Security as specified in the Offer and otherwise on such
terms as the Company's Board may in good faith determine, and failing full
acceptance by such remaining Stockholders shall be issued in compliance with
Section 7.1(c) above to such Person or Persons as the Company's Board may in
good faith determine, but, in any event, at the same price per Offered Security
as specified in the Offer.
7.2 No Additional Pre-Emptive Rights. No Stockholder shall have any
pre-emptive right to acquire Common Stock from the Company except pursuant to
Section 7.1 and, without limiting the generality of the foregoing, shall have no
pre-emptive rights on a Public Offering of Common Stock by the Company.
7.3 Termination. The provisions of this Article VII will terminate
automatically and be of no further force
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and effect upon the consummation of a Qualified Public Offering.
ARTICLE VIII
Transfers of Common Stock and
Appointment of Proxy
-----------------------------
8.1 Transfers in Accordance with Agreement. No Stockholder shall transfer
or suffer to be transferred any or all of its Common Stock, except as permitted
or required by this Agreement. The Company may refuse to register any transfer
of Common Stock on its transfer books if such transfer is not in accordance with
this Agreement and state and federal securities laws. Notwithstanding anything
herein to the contrary, if upon receipt of a Transfer of Shares a Person becomes
a Stockholder pursuant to the terms and provisions of this Agreement, such
Person shall have the same rights and shall be subject to the same restrictions
and obligations under this Agreement with respect to the transferred Shares as
if such Person were the transferring Stockholder, and all references to Shares
of the transferor shall be deemed to include the Shares of the transferee;
provided that (i) the rights of Onex and Orscheln not specifically relating to
their Shares (including, but not limited to, Orscheln's right to require
cumulative voting pursuant to Section 2.2 and the first offer rights of Onex and
Orscheln pursuant to Section 4.2) shall not be transferred or assigned in whole
or in part to any transferee except as otherwise expressly set forth herein and
(ii) any Shares transferred to the Company or an existing Stockholder shall be
treated as all other Shares held by the Company or such existing Stockholder,
respectively. Notwithstanding anything herein to the contrary, any transferee in
a Public Sale need not be or become a party to this Agreement.
8.2 Legending of Share Certificates. All certificates representing Common
Stock held by a Stockholder (and by any permitted or required transferees who
are bound by or subject to this Agreement) shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED
UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNLESS AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE AND ARE ALSO SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER CONTAINED IN THE STOCKHOLDERS AGREEMENT, DATED AS
OF AUGUST 31, 1994, AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND
CERTAIN OF THE COMPANY'S STOCKHOLDERS. A
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COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
8.3 Default of Delivery.
(a) In the event that any Stockholder or its assignees have the right to
acquire Common Stock from any other Stockholder or the right to require any such
other Stockholder to sell its Common Stock to any other Person, pursuant to the
terms of this Agreement (such selling Stockholder hereinafter referred to as the
"Transferor" and the Person to whom the Transferor is required to transfer
Common Stock, as applicable, hereinafter referred to as the "Transferee"), and
the Transferor is not present at the closing, or is present but for any reason
fails to produce and deliver to the Transferee the certificates or other
instruments representing any of the Common Stock being transferred, then the
cash purchase price, as and when payable, may be deposited into a special
account in the name of the Company at a branch of the Company's bankers and any
other consideration permitted or required to be delivered in satisfaction of the
purchase price shall be deposited with the Company. Such deposits shall
constitute valid and effective payment to the Transferor of the purchase price
for the Common Stock being transferred notwithstanding the fact that the
Transferor may have voluntarily attempted to encumber or dispose of any of the
Common Stock contrary to the terms hereof, or that one or more certificates or
other evidences of ownership of such Common Stock may have been delivered to any
other Person. From and after the date of such deposits (even though the share
certificates in the name of the Transferor have not been delivered to the
Transferee), the purchase and transfer of the Common Stock shall be deemed to
have been fully completed and all right, title, benefit and interest of the
Transferor in and to all such Common Stock, both at law and in equity, shall be
conclusively deemed to have been transferred and assigned to and become vested
in the Transferee and the Transferee will have the right to request that the
Company enter the transfer into the stock register and the Company shall be
entitled to so enter the transfer.
(b) Where the Transferee has made a deposit in accordance with Section
8.3(a), the Transferor shall be entitled to receive the cash purchase price of
the Common Stock deposited with the Company's bankers, and to receive any other
consideration deposited with the Company, upon delivery to the Company of (i)
the certificates or other instruments representing the Common Stock duly
endorsed for
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transfer and (ii) any other document required to be delivered by the Transferor
at closing, including, without limitation, the release or discharge of any
encumbrance relating to the Common Stock and stock transfer stamps, if
necessary.
8.4 Distributions upon Sale of the Company. In the event of a sale or
exchange by the Stockholders of all or substantially all of the Common Stock
held by the Stockholders, each Stockholder shall receive the same portion of
the aggregate consideration from such sale or exchange that such Stockholder
would have received if such aggregate consideration had been distributed by the
Company in complete liquidation.
ARTICLE IX
Noncompete Agreement
--------------------
9.1 Noncompete with Business of Company. Each of Orscheln, Onex, J2R and
each HCI Stockholder (each a "Restricted Person") agrees that for a period of
five years from and after the date of this Agreement, such Restricted Person
will not, nor will it permit any of its Affiliates to, engage, directly or
indirectly, alone or in association with any other Person, in the design,
development, manufacture, marketing, sale or distribution of parking brake
cables, parking brake systems, light duty cables, window regulators, shifters
and latches for use in automobiles and light trucks (the "Business"), or hold
the capital stock (or other equity interest) of any person or entity engaged in
any aspect of the Business (a "Competing Person"); provided that nothing
contained in this Section 9.1 shall in any way:
(a) prohibit any Restricted Person or any of their Affiliates from owning
up to 5% of the outstanding securities of any class of a corporation which is
publicly traded;
(b) apply to actions taken pursuant to the terms of the Joint Venture
Agreement or any of the Ancillary Agreements;
(c) restrict or preclude Orscheln from operating the businesses relating to
the Orscheln Excluded Assets (as defined in the Joint Venture Agreement), as
conducted as of the date of this Agreement;
(d) restrict or preclude Otscon Co. from engaging in the business in which
it is engaged on the date of
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this Agreement or restrict or preclude Orscheln or any Affiliate of Orscheln
from owning a partnership, equity or similar interest in Otscon Co.;
(e) restrict or preclude Onex, J2R, the HCI Stockholders or their
Affiliates from acquiring and operating any business not more than the lesser
of (A) 10% or (B) $10 million of the total revenue of which is derived from
businesses which compete with the Business;
(f) restrict or preclude Orscheln or its Affiliates from acquiring and
operating any business not more than the lesser of (A) 10% or (B) $10 million
of the total revenue of which is derived from businesses which compete with
the Business;
(g) restrict or preclude Onex, J2R, the HCI Stockholders, Orscheln or their
Affiliates from acquiring and operating any business a substantial portion of
the total revenue of which is derived from businesses which compete with the
Business, provided that prior to any such acquisition the Person who wishes
to acquire such business shall discuss with the Company the terms of such
proposed acquisition and such proposed acquisition shall be approved by
Supermajority Approval; or
(h) restrict Automotive Industries Holding, Inc. and its subsidiaries or
R J Tower Holding Corp. and its subsidiaries (in each case whether or not
existing as of the date hereof) or any other company in which J2R, any HCI
Stockholder, or Onex or their Affiliates own a direct or indirect interest
from engaging in the businesses in which they are engaged as of the date of
this Agreement.
9.2 Noncompete with Business of GPD. Each of the Company, Onex, J2R and
each HCI Stockholder (each a "GPD Restricted Person") agrees that for a period
of five years from and after the date of this Agreement, such GPD Restricted
Person will not (and the Company will not permit any Subsidiary to, and Onex,
J2R and the HCI Stockholders will not permit any of their respective Affiliates
to), directly or indirectly, alone or in association with any other Person,
utilize any proprietary technology, intellectual property or know-how acquired
by the Company or any of its Subsidiaries from Orscheln to engage in or carry on
any business in direct competition with the business operated by Orscheln from
and after the date of this Agreement (the "GPD Business"); provided that nothing
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<PAGE>
contained in this Section 9.2 shall in any way:
(a) prohibit any GPD Restricted Person or any of its Affiliates from owning
up to 5% of the outstanding securities of any class of a corporation which is
publicly traded;
(b) apply to actions taken pursuant to the terms of the Joint Venture
Agreement or any of the Ancillary Agreements; or
(c) restrict Automotive Industries Holding, Inc. and its subsidiaries or
R J Tower Holding Corp. and its subsidiaries (in each case whether or not
existing as of the date hereof) or any other company in which J2R, any HCI
Stockholder, Onex or their Affiliates own a direct or indirect interest from
engaging in the businesses in which they are engaged as of the date of this
Agreement.
ARTICLE X
Miscellaneous
-------------
10.1 Management Representatives. Each Management Stockholder, and each
transferee of Shares held by a Management Stockholder in a Transfer permitted
by Section 4.3 as to Shares received from a Management Stockholder, hereby
irrevocably constitutes and appoints the Management Representatives (as defined
below in this Section 10.1) as his representatives to take all actions on his
behalf in connection with this Agreement, in their sole and absolute discretion,
including but not limited to executing any consents or waivers in connection
with, or any amendments to, this Agreement (with the exception of any decision
to sell his Shares pursuant to Article VI). In the event of a disagreement among
the Management Representatives, a majority of them shall have all authority
granted to the Management Representatives by the Management Stockholders under
this Agreement. The term "Management Representatives" shall mean the President
of DASI and any two Vice-Presidents of DASI designated from time to time by the
President of DASI.
10.2 Acknowledgement. The parties hereto acknowledge that they have read
and understood the Company's Certificate of Incorporation and By-Laws.
10.3 Notices. All notices, consents and other communications required or
permitted to be given under or by reason of this Agreement shall be in writing,
shall be
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<PAGE>
delivered personally or by telex or telecopy as described below or by reputable
overnight courier, and shall be deemed given on the date on which such delivery
is made. If delivered by telex or telecopy, such notices or communications
shall be confirmed by a registered or certified letter (return receipt
requested), postage prepaid. Any such delivery shall be addressed to (i) the HCI
Stockholders at the addresses set forth on Schedule I hereto, (ii) the
Management Stockholders at the addresses set forth on Schedule II hereto, and
(iii) to the other parties at the following addresses (or at such other address
for a party as shall be specified by such party by like notice to the other
parties):
(a) if to J2R or the Company:
c/o Hidden Creek Industries
4806 IDS Center
Minneapolis, Minnesota 55402
Attention: Scott D. Rued
Telecopy: (612) 332-2012
with a copy to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Jeffrey C. Hammes, Esq.
Telecopy: (312) 861-2200
(b) if to Onex:
169 Bay Street, 29th Floor (P.O. Box 700)
Toronto, Ontario M5J 2S1
Attention: President
Telecopy: (416) 362-5765
with a copy to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Jeffrey C. Hammes, Esq.
Telecopy: (312) 861-2200
(c) if to Orscheln:
Orscheln Co.
2000 U.S. Highway 63 South, P.O. Box 280
Moberly, Missouri 65270
Attn: James L. O'Loughlin, General Counsel
-38-
<PAGE>
Telecopy: (816) 269-4530
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Attention: Richard R. Howe, Esq.
Telecopy: (212) 558-3111
(d) if to any other person which becomes a party to this Agreement in
accordance with the terms hereof, at the address for delivery of notices or
communications given to all other parties by such party at such time.
Notices to any director of the Company or any Subsidiary shall be given:
(a) by telephone or delivery in person to such director at the address (or
telephone number) designated by him from time to time by notice to Onex and
the Company (in the case of Orscheln Directors) or to Orscheln and the Company
(in the case of MC Directors), confirmed by letter to such address; or
(b) by registered mail with postage prepaid. If a director has not
designated an address, notice to such director may be given to his address last
known to the Company.
10.4 Extended Meanings. In this Agreement, words importing the singular
number include the plural and vice versa and words importing gender include all
genders.
10.5 Captions. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the interpretation of this
Agreement.
10.6 Applicable Law. The corporate law of Delaware will govern all issues
concerning the Company's Certificate of Incorporation and By-Laws and the
relative rights of the Company and its stockholders. All other questions
concerning the construction, validity and interpretation of this Agreement will
be governed by the internal law, and not the law of conflicts, of the State of
New York.
10.7 Severability. The provisions of this Agreement are intended to be and
shall be deemed severable. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all
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<PAGE>
respects as if such invalid or unenforceable provision were omitted.
10.8 Currency. References in this Agreement to monetary amounts shall
be in United States currency unless otherwise expressly stated.
10.9 Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Shares and the respective successors and assigns of each of them, so
long as they hold Shares.
10.10 Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement will be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company, Orscheln, J2R and
Onex; provided that any modification, amendment or waiver of Article VI hereof
shall also require the approval in writing of the Management Representatives in
accordance with Section 10.1. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. No purported waiver
shall be effective unless in writing. The waiver by any party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent or other breach.
10.11 Remedies. The Stockholders shall be entitled to enforce their
rights under this Agreement specifically to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any Stockholder may in its sole discretion, subject to
Section 10.14, apply to any court of law or equity of competent jurisdiction for
temporary preliminary relief (specific performance and/or injunctive relief),
without posting a bond or other security) in order to enforce or prevent any
violation of the provisions of this Agreement.
10.12 Counterparts. This Agreement may be executed in counterparts,
each of which shall be considered an original, but all of which together shall
constitute one and the same instrument.
-40-
<PAGE>
10.13 Complete Agreement. This Agreement, the documents expressly referred
to herein (including the MC Stockholders Agreement and the Registration
Agreement) and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understanding, agreements or representations by or among the parties,
written or oral, that may be related to the subject matter hereof in any way
(including any agreements between MC Holding and its stockholders as of
immediately prior to the Closing Date), except for the Co-Investment Agreement
which will not be superseded or preempted as between Onex and J2R and the MC
Stockholders Agreement which will not be superseded or preempted as between the
MC Stockholders.
10.14 Arbitration. Any and all differences and disputes which may
arise between the parties to this Agreement, their heirs, successors, assigns,
employees, officers, directors, Affiliates, Subsidiaries or Stock holders which
are related to this Agreement shall be submitted for resolution to binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Prior to initiating arbitration, the parties shall
first meet face-to-face to attempt to resolve the differences. Any differences
which the parties are unable to resolve in said face-to-face meeting shall be
heard and finally settled in New York, New York, or in any other location
mutually agreed upon by the parties. Such arbitration shall be initiated in the
New York City office of the American Arbitration Association. Any award entered
in any such arbitration shall be final and binding and may be entered and
enforced in any court of competent jurisdiction. The arbitrator shall make such
orders, conduct and schedule all proceedings in connection with the arbitration
so that final arbitration commences no less than thirty (30) days and concludes
no later than seventy-five (75) days after a party files the initial notice of
arbitration, and so that the final arbitration award is made and delivered to
the parties within ninety (90) days after the filing of the initial notice of
arbitration. Nothing herein contained shall be construed as preventing any
party from instituting legal or equitable action in any jurisdiction against any
of the other parties for temporary or similar provisional relief to the full
extent permitted under the laws applicable to this Agreement, or any such other
written agreement between the parties or the performance hereof or thereof or
otherwise pending final settlement of any dispute, difference or question by
arbitration. Any such provisional relief may be
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<PAGE>
modified or amended in any way by the arbitrator at any time after his
appointment.
* * * * *
-42-
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Stockholders Agreement as of the date first above written.
THIS AGREEMENT IS SUBJECT TO A BINDING ARBITRATION AGREEMENT.
DURA AUTOMOTIVE HOLDING, INC.
By
___________________________
Its
__________________________
ONEX U.S. INVESTMENTS, INC.
By
___________________________
Its
__________________________
J2R CORPORATION
By
___________________________
Its
__________________________
ORSCHELN CO.
By
___________________________
Its
__________________________
______________________________
S.A. Johnson
______________________________
Scott D. Rued
______________________________
Robert R. Hibbs
______________________________
Mary L. Johnson
<PAGE>
__________________________________ ___________________________________
David R. Bovee Alfred C. Liddell
__________________________________ ___________________________________
Joe A. Bubenzer J. Frank Mack
__________________________________ ___________________________________
Miles G. Doolittle Michael McCabe
__________________________________ ___________________________________
Douglas Elliott William C. Oldenburg
__________________________________ ___________________________________
John A. Fritz Sandra Pritchard
__________________________________ ___________________________________
Anthony R. Gurney Earl Proctor
__________________________________ ___________________________________
Michael S. Hettle Keith R. Przybylski
__________________________________ ___________________________________
Henry L. Huber David A. Skrzyniarz
__________________________________ ___________________________________
Milton D. Kniss Karl F. Storrie
__________________________________ ___________________________________
Carl W. Kucsera John B. Truckey
__________________________________ ___________________________________
Michael J. Kukla George E. Whitehead
<PAGE>
SCHEDULE I - HCI STOCKHOLDERS
-----------------------------
S.A. Johnson
Scott D. Rued
Robert R. Hibbs
Mary L. Johnson
<PAGE>
SCHEDULE II - MANAGEMENT STOCKHOLDERS
-------------------------------------
David R. Bovee
Joe A. Bubenzer
Miles G. Doolittle
Douglas Elliott
John A. Fritz
Anthony R. Gurney
Michael S. Hettle
Henry L. Huber
Milton D. Kniss
Carl W. Kucsera
Michael J. Kukla
Alfred C. Liddell
J. Frank Mack
Michael McCabe
William C. Oldenburg
Sandra Pritchard
Earl Proctor
Keith R. Przybylski
David A. Skrzyniarz
Karl F. Storrie
John B. Truckey
George E. Whitehead
<PAGE>
EXHIBIT 4.2
AMENDMENT TO STOCKHOLDERS AGREEMENT
THIS AMENDMENT (the "Amendment") is made and entered into as of May 17,
1995, by and between Dura Automotive Holding, Inc., a Delaware corporation (the
"Company"), Onex DHC LLC, a Wyoming limited liability company ("Onex"), J2R
Corporation, a Delaware corporation ("J2R"), Orscheln Co., a Delaware
corporation ("Orscheln"), each of the persons listed on Schedule I hereto (the
"HCI Stockholders"), and each of the persons listed on Schedule II hereto (the
"Management Stockholders").
The Company, Onex, J2R, Orscheln, the HCI Stockholders and the Management
Stockholders are parties to that certain Stockholders Agreement dated as of
August 31, 1994 (the "Stockholders Agreement"). Capitalized terms used and not
defined herein are used as defined in the Stockholders Agreement.
The parties hereto are entering into this Amendment to amend the
Stockholders Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Amendments to the Stockholders Agreement.
(a) Section 1.1. Section 1.1 of the Stockholders Agreement shall be
amended by deleting the definition of "Common Stock" and replacing by the
following new definition of "Common Stock":
"Common Stock" means (i) the Class A Common, the Class A Non-
Voting Common Stock, par value $.01 per share, the Class B Common, and
the Class C Common of the Company, (ii) any Class A Common issued or
issuable upon exercise of any options issued by the Company
(including, without limitation, the Orscheln Option) and (iii) any
equity securities issued or issuable by the Company with respect to
the securities referred to in clauses (i) and (ii) hereof in
connection with any stock split, stock dividend, combination of
shares, recapitalization, merger, consolidation or other
reorganization.
(b) Section 10.12. Section 10.12 of the Stockholders Agreement shall
be deleted in its entirety and shall be replaced by the following new
Section 10.12:
10.12 Counterparts.
(a) This Agreement may be executed in counterparts, each of
which shall be considered an original, but all of which together
shall constitute one and the same instrument.
<PAGE>
(b) Any Management Stockholder may also execute this
Agreement by executing and delivering to the Company a
counterpart and acknowledgment in the form set out as Schedule
III to this Agreement, whereupon such Management Stockholder
shall become bound by, and entitled to the benefits of, this
Agreement as fully and effectively as though such Management
Stockholder had executed a counterpart of this Agreement together
with the other parties to this Agreement.
(c) Schedule III. Schedule III to this Amendment shall be added as
Schedule III to the Stockholders Agreement.
2. Effect. Except as amended by this Amendment, the Stockholders
Agreement shall remain in full force and effect. All references to the
"Agreement" in the Stockholders Agreement shall hereafter be deemed to refer to
the Stockholders Agreement as amended hereby.
3. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
4. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Amendment and the schedule
hereto shall be governed by, and construed in accordance with, the laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
DURA AUTOMOTIVE HOLDING, INC. J2R CORPORATION
By: /s/ David Bovee By:
------------------------- ---------------------------
Its: Vice President Its:
------------------------ --------------------------
ONEX DHC LLC ORSCHELN CO.
By: By:
------------------------- ---------------------------
Its: Its:
------------------------ --------------------------
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
DURA AUTOMOTIVE HOLDING, INC. J2R CORPORATION
By: By: /s/ Mary L. Johnson
------------------------- ---------------------------
Its: Its: Vice Pres.
------------------------ --------------------------
ONEX DHC LLC ORSCHELN CO.
By: By:
------------------------- ---------------------------
Its: Its:
------------------------ --------------------------
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
DURA AUTOMOTIVE HOLDING, INC. J2R CORPORATION
By: By:
------------------------- ---------------------------
Its: Its:
------------------------ --------------------------
ONEX DHC LLC ORSCHELN CO.
By: /s/ Donald F. West By:
------------------------- ---------------------------
Its: REPRESENTATIVE Its:
------------------------ --------------------------
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
DURA AUTOMOTIVE HOLDING, INC. J2R CORPORATION
By: By:
------------------------- ---------------------------
Its: Its:
------------------------ --------------------------
ONEX DHC LLC ORSCHELN CO.
By: By: /s/ James O'Loughlin
------------------------- ---------------------------
Its: Its: VP & GC
------------------------ --------------------------
<PAGE>
MANAGEMENT REPRESENTATIVES
(ON BEHALF OF ALL HCI
STOCKHOLDERS AND ALL
MANAGEMENT STOCKHOLDERS)
/s/ Karl F. Storrie /s/ David R. Bovee
- ---------------------------------- -----------------------------------
Karl F. Storrie David R. Bovee
- ----------------------------------
Robert R. Hibbs
<PAGE>
MANAGEMENT REPRESENTATIVES
(ON BEHALF OF ALL HCI
STOCKHOLDERS AND ALL
MANAGEMENT STOCKHOLDERS)
- ---------------------------------- -----------------------------------
Karl F. Storrie David R. Bovee
/s/ Robert R. Hibbs
- ----------------------------------
Robert R. Hibbs
<PAGE>
SCHEDULE I - HCI STOCKHOLDERS
S.A. Johnson
Scott D. Rued
Robert R. Hibbs
Mary L. Johnson
<PAGE>
SCHEDULE II - MANAGEMENT STOCKHOLDERS
David R. Bovee
Joe A. Bubenzer
Miles G. Doolittle
Douglas Elliott
John A. Fritz
Anthony R. Gurney
Michael S. Hettle
Henry L. Huber
Milton D. Kniss
Carl W. Kucsera
Michael J. Kukla
Alfred C. Liddell
J. Frank Mack
Michael McCabe
William C. Oldenburg
Sandra Pritchard
Earl Proctor
Keith R. Przybylski
David A. Skrzyniarz
Karl F. Storrie
John B. Truckey
George E. Whitehead
<PAGE>
SCHEDULE III
STOCKHOLDERS AGREEMENT
COUNTERPART AND ACKNOWLEDGMENT
------------------------------
TO: DURA AUTOMOTIVE HOLDING, INC., ONEX DHC LLC, J2R CORPORATION, ORSCHELN CO.,
THE HCI STOCKHOLDERS, AND THE MANAGEMENT STOCKHOLDERS
RE: The Stockholders Agreement (the "Agreement") dated as of August 31, 1994
and amended as of May 17, 1995 between Dura Automotive Holding, Inc., Onex
DHC LLC, J2R Corporation, Orscheln Co., the HCI Stockholders, and the
Management Stockholders (as defined in the Agreement).
The undersigned hereby agrees to be bound by the terms of the Agreement as
a party to the Agreement, and shall be entitled to all benefits of a Management
Stockholder pursuant to the Agreement, as fully and effectively as though the
undersigned had executed a counterpart of the Agreement together with the other
parties to the Agreement. The undersigned hereby acknowledges having received
and reviewed a copy of the Agreement.
Dated this _____ of May, 1995.
-------------------------------------------------------------------
Signature of Management Stockholder
-------------------------------------------------------------------
Name of Management Stockholder (Please Print)
Address:
------------------------------------------------------------
------------------------------------------------------------
Agreed to and accepted this day of May, 1995.
---
DURA AUTOMOTIVE HOLDING, INC. J2R CORPORATION
By: By:
-------------------------- --------------------------------
Its: Its:
------------------------ ------------------------------
ONEX DHC LLC ORSCHELN CO.
By: By:
-------------------------- --------------------------------
Its: Its:
------------------------ ------------------------------
<PAGE>
Exhibit 4.3
REGISTRATION AGREEMENT
----------------------
THIS AGREEMENT is made as of August 31, 1994, among Dura Automotive
Holding, Inc., a Delaware corporation (the "Company"), the Persons listed on
Schedule A attached hereto (the "MC Stockholders") and Orscheln Co., a Delaware
corporation ("Orscheln").
The parties to this Agreement are parties to either a Joint Venture
Agreement of even date herewith (the "Joint Venture Agreement") or a Management
Contribution Agreement of even date herewith (the "Management Contribution
Agreement"). In order to induce the MC Stockholders and Orscheln to enter into
the Joint Venture Agreement or the Management Contribution Agreement, as the
case may be, the Company has agreed to provide the registration rights set forth
in this Agreement. The execution and delivery of this Agreement is a condition
to the closing under the Joint Venture Agreement. Unless otherwise provided in
this Agreement, capitalized terms used herein shall have the meanings set forth
in paragraph 11 hereof.
The parties hereto agree as follows:
1. Demand Registrations.
--------------------
(a) Right to Require Registration. At any time or from time to time
after such date as the Company has completed an initial public offering of its
equity secur ities registered under the Securities Act, the holders of at least
a majority of the MC Registrable Securities and the holders of at least a
majority of the Orscheln Registrable Securities shall each have the right to
require the Company to use its best efforts to cause the registration under the
Securities Act of all or part of their MC Registrable Securities or their
Orscheln Registrable Securities, as applicable, on Form S-1 or any similar long-
form registra tion ("Long-Form Registrations") or, if available, on Form S-2 or
S-3 or any similar short-form registration ("Short-Form Registrations"). Each
notice (a "Demand") from one or more holders of Registrable Securities that it
or they desire to exercise the right to a Demand Registration (as hereinafter
defined) shall be in writing and shall specify the names of the holder or
holders of Registrable Securities on whose behalf the Demand is being made, the
approximate number of Registrable Securities as to which such right is being
exercised, the intended method of distribution of such Registrable Securities
and the antici pated per share price range for such offering. Each Demand shall
contain a representation by the holder or holders of
<PAGE>
Registrable Securities that it or they have a right pursuant to this Agreement
to deliver such Demand. Within ten days after receipt of any Demand, the Company
will give written notice of such requested registration to all other holders of
Registrable Securities and will include in such registra tion all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within 15 days after the receipt of the Company's notice. All
registrations requested pursuant to this paragraph 1(a) are referred to herein
as "Demand Registrations."
(b) Number of Demand Registrations. At any time or from time to time
after such date as the Company has completed an initial public offering of its
equity secur ities registered under the Securities Act, the holders of a
majority of the Orscheln Registrable Securities will be entitled to four Demand
Registrations that are Long-Form Registrations and an unlimited number of Demand
Registra tions that are Short-Form Registrations in which the Company will pay
all Registration Expenses ("Orscheln Demand Registrations"); provided that the
Company shall in no event be required to file a Demand Registration if the
amount of Orscheln Registrable Securities to which a Demand relates is less than
20% of the total number of Orscheln Registrable Securities outstanding. The
holders of a majority of the MC Registrable Securities will be entitled to four
Demand Registrations that are Long-Form Registrations and an unlim ited number
of Demand Registrations that are Short-Form Registrations in which the Company
will pay all Registration Expenses ("MC Demand Registrations") provided that the
Company shall in no event be required to file a Demand Registration if the
amount of MC Registrable Securities to which a Demand relates is less than 20%
of the total number of MC Registrable Securities outstanding.
(c) Long-Form Registrations. A registration will not count as one of
the permitted Long-Form Registrations until it has become effective (unless such
registration has not become effective due solely to the refusal of the holders
requesting registration to furnish information required therefor and such
holders to not agree to bear all Registration Expenses in connection therewith),
and the last or any subsequent Long-Form Registration which is an Orscheln
Demand Registration or an MC Demand Registration will not count as one of the
permitted Long-Form Registra tions unless the holders of Registrable Securities
request ing such registration are able to register and sell at least 90% of the
Registrable Securities requested to be included in such registration, provided
that in any event the Company will pay all Registration Expenses in connection
with any registration initiated as a Long-Form Registration which is
-2-
<PAGE>
an Orscheln Registration or an MC Demand Registration whether or not it has
become effective. All Long-Form Registrations shall be underwritten
registrations unless the requesting holders specify that the offering is to be
made on a continuous or delayed basis in the future and a Short-Form
Registration is not available for such offering.
(d) Short-Form Registrations. Demand Registrations will be Short-Form
Registrations whenever the Company is permitted to use any applicable short
form. After the Company has become subject to the reporting requirements of the
Securities Exchange Act, the Company will use its best efforts to make Short-
Form Registrations available for the sale of Registrable Securities.
(e) Priority on Demand Registrations. The Company will not include in
any Demand Registration any securities which are not Registrable Securities
without the prior written consent of the holders of a majority of the Securities
included in such registration. If a Demand Registration is an underwritten
offering and the managing underwriters advise the Company in writing that in
their opinion the number of Registrable Securities and, if per mitted hereunder,
other securities requested to be included in such offering exceeds the number of
Registrable Secur ities and other securities, if any, which can be sold therein
without adversely affecting the marketing of the offering, the Company will
include in such registration prior to the inclusion of any securities which are
not Registrable Securities the number of Registrable Securities requested to be
included which in the opinion of such underwriters can be sold without adversely
affecting the marketing of the offering, pro rata among the respective holders
thereof on the basis of the number of Registrable Securities owned by each such
holder.
(f) Restrictions on Demand Registrations. Notwithstanding anything
herein to the contrary, (i) the Company will not be obligated to effect any
Demand Regis tration within six months after the effective date of a Demand
Registration or a registration in which the holders of Registrable Securities
were given piggyback rights pursuant to paragraph 2 and in which there was no
reduction in the number of Registrable Securities requested to be included,
provided, however, that in such event the holders of Registrable Securities
making a Demand may withdraw the request for registration and such request shall
not be considered one of the permitted Demand Registrations referred to above;
and (ii) the Company will not be required to file any such registration
statement during any period of time (not to exceed sixty days in the aggregate
with respect
-3-
<PAGE>
to each request) when the Company is in possession of material information that
it deems advisable not to disclose in a registration statement, provided,
however, that if at the expiration of any period of time referred to in this
clause (ii) the holders of Registrable Securities withdraw the registration
request, such request shall not be con sidered one of the permitted Demand
Registration requests referred to above. The Company may postpone for up to six
months the filing or the effectiveness of a registration statement for a Demand
Registration if the Company and the holders of a majority of the Registrable
Securities agree that such Demand Registration would reasonably be expected to
have an adverse effect (x) on any proposal or plan by the Company or any of its
Subsidiaries to engage in any acqui sition of assets (other than in the ordinary
course of business) or any merger, consolidation, tender offer or similar
transaction, or (y) any material corporate devel opment; provided that in such
event, the holders of Registrable Securities initially requesting such Demand
Registration will be entitled to withdraw such request and, if such request is
withdrawn, such Demand Registration will not count as one of the permitted
Demand Registrations hereunder and the Company will pay all Registration
Expenses in connection with such registration.
(g) Selection of Underwriters. In the case of an MC Demand
Registration, the holders of a majority of the MC Registrable Securities
included in any MC Demand Registra tion will have the right to select the
underwriters for the purposes of any underwritten offering, provided that the
"book running" managing underwriter so designated shall be a nationally
recognized investment banking firm, subject to the Company's approval, which
will not be unreasonably withheld. In the case of an Orscheln Demand
Registration, the holders of a majority of the Orscheln Registrable Securities
included in any Orscheln Demand Registration will have the right to select the
underwriters for the purposes of any underwritten offering, provided that the
"book running" managing underwriter so designated shall be a nationally
recognized investment banking firm, subject to the Company's approval, which
will not be unreasonably withheld.
(h) Other Registration Rights. Except as provided in this Agreement,
the Company will not grant to any Persons the right to request the Company to
register any equity securities of the Company, or any securities con vertible or
exchangeable into or exercisable for such securities, without the prior written
consent of the holders of at least a majority of the MC Registrable Securities
and the prior written consent of the holders of at least a
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majority of the Orscheln Registered Securities; provided that the Company may
grant rights to other Persons to participate in Piggyback Registrations or
Demand Regis trations so long as such rights are subordinate to the rights of
the holders of Registrable Securities with respect to such Piggyback
Registrations or Demand Registrations.
2. Piggyback Registrations.
-----------------------
(a) Right to Piggyback. Whenever the Company proposes to register any
of its equity securities under the Securities Act (including secondary
registrations on behalf of the holders of its securities other than pursuant to
a Demand Registration), other than a registration statement on Form S-8 or Form
S-4 covering solely securities issued in connection with a transaction specified
in Rule 145(a) under the Securities Act, (a "Piggyback Registration"), the
Company will give written notice to all holders of Regis trable Securities of
its intention to effect such a regis tration at least 15 days prior to the
anticipated filing date of such Piggyback Registration; provided, however, that
if the giving of such notice would require the Company to make a general
announcement of the proposed filing of such Piggyback Registration, such notice
may be given within five days after such filing but shall be given at least
thirty days prior to the anticipated effective date of such Piggyback
Registration. Such notice shall offer to include in such Piggyback Registration
for offer to the public such number of Registrable Securities as each such
holder may request, subject to the conditions set forth herein. Should any
holder of Registrable Securities desire to have any Registrable Securities
included in such Piggyback Regis tration and offered to the public, such holder
shall so advise the Company in writing not later than 10 business days after
receipt of the Company's notice referred to above. Such notice shall set forth
the names of the holders who have elected to have all or some of their
Registrable Securities registered in the Piggyback Registration and the number
of Registrable Securities which such holder or holders desire to have included
in the Piggyback Registra tion and offered to the public. Upon the request of
the Company, such holder shall enter into such underwriting, custody and other
agreements as shall be customary in connection with registered secondary
offerings.
(b) Piggyback Expenses. The Registration Expenses of the holders of
Registrable Securities will be paid by the Company in all Piggyback
Registrations.
(c) Priority on Primary Registrations. If a Piggyback Registration is
an underwritten primary
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registration on behalf of the Company, and the managing underwriters advise the
Company in writing that in their opinion the number of securities requested to
be included in such registration exceeds the number which can be sold in such
offering without adversely affecting the marketing of the offering, the Company
will include in such registration (i) first, the securities the Company proposes
to sell, (ii) second, the Registrable Securities requested to be included in
such registration, pro rata among the holders of such Registrable Securities on
the basis of the number of shares owned by each such holder, and (iii) third,
other securities requested to be included in such registration.
(d) Priority on Secondary Registrations. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of the Company's
securities, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketing of the offering, the Company will include in
such registration (i) first, the securities requested to be included therein by
the holders requesting such registration, (ii) second, the Registrable
Securities requested to be included in such registration, pro rata among the
holders of such Registrable Securities on the basis of the number of shares
owned by each such holder, and (iii) third, other securities requested to be
included in such registration.
(e) Selection of Underwriters. If any Piggyback Registration is an
underwritten offering, the "book running" managing underwriter for the
underwriting shall be a nationally recognized investment banking firm, and the
selection of the underwriters for the offering must be approved by the holders
of a majority of the Registrable Securities included in such Piggyback
Registration. Such approval will not be unreasonably withheld.
(f) Other Registrations. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to
paragraph 1 or pursuant to this paragraph 2, and if such previous registration
has not been withdrawn or abandoned, the Company will not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-8 or Form S-4 covering solely securities
issued in connection with a transaction specified in Rule 145(a) under the
Securities Act or any successor form), whether on its own behalf or at the
request of any holder or holders of such securities, until a period
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of at least six months has elapsed from the effective date of such previous
registration.
3. Conditions Relating to Registration. The registration rights of
the holders of Registrable Securities are subject to the following conditions:
(a) A holder whose Registrable Securities are to be included in a
Demand Registration or a Piggyback Registration, as the case may be (a
"Selling Holder"), shall provide the Company with such information with
respect to the Registrable Securities to be sold, the plans for the proposed
disposition thereof, and such other information as shall, in the opinion of
counsel for the Company, be necessary to enable the Company to include in
the registration statement relating to the Demand Registration or Piggyback
Registration, as the case may be, all material facts required to be
disclosed with respect to the Selling Holder or Holders;
(b) The Company shall not be required to furnish any audited financial
statements at the request of the Selling Holder or Holders other than those
statements customarily prepared at the end of its fiscal year, unless (i)
the Selling Holder or Holders shall agree to reimburse the Company for the
out-of-pocket costs incurred by the Company in the preparation of such other
audited financial statements or (ii) such audited financial statements shall
be required by the Securities and Exchange Commission as a condition to
ordering a registration statement effective under the Securities Act; and
(c) The Company shall not be required by the Selling Holder or Holders
to amend or supplement any registration statement filed hereunder at any
time after the 60th day following its effective date.
4. Holdback Agreements.
(a) If and to the extent requested in writing by the underwriter or
managing underwriter in the case of an underwritten offering relating to a
Demand Registration or Piggyback Registration, each holder of Registrable
Securities agrees not to effect any public sale or distribution (including
sales pursuant to Rule 144) of equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for such
securities, during the 10 day prior to the requested effective date of, and
during the period of such underwriting beginning on the actual effective
date of, such registration statement and
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<PAGE>
ending 90 days after such effective date (except pursuant to such registration
statement).
(b) The Company agrees (i) not to effect any public sale or
distribution of, or purchase any of, its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
10 day period prior to the requested effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration and ending 90 days after
such effective date (except as part of such underwritten registration or
pursuant to registrations on Form S-8 or Form S-4 covering solely securities
issued in connection with a transaction specified in Rule 145(a) under the
Securities Act or any successor form), unless the underwriters managing the
registered public offering otherwise agree, and (ii) to cause each holder of its
common stock, or any securities convertible into or exchangeable or exercisable
for common stock, purchased from the Company at any time after the date of this
Agreement (other than in a registered public offering) to agree not to effect
any public sale or distribution (including sales pursuant to Rule 144) of any
such securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
registered public offering otherwise agree.
5. Registration Procedures. (a) Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company will use its best efforts to effect or cause the
Demand Registration or Piggyback Registration, as the case may be, to permit the
sale of such Registrable Securities by the holders thereof in accordance with
the intended method of disposition thereof described in such Demand Registration
or Piggyback Registration (including the registration of Common Stock held by a
holder of Registrable Securities requesting registration as to which the Company
has received reasonable assurances that only Registrable Securities will be
distributed to the public), and pursuant thereto the Company will as soon as
reasonable possible:
(i) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities on any
form which may be utilized by the Company and which shall permit the
disposition of the Registrable Securities in accordance with the intended
method or methods thereof, as specified in writing by such holders of
Registrable Securities, and use its best efforts to cause such registration
statement to become effective (provided
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<PAGE>
that before filing a registration statement or prospectus or any amendments
or supplements thereto, the Company will furnish to (A) each seller of
Registrable Securities, (B) each underwriter (which term, for purposes of
this Agreement, shall include a person deemed to be an underwriter within
the meaning of Section 2(11) of the Securities Act), if any, thereof, (C)
the sales or placement agent, if any, therefor, (D) counsel for such
underwriters or agent, (E) counsel for each holder of more than 5% of the
Registrable Securities and (F) counsel for the managing underwriter or
underwriters, if any, thereof copies of all such documents proposed to be
filed, and provide such persons the opportunity to participate in the
preparation of such registration statement, each prospectus included therein
or filed with the Securities and Exchange Commission, and each amendment or
supplement thereto;
(ii) prepare and file with the Securities and Exchange Commission
such amendments and supplements to such registration statement and the
prospectus included therein as may be necessary to effect and maintain the
effectiveness of such registration statement for a period of not less than
six months and as may be required by the applicable rules and regulations of
the Securities and Exchange Commission and the instructions applicable to
the form of such registration statement, cause each required prospectus
supplement to be filed with the Securities and Exchange Commission pursuant
to Rule 424 under the Securities Act to the extent required thereby, and
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;
(iii) furnish to each seller of Registrable Securities, each
placement or sales agent, if any, therefor, each underwriter, if any,
thereof and the respective counsel referred to in paragraph 5(a)(i) an
executed copy of such registration statement, each such amendment and
supplement thereto (in each case including all exhibits thereto and
documents incorporated by reference therein) and such number of copies of
such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller, such agent,
if any, and such underwriter, if any, may reasonably
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<PAGE>
request in order to facilitate the disposition of the Registrable Securities
owned by such seller, offered and sold by such agent or underwritten by such
underwriter and to permit such holder, agent or underwriter to satisfy the
prospectus delivery requirements of the Securities Act; and the Company
hereby consents to the use of such prospectus (including such preliminary
and summary prospectus) and any amendment or supplement thereto by each such
holder and by any such agent and underwriter, in each case in the form most
recently provided to such party by the Company, in connection with the
offering and sale of the Registrable Securities covered by the prospectus
(including such preliminary and summary prospectus) or any supplement or
amendment thereto;
(iv) promptly notify the Selling Holders of Registrable Securities,
the sales or placement agent, if any, therefor and the managing underwriter
or underwriters, if any, thereof and confirm such advice in writing, (A)
when such registration statement or the prospectus included therein or any
prospectus amendment or supplement or post-effective amendment has been
filed, and, with respect to such registration statement or any post-
effective amendment, when the same has become effective, (B) of any comments
by the Securities and Exchange Commission or by any Blue Sky or securities
commissioner or regulator of any state with respect thereto or any request
by the Securities and Exchange Commission for amendments or supplements to
such registration statement or prospectus or for additional information, (C)
of the issuance by the Securities and Exchange Commission of any stop order
suspending the effectiveness of such registration statement or the
initiation or threatening of any proceedings for that purpose, (D) if at any
time the representations and warranties of the Company contemplated by
paragraph 7 hereof cease to be true and correct in all material respects, or
(E) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose;
(v) use its best efforts to (A) register or qualify such Registrable
Securities under such other securities or insurance laws or blue sky laws of
such jurisdictions as any seller of Registrable Securities, each placement
or sales agent, if any, therefor, and underwriter, if any, thereof
reasonably requests,
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<PAGE>
(B) keep such registrations or qualifications in effect and comply with such
laws so as to permit the continuance of offers, sales and dealings therein
in such jurisdictions for so long as may be necessary to enable any such
holder, agent or underwriter to complete its distribution of Registrable
Securities pursuant to such registration statement and (C) do any and all
other acts and things which may be reasonably necessary or advisable to
enable such seller, agent, if any, and underwriter, if any, to consummate
the disposition in such jurisdictions of the Registrable Securities owned by
such seller of Registrable Securities (provided that the Company will not be
required to (1) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this subparagraph, (2)
subject itself to taxation in any such jurisdiction or (3) consent to
general service of process in any such jurisdiction);
(vi) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, that such registration statement, prospectus, prospectus
amendment or supplement or post-effective amendment, or any document
incorporated by reference in any of the foregoing, contains an untrue
statement of a material fact or omits to state any material fact required to
be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing, and, at the request of any such
seller, the Company will promptly prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement
of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(vii) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are
then listed and, if not so listed, to be listed on the NASD automated
quotation system and, if listed on the NASD automated quotation system, use
its best efforts to secure designation of all such Registrable Securities
covered by such registration statement as a NASDAQ "national market system
security" within the meaning of Rule 11Aa2-1 of the Securities and Exchange
Commission or, failing that, to secure NASDAQ authorization for such
Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least
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<PAGE>
two market makers to register as such with respect to such Registrable
Securities with the NASD;
(viii) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such
registration statement;
(ix) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders
of a majority of the Registrable Securities being sold or the underwriters,
if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities;
(x) for a reasonable period prior to the filing of such registration
statement, and throughout the period ending six months after the effective
date of such registration statement, make available for inspection by any of
the parties referred to in paragraph 5(a)(i) above and any attorney,
accountant or other agent retained by any such seller or underwriter, all
financial and other information and records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors,
employees, counsel and independent accountants to supply all information and
to respond to such inquiries requested or made by any such person in
connection with such registration statement, as shall be reasonably
necessary, in the judgment of the respective counsel referred to in such
paragraph, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act;
(xi) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning
with the first day of the Company's first full calendar quarter after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(xii) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification
of any security included in such registration
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<PAGE>
statement for sale in any jurisdiction, the Company will use its reasonable
best efforts promptly to obtain the withdrawal of such order;
(xiii) obtain cold comfort letters, dated (A) the effective date of
such registration statement, (B) the date the Registrable Securities being
sold are delivered to the underwriters, if any, for sale pursuant thereto
and (C) if required by the underwriters, if any, on or prior to the date of
any preliminary prospectuses, from the Company's independent public
accountants in customary form and covering such matters of the type
customarily covered by cold comfort letters and if the Registrable
Securities included in such registration statement constitute at least 10%
of the securities covered by such registration statement, also covering such
matters as the holders of a majority of the Registrable Securities being
sold reasonably request;
(xiv) provide a legal opinion of the Company's outside counsel with
respect to the registration statement, each amendment and supplement
thereto, the prospectus included herein (including the preliminary
prospectus) and such other documents relating thereto in customary form and
covering such matters of the type customarily covered by legal opinions of
such nature;
(xv) if requested by the managing underwriter or underwriters, any
placement or sales agent or any holder of Registrable Securities being sold
in connection with an underwritten offering, promptly incorporate in a
prospectus supplement or post-effective amendment such information as is
required by the applicable rules and regulations of the Securities and
Exchange Commission and as such managing underwriter or underwriters, such
agent or any such holder specifies should be included therein relating to
the plan of distribution with respect to such Registrable Securities,
including, without limitation, information with respect to the Registrable
Securities being sold by a holder or Registrable Securities or agent or to
any underwriters, the name and description of such holder, agent or
underwriter, the offering price of such Registrable Securities and any
discount, commission or other compensation payable in respect thereof, the
purchase price being paid thereof by such underwriters and with respect to
any other terms of the offering of the Registrable Securities to be sold by
such holder or agent or to such underwriters; and make all required filings
of such prospectus supplement or
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post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment;
(xvi) cooperate with the Selling Holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold,
which certificates shall be printed, lithographed or engraved, or produced
by any combination of such methods, on steel engraved borders and shall not
bear any restrictive legends; and in the case of an underwritten offering,
enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters may request at least
two business days prior to any sale of Registrable Securities to the
underwriters;
(xvii) use its best efforts to cause the Registrable Securities
covered by the applicable registration statement to be registered with,
consented to or approved by such other governmental agencies or authorities
(whether federal, state or local) as may be necessary to enable the seller
or sellers thereof or the underwriters, if any, to consummate the
disposition of such Registrable Securities;
(xviii) whether or not an agreement of the type referred to in
paragraph 5(a)(ix) hereof is entered into and whether or not any portion of
the offering contemplated by such registration statement is an underwritten
offering or is made through a placement or sales agent or any other entity,
(A) make such representations and warranties to the holders of such
Registrable Securities and the placement or sales agent, if any, therefor
and the underwriters, if any, thereof in form, substance and scope as are
customarily made in connection with an offering of equity securities
pursuant to any appropriate agreement and/or to a registration statement
filed on the form applicable to such Demand Registration or such Piggyback
Registration, as the case may be; (B) obtain an opinion of counsel to the
Company in customary form and covering such matters, of the type customarily
covered by such an opinion, as the managing underwriters, if any, and the
holders of at least a majority of the Registrable Securities may reasonably
request, addressed to such holder or holders and the placement or sales
agent, if any, therefor and the underwriters, if any, thereof and dated the
effective date of such registration statement (and if such registration
statement contemplates an
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underwritten offering of a part or all of the Registrable Securities, dated
the date of the closing under the underwriting agreement relating thereto)
(it being agreed that the matters to be covered by such opinion shall
include, without limitation, the due incorporation and good standing of the
Company and its Subsidiaries; the qualification of the Company and its
Subsidiaries to transact business as foreign corporations; the due
authorization, execution and delivery of any agreement of the type referred
to in paragraph 5(a)(ix) hereof; the due authorization, valid issuance and
non-assessability of the Registrable Securities being sold; the nature of
the title held by the Company and its Subsidiaries to real and personal
property; the absence of material legal or governmental proceedings
involving the Company; the absence of a breach by the Company or its
Subsidiaries of, or a default under, agreements binding the Company or any
Subsidiary; the absence of governmental approvals required to be obtained in
connection with such Demand Registration or such Piggyback Registration, as
the case may be, the offering and sale of the Registrable Securities, this
Agreement or any agreement of the type referred to in paragraph 5(a)(ix)
hereof; the compliance as to form of such registration statement and any
documents incorporated by reference therein; the effectiveness of such
registration statement under the Securities Act; and, as of the date of the
opinion and of the registration statement or most recent post-effective
amendment thereto, as the case may be, the absence from such registration
statement and the prospectus included therein, as then amended or
supplemented, and from the documents incorporated by reference therein of an
untrue statement of a material fact or the omission to state therein a
material fact necessary to make the statements therein not misleading (in
the case of such documents, in the light of the circumstances existing at
the time that such documents were filed with the Securities and Exchange
Commission under the Securities Exchange Act)); (C) obtain a "cold comfort"
letter or letters from the independent certified public accountants of the
Company addressed to the Selling Holders of Registrable Securities and the
placement or sales agent, if any, therefor and the underwriters, if any,
thereof, dated (1) the effective date of such registration statement and (2)
the date of any prospectus supplement to the prospectus included in such
registration statement or the effective date of the most recent post-
effective amendment to such registration statement which includes unaudited
or audited financial statements as of a date or for a period
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subsequent to that of the latest such statements included in such
prospectus (and, if such registration statement contemplates an
underwritten offering pursuant to any prospectus supplement to the
prospectus included in such registration statement or post-effective
amendment to such registration statement which includes unaudited or
audited financial statements as of a date or for a period subsequent
to that of the latest such statements included in such prospectus,
dated the date of the closing under the underwriting agreement
relating thereto), such letter or letters to be in customary form and
covering such matters of the type customarily covered by letters of
such type; (D) deliver such documents and certificates, including
officers' certificates, as may be reasonably requested by the holders
of at least a majority of the Registrable Securities being sold and
the placement or sales agent, if any, therefor and the managing
underwriters, if any, thereof to evidence the accuracy of the
representations and warranties made pursuant to clause (A) above or
those contained in paragraph 7 hereof and the compliance with or
satisfaction of any agreements or conditions contained in the
underwriting agreement or other agreement entered into by the Company;
and (E) undertake such obligations relating to expense reimbursement,
indemnification and contribution as are provided in paragraph 8
hereof; and
(xix) notify in writing the Selling Holders of any proposal by
the Company to amend or waive any provision of this Agreement pursuant
to paragraph 12(d) hereof and of any amendment or waiver effected
pursuant thereto, each of which notices shall contain the text of the
amendment or waiver proposed or effected, as the case may be.
(b) In the event that the Company would be required, pursuant to
paragraph 5(a)(iv)(D) or paragraph 5(a)(vi) above, to notify the holders of
Registrable Securities, the placement or sales agent, if any, therefor and the
managing underwriters, if any, thereof, the Company shall without delay prepare
and furnish to each of such holders, to each placement or sales agent, if any,
and to each underwriter, if any, a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to purchasers of
Registrable Securities, such prospectus shall not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing. The holders of Registrable Securities agree that
upon receipt of any notice
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from the Company pursuant to paragraph 5(a)(iv)(D) or paragraph 5(a)(vi)
hereof, such holder shall forthwith discontinue the disposition of Registrable
Securities pursuant to the registration statement applicable to such Registrable
Securities until they shall have received copies of such amended or supplemented
prospectus, and if so directed by the Company each such holder shall deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such holder's possession of the prospectus covering such
Registrable Securities at the time of receipt of such notice.
(c) The Company may require each holder of Registrable Securities as
to which any registration is being effected to furnish to the Company such
information regarding such holder and such holder's intended method of
distribution of such Registrable Securities as the Company may from time to time
reasonably request in writing, but only to the extent that such information is
required in order to comply with the Securities Act. Each such holder agrees to
notify the Company as promptly as practicable of any inaccuracy or change in
information previously furnished by such holder to the Company or of the
occurrence of any event in either case as a result of which any prospectus
relating to such registration contains or would contain an untrue statement of a
material fact regarding such holder or such holder's intended method of
distribution of such Registrable Securities or omits to state any material fact
regarding such holder or such holder's intended method of distribution of such
Registrable Securities required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and promptly to furnish to the Company any additional information required to
correct and update any previously furnished information or required so that such
prospectus shall not contain, with respect to such holder or the distribution of
such Registrable Securities, an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.
6. Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all Securities and
Exchange Commission registration and filing fees, fees and expenses associated
with filings required to be made with the NASD (including, if applicable, the
fees and expenses of any "qualified independent underwriter" and its counsel as
may be required by the rules and regulations of the NASD), all fees and
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expenses in connection with the qualification of the Securities for offering and
sale under the state securities, insurance and blue sky laws referred to in
paragraph 5(a)(v) hereof, including reasonable fees and disbursements of
counsel for the placement or sales agent or underwriters in connection with such
qualifications, all expenses relating to the preparation, printing, distribution
and reproduction of each registration statement required to be filed hereunder,
each prospectus included therein or prepared for distribution pursuant hereto,
each amendment or supplement to the foregoing, the certificates representing the
Registrable Securities to be sold and all other documents relating hereto,
printing expenses, messenger and delivery expenses, and fees, disbursements and
expenses of counsel for the Company and all independent certified public
accountants (including the expenses of any opinions or "cold comfort" letters
required by or incident to such performance and compliance), underwriters
(excluding discounts and commissions) and other Persons retained by the Company
(all such expenses being herein called "Registration Expenses"), will be borne
as provided in this Agreement, except that the Company will, in any event, pay
its internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), the
expense of any annual audit or quarterly review, the expense of any liability
insurance and the expenses and fees for listing the securities to be registered
on each securities exchange on which similar securities issued by the Company
are then listed or on the NASD automated quotation system (on the National
Market System if the Company so qualifies). Except as expressly provided herein,
to the extent that any Registration Expenses are incurred, assumed or paid by
any holder of Registrable Securities or any placement or sales agent therefor or
underwriter thereof, the Company shall reimburse such person for the full amount
of the Registration Expenses so incurred, assumed or paid promptly after receipt
of a request therefor.
(b) In connection with each Demand Registration and each Piggyback
Registration, the Company will reimburse the holders of Registrable Securities
covered by such registration for the reasonable fees and disbursements of one
counsel chosen by the holders of a majority of the Registrable Securities
initially requesting such registration (in the case of a Demand Registration) or
the holders of a majority of the Registrable Securities included in such
registration (in the case of a Piggyback Registration).
(c) To the extent Registration Expenses are not required to be paid
by the Company, each holder of
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<PAGE>
securities included in any registration hereunder will pay those Registration
Expenses allocable to the registration of such holder's securities so included,
and any Registration Expenses not so allocable will be borne by all sellers of
securities included in such registration in proportion to the aggregate selling
price of the securities to be so registered.
7. Representations and Warranties. The Company represents and
warrants to, and agrees with, each of the holders from time to time of
Registrable Securities that:
(a) Each registration statement covering Registrable Securities and
each prospectus (including any preliminary or summary prospectus) contained
therein or furnished pursuant to paragraph 5(a)(iii) hereof and any further
amendments or supplements to any such registration statement or prospectus,
when it becomes effective or is filed with the Securities and Exchange
Commission, as the case may be, and, in the case of an underwritten offering of
Registrable Securities, at the time of the closing under the underwriting
agreement relating thereto, will conform in all material respects to the
requirements of the Securities Act and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and at all times
subsequent to the effective time when a prospectus would be required to be
delivered under the Securities Act, other than from (i) such time as a notice
has been given to the holders pursuant to paragraph 5(a)(iv)(D) or 5(a)(vi)
hereof until (ii) such time as the Company furnishes an amended or supplemented
prospectus pursuant to paragraph 5(B) hereof, each such registration statement,
and each prospectus (including any summary prospectus) contained therein or
furnished pursuant to paragraph 5(a)(iii) hereof, as then amended or
supplemented, will conform in all material respects to the requirements of the
Securities Act and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances then
existing; provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by any holder of
Registrable Securities expressly for use therein.
(b) Any documents incorporated by reference in any prospectus
referred to in paragraph 5(a)(iii) hereof, when they become or became effective
or are or were filed with the Securities and Exchange Commission, as the case
may
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<PAGE>
be, will conform or conformed in all material respects to the requirements of
the Securities Act or the Securities Exchange Act, as applicable, and none of
such documents will contain or contained an untrue statement of a material fact
or will omit or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by any holder of Registrable Securities expressly for use
therein.
(c) The compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein contemplated will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or any of its Subsidiaries is
bound or to which any of the property or assets of the Company or any Subsidiary
is subject, nor will such action result in any violation of the provisions of
the certificate of incorporation or the by-laws of the Company or any statute
or any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any Subsidiary or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the consummation by the Company of the transactions contemplated by
this Agreement, except the registration under the Securities Act of the
Registrable Securities, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities,
insurance or blue sky laws in connection with the offering and distribution of
the Registrable Securities.
(d) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding obligation of the
Company, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
8. Indemnification.
(a) In consideration of the agreements of the holders contained in
the Stockholders' Agreement, the
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<PAGE>
Company agrees to indemnify and hold harmless each holder of Registrable
Securities to be included in such registration, and each person who participates
as a placement or sales agent or as any underwriter in any offering or sale of
such Registrable Securities, and their respective officers and directors and
each Person who controls any such person (within the meaning of the Securities
Act) against all losses, claims, damages, liabilities and expenses, joint or
several, to which any of such holders or persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims damages or
liabilities (or actions in respect thereof) arise our of or are based upon an
untrue or alleged untrue statement of a material fact contained in any
registration statement under which such Registrable Securities were registered
under the Securities Act, or any preliminary, final or summary prospectus
contained therein of furnished by the Company to any such holder, or any
placement or sales agent or underwriter, or any amendment or supplement thereto,
or arise out of are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Company shall, and it hereby agrees
to, reimburse each such holder, such agent and such underwriter for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such action or claim; provided, however, that the Company shall
not be liable to any such person in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, or preliminary, final or summary prospectus, or
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such person expressly for use therein
and provided, further, that insofar as any such losses, claims, damages,
liabilities and expenses are caused by such holder's failure to deliver a copy
of the registration statement or prospectus or any amendments or supplements
thereto after the Company has furnished such holder with a sufficient number of
copies of the same.
(b) The Company may require, as a condition to including any
Registrable Securities in any registration statement filed pursuant to paragraph
2 hereof and to entering into any underwriting agreement with respect thereto,
that the Company shall have received an undertaking reasonably satisfactory to
it from the holder of such Registrable Securities and from each underwriter
named in any such underwriting agreement, severally and not jointly, to (i)
indemnify and hold harmless the Company and all holders
-21-
<PAGE>
of Registrable Securities against any losses, claims, damages or liabilities to
which the Company or such other holders of Registrable Securities may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in such registration statement, or any preliminary, final or summary
prospectus contained therein or furnished by the Company to any such holder,
agent or underwriter, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such holder or underwriter expressly for use therein, and (ii)
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such action or claim;
provided, however, that no such holder shall be required to undertake liability
to any person under this paragraph 8(b) for any amounts in excess of the dollar
amount of the proceeds to be received by such holder from the sale of such
holder's Registrable Securities pursuant to such registration.
(c) Any Person entitled to indemnification hereunder will give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification (but the omission so to notify the indemnifying party
shall not relieve it from any liability which it may have to any indemnified
party other than under the indemnification provisions of or contemplated by
paragraph 8(a) or 8(b) hereof). In case any such action shall be brought
against any indemnified party and it shall notify an indemnifying party of the
commencement thereof, such indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, jointly with any
other indemnifying party similarly notified, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party). If such defense is assumed, the indemnifying party will not be subject
to any liability for any settlement made by the indemnified party without its
consent (but such consent will not be unreasonably withheld) and, after notice
from the
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<PAGE>
indemnifying party to such indemnified party of its election so to assume the
defense thereof, such indemnifying party shall not be liable to such indemnified
party for any legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. An indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim.
(d) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the transfer of securities.
(e) Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by paragraph 8(a) or paragraph 8(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or by such indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
paragraph 8(e) were determined by pro rata allocation (even if the holders or
any agents or underwriters or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
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<PAGE>
equitable considerations referred to in this paragraph 8(e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this paragraph 8(e), no holder shall
be required to contribute any amount in excess of the amount by which the dollar
amount of the proceeds received by such holder from the sale of any Registrable
Securities (after deducting any fees, discounts and commissions applicable
thereto) exceeds the amount of any damages which such holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, and no underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The holders' and any underwriters' obligations in this
paragraph 8(e) to contribute shall be several in proportion to the number of
Registrable Securities registered or underwritten, as the case may be, by them
and not joint.
(f) The obligations of the Company under this paragraph 8 shall be in
addition to any liability which the Company may otherwise have and such
obligations shall extend, upon the same terms and conditions, to each officer,
director and partner of each holder, agent and underwriter and each person, if
any, who controls any holder, agent or underwriter within the meaning of the
Securities Act; and the obligations of the holders and any underwriters
contemplated by this paragraph 8 shall be in addition to any liability which the
respective holder or underwriter may otherwise have and such obligations shall
extend, upon the same terms and conditions, to each officer and director of the
Company (including any person who, with his consent, is named in any
registration statement as about to become a director of the Company) and to each
person, if any, who controls the Company within the meaning of the Securities
Act.
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<PAGE>
9. Participation in Underwritten Registrations.
(a) No Person may participate in any registration hereunder which is
underwritten unless such Person (i) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements (including, without
limitation, pursuant to the terms of any overallotment or "green shoe" option
requested by the managing underwriter(s)) and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
(b) Each Person that is participating in any registration hereunder
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in paragraph 5(a)(iv)(D) or 5(a)(vi) above, such
Person will forthwith discontinue the disposition of its Registrable Securities
pursuant to the registration statement until such Person's receipt of the copies
of a supplemented or amended prospectus as contemplated by such paragraph
5(a)(vi).
10. Current Public Information. The Company covenants to the holders
of Registrable Securities that to the extent it shall be required to do so under
the Securities Exchange Act, the Company shall timely file the reports required
to be filed by it under the Securities Exchange Act or the Securities Act
(including, but not limited to, the reports under Sections 13 and 15(d) of the
Securities Exchange Act referred to in subparagraph (c)(1) of Rule 144 under the
Securities Act) and the rules and regulations adopted by the Securities and
Exchange Commission thereunder, and will take such further action as any holder
or holders of Registrable Securities may reasonably request, all to the extent
required to enable such holders to sell Registrable Securities, without
registration under the Securities Act within the limitations of the exemption
provided by Rule 144 under the Securities Act(as such rule may be amended from
time to time) or any similar rule or regulation hereafter adopted by the
Securities and Exchange Commission. Upon the request of any holder of
Registrable Securities, the Company shall deliver to such holder a written
statement as to whether it has complied with such requirements.
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<PAGE>
11. Definitions.
(a) The term "Common Stock" means the Company's Class A Common Stock,
par value $.01 per share, Class B Common Stock, par value $.01 per share, Class
C Common Stock, par value $.01 per share, and any equity securities issued or
issuable by the Company with respect to its Class A Common Stock, Class B Common
Stock or Class C Common Stock in connection with any stock split, stock
dividend, combination of shares, recapitalization, merger, consolidation or
other reorganization.
(b) The term "MC Registrable Securities" means (i) any Common Stock
issued to the MC Stockholders pursuant to the Joint Venture Agreement or the
Management Contribu tion Agreement and (ii) any other shares of Common Stock
held by Persons holding securities described in clause (i). As to any particular
MC Registrable Securities, such securities will cease to be MC Registrable
Securities when they have been distributed to the public pursuant to a offering
registered under the Securities Act or sold to the public through a broker,
dealer or market maker in compliance with Rule 144 under the Securities Act (or
any similar rule then in force). For purposes of this Agreement, a Person will
be deemed to be a holder of MC Registrable Securities whenever such Person has
the right to acquire directly or indirectly such MC Registrable Securities (upon
conversion or exercise in connection with a transfer of securities or otherwise,
but disregarding any restrictions or limitations upon the exercise of such
right), whether or not such acquisition has actually been effected.
(c) The term "Orscheln Registrable Securities" means (i) any Common
Stock issued to Orscheln pursuant to the Joint Venture Agreement and (ii) any
other shares of Common Stock held by Persons holding securities described in
clause (i). As to any particular Orscheln Registrable Securities, such
securities will cease to be Orscheln Registrable Securities when they have been
distributed to the public pursuant to a offering registered under the Securities
Act or sold to the public through a broker, dealer or market maker in compliance
with Rule 144 under the Securities Act (or any similar rule then in force). For
purposes of this Agreement, a Person will be deemed to be a holder of Orscheln
Registrable Securities whenever such Person has the right to acquire directly or
indirectly such Orscheln Registrable Securities (upon conversion or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected.
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<PAGE>
(d) The term "Person" means an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
(e) The term "Registrable Securities" means, collectively, the MC
Registrable Securities and the Orscheln Registrable Securities.
(f) The term "Securities Act" means the Securities Act of 1933, as
amended, or any similar federal law then in force.
(g) The term "Securities and Exchange Commission" includes any
governmental body or agency succeeding to the functions thereof.
(h) The term "Securities Exchange Act" means the Securities Exchange
Act of 1934, as amended, or any similar federal law then in force.
(i) The term "Subsidiary" means with respect to any Person, any
corporation of which the shares of stock having a majority of the general voting
power in electing the board of directors are, at the time as of which any
determination is being made, owned by such Person either directly or indirectly
through Subsidiaries.
12. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the holders of Registrable Securities in this
Agreement.
(b) Adjustments Affecting Registrable Securities. The Company will
not take any action, or permit any change to occur, with respect to its
securities which would materially and adversely affect the ability of the
holders of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement or which would adversely
affect the marketability of such Registrable Securities in any such registration
(including, without limitation, effecting a stock split or a combination of
shares).
(c) Remedies. Any Person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
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<PAGE>
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(d) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company, the holders of at least a majority of the MC
Registrable Securities and the holders of at least a majority of the Orscheln
Registrable Securities.
(e) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities, provided that
such subsequent holder agrees in writing to be bound by the terms of this
Agreement.
(f) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
(g) Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.
(h) Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(i) Governing Law. The corporate law of Delaware will govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity and interpretation of
this
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<PAGE>
Agreement and the exhibits and schedules hereto will be governed by the laws of
the State of New York, without regard to the conflicts of laws principles
thereof.
(j) Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, on the business day after sent to the recipient by reputable
express courier service (charges prepaid) or two business days after mailed to
the recipient by certified or registered mail, return receipt requested and
postage prepaid. Such notices, demands and other communications will be sent to
Orscheln, the MC Stockholders and to the Company at the addresses specified for
notices in the Joint Venture Agreement or to such other address or to the
attention of such other Person as the recipient party has specified by prior
written notice to the sending party.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
DURA AUTOMOTIVE HOLDING, INC.
By /s/ Robert R. Hibbs
---------------------------
Its Vice President
--------------------------
ONEX U.S. INVESTMENTS, INC.
By
---------------------------
Its
--------------------------
J2R CORPORATION
By
---------------------------
Its
--------------------------
ORSCHELN CO.
By /s/ William L. Orscheln
---------------------------
Its President
--------------------------
------------------------------
S.A. Johnson
------------------------------
Scott D. Rued
/s/ Robert R. Hibbs
------------------------------
Robert R. Hibbs
------------------------------
Mary L. Johnson
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
DURA AUTOMOTIVE HOLDING, INC.
By
---------------------------
Its
--------------------------
ONEX U.S. INVESTMENTS, INC.
By /s/ Eric Rosen
---------------------------
Its Vice President
--------------------------
J2R CORPORATION
By
---------------------------
Its
--------------------------
ORSCHELN CO.
By
---------------------------
Its
--------------------------
------------------------------
S.A. Johnson
------------------------------
Scott D. Rued
------------------------------
Robert R. Hibbs
______________________________
Mary L. Johnson
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
DURA AUTOMOTIVE HOLDING, INC.
By
---------------------------
Its
---------------------------
ONEX U.S. INVESTMENTS, INC.
By
---------------------------
Its
---------------------------
J2R CORPORATION
By /s/ S.A. Johnson
---------------------------
Its
---------------------------
ORSCHELN CO.
By
---------------------------
Its
---------------------------
/s/ S.A. Johnson
---------------------------
S.A. Johnson
/s/ Scott D. Rued
---------------------------
Scott D. Rued
---------------------------
Robert R. Hibbs
/s/ Mary L. Johnson
---------------------------
Mary L. Johnson
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<PAGE>
/s/ David R. Bovee
_________________________ _____________________________
David R. Bovee Alfred C. Liddell
/s/ Joe A. Bubenzer /s/ J. Frank Mack
_________________________ _____________________________
Joe A. Bubenzer J. Frank Mack
/s/ Miles G. Doolittle /s/ Michael McCabe
_________________________ _____________________________
Miles G. Doolittle Michael McCabe
/s/ William C. Oldenburg
_________________________ _____________________________
Douglas Elliott William C. Oldenburg
_________________________ _____________________________
John A. Fritz Sandra Pritchard
/s/ Anthony R. Gurney /s/ Earl Proctor
_________________________ _____________________________
Anthony R. Gurney Earl Proctor
/s/ Michael S. Hettle /s/ Keith R. Przybylski
_________________________ _____________________________
Michael S. Hettle Keith R. Przybylski
/s/ Henry L. Huber /s/ David A. Skrzyniarz
_________________________ _____________________________
Henry L. Huber David A. Skrzyniarz
/s/ Milton D. Kniss /s/ Karl F. Storrie
_________________________ _____________________________
Milton D. Kniss Karl F. Storrie
/s/ Carl W. Kucsera
_________________________ _____________________________
Carl W. Kucsera John B. Truckey
/s/ Michael J. Kukla
_________________________ _____________________________
Michael J. Kukla George E. Whitehead
<PAGE>
__________________________ ____________________________
David R. Bovee Alfred C. Liddell
__________________________ ____________________________
Joe A. Bubenzer J. Frank Mack
__________________________ ____________________________
Miles G. Doolittle Michael McCabe
/s/ Douglas Elliott
__________________________ ____________________________
Douglas Elliott William C. Oldenburg
/s/ John A. Fritz /s/ Sandra Pritchard
__________________________ ____________________________
John A. Fritz Sandra Pritchard
__________________________ ____________________________
Anthony R. Gurney Earl Proctor
__________________________ ____________________________
Michael S. Hettle Keith R. Przybylski
__________________________ ____________________________
Henry L. Huber David A. Skrzyniarz
__________________________ ____________________________
Milton D. Kniss Karl F. Storrie
/s/ John B. Truckey
__________________________ ____________________________
Carl W. Kucsera John B. Truckey
__________________________ ____________________________
Michael J. Kukla George E. Whitehead
<PAGE>
/s/ Alfred C. Liddell
__________________________ ________________________
David R. Bovee Alfred C. Liddell
__________________________ ________________________
Joe A. Bubenzer J. Frank Mack
__________________________ ________________________
Miles G. Doolittle Michael McCabe
/s/ Douglas Elliott
__________________________ ________________________
Douglas Elliott William C. Oldenburg
/s/ John A. Fritz /s/ Sandra Pritchard
__________________________ ________________________
John A. Fritz Sandra Pritchard
__________________________ ________________________
Anthony R. Gurney Earl Proctor
__________________________ ________________________
Michael S. Hettle Keith R. Przybylski
__________________________ ________________________
Henry L. Huber David A. Skrzyniarz
__________________________ ________________________
Milton D. Kniss Karl F. Storrie
/s/ John B. Truckey
__________________________ ________________________
Carl W. Kucsera John B. Truckey
/s/ George E. Whitehead
__________________________ ________________________
Michael J. Kukla George E. Whitehead
<PAGE>
Schedule A
----------
MC Stockholders
---------------
Onex U.S. Investments, Inc.
J2R Corporation
S.A. Johnson
Scott D. Rued
Robert R. Hibbs
Mary L. Johnson
David R. Bovee
Joe A. Bubenzer
Miles G. Doolittle
Douglas Elliott
John A. Fritz
Anthony R. Gurney
Michael S. Hettle
Henry L. Huber
Milton D. Kniss
Carl W. Kucsera
Michael J. Kukla
Alfred C. Liddell
J. Frank Mack
Michael McCabe
William C. Oldenburg
Sandra Pritchard
Earl Proctor
Keith R. Przybylski
David A. Skrzyniarz
Karl F. Storrie
John B. Truckey
George E. Whitehead
<PAGE>
Exhibit 4.4
AMENDMENT TO REGISTRATION AGREEMENT
THIS AMENDMENT (the "Amendment") is made and entered into as of May 17,
1995, by and between Dura Automotive Holding, Inc., a Delaware corporation (the
"Company"), the Persons listed on Schedule A attached hereto (the "MC
Stockholders"), and Orscheln Co., a Delaware corporation ("Orscheln").
The Company, the MC Stockholders, and Orscheln are parties to that certain
Registration Agreement dated as of August 31, 1994 (the "Registration
Agreement"). Capitalized terms used and not defined herein are used as defined
in the Registration Agreement.
The parties hereto are entering into this Amendment to amend the
Registration Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Amendments to the Registration Agreement.
-----------------------------------------
(1) Section 11(a). Section 11(a) of the Registration Agreement shall
be deleted in its entirety and shall be replaced by the following new
Section 11 (a):
(a) The term "Common Stock" means the Company's Class A
Common Stock, par value $.01 per share, Class A Non-Voting
Common Stock, par value $.01 per share, Class B Common Stock,
par value $.01 per share, Class C Common Stock, par value $.01
per share, and any equity securities issued or issuable by the
Company with respect to its Class A Common Stock, Class A
Non-Voting Common Stock, Class B Common Stock or Class C Common
Stock in connection with any stock split, stock dividend,
combination of shares, recapitalization, merger consolidation
or other reorganization.
(2) Section 12(g). Section 12(g) of the Registration Agreement shall
be deleted in its entirety and shall be replaced by the following new
Section 12(g):
(g) Counterparts.
------------
(i) This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not
contain the signatures of more than one party, but all
such counterparts taken together will constitute one and
the same Agreement.
(ii) Any MC Stockholder may also execute this
Agreement by executing and delivering to the Company a
counterpart and acknowledgment in the form set out as
Schedule
<PAGE>
B to this Agreement, whereupon such MC Stockholder
shall become bound by, and entitled to the benefits
of, this Agreement as fully and effectively as though
such MC Stockholder had executed a counterpart of
this Agreement together with the other parties to
this Agreement.
(3) Schedule B. Schedule B to this Amendment shall be added as
Schedule B to the Registration Agreement.
2. Effect. Except as amended by this Amendment, the Registration Agreement
shall remain in full force and effect. All references to the "Agreement" in the
Registration Agreement shall hereafter be deemed to refer to the Registration
Agreement as amended hereby.
3. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
4. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Amendment and the schedule
hereto shall be governed by, and construed in accordance with, the laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
DURA AUTOMOTIVE HOLDING, INC. J2R CORPORATION
By: /s/ David Bovee By:
------------------------------- -------------------------------
Its: Vice President Its:
------------------------------ ------------------------------
ONEX DHC LLC ORSCHELN CO.
By: By:
------------------------------ ------------------------------
Its: Its:
------------------------------ ------------------------------
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
DURA AUTOMOTIVE HOLDING, INC. J2R CORPORATION
By: By: /s/ Mary L. Johnson
------------------------------- -------------------------------
Its: Its: Vice Pres.
------------------------------ ------------------------------
ONEX DHC LLC ORSCHELN CO.
By: By:
------------------------------ ------------------------------
Its: Its:
------------------------------ ------------------------------
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
DURA AUTOMOTIVE HOLDING, INC. J2R CORPORATION
By: By:
------------------------------- -------------------------------
Its: Its:
------------------------------ ------------------------------
ONEX DHC LLC ORSCHELN CO.
By: /s/ Donald F. West By:
------------------------------ ------------------------------
Its: REPRESENTATIVE Its:
------------------------------ ------------------------------
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
DURA AUTOMOTIVE HOLDING, INC. J2R CORPORATION
By: By:
------------------------------- -------------------------------
Its: Its:
------------------------------ ------------------------------
ONEX DHC LLC ORSCHELN CO.
By: By: /s/ James L. O'Loughlin
------------------------------ ------------------------------
Its: Its: VP & GC
------------------------------ ------------------------------
<PAGE>
SCHEDULE A - MC STOCKHOLDERS
Onex DHC LLC
J2R Corporation
S.A. Johnson
Scott D. Rued
Robert R. Hibbs
Mary L. Johnson
David R. Bovee
Joe A. Bubenzer
Miles G. Doolittle
Douglas Elliott
John A. Fritz
Anthony R. Gurney
Michael S. Hettle
Henry L. Huber
Milton D. Kniss
Carl W. Kucsera
Michael J. Kukla
Alfred C. Liddell
J. Frank Mack
Michael McCabe
William C. Oldenburg
Sandra Pritchard
Earl Proctor
Keith R. Przybylski
David A. Skrzyniarz
Karl F. Storrie
John B. Truckey
George E. Whitehead
<PAGE>
SCHEDULE B
REGISTRATION AGREEMENT
COUNTERPART AND ACKNOWLEDGMENT
------------------------------
TO: DURA AUTOMOTIVE HOLDING, INC., MC STOCKHOLDERS, AND ORSCHELN CO.
RE: The Registration Agreement (the "Agreement") dated as of August 31, 1994
and amended as of May 17, 1995 between Dura Automotive Holding, Inc., the
MC Stockholders, and Orscheln Co. (as defined in the Agreement).
The undersigned hereby agrees to be bound by the terms of the Agreement as a
party to the Agreement, and shall be entitled to all benefits of an MC
Stockholder pursuant to the Agreement, as fully and effectively as though the
undersigned had executed a counterpart of the Agreement together with the other
parties to the Agreement. The undersigned hereby acknowledges having received
and reviewed a copy of the Agreement.
Dated this ____ of May, 1995.
-------------------------------------------------
Signature of MC Stockholder
-------------------------------------------------
Name of MC Stockholder (Please Print)
Address:
----------------------------------------
-------------------------------------------------
Agreed to and accepted this ____ day of May, 1995.
DURA AUTOMOTIVE HOLDING, INC. J2R CORPORATION
By: By:
-------------------------------- -------------------------------------
Its: Its:
------------------------------- ------------------------------------
ONEX DHC LLC ORSCHELN CO.
By: By:
-------------------------------- -------------------------------------
Its: Its:
------------------------------- ------------------------------------
<PAGE>
Exhibit 4.5
INVESTOR STOCKHOLDERS AGREEMENT
-------------------------------
DATED as of the 31st day of August, 1994,
BY AND AMONG
DURA AUTOMOTIVE HOLDING, INC., a Delaware corporation
(the "Company");
- and -
ONEX U.S. INVESTMENTS, INC., an Ontario corporation
("Onex");
- and -
J2R CORPORATION, a Delaware corporation ("J2R");
- and -
Other stockholders listed on the signature pages hereto;
- and -
Such other stockholders of the Company as may, from time to time,
become parties to this Agreement in accordance with the provisions hereof.
WHEREAS:
A. The issued and outstanding capital of the Company consists of:
(i) 153,252.56 shares of Class A Common Stock, par value
$.01 per share (the "Class A Common");
(ii) 100,000 shares of Class B Common Stock, par value
$.01 per share (the "Class B Common"); and
(iii) 25,000 shares of Class C Common Stock, par value
$.01 per share (the "Class C Common").
B. The Company, Onex, J2R and the other Stockholders (as defined
below) are parties to a joint venture agreement dated as of the date hereof
(the "Joint Venture Agreement"), pursuant to which Onex, J2R and such
Stockholders have acquired their Common Stock (as defined below).
C. The Company, Onex, J2R, Orscheln Co., the other Stockholders and
certain other Persons (as defined below) are parties to a stockholders agreement
(the "Stockholders Agreement") dated as of the date hereof.
<PAGE>
D. The Company, Onex, J2R and certain other Persons are parties to a
registration agreement (the "Registration Agreement") dated as of the date
hereof.
E. In order to provide for the stability of the Company, the
parties wish to enter into this Agreement.
F. Certain terms used in this Agreement are defined in Article 1 of
this Agreement.
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
ARTICLE I
Certain Definitions
-------------------
1.1 Certain Definitions. When used in this Agreement the following
-------------------
terms shall have the respective meanings shown:
"Affiliate" shall mean, with respect to any Person, any of (a) a
director or executive officer of such Person, (b) a spouse, parent, sibling or
descendant of such Person (or spouse, parent, sibling or descendant of any
director or executive officer of such Person), and (c) any other Person that,
directly or indirectly, controls or is controlled by or is under common control
with such Person. For the purpose of this definition and the definition of
Independent Third Party, "control" (including with correlative meanings, the
terms "controlling", "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by contract
or agency or otherwise.
"Business day" means any day which is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to be closed in New
York City.
"Closing Date" means the date on which the transactions contemplated
by the Contribution Agreement shall be consummated.
"Co-Investment Agreement" means that certain Co-Investment Agreement,
dated as of March 30, 1990, between Onex and J2R, as amended from time to time.
"Common Stock" means (i) any Class A Common, Class B Common or Class C
Common purchased, issued to or otherwise acquired by any Stockholder and (ii)
any equity securities issued or issuable, directly or indirectly, with respect
to the securities
-2-
<PAGE>
referred to in clause (i) above by way of stock dividend or stock split or
conversion or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. As to any particular shares
constituting Common Stock, such shares will continue to be Common Stock in the
hands of any holder of such Common Stock (other than purchasers pursuant to a
Public Sale).
"Company" includes any successor to the Company resulting from any
merger, consolidation or other reorganization of or including the Company.
"Institutional Investor" means a "qualified institutional buyer" as
defined in Rule 144A promulgated under the Securities Act (codified at 17 C.F.R.
(S)230.144A (1990)).
"Other Stockholder" means any holder of Common Stock which is bound by
and subject to this Agreement other than (i) Onex and its Affiliates and (ii)
the transferees of Onex or its Affiliates.
"Person" means an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization or a government or any
department or agency thereof.
"Public Sale" means any sale of Common Stock to the public pursuant to
an offering registered under the Securities Act or to the public through a
broker, dealer or market maker pursuant to the provisions of Rule 144 (or any
similar provision then in force) adopted under the Securities Act.
"Qualified Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Common Stock
consisting of at least 20% of the Common Stock determined on a fully-diluted
basis.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Stockholder Shares" means any Common Stock, except that such Common
Stock shall cease to constitute Stockholder Shares when it has been (i)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering it or (ii) sold to the public through a
broker, dealer or market maker pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act.
"Stockholders" means Other Stockholders, Onex and its Affiliates and
any of the transferees of Onex or its Affiliates which are bound by and subject
to this Agreement.
-3-
<PAGE>
ARTICLE II
Board of Directors of the Company
2.1 Board of Directors.
------------------
(a) From and after the Closing Date and until the provisions of this
Article 2 cease to be effective, each of the Stockholders will vote all of its
voting stock of the Company, and will take, and will cause any Persons
controlled by it to take, all other necessary or desirable actions within its
control (whether in its capacity as a stockholder, director, member of the
executive committee or an officer of the Company or otherwise), and the Company
will take all necessary or desirable action within its control, in order to
cause:
(i) Subject to the Stockholders Agreement, the authorized number of
directors on the Company's board of directors (the "Board") to be established at
the number determined by Onex;
(ii) the election to the Board of:
(A) two representatives designated by J2R (by written notice to
the Company, which shall furnish copies of such notice to each other party
hereto) as MC Directors (as defined in the Stockholders Agreement);
(B) individuals designated by Onex (the "Onex Directors") as the
remaining MC Directors;
(iii) at Onex's written request, the removal from the Board (with or
without cause) of any representative designated hereunder by Onex, but only upon
such written request and under no other circumstances;
(iv) at J2R's written request, the removal from the Board (with or
without cause) of any representative designated by J2R, but only upon such
written request and under no other circumstances; and
(v) in the event that any representative designated hereunder by Onex
or J2R for any reason ceases to serve as a member of the Board during his term
of office, the resulting vacancy on the Board to be filled by a representative
designated by Onex or J2R as provided hereunder.
(b) The provisions of this Article II will terminate automatically
and be of no further force and effect upon a Qualified Public Offering.
-4-
<PAGE>
ARTICLE III
Restrictions on Transfer of Common Stock
3.1 Transfer of Stockholder Stock. No Other Stockholder shall sell,
transfer, assign, pledge, exchange or otherwise dispose of (a "Transfer") any
interest in Common Stock except pursuant to the provisions of this Article III,
the provisions of the Stockholders Agreement (other than Section 4.1(iv)) or
pursuant to a Public Sale; provided that as between Onex and J2R, the provisions
of the Co-Investment Agreement will govern any "transfer" (as defined for this
purpose in the Co-Investment Agreement) and the provisions of Article III of
this Agreement and the provisions of the Stockholders Agreement will not apply.
Each Other Stockholder agrees not to consummate any Transfer pursuant to the
provisions of Section 3.2 until at least the minimum number of days required by
Section 3.2 after the delivery of such other Stockholder's Offer Notice (as
hereinafter defined), unless the parties to the Transfer have been finally
determined pursuant to this Article III prior to the expiration of such period.
3.2 First Offer Right.
-----------------
(a) In addition to Transfers pursuant to the Stockholders Agreement
(other than Section 4.1(iv)) or a Public Sale, an Other Stockholder may Transfer
an interest in Common Stock by complying with this Section 3.2. At least 60
days prior to making any Transfer by any Other Stockholder of any Common Stock
(other than pursuant to the Stockholders Agreement (other than Section 4.1(iv))
or a Public Sale), the transferring Other Stockholder (the "Transferring
Stockholder") will deliver a written notice (the "Offer Notice") to Onex. The
Offer Notice will disclose the proposed number of shares of Common Stock (the
"Subject Shares") to be transferred and, in reasonable detail, the proposed
terms and conditions of the Transfer. First, Onex may elect to purchase all
(but not less than all) of the Common Stock specified in the Offer Notice at the
price in cash and on the terms specified therein by delivering written notice of
such election to the Transferring Stockholder as soon as practical but in any
event within 45 days after the delivery of the Offer Notice. If Onex has
elected to purchase the Subject Shares from the Transferring Stockholder, the
transfer of such shares will be consummated as soon as practical after the
delivery of the election notice, but in any event within 60 days after delivery
of the Offer Notice (the "Consummation Period"). If Onex has not elected to
purchase all of the Subject Shares being offered or if Onex elects to purchase
the Subject Shares but does not consummate the purchase within the 60-day
Consummation Period, the Transferring Stockholder may, within 60 days after the
later of 45 days after delivery of the Offer Notice or if Onex does not
consummate a purchase it elected to make, the expiration of the 60-day
Consummation Period, Transfer such Subject Shares to one or more third parties
at a price in cash and on other terms no more favorable to the transferees than
-5-
<PAGE>
offered to Onex in the offer Notice; provided that prior to such Transfer, such
transferees shall have agreed in writing to be bound by the provisions of this
Agreement. Any Subject Shares not transferred within such 60-day period will be
subject to the provisions of this Section 3.2(a) upon subsequent Transfer and
the Transferring Stockholder will not be entitled to deliver another Offer
Notice for 90 days after the Transferring Stockholder has again become subject
to this Section 3.2(a).
(b) Onex may Transfer any of its rights under Section 3.2(a) to any
of its Affiliates.
(c) At least 15 days prior to the consummation of a Transfer pursuant
to Section 3.2(a) where neither Onex nor J2R is a transferee (such 15-day period
referred to herein as the "Exercise Period"), the Transferring Stockholder will
deliver a notice to Onex and J2R stating the identity of the proposed
transferee. In the event that Onex and J2R have a reasonable basis for
objecting to such proposed transferee (such reasonable basis including, but not
limited to, the status of such transferee as a competitor (or an Affiliate of a
competitor) of Onex, an Affiliate of Onex, J2R, an Affiliate of J2R or the
Company or a transferee being, in the good faith opinion of Onex and J2R, a
Person which is incompatible with the business philosophy or integrity of Onex
or J2R), Onex and J2R shall deliver to the Transferring Stockholder, during the
Exercise Period, a notice of such objection setting forth the basis for the
objection and the Transferring Stockholder shall not proceed with any further
steps relating to the offer made by such transferee, shall not complete the
transfer of the Subject Shares to such transferee and the offer so made shall no
longer be considered an offer for the purposes of this Section 3.2; provided
that this Section 3.2(c) will not apply to any Transfer made to an Institutional
Investor that is not reasonably determined to be a competitor (or an Affiliate
of a competitor) of Onex, J2R, an Affiliate of Onex, an Affiliate of J2R or the
Company. No person will be deemed to be a competitor of Onex, J2R, an Affiliate
of Onex, an Affiliate of J2R or the Company solely by reason of the engagement
by such Person in financing or investment activities.
3.3 Permitted Transfers.
-------------------
(a) The restrictions contained in this Article III shall not apply
with respect to (i) any Transfer of Common Stock by any Stockholder to or among
its Affiliates or (ii) any Transfer of Common Stock by any Other Stockholder to
any other Other Stockholder; provided that the restrictions contained in this
Article III shall continue to be applicable to the Common Stock after any such
Transfer and provided further that the transferees of such Common Stock shall
have agreed in writing to be bound by the provisions of this Agreement affecting
the Common Stock so transferred.
-6-
<PAGE>
(b) In the case of any Transfer pursuant to Section 3.3(a)(i) above to
an Affiliate other than a Person described in clause (b) of the definition of
"Affiliate", a transferee may at any time, and shall forthwith in the event that
such transferee ceases to be an Affiliate of the transferor (other than a
transferee pursuant to Section 3.3(a)(ii) above), Transfer back to such
transferee all of the Common Stock held by it.
3.4 Consents to Stock Transfers Pursuant to this Agreement. The
Stockholders hereby consent, to the extent required by the Company's Certificate
of Incorporation, to any Transfer of Common Stock made as permitted by this
Agreement and shall execute any more formal consents which counsel for the
Company may determine to be reasonably necessary for that purpose.
ARTICLE IV
Miscellaneous
4.1 Voting Agreement. The Other Stockholders shall at all times vote
their Common Stock (to the extent they are entitled to vote the same) in the
same manner as the Common Stock hold by Onex is voted, on the election of
directors and on all other matters which are submitted to a vote (or consent in
lieu of voting) of the Company's stockholders and on which such Common Stock is
entitled to vote (except to the extent such vote or consent would violate any
applicable law and except with respect to stockholder voting on the merger or
consolidation of the Company with another corporation or the sale of all or
substantially all of the Company's assets), and for this purpose, shall execute
and deliver to Onex (or its designees) proxies to vote such Common Stock in the
same manner as the Common Stock held by Onex is voted. To the extent permitted
by law, each Other Stockholder by its execution of this Agreement, irrevocably
constitutes and appoints the Person who is at any time the president of Onex,
its proxy to vote all of its Common Stock at any meeting of stockholders of the
Company, or to give consent in lieu of voting, on any matter which is submitted
for a vote or consent to the stockholders and on which such Common Stock is
entitled to vote (except to the extent such vote or consent would violate any
applicable law and except with respect to stockholder voting on the merger or
consolidation of the Company with another corporation or the sale of all or
substantially all of the Company's assets), provided that such Common Stock is
voted or consent is given with respect to it in the same manner as the Common
Stock held by Onex. Notwithstanding anything contained in this paragraph, such
Stockholder's Common Stock shall not, except with the express consent of such
Stockholder, be voted in favor of any resolution the effect of which will be to
change such Stockholder's Common Stock or Onex's Common Stock, or convert or
exchange such Stockholder's Common Stock or Onex's Common Stock into or for
different securities, unless in every such case such Stockholder's Common Stock
and
-7-
<PAGE>
Onex's Common Stock are thereby changed identically or converted into or
exchanged for the same type of securities pro rata.
4.2 Acknowledgement. The parties hereto acknowledge that, except as
provided in the Company's Certificate of Incorporation, the Class A Common,
Class B Common and Class C Common will vote together as a single class and none
of the classes of Common Stock will be entitled to a separate class vote, except
as required by law.
4.3 Legend. Each certificate evidencing Stockholder Shares and each
certificate issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain Stockholder Shares as defined herein after such
transfer) shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"The securities represented by this certificate are subject to an
Investor Stockholders Agreement, dated as of August 31, 1994, among
the issuer of such securities (the "Company") and certain of the
Company's stockholders. A copy of such Investors Stockholders
Agreement will be furnished without charge by the Company to the
holder hereof upon written request."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding prior to the date hereof. The legend set forth above shall
be removed from the certificates evidencing any shares which cease to be
Stockholder Shares in accordance with Section 1.1 hereof.
4.4 Notices. All notices, consents and other communications required
or permitted to be given under or by reason of this Agreement shall be in
writing, shall be delivered personally or by telex or telecopy as described
below or by reputable overnight courier, and shall be deemed given on the date
on which such delivery is made. If delivered by telex or telecopy, such notices
or communications shall be confirmed by a registered or certified letter (return
receipt requested), postage prepaid. Any such delivery shall be addressed to
the intended recipient at the following addresses and telecopy numbers (or at
such other address or telecopy number for a party as shall be specified by such
party by like notice to the other parties):
(a) if to J2R or the Company:
c/o Hidden Creek Industries
4806 IDS Center
Minneapolis, Minnesota 55402
Attention: Scott D. Rued
Telecopy: (612) 332-2012
-8-
<PAGE>
with a copy to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Jeffrey C. Hammes, Esq.
Telecopy: (312) 861-2200
(b) if to Onex:
29th Floor (P.O. Box 153)
Commerce Court West
Toronto, Ontario
M5L 1E7
Attention: President
Telecopy: (416) 362-5765
with a copy to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Jeffrey C. Hammes, Esq.
Telecopy: (312) 861-2200
(c) if to any other person which becomes a party to this Agreement in
accordance with the terms hereof, at the address or telecopy number for delivery
of notices or communications given to all other parties by such party at such
time.
Notices to any director of the Company shall be given:
(a) by telephone or delivery in person to such director at the address
(or telephone number) designated by him from time to time by notice to Onex and
the Company (in the case of directors designated by an Other Stockholder) or to
the Other Stockholders and the Company (in the case of directors designated by
Onex), confirmed by letter to such address; or
(b) by registered mail with postage prepaid. If a director has not
designated an address, notice to such director may be given to his address last
known to the Company.
4.5 Extended Meanings. In this Agreement, words importing the
singular number include the plural and vice versa and words importing gender
include all genders.
4.6 Captions. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the interpretation of this
Agreement.
4.7 Applicable Law. The corporate law of Delaware will govern all
issues concerning the relative rights of the Company and
-9-
<PAGE>
its stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by the internal law, and not
the law of conflicts, of the State of New York.
4.8 Time. Time shall be of the essence of this Agreement.
4.9 Severability. The provisions of this Agreement are intended to
be and shall be deemed severable. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
4.10 Currency. References in this Agreement to monetary amounts shall
be in United States currency unless otherwise expressly stated.
4.11 Assignment. This Agreement shall be binding upon the parties
hereto, all Other Stockholders and, to the extent expressly provided elsewhere
in this Agreement, their respective permitted transferees and assigns (other
than purchasers of Common Stock pursuant to a Public Sale), together with in
each case all successors, heirs, executors and administrators thereof, and shall
inure to the benefit of the parties hereto, all Other Stockholders and, to the
extent expressly provided elsewhere in this Agreement, assigns of Onex,
together, in each case, with all successors, heirs, executors and administrators
thereof. The parties hereto agree that the rights of Onex contained in this
Agreement are personal to Onex and may not be assigned to, and will not inure to
the benefit of any transferees of Onex other than its Affiliates or, as
expressly provided herein, the Company. Except an otherwise provided herein, no
party may assign any of its rights or delegate any of its duties under this
Agreement.
4.12 Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement will be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company and the holders of at
least a majority of the shares of Common Stock and, to the extent that any
modification, amendment or waiver adversely affects the rights of the holders of
any class of Common Stock, by the holders of at least a majority of shares of
such adversely affected class of Common Stock. The failure of a party to insist
upon strict adherence to any term of this Agreement on any occasion shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement. No purported
waiver shall be effective unless in writing. The waiver by any party of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent or other breach.
-10-
<PAGE>
4.13 Remedies. The Stockholders shall be entitled to enforce their
rights under this Agreement specifically to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any Stockholder may in its sole discretion apply to any court
of law or equity of competent jurisdiction for specific performance and/or
injunctive relief (without posting a bond or other security) in order to enforce
or prevent any violation of the provisions of this Agreement.
4.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall be considered an original, but all of which together shall
constitute one and the same instrument.
4.15 Complete Agreement. This Agreement, the documents expressly
referred to herein (including the Registration Agreement) and other documents of
even date herewith embody the complete agreement and understanding among the
parties and supersede and preempt any prior understanding, agreements or
representations by or among the parties, written or oral, that may be related to
the subject matter hereof in any way, except for the Co-Investment Agreement
which will not be superseded or preempted as between Onex, J2R and their
Affiliates.
* * * * * * *
-11-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto, all as of the date first above written.
DURA AUTOMOTIVE HOLDING, INC.
By ________________________________
Its _______________________________
ONEX U.S. INVESTMENTS, INC.
By ________________________________
Its _______________________________
J2R CORPORATION
By ________________________________
Its _______________________________
___________________________________
S.A. Johnson
___________________________________
Scott D. Rued
___________________________________
Robert R. Hibbs
___________________________________
Mary L. Johnson
-12-
<PAGE>
Exhibit 5
[LETTERHEAD OF KIRKLAND & ELLIS]
June 21, 1996
Dura Automotive Systems, Inc.
4508 IDS Center
Minneapolis, Minnesota 55402
Re: Dura Automotive Systems, Inc.
Registration Statement on Form S-1
Ladies and Gentlemen:
We have acted as special counsel to Dura Automotive Systems, Inc., a
Delaware corporation (the "Company"), in connection with the proposed
registration by the Company of up to 3,105,000 shares of the Company's Class A
Common Stock, par value $.01 per share (the "Shares") pursuant to a Registration
Statement on Form S-1 filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act") (such
Registration Statement, as amended or supplemented and together with any
registration statement referred to in the next succeeding sentence, is
hereinafter referred to as the "Registration Statement"). This opinion also
relates to any registration statement in connection with this offering that is
to be effective upon filing pursuant to Rule 462(b) under the Act, and the term
"Shares" as used herein includes any additional shares of the Company's Class A
Common Stock registered pursuant to such subsequently filed registration
statement.
In that connection, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we have deemed necessary for the purposes of this
opinion, including (i) the Amended and Restated Certificate of Incorporation and
Amended and Restated By-Laws of the Company, (ii) minutes and records of the
corporate proceedings of the Company with respect to the Shares, (iii) the
Registration Statement and exhibits thereto, (iv) the form of purchase agreement
(the "Purchase Agreement") to be entered into among the Company, Donaldson,
Lufkin & Jenrette Securities Corporation, Morgan Stanley & Co. Incorporated and
Robert W. Baird & Co. Incorporated, as representatives of the underwriters, and
(v) such other documents and instruments as we have deemed necessary for the
expression of the opinions contained herein.
For purposes of this opinion, we have assumed the authenticity of all
documents submitted to us as originals, the conformity to the originals of all
documents submitted to us as
<PAGE>
Dura Automotive Systems, Inc.
June 21, 1996
Page 2
copies and the authenticity of the originals of all documents submitted to us as
copies. We have also assumed the genuineness of the signatures of persons
signing all documents in connection with which this opinion is rendered, the
authority of such persons signing on behalf of the parties thereto and the due
authorization, execution and delivery of all documents by the parties thereto
other than the Company. As to any facts material to the opinions expressed
herein which we have not independently established or verified, we have relied
upon statements and representations of officers and other representatives of the
Company and others.
Our opinion expressed below is subject to the qualifications that we
express no opinion as to the applicability of, compliance with, or effect of any
laws except the laws of the State of Illinois, the General Corporation Law of
the State of Delaware and the federal laws of the United States of America.
Based upon and subject to the foregoing qualifications, assumptions
and limitations and the further limitations set forth below, we are of the
opinion that the Shares have been duly authorized for issuance and, upon (i)
effectiveness under the Act of the Registration Statement and (ii) payment for
the Shares in accordance with the terms of the Purchase Agreement and issuance
in accordance therewith, the Shares will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5 to the Registration Statement. We also consent to the reference to
our firm under the heading "Legal Matters" in the Registration Statement. In
giving this consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission.
This opinion is limited to the specific issues addressed herein, and
no opinion may be inferred or implied beyond that expressly stated herein. We
assume no obligation to revise or supplement this opinion should the present
laws of the State of Illinois, the General Corporation Law of the State of
Delaware or the federal laws of the United States be changed by legislative
action, judicial decision or otherwise.
<PAGE>
Dura Automotive Systems, Inc.
June 21, 1996
Page 3
This opinion is furnished to you in connection with the filing of the
Registration Statement and is not to be used, circulated, quoted or otherwise
relied upon for any other purpose without our prior written consent.
Very truly yours,
/s/ KIRKLAND & ELLIS
KIRKLAND & ELLIS
<PAGE>
[Execution Version]
================================================================================
JOINT VENTURE AGREEMENT
by and among
ORSCHELN CO.,
MC HOLDING CORP.,
ONEX U.S. INVESTMENTS, INC.,
J2R CORPORATION
and
DURA AUTOMOTIVE HOLDING, INC.
Dated as of August 31, 1994
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I TRANSFER TO NEWCO OF MC HOLDING SHARES AND OF
THE ORSCHELN TRANSFERRED ASSETS . . . . . . . . . . . . . 3
1.1 Transfer of MC Holding Shares to Newco; Issuance
of Newco Shares to the MC Holding Stockholders;
Issuance of Promissory Note of MC Holding to
the MC Holding Stockholders . . . . . . . . . . . . . . . 3
1.2 Transfer of the Orscheln Transferred Assets to Newco;
Consideration for Transfer; Assumption by Newco of
Orscheln Assumed Liabilities; Issuance of Newco
Shares and Options to Purchase Newco Shares to
Orscheln; Issuance of Promissory Note to Orscheln . . . . 4
1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . 27
1.4 Post-Closing Adjustment of Cash Consideration . . . . . . 29
ARTICLE II REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . 40
2.1 Representations and Warranties of Orscheln. . . . . . . . 40
2.2 Representations and Warranties of MC Holding. . . . . . . 57
2.3 Representations and Warranties of the MC
Holding Stockholders. . . . . . . . . . . . . . . . . . . 73
2.4 No Other Representations or Warranties. . . . . . . . . . 76
ARTICLE III COVENANTS OF ORSCHELN . . . . . . . . . . . . . . . . . 77
3.1 Interim Operation of Orscheln . . . . . . . . . . . . . . 77
3.2 Records . . . . . . . . . . . . . . . . . . . . . . . . . 78
3.3 Transfer Taxes; Fees and Expenses . . . . . . . . . . . . 79
3.4 Affirmative Covenants . . . . . . . . . . . . . . . . . . 79
ARTICLE IV COVENANTS OF MC HOLDING AND THE MC HOLDING STOCKHOLDERS. 81
4.1 Interim Operation of MC Holding . . . . . . . . . . . . . 81
4.2 Interim Operation of Dura . . . . . . . . . . . . . . . . 83
4.3 Affirmative Covenants . . . . . . . . . . . . . . . . . . 85
4.4 Transfer Taxes; Fees and Expenses . . . . . . . . . . . . 87
ARTICLE V OTHER COVENANTS OF THE PARTIES. . . . . . . . . . . . . . 87
5.1 Filings; Other Action . . . . . . . . . . . . . . . . . . 87
5.2 Access and Confidentiality. . . . . . . . . . . . . . . . 88
5.3 Public Disclosure . . . . . . . . . . . . . . . . . . . . 90
5.4 Interim Operation of Newco. . . . . . . . . . . . . . . . 91
5.5 Ancillary Agreements. . . . . . . . . . . . . . . . . . . 91
5.6 Employees . . . . . . . . . . . . . . . . . . . . . . . . 91
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
5.7 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 92
5.8 Covenants Relating to Taxes. . . . . . . . . . . . . . . . . 97
5.9 Payment of Fees and Expenses . . . . . . . . . . . . . . . . 97
5.10 Notification of Certain Matters. . . . . . . . . . . . . . . 97
5.11 Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . 98
ARTICLE VI CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 98
6.1 Conditions to Obligations of Orscheln. . . . . . . . . . . . 98
6.2 Conditions to Obligations of MC Holding and the MC
Holding Stockholders . . . . . . . . . . . . . . . . . . . . 101
ARTICLE VII TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . 106
7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . 106
7.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . 107
ARTICLE VIII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 107
8.1 Survival of Representations and Warranties . . . . . . . . . 107
8.2 Indemnification by Newco . . . . . . . . . . . . . . . . . . 107
8.3 Indemnification by Orscheln; . . . . . . . . . . . . . . . . 109
8.4 Defense of Claims. . . . . . . . . . . . . . . . . . . . . . 109
ARTICLE IX MISCELLANEOUS AND GENERAL . . . . . . . . . . . . . . . . . 111
9.1 Payment of Expenses. . . . . . . . . . . . . . . . . . . . . 111
9.2 Modification and Amendment . . . . . . . . . . . . . . . . . 112
9.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 112
9.4 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 112
9.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 113
9.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 115
9.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 115
9.8 Captions; Interpretation . . . . . . . . . . . . . . . . . . 115
9.9 Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . 116
9.10 Litigation Arising from Activities Prior to the Closing. . . 116
9.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . 117
9.12 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . 117
TESTIMONIUM AND SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 119
</TABLE>
-ii-
<PAGE>
List of Schedules
-----------------
Schedule 1.1 - MC Holding Stockholders
Terms of Options
Schedule 1.2(a) - Orscheln Transferred Assets
Schedule 1.2(a)(i) - Orscheln Transferred Real
Property
Schedule 1.2(a)(ii) - Orscheln Transferred Leased
Property
Schedule 1.2(a)(iii)(a) - Certain Orscheln Machinery
Equipment, Etc.
Schedule 1.2(a)(iii)(b) - Certain Orscheln Machinery,
Equipment, Etc.
Schedule 1.2(a)(iv)(a) - Certain Orscheln Inventories
Schedule 1.2(a)(iv)(b) - Certain Orscheln Inventories
Schedule 1.2(a)(viii) - Orscheln Intellectual Property
Schedule 1.2(a)(xii) - Petty Cash Funds and Imprest
Checking Accounts
Schedule 1.2(a)(xvi) - Orscheln Subleases
Schedule 1.2(b)(ii) - Orscheln Assumed Debt
Schedule 1.2(b)(iv)(N) - Proration of Taxes
Schedule 2.1(c) - Consents Required to be Ob-
tained by Orscheln
Schedule 2.1(e) - Orscheln Financial Statements
Schedule 2.1(g) - Certain Changes of Orscheln
Schedule 2.1(i) - Certain Orscheln Liabilities
Schedule 2.1(j) - Defaults, etc. of Orscheln
Schedule 2.1(k) - Litigation of Orscheln
Schedule 2.1(1) - Intellectual Property of
Orscheln
Schedule 2.1(m) - Labor Matters of Orscheln
Schedule 2.1(o) - Environmental Matters of
Orscheln
Schedule 2.1(t)(ii) - Orscheln Transferred Leases
Schedule 2.1(u) - Contracts of Orscheln
Schedule 2.1(v)(ii) - Unfiled Tax Returns of
Orscheln
Schedule 2.1(v)(iii) - Employee Income Tax Withhold-
ing by Orscheln
Schedule 2.1(v)(iv) - Tax Proceedings of Orscheln
Schedule 2.2(b) - Options of MC Holding
Schedule 2.2(c) - Consents Required to be Ob-
tained by MC Holding or Dura
Schedule 2.2(e) - Financial Statements of MC
Holding and Dura
Schedule 2.2(g) - Certain Changes of MC Holding
and Dura
Schedule 2.2(i) - Certain MC Holding Liabilities
Schedule 2.2(j) - Company Benefit Plans of MC
Holding and Dura
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<PAGE>
Schedule 2.2(k) - Defaults, etc. of MC Holding
and Dura
Schedule 2.2(1) - Litigation of MC Holding and
Dura
Schedule 2.2(m) - Intellectual Property of MC
Holding and Dura
Schedule 2.2(n) - Labor matters of MC Holding
and Dura
Schedule 2.2(o)(ii) - Unfiled Tax Returns of MC
Holding and Dura
Schedule 2.2(o)(iii) - Employee Income Tax Withhold-
ing by MC Holding and Dura
Schedule 2.2(o)(iv) - Tax Proceedings of MC Holding
and Dura
Schedule 2.2(q) - Environmental Matters of MC
Holding and Dura
Schedule 2.2(u) - MC Holding and Dura Leased
Property
Schedule 2.2(v) - Contracts of MC Holding and
Dura
Schedule 2.3(d) - Consents Required to be Ob-
tained by the MC Holding
Stockholders
Schedule 3.1 - Interim Operation of Orscheln
Schedule 4.1 - Interim Operation of MC Hold-
ing
Schedule 4.2 - Interim Operation of Dura
Schedule 5.5 - Ancillary Agreements
Schedule 5.6 - Orscheln Transferred Business
Employees
Schedule 5.7(b) - Orscheln Employee Benefit
Plans
Schedule 9.1 - Expenses
-iv-
<PAGE>
List of Exhibits
----------------
Exhibit A - Form of Stockholders Agreement
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Certificate of Incorporation of Newco
Exhibit D - Form of By-Laws of Newco
Exhibit E - Form of Management Stockholders Contribution
Agreement
List of Appendices
------------------
Appendix A - Form of Opinion of Kirkland & Ellis
Appendix B - Form of Opinion of Counsel to the MC Holding
Stockholders
Appendix C - Form of Opinion of James L. O'Loughlin
-v-
<PAGE>
JOINT VENTURE AGREEMENT
JOINT VENTURE AGREEMENT (hereinafter called this "Agreement"), dated as
of August 31, 1994, by and among ORSCHELN CO., a Delaware corporation
("Orscheln"), MC HOLDING CORP., a Delaware corporation ("MC Holding"), ONEX U.S.
INVESTMENTS, INC., an Ontario corporation ("Onex"), J2R CORPORATION, a Delaware
corporation ("J2R" and, collectively with Onex, the "MC Holding Stockholders")
and DURA AUTOMOTIVE HOLDING, INC., a Delaware corporation ("Newco").
RECITALS
WHEREAS, the MC Holding Stockholders own the number of shares of capital
stock of MC Holding set forth on Schedule 1.1 hereto;
WHEREAS, all of the issued and outstanding shares of capital stock of MC
Holding are collectively owned by the MC Holding Stockholders and the MC
Management Stockholders (as defined herein);
WHEREAS, Kim B. Clark (the "Optionholder") owns an option to purchase
the number of shares of capital stock of MC Holding set forth on Schedule 1.1
hereto and such option constitutes all of the options to purchase shares of
capital stock of MC Holding outstanding on the date hereof;
WHEREAS, Orscheln owns the Orscheln Transferred Assets (as defined
herein) described on Schedule 1.2(a);
WHEREAS, MC Holding owns all of the issued and outstanding shares of
capital stock of Dura Mechanical Components, Inc., a Delaware corporation
("Dura");
WHEREAS, Orscheln, on the one hand, and MC Holding and the MC Holding
Stockholders, on the other hand, desire, upon the terms and subject to the
conditions of this Agreement, to form a joint venture through (i) the
contribution
<PAGE>
by the MC Holding Stockholders and the MC Management Stockholders of all of the
issued and outstanding shares of MC Holding Common Stock (as defined herein)
(the "MC Holding Shares") to Newco, and (ii) the contribution by Orscheln of the
Orscheln Transferred Assets to Newco;
WHEREAS, contemporaneously with the execution of this Agreement, each of
the MC Management Stockholders is executing and delivering a Management
Stockholders Contribution Agreement in substantially the form attached hereto as
Exhibit E (the "Management Stockholders Contribution Agreement"), and the
parties anticipate that, as soon as practicable after the date hereof, MC
Holding, Newco and the Optionholder will execute and deliver a counterpart to
the Management Stockholders Contribution Agreement;
WHEREAS, in consideration for the contributions referred to above, (i)
Newco will issue to the MC Holding Stockholders and the MC Management
Stockholders an aggregate of 28,038.91 shares of Class A Common Stock, par value
$0.01 per share (the "Class A Common Stock"), of Newco, 100,000 shares of Class
B Common Stock, par value $0.01 per share (the "Class B Common Stock"), of Newco
and 25,000 shares of Class C Common Stock, par value $0.01 per share (the "Class
C Common Stock", and collectively with the Class A Common Stock and the Class B
Common Stock, the "Newco Common Stock"), of Newco, and Newco shall issue to
Orscheln 125,213.65 shares of Class A Common Stock (such shares of Newco Common
Stock to be issued to the MC Holding Stockholders, the MC Management
Stockholders and Orscheln collectively referred to herein as the "Newco Shares")
and an option to purchase an aggregate of 818.18 shares of Class A Common Stock,
(ii) Orscheln shall receive from Newco the amount of cash consideration set
forth herein and (iii) Newco shall
-2-
<PAGE>
assume certain notes payable, other funded indebtedness and certain other
liabilities of Orscheln as set forth herein;
WHEREAS, upon execution and delivery by MC Holding, Newco and the
Optionholder of a counterpart to the Management Stockholders Contribution
Agreement, Newco will issue to the Optionholder an option to purchase an
aggregate of 1,000 shares of Class A Common Stock, and
WHEREAS, Orscheln will retain, and not transfer to Newco, the Orscheln
Excluded Assets (as defined herein) and Newco will not assume the Orscheln
Excluded Liabilities (as defined herein);
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
TRANSFER TO NEWCO OF MC HOLDING SHARES AND
OF THE ORSCHELN TRANSFERRED ASSETS
l.l(a) Transfer of MC Holding Shares to Newco; Issuance of Newco Shares
to the MC Holding Stockholders; Issuance of Promissory Note of MC Holding to the
MC Holding Stockholders. Upon the terms and subject to the conditions of this
Agreement, and based on the representations, warranties and agreements contained
herein, each of the MC Holding Stockholders agrees to transfer and contribute to
Newco, and Newco agrees to receive, at the Closing (as hereinafter defined) each
of the MC Holding Shares held by such MC Holding Stockholder. In consideration
of such contributions, Newco agrees, subject to the conditions of this
Agreement, to issue to each of the MC Holding Stockholders the number of shares
of Class A Common Stock, Class B Common Stock or Class C Common Stock, equal to
the number of shares of
-3-
<PAGE>
Class A Common Stock, Class B Common Stock or Class C Common Stock set forth
opposite such MC Holding Stockholder's name on Schedule 1.1.
(b) Purchase of MC Holding Promissory Notes by the MC Holding
Stockholders. In addition to the foregoing transfer of MC Holding Shares by the
MC Holding Stockholders, upon the terms and subject to the conditions of this
Agreement, and based on the representations, warranties and agreements contained
herein, Onex agrees to purchase from MC Holding, and MC Holding agrees to issue
to Onex, at the Closing a subordinated promissory note of MC Holding in an
aggregate principal amount of $1,800,000, and J2R agrees to purchase from MC
Holding, and MC Holding agrees to issue to J2R, at the Closing a subordinated
promissory note of MC Holding in an aggregate principal amount of $200,000, each
of such subordinated promissory notes to be purchased for a price equal to the
principal amount thereof.
1.2 Transfer of the Orscheln Transferred Assets to Newco; Consideration
for Transfer; Assumption by Newco of Orscheln Assumed Liabilities; Issuance of
Newco Shares and Options to Purchase Newco Shares to Orscheln; Issuance of
Promissory Note of Newco to Orscheln. As used herein, "Orscheln Transferred
Business" means, collectively, the Orscheln Automotive Parking Brake Division
and the Orscheln Light Duty Cable Division. The Orscheln Automotive Parking
Brake Division means the business of Orscheln engaged primarily in the design
and manufacturing of automotive parking brake cables and levers and the
marketing and sale of such automotive parking brake cables and levers to
automotive original equipment manufacturers ("Automotive OEMs") or direct or
indirect suppliers to Automotive OEMs (such suppliers, together with Automotive
OEMs, "Automotive Customers"), excluding such business engaged in by the QUALICO
and PLATCO
-4-
<PAGE>
facilities. The Orscheln Light Duty Cable Division means the business of
Orscheln engaged in the design and manufacture of hood release cables and
heater, vent and air conditioning controls for passenger cars and light duty
trucks for marketing and sale to Automotive Customers. For purposes of
clarification, the Orscheln Transferred Business shall expressly not include
those businesses of Orscheln engaged in (i) the marketing and manufacturing of
pull and push/pull control cables for industrial use and (ii) the marketing and
manufacturing of automotive parking brake cables and levers and automotive light
duty control cables (including hood release cables and heater, vent and air
conditioning controls) for sale to customers other than Automotive Customers
(such businesses of Orscheln being sometimes collectively referred to herein as
the "Orscheln Retained Business").
(a) Upon the terms and subject to the conditions of this Agreement, and based
upon the representations, warranties and agreements contained herein, Orscheln
agrees to contribute to Newco, and Newco agrees to acquire and accept from
Orscheln, at the Closing, all of Orscheln's right, title and interest in and to
the "Orscheln Transferred Assets," which term as used herein means all
properties and assets of Orscheln, other than the Orscheln Excluded Assets (as
defined below), used or held for use primarily in the conduct or operation by
Orscheln of the Orscheln Transferred Business on the Closing Date, whether
tangible or intangible, real, personal or mixed, currently in use or idle,
whether acquired by Orscheln prior to or after the date hereof, wherever
located, whether or not specifically referred to herein or in any instrument of
conveyance delivered pursuant hereto and whether or not having any value for
accounting purposes or carried or reflected on or referred to in the financial
statements of Orscheln, including, without limitation, the assets listed on
Schedule 1.2(a) that
-5-
<PAGE>
are identified as Orscheln Transferred Assets and, without duplication of the
foregoing, the following properties and assets:
(i) Real Property. The fee interests in real property, together with
all improvements, structures and buildings located thereon, construction in
progress and fixtures of every kind and nature whatsoever forming part of
said improvements, structures and buildings, and all easements, rights of
way, transferable licenses and other appurtenances thereto, described in
Schedule 1.2(a)(i) hereto (the "Orscheln Transferred Real Property").
Notwithstanding the foregoing, in the event that Newco shall cease to
conduct manufacturing activities relating to the Orscheln Transferred
Business at the CABROOK Facility described in Schedule 1.2(a)(i), Newco will
transfer to Orscheln such parcel of Orscheln Transferred Real Property
within 90 days of such cessation, and Orscheln shall make no payment in
consideration of such transfer. In the event of a transfer of the CABROOK
Facility to Orscheln pursuant to the foregoing sentence, all liabilities and
obligations relating to the ownership of the CABROOK Facility arising after
the date of such transfer shall be assumed by Orscheln and Newco shall have
no liability with respect thereto (it being understood and agreed, however,
that all liabilities and obligations relating to the ownership of the
CABROOK Facility arising prior to the date of such transfer but after the
date of the transfer of the CABROOK Facility to Newco pursuant to this
Agreement shall be assumed by Newco and Orscheln shall have no liability
with respect thereto);
(ii) Leasehold Interests. The leasehold interests in real property
(collectively, the "Orscheln
-6-
<PAGE>
Transferred Leased Property") (and any deposits with respect thereto) and
leasehold improvements thereon identified in Schedule 1.2(a)(ii) hereto. Each of
the parties hereto agrees that pursuant to, and in accordance with the terms and
conditions of, the sublease agreement attached hereto as an Ancillary Agreement
(as defined in Section 5.5) included in Schedule 5.5, (a) on the Closing Date,
Newco shall sublease the Human Resources Center described on Schedule 1.2(a)(ii)
to Orscheln for the remaining current term of the lease relating to such Human
Resources Center at an annual rental equal to $ -O-, (b) upon expiration of the
current term of the lease covering the FABCON Facility and the Human Resources
Center described on Schedule 1.2(a)(ii), Newco will exercise the purchase option
applicable to such lease, and (c) immediately upon the exercise by Newco of the
purchase option referred to in clause (b) of this paragraph, Newco will transfer
the Human Resources Center described on Schedule 1.2(a)(ii) to Orscheln, and
Orscheln shall make no payment to Newco in connection with such transfer. Upon
the effective date of the transfer of the Human Resources Center referred to in
clause (c) of the preceding sentence, all liabilities and obligations relating
to the ownership of the Human Resources Center arising after such date shall be
assumed by Orscheln and Newco shall have no liability with respect thereto (it
being understood and agreed, however, that all liabilities and obligations
relating to the ownership of the Human Resources Center arising prior to the
date of such transfer but after the transfer of the Human Resources Center to
Newco pursuant to this Agreement shall be assumed by Newco and Orscheln shall
have no liability with respect thereto);
-7-
<PAGE>
(iii) Machinery, Equipment, Etc. Except as provided in the Ancillary
Agreements, all machinery, moveable or immoveable equipment, tools, dies, molds
and prints, vehicles, furniture and other tangible personal property located at
(a) the CABROOK, CABURY North, CABURY South, FABCON, FLEXCON, RIVCON and
HANNICON facilities, the Quality Testing Lab and the Technical Center (other
than the assets listed on Schedule 1.2(a)(iii)(a) hereto) or (b) the PLATCO,
QUALICO and ORBCO facilities and which are listed on Schedule 1.2(a)(iii)(b)
hereto as being transferred by Orscheln to Newco;
(iv) Inventories. All inventories, including without limitation raw
materials, work-in-process, finished goods, purchased goods, parts, accessories
and supplies which are located at, or in transit to, (a) the CABROOK, CABURY
North, CABURY South, FABCON, FLEXCON, RIVCON and HANNICON facilities, the
Quality Testing Lab and the Technical Center (other than the inventories listed
on Schedule 1.2(a)(iv)(a) hereto), (b) any and all other facilities of Orscheln
and which are specified on Schedule 1.2(a)(iv)(b) hereto as being transferred by
Orscheln to Newco or (c) any facility of a customer or outside processor of the
Orscheln Transferred Business under consignment or outside processing
arrangements and which relate to the Orscheln Transferred Business;
(v) Accounts Receivable. All accounts receivable and notes receivable and
all reserves, guarantees and security with respect thereto, in each case arising
from the sale of products manufactured or sold by Orscheln in the conduct or
operation by Orscheln of the Orscheln Transferred Business prior to the Closing
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Date, including, without limitation, the sale of products manufactured or sold
by Orscheln to Otscon (as defined herein), in each case as reflected on the
internal accounting system of Orscheln on the Closing Date;
(vi) Business Contracts. All contracts, leases, licenses, agreements,
purchase and sale orders, commitments and other instruments, documents and
arrangements (collectively, "Business Contracts") in favor of the Orscheln
Transferred Business or which relate primarily to the Orscheln Transferred
Business, excluding insurance policies described in Section 1.2(a)(xxv);
(vii) Records. All Records (as defined in Section 3.2) relating primarily
to the Orscheln Transferred Business that are currently used by Orscheln in the
conduct or operation of the Orscheln Transferred Business;
(viii) Intellectual Property. The Intellectual Property (as defined in
Section 2.1(1)) of Orscheln that is listed or described on Schedule
1.2(a)(viii);
(ix) Rights to Certain Insurance Proceeds and Indemnification Payments,
Claims, etc. All rights of Orscheln to receive payment of insurance proceeds or
indemnification payments in connection with the Orscheln Transferred Business or
the Orscheln Assumed Liabilities (other than insurance or indemnification
payments relating to product liability claims) and all claims, causes of action,
choses in action, rights of recovery, and rights of setoff of any kind relating
primarily to the Orscheln Transferred Business or the Orscheln Transferred
Assets, except for the Specified Customer Claims;
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(a) For purposes hereof: "Specified Customer Claims" means all Ford
Claims and all GM Claims, collectively; "Ford Claims" means all claims, causes
of action, choses in action, rights of recovery, and rights of setoff of
Orscheln against Ford Motor Company (or any of its affiliates or suppliers)
arising from facts or circumstances arising on or prior to the Closing Date; and
"GM Claims" means all claims, causes of action, choses in action, rights of
recovery, and rights of setoff of Orscheln against General Motors Corporation
(or any of its affiliates or suppliers) arising from facts or circumstances
arising on or prior to the Closing Date.
(b) With respect to Ford Claims, Orscheln hereby agrees that until the
occurrence of a Ford Indemnification Breach Event, (i) Orscheln will hold in
trust solely for the benefit of Newco all Ford Claims and will promptly pay or
otherwise transfer to Newco all amounts of cash or other property received or
receivable with respect thereto, net of reasonable out-of-pocket costs and
expenses (including, without limitation, reasonable expenses of investigation
and fees and disbursements of counsel) with respect thereto and (ii) Newco shall
act as exclusive agent for Orscheln with respect to all Ford Claims and shall
have exclusive authority to assert on behalf of Orscheln in such manner or
forum, or to refrain from asserting, to settle or refrain from settling, and to
select, direct and otherwise manage counsel in connection with, any and all Ford
Claims as Newco deems appropriate in its sole discretion. Orscheln will not
directly or indirectly transfer any interest in any of the Ford Claims without
the prior written consent of Newco, which consent Newco may withhold in its sole
discretion.
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(c) With respect to GM Claims, Orscheln hereby agrees that until the
occurrence of a GM Indemnification Breach Event, (i) Orscheln will hold in trust
solely for the benefit of Newco all GM Claims and will promptly pay or otherwise
transfer to Newco all amounts of cash or other property received or receivable
with respect thereto, net of reasonable out-of-pocket costs and expenses
(including, without limitation, reasonable expenses of investigation and fees
and disbursements of counsel) with respect thereto and (ii) Newco shall act as
exclusive agent for Orscheln with respect to all GM Claims and shall have
exclusive authority to assert on behalf of Orscheln in such manner or forum, or
to refrain from asserting, to settle or refrain from settling, and to select,
direct and otherwise manage counsel in connection with, any and all GM Claims as
Newco deems appropriate in its sole discretion. Orscheln will not directly or
indirectly transfer any interest in any of the GM Claims without the prior
written consent of Newco, which consent Newco may withhold in its sole
discretion.
(d) For purposes hereof, a "Ford Indemnification Breach Event" will
be deemed to have occurred (i) if, within ten days after Arthur Andersen & Co.
or Newco's then current independent auditors shall have delivered to Newco a
Ford Claims Transfer Notice (as defined below), Newco shall have failed to
demonstrate to Orscheln's reasonable satisfaction that Newco will be able to pay
the full amount of any indemnification that may be required pursuant to and in
accordance with Section 8.2 with respect to claims by Ford Motor Company (or its
affiliates or suppliers) against Orscheln, or (ii) Newco shall be in breach of
its obligations pursuant to Section 8.2 to indemnify or defend Orscheln
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against any claim by Ford Motor Company (or its affiliates or suppliers) ten
days after delivery by Orscheln to Newco of a written notice describing such
breach with particularity. For purposes of the foregoing, a "Ford Claims
Transfer Notice" is a letter by Arthur Andersen & Co. or Newco's then current
independent auditors confirming, based upon the information available to it
regarding Newco's financial condition and prospects and the expected magnitude
of any liability of Newco with respect to claims by Ford Motor Company (or any
of its affiliates or suppliers) against Orscheln for which Newco is obligated to
indemnify Orscheln pursuant to Section 8.2, that any opinion that they would be
able to issue on the financial statements of Newco would include a "going
concern" qualification.
(e) For purposes hereof, a "GM Indemnification Breach Event" will be
deemed to have occurred (i) if, within ten days after Arthur Andersen & Co. or
Newco's then current independent auditors shall have delivered to Newco a GM
Claims Transfer Notice (as defined below), Newco shall have failed to
demonstrate to Orscheln's reasonable satisfaction that Newco will be able to pay
the full amount of any indemnification that may be required pursuant to and in
accordance with Section 8.2 with respect to claims by General Motors Corporation
(or its affiliates or suppliers) against Orscheln, or (ii) Newco shall be in
breach of its obligations pursuant to Section 8.2 to indemnify or defend
Orscheln against any claim by General Motors Corporation (or its affiliates or
suppliers) ten days after delivery by Orscheln to Newco of a written notice
describing such breach with particularity. For purposes of the foregoing, a "GM
Claims Transfer Notice" is a letter by Arthur Andersen & Co. or Newco's then
current
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independent auditors confirming, based upon the information available to it
regarding Newco's financial condition and prospects and the expected magnitude
of any liability of Newco with respect to claims by General Motors Corporation
(or any if its affiliates or suppliers) against Orscheln for which Newco is
obligated to indemnify Orscheln pursuant to Section 8.2, that any opinion that
they would be able to issue on the financial statements of Newco would include a
"going concern" qualification.
(f) Upon and after any Ford Indemnification Breach Event, in the event
that Orscheln receives and retains any amount of cash or other property with
respect to any Ford Claim, net of reasonable out-of-pocket costs and expenses
(including, without limitation, reasonable expenses of investigation and fees
and disbursements of counsel) with respect thereto, then Newco's obligation to
indemnify Orscheln pursuant to Section 8.2 hereof will be reduced by the amount
thereof, notwithstanding any other provisions hereof. Upon and after any GM
Indemnification Breach Event, in the event that Orscheln receives and retains
any amount of cash or other property with respect to any GM Claim, net of
reasonable out-of-pocket costs and expenses (including, without limitation,
reasonable expenses of investigation and fees and disbursements of counsel) with
respect thereto, then Newco's obligation to indemnify Orscheln pursuant to
Section 8.2 hereof will be reduced by the amount thereof, notwithstanding any
other provisions hereof.
(x) Commercial Data and Intangibles. All financial, accounting and
operating data, other than those which relate primarily to the Orscheln Excluded
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Assets or the Orscheln Excluded Liabilities (as defined in Section 1.2(b)
hereof), including but not limited to all books, records and files, computer
software, programs and data bases, market and price studies, market analysis
surveys, marketing and business plans, credit information, cost and pricing
information, customer and supplier lists, files and records, sales, promotional
and training material and payroll, personnel and health and safety records
(provided, however, that employee medical records shall be transferred only to
Newco's medical staff);
(xi) Permits. All permits, licenses, certifications, franchises,
approvals and other similar rights that are used, required or necessary for the
lawful ownership of the Orscheln Transferred Assets and all permits, licenses,
franchises, approvals and other similar rights that are used in the conduct or
operation by Orscheln of the Orscheln Transferred Business;
(xii) Cash. All petty cash funds and imprest checking accounts
maintained at the Orscheln facilities listed on Schedule 1.2(a)(xii);
(xiii) Unbilled Customer Dies. Unbilled customer dies relating
primarily to the Orscheln Transferred Business;
(xiv) Other Assets. All other assets, including prepaid expenses
relating to the Orscheln Transferred Business and prepaid salaries of the
Orscheln Transferred Business Employees in the ordinary course of business
consistent with past practice, used or held for use primarily in the conduct or
operation of the Orscheln Transferred Business;
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specifically excepting and excluding, however, the following properties and
assets (the "Orscheln Excluded Assets"):
(xv) Real Property. Any and all fee interests in real property owned
or held by Orscheln that are not listed or described in Schedule 1.2(a)(i)
hereto, together with all improvements, structures and buildings located
thereon, construction in progress and fixtures of every kind and nature
whatsoever forming part of said improvements, structures and buildings, and
all easements, rights of way, transferable licenses and other appurtenances
thereto;
(xvi) Leasehold Interests. Any and all leasehold interests in real
property held by Orscheln that are not listed or described in Schedule
1.2(a)(ii) hereto (and any deposits with respect thereto) and leasehold
improvements on such real property; provided, however, that Orscheln agrees
to sublease to Newco the leases covering the Orscheln Leased Properties
listed in Schedule 1.2(a)(xvi);
(xvii) Machinery, Equipment, Etc. All machinery, moveable or
immoveable equipment, tools, dies, molds and prints, vehicles, furniture
and other tangible personal property located at (a) the CABROOK, CABURY
North, CABURY South, FABCON, FLEXCON, RIVCON and HANNICON Facilities, the
Quality Testing Lab and the Technical Center and which are listed on
Schedule 1.2(a)(iii)(a) hereto or (b) any and all other Orscheln Facilities
(other than the assets listed on Schedule 1.2(a)(iii)(b) hereto as being
transferred by Orscheln to Newco);
(xviii) Inventories. All inventories, including raw materials work-
in-process, finished goods, purchased goods, parts, accessories and supplies
which are
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located at, or in transit to, (a) the CABROOK, CABURY North, CABURY South,
FABCON, FLEXCON, RIVCON and HANNICON facilities, the Quality Testing Lab and the
Technical Center and which are listed on Schedule 1.2(a)(iv)(a) hereto, (b) any
other facility of Orscheln (other than the inventories which are listed on
Schedule 1.2(a)(iv)(b) hereto as being transferred by Orscheln to Newco), or (c)
any facility of a customer or outside processor of the Orscheln Retained
Business under consignment or outside processing arrangements and which relate
to the Orscheln Retained Business;
(xix) Accounts Receivable. All accounts receivable and notes
receivable and all reserves, guarantees and security with respect thereto, in
each case arising from the sale of products manufactured or sold by Orscheln
other than in the conduct or operation of the Orscheln Transferred Business
prior to the Closing Date, as reflected in the internal accounting system of
Orscheln on the Closing Date;
(xx) Business Contracts. All Business Contracts other than those
Business Contracts which are in favor of the Orscheln Transferred Business or
which pertain primarily to the Orscheln Transferred Business;
(xxi) Intellectual Property. All Intellectual Property of Orscheln not
listed on Schedule 1.2(a) (viii) hereto;
(xxii) Cash. All cash, cash equivalents and overdrafts of Orscheln
(whether or not relating to the Orscheln Transferred Business) that are not
described in Section 1.2(a)(xii);
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(xxiii) Tax Records. Subject to Section 5.8 hereof, the records and
materials relating primarily to taxes of Orscheln and its stockholders with
respect to the conduct of the Orscheln Transferred Business prior to or on the
Closing Date;
(xxiv) Orscheln Name and Logo. Except as permitted by one or more
Ancillary Agreements, any right to use any name or logo of Orscheln, or any
variant or derivative thereof, whether or not such logo, name, variant or
derivative was used by Orscheln in the conduct or operation of the Orscheln
Transferred Business;
(xxv) Insurance Policies, Claims, Etc. The insurance policies of
Orscheln pertaining to the businesses of Orscheln (including the Orscheln
Transferred Business) and the rights of Orscheln thereunder and all claims,
causes of action, choses in action, rights of recovery, and rights of setoff of
any kind that do not relate primarily to Orscheln Transferred Business or the
Orscheln Transferred Assets or that relate to the Specified Customer Claims;
(xxvi) Pension Funds, Etc. All pension funds or segregated funds held
by Orscheln for the benefit of employees of Orscheln;
(xxvii) Tax Refunds. All rights of Orscheln to refunds in respect of
federal, state, local or foreign taxes of any kind and character in respect of
the operation of the businesses of Orscheln (including the Orscheln Transferred
Business) prior to or on the Closing Date;
(xxviii) Shares of Stock. All shares of stock of other corporations
held by Orscheln;
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(xxix) Memberships. All memberships in country clubs and other social
or business organizations; and
(xxx) Miscellaneous. Except for such assets as are designated herein
as Orscheln Transferred Assets, any assets, including, without limitation,
real property and leasehold interests, equipment, tools, dies, molds and
prints, inventories, technology, Intellectual Property, Business Contracts,
commercial data and intangibles and permits of Orscheln which are not used
primarily in or which do not pertain primarily to the Orscheln Transferred
Business, including, without limitation, DEMA, Munilease, Utility Air and
Corsa.
(b) In consideration of the contribution by Orscheln of the Orscheln
Transferred Assets, subject to the terms and condition of this Agreement, Newco
will, at the Closing:
(i) (A) issue to Orscheln 125,213.65 shares of Class A Common Stock and an
option to purchase 818.18 shares of Class A Common Stock having the terms and
provisions set forth on Schedule 1.1 and (B) issue to Orscheln a subordinated
promissory note of Newco in an aggregate principal amount of $2,000,000;
(ii) assume and agree to pay, perform and discharge in accordance with and
subject to their respective terms notes payable and other funded indebtedness of
Orscheln in an aggregate amount (including unpaid accrued interest on such
indebtedness, any premiums or penalties payable upon prepayment thereof and any
other amounts owing in connection therewith) not to exceed $26,000,000 under the
agreements and instruments listed on Schedule 1.2(b)(ii) hereto (such amounts so
assumed, the "Orscheln Assumed Debt"), all as the same shall exist at the
Closing Date;
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(iii) transfer to Orscheln an amount in cash equal to $38,000,000 less
the aggregate amount of the Orscheln Assumed Debt, which amount shall be
adjusted by the amount of the Estimated Adjustment (as defined in Section
1.4 and determined in accordance therewith) (the "Cash Consideration"); and
(iv) assume and agree to pay, perform and discharge in accordance with
and subject to their respective terms all other liabilities and obligations
of Orscheln to the extent arising from the Orscheln Transferred Business
(other than notes payable and other funded indebtedness), whether accrued,
absolute, contingent or otherwise, whether due or to become due, and
whether or not having any value (or negative value) for accounting purposes
or carried or reflected on or referred to in the financial statements of
Orscheln, all as the same shall exist at the Closing Date (such liabilities
and obligations, together with the Orscheln Assumed Debt, but excluding the
Orscheln Excluded Liabilities and liabilities and obligations to the extent
arising from the Orscheln Excluded Assets, the "Orscheln Assumed
Liabilities"), including, without limitation, the following:
(A) Except for the Orscheln Excluded Liabilities, all liabilities
and obligations to the extent arising out of, resulting from or relating
to the Orscheln Transferred Assets or incurred by Orscheln in the
conduct or operation of the Orscheln Transferred Business, whether or
not such liabilities and obligations are accrued on the books of
Orscheln as of the Closing Date, including, without limitation, all
liabilities and obligations described on Schedule 2.1(k);
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(B) (i) All accounts payable of Orscheln, net of payables related to
non-operating expenses, payroll and related taxes, and in-transit
inventories to the extent arising out of the conduct or operation of the
Orscheln Transferred Business, as reflected on the internal accounting
system of Orscheln using an allocation method based on standard costs of
sales for materials and overhead reported for the months of November and
December 1993 (which allocation method has previously been reviewed and
approved by Dura) and (ii) all accrued liabilities of Orscheln consisting
of payroll liabilities, payroll tax liabilities and other benefit-related
liabilities to the extent attributable to the Orscheln Transferred Business
Employees;
(C) All liabilities and obligations of Orscheln under orders, Business
Contracts and other commitments included in the Orscheln Transferred Assets
to the extent arising from the Orscheln Transferred Business, including,
without limitation, rights arising as a direct consequence of the
assignment of such orders, Business Contracts and commitments by Orscheln
to Newco hereunder;
(D) All liabilities and obligations arising out of, resulting from or
relating to claims, whether founded upon negligence, breach of warranty,
strict liability in tort and/or other similar legal theory, seeking
compensation or recovery for or relating to injury to person or damage to
property arising out of a defect or alleged-defect of a product designed,
manufactured or sold by Newco;
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(E) All liabilities and obligations of Orscheln arising out of,
resulting from or relating to the Ford CDW-27 recall or the Ford F-Truck
recall;
(F) All liabilities and obligations of Orscheln arising out of,
resulting from or relating to any violation of any statute, ordinance,
regulation or other governmental requirements, including, without
limitation, any such statute, ordinance, regulation or other governmental
requirement relating to the emission, discharge or release of hazardous
materials into the environment or the generation, treatment, storage,
transportation or disposal of hazardous wastes by Orscheln prior to the
Closing Date to the extent arising from its conduct or operation of the
Orscheln Transferred Business prior to the Closing Date or by Newco on or
after the Closing Date; provided, however, that the Orscheln Assumed
Liabilities shall not include any such liabilities or obligations of
Orscheln arising out of, resulting from or relating to the ownership or
operation by Orscheln of any Orscheln Excluded Asset, including the ORBCO
facility, or to the extent relating to the conduct or operation by Orscheln
of the Orscheln Retained Business;
(G) All liabilities and obligations arising out of, resulting from or
relating to claims of infringement or other misappropriation of the
Intellectual Property rights of other persons with respect to the
manufacture, use and sale of products by Orscheln to the extent arising
from its conduct of the Orscheln Transferred Business prior
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to the Closing Date or by Newco on or after the Closing Date;
(H) All liabilities for the return of goods sold by Orscheln to the extent
arising from its conduct of the Orscheln Transferred Business before the Closing
Date or by Newco on or after the Closing Date and returned or returnable by a
distributor of products of the Orscheln Transferred Business; and
(I) All liabilities or obligations for property taxes (other than stamp,
transfer, document, sales, use, registration or other taxes and fees resulting
directly from the transfer of the Orscheln Transferred Assets by Orscheln to
Newco that are payable by Orscheln pursuant to Section 3.3 hereof) assessed by
any state or local government, or any political subdivision thereof or any
taxing authority therein, on any of the Orscheln Transferred Real Property that
either (a) have not been paid by Orscheln and are included on the Orscheln Final
Closing Balance Sheet or (b) arise with respect to the period beginning after
the Closing Date;
(J) Any liabilities or obligations with respect to federal, state, local or
foreign taxes of every kind and character to the extent arising from the conduct
or operation of the Orscheln Transferred Business after the Closing Date (for
this purpose, the determination of such taxes for the portion of the taxable
year or period ending on, and the portion of the taxable year or period
beginning after, the Closing Date shall be made by assuming that Orscheln had a
taxable year or peri-
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od that ended at the close of business on the Closing Date (as shown on
Schedule 1.2(b)(iv)(N)), except that exemptions, allowances or deductions
that are calculated on an annual basis, such as the deduction for
depreciation, shall be apportioned on a time basis);
(K) All obligations and liabilities of Orscheln relating to workers'
compensation, hospital, medical, surgical, disability, vision, dental and
similar plans of Orscheln relating to the Orscheln Transferred Business
Employees (as defined in Section 5.6);
specifically excepting and excluding, however, the following liabilities and
obligations, whether accrued, absolute, contingent or otherwise and whether due
or to become due, and whether or not having any value (or negative value) for
accounting purposes or carried or reflected on or referred to in the financial
statements of Orscheln, all as the same shall exist at the Closing Date (the
"Orscheln Excluded Liabilities"):
(L) Except as otherwise provided herein, any liabilities or
obligations of Orscheln to the extent that they arise out of, result from
or relate to the Orscheln Excluded Assets or the Orscheln Retained
Business;
(M) (i) All accounts payable of Orscheln, net of payables to the
extent arising out of the conduct or operation of the Orscheln Retained
Business, as reflected on the internal accounting system of Orscheln using
an allocation method based on standard costs of sales for material and
overhead reported for the months of November and December 1993 (which
allocation method has previ-
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ously been reviewed and approved by Dura) and (ii) all accrued liabilities of
Orscheln consisting of payroll liabilities, payroll tax liabilities and other
benefit-related liabilities attributable to employees of Orscheln who are not
Orscheln Transferred Business Employees;
(N) Except as provided in subclause (I) of this Section 1.2(b)(iv), any
liabilities or obligations with respect to federal, state, local or foreign
taxes of every kind and character to the extent connected with the conduct or
operation of the Orscheln Transferred Business on or prior to the Closing Date
or the sale of the Orscheln Transferred Business (for this purpose, the
determination of such taxes for the portion of the taxable year or period ending
on, and the portion of the taxable year or period beginning after, the Closing
Date shall be made by assuming that Orscheln had a taxable year or period that
ended at the close of business on the Closing Date (as shown on Schedule
1.2(b)(iv)(N)), except that exemptions, allowances or deductions that are
calculated on an annual basis, such as the deduction for depreciation, shall be
apportioned on a time basis);
(O) Orscheln's liabilities and obligations created by this Agreement and
the other agreements of Orscheln contemplated hereby;
(P) All liabilities and obligations arising out of, resulting from or
relating to claims, whether founded upon negligence, breach of warranty, strict
liability in tort and/or other similar legal theory, seeking compensation or
recovery for
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or relating to injury to person or damage to property occurring
prior to the Closing Date and arising out of a defect or alleged
defect of a product designed, manufactured or sold by Orscheln in
connection with its conduct of the Orscheln Transferred Business
before the Closing Date or in connection with its conduct or
operation of the Orscheln Retained Business;
(Q) Any liabilities and obligations of Orscheln relating to
any retirement, pension, profit sharing or other compensation or
employee benefit plans of Orscheln, except for workers'
compensation, hospital, medical, surgical, disability, vision,
dental and similar plans of Orscheln relating to the Orscheln
Transferred Business Employees that are to be assumed by Newco
pursuant to this Agreement;
(R) All liabilities and obligations of Orscheln arising out
of, resulting from or relating to any violation of any statute,
ordinance, regulation or other governmental requirements,
including, without limitation, any such statute, ordinance,
regulation or other governmental requirement relating to the
emission, discharge or release of hazardous materials into the
environment or the generation, treatment, storage, transportation
or disposal of hazardous wastes by Orscheln in connection with
its conduct or operation of the Orscheln Retained Business and
any such liabilities or obligations of Orscheln arising out of,
resulting from or relating to the ownership or operation by
Orscheln of any Orscheln Excluded Asset, including the ORBCO
facility;
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(S) All liabilities and obligations arising out of,
resulting from or relating to claims of infringement or other
misappropriation of the Intellectual Property rights of other persons
with respect to the manufacture, use and sale of products by Orscheln
in connection with its conduct or operation of the Orscheln Retained
Business;
(T) Except as set forth in (H) above, all liabilities for
the return of goods sold by Orscheln to the extent connected with its
conduct or operation of the Orscheln Retained Business and returned or
returnable by a distributor of products of the Orscheln Retained
Business;
(U) All notes payable and funded indebtedness of Orscheln
other than the Orscheln Assumed Debt; and
(V) All liabilities and obligations of Orscheln, if any,
arising out of, resulting from or relating to the litigation captioned
Derick Bobb. et al. v. Ford Motor Company currently pending in the
United States District Court for the Middle District of Pennsylvania,
Civil Action No. 4:CV94-490 or the specific facts and circumstances
giving rise to that litigation.
(c) The parties have attempted in good faith to divide machinery,
equipment, tools, dies, molds and other such assets between the Orscheln
Transferred Business and the Orscheln Retained Business based upon primary use
and in a manner which will allow the two businesses to function separately after
the Closing. However, as to any Orscheln Transferred Asset or Orscheln Retained
Asset which was at any time used by or for the benefit of both the Orscheln
Transferred Business and the Orscheln Retained Business be-
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fore the Closing, and is at any time reasonably required by both parties after
the Closing, the parties shall cooperate so as to allow any such asset to be
used by both parties to meet the reasonable needs of each other and in a manner
which will not unreasonably interfere with the business or operations of the
other.
1.3 Closing. (a) The closing of (i) the transfer of the MC Holding Shares,
(ii) the purchase by Onex and J2R from MC Holding of the subordinated promissory
notes of MC Holding described in Section l.l(b), (iii) the issuance to Orscheln
by Newco of the subordinated promissory note of Newco described in Section
1.2(b)(i), (iv) the transfer of the Orscheln Transferred Assets and (v) the
other transactions contemplated by this Agreement and the MC Management
Stockholders Contribution Agreements (the "Closing") shall take place at the
offices of Kirkland & Ellis, 200 East Randolph Street, Chicago, Illinois 60601,
at 11:59 p.m., Central Daylight Time, on August 31, 1994, or at such other time,
date and/or place as the parties hereto may agree. For all purposes hereof, the
transfer of the MC Holding Shares and issuance of the shares of Newco Common
Stock in exchange therefor shall be deemed to immediately precede the other
transactions occurring at the Closing, and the Closing will not be deemed to
occur until all such transactions have been consummated. As used herein, the
"Closing Date" means 11:59 p.m. (Central Daylight Time) on August 31, 1994.
(b) At the Closing: (i) Each MC Stockholder and, pursuant to the MC
Management Stockholders Contribution Agreements, each MC Management Stockholder
will deliver to Newco certificates in definitive form representing all of the MC
Holding Shares held by such MC Holding Stockholder or MC Management Stockholder,
duly endorsed in blank, or accompanied by stock powers duly executed in blank,
with all ap-
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plicable stock transfer tax stamps, if any, properly affixed; (ii) Onex will
deliver to MC Holding an aggregate amount of $1,800,000, by wire transfer of
immediately available funds, to an account designated by MC Holding prior to the
Closing and MC Holding will deliver to Onex a subordinated promissory Note of MC
Holding in an aggregate principal amount of $1,800,000; (iii) J2R will deliver
to MC Holding an aggregate amount of $200,000, by wire transfer of immediately
available funds, to an account designated by MC Holding prior to the Closing,
and MC Holding will deliver to J2R a subordinated promissory note of MC Holding
in an aggregate principal amount of $200,000; (iv) Orscheln will deliver to
Newco such instruments of conveyance and assignment, dated the Closing Date and
in form and substance reasonably satisfactory to MC Holding, as shall be
necessary to vest effectively in Newco good and marketable title to the Orscheln
Transferred Assets and will take such action as may be necessary to deliver and
to put Newco in possession of the Orscheln Transferred Assets; (v) Newco will,
pursuant to the Management Stockholders Contribution Agreements, deliver to the
MC Holding Stockholders certificates representing an aggregate number of
28,038.91 shares of Class A Common Stock, 100,000 shares of Class B Common Stock
and 25,000 shares of Class C Common Stock registered in the names of each of the
MC Holding Stockholders in the respective amounts set forth opposite their names
on Schedule 1.1 hereto; (vi) Newco will deliver to Orscheln certificates
representing an aggregate number of 125,213.65 shares of Class A Common Stock
and one or more certificates representing an option to purchase 818.18 shares of
Class A Common Stock having the terms and provisions set forth on Schedule 1.1,
in each case registered in the name of Orscheln; (vii) Newco will deliver to
Orscheln an aggregate amount, in U.S. dollars, equal to the Cash Consideration,
by wire transfer of
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immediately available funds, to an account to be designated by Orscheln to MC
Holding prior to the Closing; (viii) Newco will deliver to Orscheln a
subordinated promissory note of Newco in an aggregate principal amount of
$2,000,000, (ix) Newco will deliver to Orscheln such instruments, in form and
substance reasonably satisfactory to Orscheln, as shall be necessary to effect
the assumption by Newco of the Orscheln Assumed Liabilities; (x) Newco will pay
the fees and expenses specified in Section 9.1 of Orscheln, MC Holding and the
MC Holding Stockholders; and (xi) each party hereto shall deliver all such
documents, and take all such other action, contemplated by this Agreement.
1.4 Post-Closing Adjustment of Cash Consideration. The Cash Consideration
Adjustment (as defined hereafter and determined in accordance with this Section
1.4) shall be determined as follows:
(a) Accounting Principles. Notwithstanding anything contained herein to the
contrary, (i) the Orscheln Closing Balance Sheet and the Orscheln Final Closing
Balance Sheet (as such terms are defined in this Section 1.4) shall be prepared
in accordance with generally accepted accounting principles and, to the extent
consistent therewith, the accounting principles consistently applied by Orscheln
in the preparation of the balance sheet of Orscheln as of December 25, 1993 (the
"Orscheln 1993 Balance Sheet") and (ii) the MC Holding Closing Balance Sheet and
the MC Holding Final Closing Balance Sheet (as such terms are defined in this
Section 1.4) shall be prepared in accordance with generally accepted accounting
principles and, to the extent consistent therewith, the accounting principles
consistently applied by MC Holding in the preparation of the balance sheet of MC
Holding as of January 2, 1994 (the "MC Holding 1994 Balance Sheet"); in each
case
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notwithstanding the fact that the generally accepted accounting principles
described in clauses (i) and (ii) may not be fully consistent with each other.
(b) Estimated Adjustments.
(i) Not less than five (5) business days prior to the Closing Date,
Orscheln will deliver to MC Holding and the representative designated by the
holders of a majority of the outstanding shares of MC Holding Stock held by the
MC Holding Stockholders on the date hereof (the "MC Stockholder Representative")
a certificate signed by a senior officer of Orscheln setting forth his best
estimate of the Orscheln Estimated Adjustment and the basis of the calculation
thereof. The "Orscheln Estimated Adjustment" shall be the amount (which may be
negative) determined by subtracting the December 25, 1993 Net Book Value of the
Orscheln Transferred Assets, as determined in accordance with paragraph (d) of
this Section 1.4, from the estimated Closing Date Net Book Value of the Orscheln
Transferred Assets, as determined in accordance with this Section 1.4 in good
faith by such officer of Orscheln based on his estimates as of the Closing Date,
which estimates shall be based upon actual results through July 30, 1994 and the
August 1994 budget. The Orscheln Estimated Adjustment shall be determined by
application of the same accounting methods specified in paragraph (d) of this
Section 1.4.
(ii) Not less than five (5) business days prior to the Closing Date, MC
Holding will deliver to Orscheln a certificate signed by a senior officer of MC
Holding setting forth his best estimate of the MC Holding Estimated Adjustment
and the basis of the calculation thereof. The "MC Holding Estimated Adjustment"
shall be the amount (which may be negative) determined by subtracting the
January 2, 1994 Net Book Value of the MC Holding Stockholders' Equity, as
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determined in accordance with paragraph (f) of this Section 1.4, from the
estimated Closing Date Net Book Value of the MC Holding Stockholders' Equity, as
determined in accordance with this Section 1.4 in good faith by such officer of
MC Holding based on his estimates as of the Closing Date, which estimates shall
be based upon actual results through July 31, 1994 and the August 1994 budget.
The MC Holding Estimated Adjustment shall be determined by application of the
same accounting methods specified in paragraph (f) of this Section 1.4.
(iii) The Cash Consideration to be paid to Orscheln at the Closing pursuant
to Section 1.3(b)(vii) shall be adjusted by adding to it the Estimated
Adjustment. The "Estimated Adjustment" shall be the sum of (A) the amount (which
may be negative) obtained by subtracting the MC Holding Estimated Adjustment
from the Orscheln Estimated Adjustment and (B) an amount equal to 18.2% of the
MC Holding Estimated Adjustment.
(c) Closing Audits. (i) As promptly as practicable (but in no event more
than 60 days) after the Closing, Orscheln shall prepare a balance sheet (the
"Orscheln Closing Balance Sheet") which shall set forth the book value of the
Orscheln Transferred Assets and the book value of the Orscheln Assumed
Liabilities, in each case as of the close of business on the Closing Date and
determined in accordance with the same accounting principles as those used in
the preparation of the Orscheln Financial Statements referred to in Section
2.1(e). Such balance sheet shall be audited by Arthur Andersen & Co. and shall
be furnished, together with the notes thereto and the report of Arthur Andersen
& Co. thereon, to MC Holding and the MC Stockholder Representative. The Orscheln
Closing Balance Sheet shall be presented in a level of detail comparable to that
of Orscheln's bal-
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ance sheet included in the Orscheln Financial Statements referred to in Section
2.1(e) and in any event reasonably sufficient to enable the parties to make the
determinations required by this Section 1.4.
MC Holding and the MC Stockholder Representative shall have a 30-day
period, commencing upon its receipt of the Orscheln Closing Balance Sheet, to
complete a review of the Orscheln Closing Balance Sheet, and within such review
period MC Holding and the MC Stockholder Representative shall notify Orscheln in
writing of the existence or absence of any objections to the Orscheln Closing
Balance Sheet. During such thirty-day period, Orscheln shall make available to
MC Holding and the MC Stockholder Representative and their respective
representatives and accountants, upon request by MC Holding or the MC
Stockholder Representative, all relevant work papers and other relevant
information relating to the Orscheln Closing Balance Sheet and appropriate
personnel of Orscheln. If (i) MC Holding or the MC Stockholder Representative
shall not object to the Orscheln Closing Balance Sheet within such period or
(ii) the aggregate net amount of all items disputed by MC Holding and the MC
Stockholder Representative is less than $100,000, the Orscheln Closing Balance
Sheet will, without further action, become the "Orscheln Final Closing Balance
Sheet."
If MC Holding or the MC Stockholder Representative shall notify Orscheln
within such 30-day period as to any objections to the Orscheln Closing Balance
Sheet involving a net aggregate amount of items in dispute in excess of
$100,000, such notice shall state the basis of and (to the extent known) the
details concerning such objections. MC Holding, the MC Stockholder
Representative, Orscheln and Arthur Andersen & Co. will promptly attempt in good
faith to resolve all such objections. Orscheln shall make available
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to MC Holding and the MC Stockholder Representative and their respective
representatives and accountants, upon request by MC Holding or the MC
Stockholder Representative, all relevant work papers and other relevant
information relating to the objections of MC Holding or the MC Stockholder
Representative and appropriate personnel of Orscheln. If MC Holding, the MC
Stockholder Representative, Orscheln and Arthur Andersen & Co. are able to
resolve all such objections within 30 days following receipt by Orscheln of MC
Holding's or the MC Stockholder Representative's notice of objections as
provided above, the Orscheln Closing Balance Sheet, as modified to reflect any
changes agreed to in the resolutions of the objections, will become the
"Orscheln Final Closing Balance Sheet."
If MC Holding, the MC Stockholder Representative, Orscheln and Arthur
Andersen & Co. are unable to resolve all such objections within such 30-day
period, then MC Holding, the MC Stockholder Representative and Orscheln shall
specify in writing the matters and amounts upon which they are unable to reach
agreement and shall designate an independent accounting firm chosen from one of
the remaining "Big Six" accounting firms to act as arbitrator (the
"Arbitrator"). If MC Holding, the MC Stockholder Representative and Orscheln are
unable to designate such a firm by mutual agreement, such firm shall be
appointed by the American Arbitration Association. MC Holding and Orscheln shall
share equally the fees and expenses of such firm. The parties shall endeavor to
cause such firm to deliver its report within 30 days after its appointment. The
report of such firm shall be final and not subject to appeal by court action,
arbitration or otherwise and shall determine the "Orscheln Final Closing Balance
Sheet" for purposes of this Section 1.4.
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Orscheln shall cause Arthur Andersen & Co. to make available to the
Arbitrator, MC Holding and the MC Stockholder Representative all relevant work
papers and other relevant information and to cooperate with them in resolving
all such objections. The Orscheln Final Closing Balance Sheet, as finally
determined in accordance with this Section 1.4, shall be final and binding on
all parties hereto and shall not be subject to appeal by court action,
arbitration or otherwise.
(ii) As promptly as practicable (and in no event more than 60 days) after
the Closing, MC Holding shall prepare a balance sheet (the "MC Holding Closing
Balance Sheet") which shall set forth the consolidated assets, liabilities and
stockholders' equity of MC Holding as of the close of business on the Closing
Date in accordance with the same accounting principles as those used in the
preparation of the MC Holding Financial Statements referred to in Section
2.2(e). Such balance sheet shall be audited by Arthur Andersen & Co. and shall
be furnished, together with the notes thereto and the report of Arthur Anderson
& Co. thereon, to Orscheln. The MC Holding Closing Balance Sheet shall be
presented in a level of detail comparable to that of MC Holding's balance sheet
included in the MC Holding Financial Statements referred to in Section 2.2(e)
and in any event reasonably sufficient to enable the parties to make the
determinations required by this Section 1.4.
Orscheln shall have a 30-day period, commencing upon its receipt of the MC
Holding Closing Balance Sheet, to complete a review of the MC Holding Closing
Balance Sheet, and within such review period Orscheln shall notify MC Holding in
writing of the existence or absence of any objections to the MC Holding Closing
Balance Sheet. During such thirty-day period, MC Holding shall make available to
Orscheln
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and its representatives and accountants, upon request by Orscheln, all relevant
work papers and other relevant information relating to the MC Holding Closing
Balance Sheet and appropriate personnel of MC Holding and Dura. If (i) Orscheln
shall not object to the MC Holding Closing Balance Sheet within such period or
(ii) the aggregate net amount of all items disputed by Orscheln is less than
$100,000, the MC Holding Closing Balance Sheet will, without further action,
become the "MC Holding Final Closing Balance Sheet."
If Orscheln shall notify MC Holding within such 30-day period as to any
objections to the MC Holding Closing Balance Sheet involving a net aggregate
amount of items in dispute in excess of $100,000, such notice shall state the
basis of and (to the extent known) the details concerning such objections. MC
Holding, the MC Stockholder Representative, Orscheln and Arthur Andersen & Co.
will promptly attempt in good faith to resolve all such objections. MC Holding
shall make available to Orscheln and its representatives and accountants, upon
request by Orscheln, all relevant work papers and other relevant information
relating to the objections of Orscheln and appropriate personnel of MC Holding
and Dura. If MC Holding, the MC Stockholder Representative, Orscheln and Arthur
Andersen & Co. are able to resolve all such objections within 30 days following
receipt by MC Holding of Orscheln's notice of objections as provided above, the
MC Holding Closing Balance Sheet, as modified to reflect any changes agreed to
in the resolutions of the objections, will become the "MC Holding Final Closing
Balance Sheet."
If MC Holding, Orscheln and Arthur Andersen & Co. are unable to resolve all
such objections within such 30-day period, then MC Holding and Orscheln shall
specify in writing the matters and amounts upon which they are unable to
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reach agreement and shall designate an independent accounting firm chosen from
one of the remaining "Big Six" accounting firms to act as Arbitrator. If MC
Holding and Orscheln are unable to designate such a firm by mutual agreement,
such firm shall be appointed by the American Arbitration Association. MC Holding
and Orscheln shall share equally the fees and expenses of such firm. The parties
shall endeavor to cause such firm to deliver its report within 30 days after its
appointment. The report of such firm shall be final and not subject to appeal by
court action, arbitration or otherwise and shall determine the "MC Holding Final
Closing Balance Sheet" for purposes of this Section 1.4.
MC Holding shall cause Arthur Andersen & Co. to make available to the
Arbitrator and Orscheln all relevant work papers and other relevant information
and to cooperate with them in resolving all such objections. The MC Holding
Final Closing Balance Sheet, as finally determined in accordance with this
Section 1.4, shall be final and binding on all parties hereto and shall not be
subject to appeal by court action, arbitration or otherwise.
(d) December 25, 1993 Net Book Value of the Orscheln Transferred Assets. The
December 25, 1993 Net Book Value of the Orscheln Transferred Assets will be an
amount equal to the book value of the Orscheln Transferred Assets at December
25, 1993 minus the book value of the Orscheln Assumed Liabilities (excluding any
items relating to Orscheln Assumed Debt), as they existed at December 25, 1993,
in each case as reflected in the Orscheln 1993 Balance Sheet. Notwithstanding
anything to the contrary contained herein, all inventories reflected on the
Orscheln 1993 Balance Sheet shall be stated on a first-in-first-out ("FIFO")
basis.
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(e) Closing Date Net Book Value of the Orscheln Transferred
Assets. The Closing Date Net Book Value of the Orscheln Transferred Assets will
be an amount equal to the book value of the Orscheln Transferred Assets at the
Closing Date minus the book value of Orscheln Assumed Liabilities (excluding any
items relating to Orscheln Assumed Debt), at the Closing Date, in each case as
reflected in the Orscheln Final Closing Balance Sheet; provided, however, that
no liabilities will be recorded for such costs or expenses which Newco is
obligated to reimburse Orscheln pursuant to Section 9.1 of this Agreement; and
provided, further, that the inventories on the Orscheln Final Closing Balance
Sheet shall be stated on a FIFO basis. The parties having agreed that Newco will
assume all liabilities and obligations arising out of, resulting from or
relating to the Ford CDW-27 recall or the Ford F-Truck recall, notwithstanding
anything to the contrary contained herein, any accruals for or payments to Ford
by Orscheln related to the Ford CDW-27 recall or the Ford F-Truck recall shall
be reimbursed at Closing to Orscheln by Newco.
(f) January 2, 1994 Net Book Value of the MC Holding
Stockholders' Equity. The January 2, 1994 Net Book Value of the MC Holding
Stockholders' Equity will be an amount equal to the consolidated net book value
of the stockholders' equity of MC Holding at January 2, 1994, in each case as
reflected in the MC Holding 1993 Balance Sheet. Notwithstanding anything to the
contrary contained herein, all inventories reflected on the MC Holding 1993
Balance Sheet shall be stated on a FIFO basis.
(g) Closing Date Book Value of the MC Holding Stockholders'
Equity. The Closing Date Net Book Value of the MC Holding Stockholders' Equity
will be an amount equal to the consolidated net book value of the stockholders'
eq-
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uity of MC Holding at the Closing Date as reflected in the MC Holding Final
Closing Balance Sheet, provided, however, that for purposes of calculating the
consolidated net book value of the stockholders' equity of MC Holding at the
Closing Date, (x) such net book value shall be reduced by the actual amount of
income tax owed by MC Holding for the period January 1, 1994 through the Closing
Date (e.g., after application of any applicable net operating loss
carryforwards), but shall not otherwise be reduced or increased on account of
any income tax liability or income tax benefit for the period January 1, 1994
through the Closing Date and (y) such net book value shall be adjusted for any
penalties relating to any prepayment of existing indebtedness of MC Holding
contemplated by this Agreement (but only to the extent that such penalties are
not reflected in the pre-tax income of MC Holding through the Closing Date); and
provided, further, that design and engineering costs incurred during the period
subsequent to January 2, 1994 shall be expensed as incurred and shall not be
capitalized for purposes of the MC Holding Final Closing Date Balance Sheet; and
provided, further, that no liabilities will be recorded for such costs or
expenses which Newco is obligated to reimburse MC Holding pursuant to Section
9.1 of this Agreement; and provided, further, that the inventories on the MC
Holding Final Closing Balance Sheet shall be stated on a FIFO basis.
(h) Determination of Adjustments.
(i) The "Orscheln Adjustment" shall be the amount (which may be
negative) determined by subtracting the December 25, 1993 Net Book Value of the
Orscheln Transferred Assets, as determined in accordance with paragraph (d) of
this Section 1.4, from the Closing Date Net Book Value of the
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Orscheln Transferred Assets, as determined in accordance with paragraph (e) of
this Section 1.4.
(ii) The "MC Holding Adjustment" shall be the amount (which may
be negative) determined by subtracting the January 2, 1994 Net Book Value of the
MC Holding Stockholders' Equity, as determined in accordance with paragraph (f)
of this Section 1.4, from the Closing Date Book Value of the MC Holding
Stockholders' Equity, as determined in accordance with paragraph (g) of this
Section 1.4.
(iii) The "Cash Consideration Adjustment" shall be the sum of (A)
the amount (which may be negative) obtained by subtracting the MC Holding
Adjustment from the Orscheln Adjustment and (B) an amount equal to 18.2% of the
MC Holding Adjustment.
(iv) The Cash Consideration Adjustment will be finally determined
on the date the amounts of the Orscheln Adjustment and the MC Holding Adjustment
are finally determined.
(i) Payment of Cash Consideration Adjustment. If the Cash
Consideration Adjustment exceeds the Estimated Adjustment, Newco shall transfer
to Orscheln, by wire transfer of immediately available funds to the account
designated by Orscheln pursuant to Section 1.3(b), the amount equal to the
amount by which the Cash Consideration Adjustment exceeds the Estimated
Adjustment, within ten (10) business days after the final determination of the
Cash Consideration pursuant to paragraph (h) of this Section 1.4. If the
Estimated Adjustment exceeds the Cash Consideration Adjustment, Orscheln shall
transfer to Newco, by wire transfer of immediately available funds to an account
designated by Newco, an amount equal to the amount by which the Estimated
Adjustment exceeds the Cash Consideration Adjustment, together with interest at
the Prime Rate published by Bank of America
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on the Closing Date thereon for the period from the Closing Date through and
including the date on which the Cash Consideration Adjustment is paid, within
ten (10) business days after the final determination of the Cash Consideration
pursuant to paragraph (i) of this Section 1.4.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Orscheln. Orscheln hereby
represents and warrants to the MC Holding Stockholders and Newco that:
(a) Corporate Organization and Qualification. Orscheln is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction where the properties owned,
leased or operated, or the business conducted, by it make such qualification
necessary, except where the failure to be so qualified would not have a Material
Adverse Effect on the Orscheln Transferred Business. For purposes of this
Agreement, "Material Adverse Effect" means with respect to any party an effect
on the financial position or results of operations of such party (considered, in
the case of Orscheln, without including therein the Orscheln Excluded Assets or
the Orscheln Excluded Liabilities), which is both material and adverse. Orscheln
has all requisite corporate power and authority to carry on in all material
respects its business as it is now being conducted.
(b) Organizational Documents. Orscheln has delivered or made available
to MC Holding and the MC Holding Stockholders complete and correct copies of the
certificate of incorporation, by-laws and other organizational documents of
Orscheln, in each case as in effect on the date hereof.
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(c) Governmental Filings; Consents. Other than the filings required to
be made pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "H-S-R Act"), no notices, reports or other filings are required to be made
by Orscheln with, nor, except as contemplated by Section 5.1, are any consents,
registrations, approvals, permits or authorizations required to be obtained by
Orscheln from, any governmental or regulatory authorities or, to the knowledge
of Orscheln, any third party, in connection with the execution, delivery and
performance by Orscheln of this Agreement, the failure to make or obtain any or
all of which would (i) have a Material Adverse Effect on the Orscheln
Transferred Business, (ii) be reasonably likely to prevent or materially delay
the transactions contemplated by this Agreement, or (iii) subject Newco, MC
Holding or either of the MC Holding Stockholders to any material liability,
except for such as have been or will be obtained on or prior to the Closing
Date. To the knowledge of Orscheln, Schedule 2.1(c) hereto lists all material
consents, registrations, approvals, permits or authorizations that are required
to be obtained by Orscheln from any third party in connection with the
execution, delivery and performance of this Agreement the failure to make or
obtain any or all of which would (i) have a Material Adverse Effect on the
Orscheln Transferred Business, (ii) be reasonably likely to prevent or
materially delay the transactions contemplated by this Agreement or (iii)
subject Newco, MC Holding or either of the MC Holding Stockholders to any
material liability.
(d) Authority; No Violations. Orscheln has all requisite corporate
power and authority and has taken all corporate action necessary in order to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly approved by the holders of the
outstanding shares of capital stock of Or-
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scheln entitled to vote thereon. This Agreement has been duly executed and
delivered by Orscheln and constitutes a valid and legally binding agreement of
Orscheln enforceable against Orscheln in accordance with its terms. The
execution, delivery and performance by Orscheln of this Agreement do not, and
will not, constitute or result in (i) a breach or violation of the certificate
of incorporation or by-laws of Orscheln or (ii) a breach or violation of,
default under or creation of any lien, encumbrance, security interest or pledge
("Encumbrances") on assets of Orscheln pursuant to (with or without the giving
of notice or the lapse of time or both) any provision of any agreement, lease,
contract, note, mortgage, indenture, arrangement or other obligation
("Contract") to which Orscheln is a party or by which any of its properties is
bound that is material to the Orscheln Transferred Business, or any statute,
law, rule, ordinance or regulation ("Law") to which Orscheln or any of its
properties is subject, except to the extent that, with respect to any Laws or
Contracts, any such breaches, violations, defaults or Encumbrances would not,
individually or in the aggregate, have a Material Adverse Effect on the Orscheln
Transferred Business.
(e) Financial Statements. Attached hereto as Schedule 2.1(e) are the
audited financial statements of Orscheln as of December 25, 1993 and for the
fiscal year then ended (the "Orscheln Financial Statements"), and the unaudited
pro forma divisional balance sheet of the Orscheln Transferred Business as of
December 25, 1993 (the "Orscheln 1993 Divisional Balance Sheet"). The Orscheln
Financial Statements are true and correct in all material respects and present
fairly, in all material respects, the financial position of Orscheln at December
25, 1993, and its results of operations for the period ended December 25, 1993,
in conformity with generally accepted accounting principles as
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applied in the United States ("GAAP"). The Orscheln 1993 Divisional Balance
Sheet presents fairly, in all material respects, the financial position of the
Orscheln Transferred Business as of December 25, 1993 (based on the allocation
methods approved by the parties hereto).
(f) Material Adverse Change. Between December 25, 1993 and the date of
this Agreement, no event has occurred which has had, or is reasonably likely to
have, a Material Adverse Effect on the Orscheln Transferred Business.
(g) Absence of Certain Changes. Except as disclosed on Schedule 2.1(g)
hereto or as expressly contemplated in this Agreement, between December 25, 1993
and the date of this Agreement (x) Orscheln has conducted the Orscheln
Transferred Business only in accordance with, and Orscheln has not engaged in
any material transaction other than according to, the ordinary course of such
business, consistent with past practice, and (y) there has not been (i) any
material change in the accounting principles, practices or methods of Orscheln
or (ii) any lapse of any right under any Contract of Orscheln or forgiveness by
Orscheln of any debt of a third party which has had or is reasonably likely to
have a Material Adverse Effect on the Orscheln Transferred Business. Except as
disclosed on Schedule 2.1(g) hereto or as expressly contemplated in this
Agreement, between December 25, 1993 and the date of this Agreement Orscheln has
not (i) except in the ordinary course of business, sold, assigned or transferred
any material asset which would have been included in the Orscheln Transferred
Assets if it were held by Orscheln immediately prior to the Closing, or
mortgaged, pledged or subjected any material Orscheln Transferred Asset to any
lien, except for liens for current property taxes not yet due and payable, (ii)
except in the ordi-
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nary course of business, sold, assigned, transferred, abandoned or permitted to
lapse any licenses, permits, proprietary rights or other intangible assets,
which, individually or in the aggregate, are material to the Orscheln
Transferred Business, or granted any license or sublicense of any rights under
or with respect to any proprietary rights that are material to the Orscheln
Transferred Business, (iii) made or granted any bonus or any wage or salary
increase to any Orscheln Transferred Business Employee (as defined in Section
5.6) or made any other material change in employment terms for any Orscheln
Transferred Business Employee, other than bonuses and increases in the ordinary
course of business, (iv) made any capital expenditures or commitments therefor
relating to the Orscheln Transferred Business such that the aggregate
outstanding amount of unpaid obligations and commitments with respect thereto
shall comprise in excess of $1 million of Orscheln Assumed Liabilities on the
Closing Date, (v) suffered any material damage, destruction or casualty loss to
the Orscheln Transferred Assets, whether or not covered by insurance, (vi)
entered into any agreement to do any of the foregoing or (vii) received
notification that any material customer or supplier of the Orscheln Transferred
Business will stop or decrease in any material respect the rate of business done
with the Orscheln Transferred Business.
(h) Title to Properties; Absence of Liens, etc. Orscheln has, and
subject to the terms and conditions of this Agreement will convey, transfer,
assign and deliver, good, marketable and insurable title to all of the Orscheln
Transferred Assets, real and personal, and, with respect to real property
included in the Orscheln Transferred Assets, good, marketable and insurable
title, free and clear of any Encumbrances and defects, except where the failure
to have such good, marketable and insurable title, as the case may
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be, or where the existence of any such Encumbrance or defect would not
materially interfere with the use of such property, and except for (i) any
Encumbrances or defects generally or specifically disclosed in the Orscheln
Financial Statements and (ii) with respect to personal property, any
Encumbrances or defects incurred or created in the ordinary course of business
subsequent to the close of the period covered by the Orscheln Financial
Statements.
(i) Absence of Undisclosed Liabilities. Except as set forth in the
balance sheet included in the Orscheln Financial Statements or disclosed in the
footnotes thereto, at the date of such balance sheet, and except as set forth in
such balance sheet or disclosed in the footnotes thereto or in Schedule 2.1(i)
and except for debts, liabilities and obligations incurred in the ordinary
course of business after such date, at the date of this Agreement, Orscheln had
no material debts, liabilities or obligations, contingent or otherwise, in
respect of the Orscheln Transferred Business that were required by GAAP, as
heretofore applied by Orscheln in preparation of the Orscheln Financial
Statements, to be set forth or disclosed therein and that were not so set forth
or disclosed.
(j) Licenses and Registrations; Compliance with Laws. To the knowledge
of Orscheln, (i) on the date hereof Orscheln has all permits, governmental
licenses, registrations and approvals required by law or the rules or
regulations of any governmental entity having jurisdiction over Orscheln that
are necessary and material to enable Orscheln to carry on the Orscheln
Transferred Business as presently conducted and (ii) no proceeding is pending or
threatened to revoke or limit any of such permits, governmental licenses,
registrations and approvals. Except as disclosed on Schedule 2.1(j), on the date
hereof Orscheln is not in violation
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of, or in default under, any Law applicable to the Orscheln Transferred Assets
or the Orscheln Transferred Business (excluding, for all purposes of this
Section 2.1(j), any Environmental Law (as hereinafter defined)), except for
violations or defaults which, individually or in the aggregate, would not have a
Material Adverse Effect on the Orscheln Transferred Business.
(k) Litigation. Except as described in Schedule 2.1(k), on the date
hereof there are no actions, suits or proceedings at law, in equity or otherwise
pending or threatened in writing against Orscheln in, before or by any court,
arbitrator or governmental agency which relate to the Orscheln Transferred
Assets and which, if adversely determined, would be reasonably likely to (i)
have a Material Adverse Effect on the Orscheln Transferred Business or (ii)
enjoin or prevent the consummation of the transactions contemplated hereby.
Except as set forth on Schedule 2.1(k) or as generally pertain to entities
engaged in businesses similar to those conducted by Orscheln, Orscheln is not
subject to any judgment, order or decree of any court or governmental agency
with respect to the Orscheln Transferred Assets.
(1) Intellectual Property. Except as described in Schedule 2.1(1), (i)
on the date hereof Orscheln owns or possesses adequate licenses or other rights
to use all patents, copyrights, registered industrial designs, trademarks,
service marks, trade secrets, know-how, technical information, software and
other similar intellectual property rights ("Intellectual Property") that are
currently used by Orscheln in, or are necessary for, its conduct or operation of
the Orscheln Transferred Business as currently conducted, except for such
Intellectual Property the failure of which to own or possess would not have a
Material Adverse Effect
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on the Orscheln Transferred Business, (ii) during the twelve months preceding
the date hereof, Orscheln has not received any written notice, and there are no
unresolved claims, that the operations of the Orscheln Transferred Business are
violating the rights of others in respect of any Intellectual Property included
in the Orscheln Transferred Assets and being transferred to Newco pursuant to
this Agreement, except for such claims which, if adversely determined, would not
be material to the Orscheln Transferred Business and (iii) during the twelve
months preceding the date hereof, Orscheln has not, to its knowledge, infringed,
misappropriated or otherwise conflicted with any Intellectual Property rights of
other persons in connection with its conduct of the Orscheln Transferred
Business.
(m) Labor Matters. To the knowledge of Orscheln, Orscheln has complied
in all material respects with all applicable laws relating to the employment of
labor, including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other taxes. To the
knowledge of Orscheln, except as set forth on Schedule 2.1(m), there are no
material administrative charges or court complaints pending or threatened
against Orscheln before the U.S. Equal Employment Opportunity Commission or any
state or federal court or agency concerning an alleged employment discrimination
or any other matters relating to the employment of labor. To the knowledge of
Orscheln, (i) there is no labor strike, dispute, work stoppage or slowdown by
the employees of the Orscheln Transferred Business pending or threatened against
Orscheln and (ii) there is no request for union representation pending by the
Orscheln Transferred Business employees. To the knowledge of Orscheln, there is
no grievance or arbitration proceeding pending by the employees of the Orscheln
Transferred Business which is reasonably likely to be material to
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the Orscheln Transferred Business. Orscheln is not a party to any labor or union
agreement.
(n) Brokers and Finders. Neither Orscheln nor any of its officers or
directors has employed any broker or finder or incurred any liability to any
person for any brokerage fees, commissions or finders' fees in connection with
the transactions contemplated hereby, other than Smith Barney Shearson Inc., for
whose fees, commissions and expenses Orscheln shall be responsible to the extent
not paid by Newco pursuant to Section 9.1.
(o) Environmental Matters. Orscheln has delivered to MC Holding and
the MC Holding Stockholders or their representatives complete and correct copies
of all Phase I and Phase II environmental assessments in its possession or
reasonably available to it prepared on or prior to the date hereof regarding the
properties owned or operated by Orscheln and included in the Orscheln
Transferred Assets. To the knowledge of Orscheln, except as set forth on
Schedule 2.1(o) hereto, with respect to the ownership or operation by Orscheln
of the Orscheln Transferred Assets:
(i) Orscheln has, in respect of its operation or conduct of the
Orscheln Transferred Business, complied and is in compliance in all
material respects with Environmental Laws except for such noncompliances as
would not, individually or in the aggregate, be material to the Orscheln
Transferred Business;
(ii) Orscheln has obtained all material permits, licenses and
other authorizations required pursuant to Environmental Laws to conduct and
operate the Orscheln Transferred Business as currently conducted;
(iii) Orscheln has, in respect of the Orscheln Transferred
Business, received no written notice of any
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violation of, or any liability or corrective or remedial obligation under,
any Environmental Laws (including without limitation any such notice
pursuant to CERCLA) except for such violations or liabilities which would
not, individually or in the aggregate, be material to the Orscheln
Transferred Business; and
(iv) No facts or circumstances exist (including without limitation on-
site or off-site disposal or release of Hazardous Substances) which could
reasonably be expected to give rise to any material liability or material
corrective or remedial obligation under any Environmental Laws for which
Newco would be responsible.
For purposes of this Agreement, "Environmental Law" means any federal,
state or local law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, legal doctrine, order, judgment, decree,
injunction, or other governmental requirement, (x) relating to water, health or
safety or the protection, preservation or restoration of the environment
(including, without limitation, air, water vapor, surface water, groundwater,
drinking water supply, surface land, subsurface land, plant and animal life or
any other natural resource), or to human health or safety, or (y) the exposure
to, or the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Hazardous
Substances, in each case as amended and in effect at or prior to the Closing
Date. The term Environmental Law includes, without limitation, the federal
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act, the federal Water Pollution
Control Act of 1972, the federal Clean Air Act, the federal Clean Water Act, the
fed-
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eral Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the federal Solid Waste Disposal and the
federal Toxic Substances Control Act, the federal Insecticide, Fungicide and
Rodenticide Act, the federal Occupational Safety and Health Act of 1970, each as
amended and as now or hereafter in effect, and any common law or equitable
doctrine (including, without limitation, injunctive relief and tort doctrines
such as negligence, nuisance, trespass and strict liability) that may impose
liability or obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Hazardous Substance. "Hazardous
Substance" means any substance listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any
Environmental Law, whether by type or by quantity, including any substance
containing any such substance as a component. Hazardous Substance includes,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial substance
or petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos, asbestos-containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl.
(p) Assets and Business. After the transfer of the Orscheln Transferred
Assets in accordance with Section 1.2 and the execution and delivery by Orscheln
and Newco or Dura of the Ancillary Agreements, the Orscheln Transferred Assets
that Newco will own and the rights of Newco or Dura under the Ancillary
Agreements will include all of the properties, assets and rights that are
reasonably necessary to conduct the Orscheln Transferred Business in
substantially the manner heretofore conducted.
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(q) Securities Act. The Newco Shares to be acquired by Orscheln pursuant to
this Agreement are being acquired by Orscheln for its own account for investment
only and not with a view to or in connection with any public disposition thereof
or with any present intention of selling, distributing or otherwise disposing of
such Newco Shares, and Orscheln will not sell, or offer to sell or otherwise
dispose of such Newco Shares so acquired in violation of any of the registration
requirements of the Securities Act or any applicable state securities laws.
(r) FIRPTA Representation. Orscheln is not a "foreign person" within the
meaning of Section 1445(a) of the Code (as defined herein) regarding withholding
of tax on certain dispositions by foreign persons.
(s) Owned Real Property. With respect to the Orscheln Real Property, to the
knowledge of Orscheln: (i) there are no eminent domain or condemnation
proceedings pending or threatened affecting any portion of the Orscheln
Transferred Real Property; (ii) the current use of the Orscheln Transferred Real
Property and the operation of the Orscheln Transferred Business does not violate
in any material respect any material instrument of record or agreement affecting
the Orscheln Transferred Real Property or any applicable law, code, statute,
ordinance, regulation, order or other requirement of any governmental authority
having jurisdiction over any of the Orscheln Transferred Real Property
(collectively, the "Legal Requirements" (excluding, for all purposes of this
Section 2.1(s), any Environmental Law)); (iii) all buildings, structures and
other improvements located on the Transferred Real Property, including, without
limitation, all material components thereof, are in operating condition and
repair sufficient to operate the Orscheln Transferred Business, subject to the
provision of
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usual and customary maintenance provided in the ordinary course of business with
respect to buildings, structures and improvements of like age and construction
and all water, gas, electrical, steam, compressed air, telecommunication,
sanitary and storm sewage lines and other utilities and systems serving the
Orscheln Transferred Real Property are sufficient to enable the continued
operation of the Orscheln Transferred Real Property as it is now operated in
connection with the conduct or operation of the Orscheln Transferred Business;
and (iv) all material certificates of occupancy, permits, licenses, approvals
and other authorizations required in connection with the operation of the
Orscheln Transferred Business on the Orscheln Transferred Real Property required
to have been issued to enable the Orscheln Transferred Real Property to be
lawfully occupied and used for all of the purposes for which it is currently
occupied and used in connection with the operation of the Orscheln Transferred
Business have been lawfully issued and are, as of the date hereof, in full force
and effect.
(t) Orscheln Transferred Leased Real Property. With respect to the
Orscheln Transferred Leased Real Property and the leases with respect thereto
(the "Orscheln Transferred Leases"): (i) true, correct and complete copies of
each of the Orscheln Transferred Leases have been delivered to MC Holding, and
none of the Orscheln Transferred Leases has been modified in any material
respect, except to the extent that such modifications are in writing and have
been delivered or made available to MC Holding; (ii) except as set forth on
Schedule 2.1(t)(ii) Orscheln has not assigned, subleased, transferred, conveyed,
mortgaged or otherwise encumbered any material interest in the Orscheln
Transferred Leased Real Property or the Orscheln Transferred Leases; (iii) the
Orscheln Transferred Leases are legal and valid agreements and are in full force
and effect except where the
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invalidity or unenforceability would not be material to the Orscheln Transferred
Business; (iv) there are no material defaults by either the landlord or the
tenant under any material Orscheln Transferred Lease; (v) the Orscheln
Transferred Leases shall be valid and enforceable agreements of Newco as tenant
thereunder after assignment of such Orscheln Transferred Leases to Newco and
consent to such assignment by the relevant landlord; and (vi) there are no
material disputes, oral agreements or forbearance agreements in effect with
respect to any of the Orscheln Transferred Leases.
(u) Contracts. (i) Except as set forth in Schedule 2.1 (u), to the
knowledge of Orscheln, Orscheln is not a party to any written:
(A) contract with any labor union or contract for the employment
of any officer, individual employee or other person on a full-time or part-
time basis that will be assumed by Newco that is not terminable at will or
that will result in Newco incurring an obligation in excess of $25,000;
(B) agreement or indenture relating to the Orscheln Assumed Debt
or the mortgaging, pledging or otherwise placing a lien on any of the
Orscheln Transferred Assets;
(C) agreement or commitment with respect to the lending or
investment of funds to or in other persons or entities, except advances to
employees in the ordinary course of business and consistent with past
practice, that would result in Newco incurring any obligation or liability
thereunder;
(D) guarantee or any obligation for borrowed money or otherwise,
other than endorsements made for collection in the ordinary course of
business, that
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would result in Newco incurring any obligation or liability thereunder;
(E) any lease or agreement under which Orscheln is lessee of or holds
or operates any personal property owned by any other party under which Newco
will incur any obligation or liability and for which the annual rental
exceeds $25,000;
(F) any lease or agreement under which it is lessor of or permits any
third party to hold or operate any property, real or personal, owned or
controlled by it that Newco will assume for which the annual rental exceeds
$25,000;
(G) material license or royalty agreement relating to the Orscheln
Transferred Business;
(H) agreement, arrangement or understanding relating to the Orscheln
Transferred Business with any officer, director, partner, stockholder or
other insider or affiliate of Orscheln (other than for employment in
customary terms); or
(I) contract that prohibits Orscheln from operating or conducting the
Orscheln Transferred Business anywhere in the world.
(ii) To the knowledge of Orscheln, true and correct copies of all
written contracts specified on Schedule 2.1(u), together with all amendments,
waivers or other changes thereto, have been made available to MC Holding, or one
or more of its representatives.
(iii) To the knowledge of Orscheln, all of the contracts, agreements and
instruments set forth on Schedule 2.1(u) are valid, binding and enforceable in
accordance with their respective terms, except where the invalidity or
unenforceability of such contracts, agreements or instru-
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ments would not, individually or in the aggregate, be material to the Orscheln
Transferred Business. Orscheln has performed all material obligations required
to be performed by it under the contracts, agreements and instruments listed on
Schedule 2.1(u) and is not in default or in breach of nor in receipt of any
claim of default or breach under any material contract, agreement or instrument
listed in Schedule 2.1(u) to which Orscheln is subject; no event has occurred
which with the passage of time or the giving of notice or both would result in a
default, breach or event of noncompliance under any material contract, agreement
or instrument to which Orscheln is subject and that is listed in Schedule
2.1(u); and Orscheln does not have knowledge of any breach by the other parties
to any material contract or commitment listed in Schedule 2.1(u) to which it is
a party that would result in a loss to Newco in excess of $100,000.
(v) Tax Matters. (i) For purposes of this Agreement: (A) "Code" means
the Internal Revenue Code of 1986, as amended; (B) "Tax" or "Taxes" mean any or
all federal, state, local or foreign income, gross receipts, severance,
property, production, sales, use, license, excise, franchise, employment,
withholding, transfer or other taxes, together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions or
penalties; and (C) "Tax Returns" means all federal, state, local and foreign
returns required to be filed with respect to Taxes.
(ii) Except as disclosed on Schedule 2.1(v)(ii) or in the Orscheln
Financial Statements, (a) all Tax Returns that are required to be filed on or
before the Closing Date by Orscheln have been or will be timely filed; (b) all
Tax Returns referred to in clause (a) are accurate and complete in all material
respects; (c) all Taxes shown as due on the
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Tax Returns referred to in clause (a) have been or will be timely paid; and (d)
there are no (and have been no) written tax sharing or other agreements
regarding the allocation of liability for Taxes (or any items of deduction,
income or credit) to which Orscheln is or has been a party.
(iii) Except as disclosed in Schedule 2.1(v)(iii) Orscheln has
withheld amounts from its employees and has filed or will file all federal,
foreign, state and local returns and reports with respect to employee income tax
withholding and social security and payroll and unemployment Taxes for all
periods (or portions thereof) ending on or before the Closing, in compliance
with the provisions of the Code and other applicable federal, foreign, state and
local laws, except for such amounts the failure to withhold which, and such
returns and reports the failure to file which, in the aggregate, will not have a
Material Adverse Effect on the Orscheln Transferred Business.
(iv) Except as set forth in Schedule 2.1(v)(iv), on the date hereof
there are no claims, investigations, actions or proceedings pending or, to the
knowledge of Orscheln, threatened against Orscheln by any taxing authority,
other than claims, investigations, actions or proceedings which, individually or
in the aggregate, would not be reasonably likely to have a Material Adverse
Effect on the Orscheln Transferred Business; there are no liens for Taxes upon
the Orscheln Transferred Assets; and there has been neither any waiver of any
applicable statute of limitations nor consent for the extension of the time for
the assessment of any Tax against Orscheln.
(v) Orscheln made a valid election under Section 1362 of the Code and
under any corresponding state tax provision to be an S corporation for its 1987
taxable year, and such election has not been terminated.
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(vi) The representations and warranties set forth in this Section
2.1(v) are not applicable to the extent that the Orscheln Transferred Assets
cannot be subject to Tax liens and Newco cannot be made liable for Taxes
relating to any matter constituting a breach of such representations and
warranties.
(w) No Other Representations or Warranties. Except for the
representations and warranties contained in this Agreement, neither Orscheln nor
any of its officers, directors, employees, agents or representatives makes any
other representation or warranty with respect to this Agreement or the
transactions contemplated hereby, notwithstanding the delivery or disclosure to
MC Holding, the MC Holding Stockholders or Dura or any officers, directors,
employees, agents or representatives of any of them or any other person of any
documentation or other information by Orscheln or any of its officers,
directors, employees, agents or representatives.
2.2 Representations and Warranties of MC Holding. MC Holding hereby
represents and warrants to Orscheln and Newco as follows:
(a) Corporate Organization and Qualification. Each of MC Holding and
Dura is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and is duly qualified to do business as
a foreign corporation in good standing in each jurisdiction where the properties
owned, leased or operated, or the business conducted, by it make such
qualification necessary, except where the failure to be so qualified would not
have a Material Adverse Effect on the business of MC Holding and Dura, taken as
a whole (the "MC Holding Group"). Each of MC Holding and Dura has all requisite
corporate power and au-
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thority to carry on in all material respects its business as it is now being
conducted.
(b) Capitalization of MC Holding and Dura; Validity of MC Holding
Shares and Dura Shares; Organizational Documents. The total authorized capital
stock of MC Holding consists of 500,000 shares of Class A common stock, par
value $.01 per share (the "MC Holding Class A Common Stock"), 300,000 shares of
Class B common stock, par value $.01 per share (the "MC Holding Class B Common
Stock"), and 100,000 shares of Class C common stock, par value $.01 per share
(the "MC Holding Class C Common Stock") (collectively, the "MC Holding Common
Stock"), of which 28,038.91 shares of MC Holding Class A Common Stock, 100,000
shares of MC Holding Class B Common Stock and 25,000 shares of MC Holding Class
C Common Stock are issued and outstanding as of the date of this Agreement, and,
except for 4,000 shares of MC Holding Class A Common Stock that are held in the
treasury of MC Holding, no shares of MC Holding Common Stock are held in the
treasury of MC Holding. The total authorized capital stock of Dura consists of
1,000 shares of Common Stock, par value $.01 per share (the "Dura Common
Stock"). All of the MC Holding Shares are collectively owned of record by the MC
Holding Stockholders and the MC Management Stockholders and all of the issued
and outstanding shares of Dura Common Stock are owned of record by MC Holding.
All issued and outstanding shares of MC Holding Common Stock and Dura Common
Stock have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth on Schedule 2.2(b), there are no existing
options, warrants, calls, rights, commitments or other similar arrangements
relating to (i) the MC Holding Common Stock or the Dura Common Stock or (ii) the
capital stock of MC Holding or Dura or (iii) to any securities or obligations
convertible into or exchangeable for, or giving any person any right to sub-
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scribe for or acquire from MC Holding or Dura, any shares of capital stock or
other securities or obligations of MC Holding or Dura, respectively. MC Holding
has delivered or made available to Orscheln complete and correct copies of the
certificate of incorporation, by-laws and other organizational documents of MC
Holding and Dura, in each case as in effect on the date hereof.
(c) Governmental Filings; Consents. Other than the filings required to
be made pursuant to the H-S-R Act, no notices, reports or other filings are
required to be made by MC Holding or Dura with, nor, except as contemplated by
Section 5.1, are any consents, registrations, approvals, permits or
authorizations required to be obtained by MC Holding or Dura from, any
governmental or regulatory authorities or, to the knowledge of MC Holding, any
third party, in connection with the execution, delivery and performance by MC
Holding of this Agreement, the failure to make or obtain any or all of which
would (i) have a Material Adverse Effect on the MC Holding Group, (ii) be
reasonably likely to prevent or materially delay the transactions contemplated
by this Agreement or (iii) subject Newco or Orscheln to any material liability,
except for such as have been or will be obtained on or prior to the Closing
Date. To the knowledge of MC Holding, Schedule 2.2(c) hereto lists all material
consents, registrations, approvals, permits or authorizations that are required
to be obtained by MC Holding or Dura from any third party in connection with the
execution, delivery and performance of this Agreement the failure to make or
obtain any or all of which would (i) have a Material Adverse Effect on the MC
Holding Group, (ii) be reasonably likely to prevent or materially delay the
transactions contemplated by this Agreement or (iii) subject Newco or Orscheln
to any material liability.
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(d) AuthoritY; No Violations. MC Holding has all requisite corporate
power and authority and has taken all corporate action necessary in order to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by MC
Holding and constitutes a valid and legally binding agreement of MC Holding
enforceable against MC Holding in accordance with its terms. The execution,
delivery and performance by MC Holding of this Agreement do not, and will not,
constitute or result in (i) a breach or violation of the certificate of
incorporation or by-laws of MC Holding or Dura, (ii) a breach or violation of,
default under or creation of Encumbrances on the assets of MC Holding or Dura
pursuant to (with or without the giving of notice or the lapse of time or both)
any provision of any Contract to which MC Holding or Dura is a party or by which
any properties of either of them is bound that is material to MC Holding or
Dura, or any Law to which MC Holding or Dura or any properties of either of them
is subject except to the extent that, with respect to any Laws or Contracts, any
such breaches, violations, defaults or Encumbrances would not, individually or
in the aggregate, have a Material Adverse Effect on the MC Holding Group.
(e) Financial Statements. Attached hereto as Schedule 2.2(e) are the
audited balance sheet of MC Holding as of January 2, 1994 and the statement of
operations and cash flows for the year then ended (the "MC Holding Financial
Statements"). The MC Holding Financial Statements are true and correct in all
material respects and present fairly, in all material respects, the financial
position of MC Holding at January 2, 1994, and its results of operations for the
period ended January 2, 1994, in conformity with GAAP.
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(f) Material Adverse Change. Between January 2, 1994 and the date of
this Agreement, no event has occurred which has had, or is reasonably likely to
have, a Material Adverse Effect on MC Holding.
(g) Absence of Certain Changes. Except as disclosed on Schedule 2.2(g)
hereto or as expressly contemplated in this Agreement, between January 2, 1994
and the date of this Agreement each of MC Holding and Dura has conducted its
business only in accordance with, and neither MC Holding nor Dura has engaged in
any material transaction other than according to, the ordinary course of such
business, consistent with past practice, and there has not been (i) any material
change in the accounting principles, practices or methods of MC Holding or Dura
or (ii) any lapse of any right under any Contract of MC Holding or Dura or
forgiveness by MC Holding or Dura of any debt of a third party which has had or
is reasonably likely to have a Material Adverse Effect on the MC Holding Group.
Except as disclosed on Schedule 2.2(g) hereto or as expressly contemplated in
this Agreement, between January 2, 1994 and the date of this Agreement neither
MC Holding nor Dura has (i) except in the ordinary course of business, sold,
assigned or transferred any material asset, or mortgaged, pledged or subjected
any material asset to any lien, except for liens for current property taxes not
yet due and payable, (ii) except in the ordinary course of business, sold,
assigned, transferred, abandoned or permitted to lapse any licenses, permits,
proprietary rights or other intangible assets, which, individually or in the
aggregate, are material to the MC Holding Group, or granted any license or
sublicense of any rights under or with respect to any proprietary rights that
are material to the MC Holding Group, (iii) made or granted any bonus or any
wage or salary increase to any employee, officer or director, or made any other
material change in em-
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ployment terms for any employee, officer or director, other than bonuses and
increases in the ordinary course of business, (iv) made any capital expenditures
or commitments therefor such that the aggregate outstanding amount of unpaid
obligations and commitments with respect thereto shall exceed $1 million on the
Closing Date, (v) suffered any material damage, destruction or casualty loss,
whether or not covered by insurance, (vi) entered into any agreement to do any
of the foregoing or (vi) received notification that any material customer or
supplier of MC Holding or Dura will stop or decrease in any material respect the
rate of business done with the MC Holding Group.
(h) Title to Properties; Absence of Liens, etc. Each of MC Holding and
Dura has good, marketable and insurable title to all of its properties and
assets, real and personal, and, with respect to real property, good, marketable
and insurable title, free and clear of any Encumbrances and defects, except
where the failure to have such good, marketable and insurable title, as the case
may be, or where the existence of any such Encumbrance or defect would not
materially interfere with the use of such property, and except for (i) any
Encumbrances or defects generally or specifically disclosed in the MC Holding
Financial Statements and (ii) with respect to personal property, any
Encumbrances or defects incurred or created in the ordinary course of business
subsequent to the close of the period covered by the MC Holding Financial
Statements.
(i) Absence of Undisclosed Liabilities. Except as set forth in the
balance sheets included in the MC Holding Financial Statements, or disclosed in
the footnotes thereto or in Schedule 2.2(i) and except for debts, liabilities
and obligations incurred in the ordinary course of business, at the respective
dates of such balance sheets and
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at the date of this Agreement neither MC Holding nor Dura had any material
debts, liabilities or obligations, contingent or otherwise, that were required
by GAAP, as heretofore applied by MC Holding in preparation of the MC Holding
Financial Statements, to be set forth or disclosed therein and that were not so
set forth or disclosed.
(j) Employee Benefit Plans. For purposes of this Agreement (i) "ERISA"
means the Employee Retirement Income Security Act of 1974, as amended; (ii)
"ERISA Affiliate" means any trade or business, whether or not incorporated, that
together with MC Holding or Dura would be deemed a single employer within the
meaning of Section 4001 of ERISA or Section 414(b), (c), (m) or (o) of the
"Code" (as defined in Section 2.2(o)); (iii) "Employee Benefit Plan" means any
"employee benefit plan," as defined in Section 3(3) of ERISA, maintained,
sponsored or contributed to by MC Holding or Dura or any ERISA Affiliate of
either of them; and (iv) "Company Benefit Plan" means any Employee Benefit Plan
maintained, sponsored or contributed to by MC Holding or Dura, as applicable,
but no other ERISA Affiliate. On the date hereof no Employee Benefit Plan is, or
has been within the preceding six-year period, a "multi-employer plan" as
defined in Section 4001(a)(3) of ERISA. As of the date of the most recent Arthur
Andersen auditor's reports for the Employee Benefit Plans which are defined
benefit pension plans, the "accumulated benefit obligation" (as defined in
Financial Accounting Standard No. 87) thereunder does not exceed the market
value of assets available to provide benefits thereunder by more than $100,000.
All contributions required to be made to each Employee Benefit Plan under its
terms, ERISA or the Code for all periods prior to the date hereof have been or
will be timely made with respect to any current or former employees of MC
Holding or Dura or their beneficiaries. Nothing done or omitted to be done on or
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prior to the date hereof and no transaction or holding of any asset under or in
connection with any Employee Benefit Plan on or prior to the date hereof has
made or will make MC Holding, Dura or any officer or director of MC Holding or
Dura subject to liability under Title I or ERISA or liable for any tax or
penalty pursuant to Section 4972, 4975, 4976, 4979 or 4980B of the Code or
Section 502(i) or (1) of ERISA which, individually or in the aggregate, could
reasonably be expected to result in a material liability to MC Holding or Dura,
as applicable. Schedule 2.2(j) contains a true and complete list of each Company
Benefit Plan at the date hereof. Each Company Benefit Plan is in material
compliance with ERISA, the Code and other applicable law.
(k) Licenses and Registrations; Compliance with Laws. To the knowledge
of MC Holding, (i) on the date hereof each of MC Holding and Dura has all
permits, governmental licenses, registrations and approvals required by law or
the rules or regulations of any governmental entity having jurisdiction over MC
Holding or Dura, as applicable, that are necessary and material to enable each
of MC Holding and Dura to carry on its businesses as presently conducted and
(ii) no proceeding is pending or, to the knowledge of MC Holding, threatened to
revoke or limit any of such permits, governmental licenses, registrations and
approvals. Except as disclosed on Schedule 2.2(k), on the date hereof neither MC
Holding nor Dura is in violation of, or in default under, any Law applicable to
MC Holding or Dura or its business, properties, assets or operations (excluding,
for all purposes of this Section 2.2(k), any Environmental Law), except for
violations or defaults which, individually or in the aggregate, would not have a
Material Adverse Effect on the MC Holding Group.
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(1) Litigation. Except as described in Schedule 2.2(1), on the date
hereof there are no actions, suits or proceedings at law, in equity or otherwise
pending or threatened in writing against MC Holding or Dura, in, before or by
any court, arbitrator or governmental agency which, if adversely determined,
would be reasonably likely to (i) have a Material Adverse Effect on MC Holding
Group or (ii) enjoin or prevent the consummation of the transactions
contemplated hereby. Except as set forth on Schedule 2.2(1) or as generally
pertain to entities engaged in businesses similar to those conducted by MC
Holding or Dura, neither MC Holding nor Dura is subject to any judgment, order
or decree of any court or governmental agency.
(m) Intellectual Property. Except as described in Schedule 2.2(m), (i)
on the date hereof each of MC Holding and Dura owns or possesses adequate
licenses to use all Intellectual Property that is currently used by, or
necessary to permit, each of MC Holding and Dura to operate its business as
currently conducted, except for such Intellectual Property the failure of which
to own or possess would not have a Material Adverse Effect on the MC Holding
Group, (ii) during the twelve months preceding the date hereof, neither MC
Holding nor Dura has received any written notice, and there are no unresolved
claims, that the operations of the business of MC Holding or Dura are violating
the rights of others in respect of any Intellectual Property, except for such
claims which, if adversely determined, would not be material to the MC Holding
Group and (iii) during the twelve months preceding the date hereof, neither MC
Holding nor Dura has, to its knowledge, infringed, misappropriated or otherwise
conflicted with any Intellectual Property rights of other persons in connection
with the conduct of its business.
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(n) Labor Matters. To the knowledge of MC Holding, each of MC Holding
and Dura has complied in all material respects with all applicable laws relating
to the employment of labor, including provisions thereof relating to wages,
hours, equal opportunity, collective bargaining and the payment of social
security and other taxes. To the knowledge of MC Holding, except as set forth on
Schedule 2.2(n), there are no material administrative charges or court
complaints pending or threatened against MC Holding or Dura before the U.S.
Equal Employment Opportunity Commission or any state or federal court or agency
concerning an alleged employment discrimination or any other matters relating to
the employment of labor. To the knowledge of MC Holding, (i) there is no labor
strike, dispute, work stoppage or slowdown by the employees of MC Holding or
Dura pending or threatened against MC Holding or Dura and (ii) there is no
request for union representation pending by the employees of MC Holding or Dura.
To the knowledge of MC Holding, there is no grievance or arbitration proceeding
pending which is reasonably likely to be material to the MC Holding Group.
Except as set forth in Schedule 2.2(n), neither MC Holding nor Dura is a party
to any labor or union agreement.
(o) Tax Matters. (i) For purposes of this Agreement: (A) "Code" means
the Internal Revenue Code of 1986, as amended; (B) "Tax" or "Taxes" means any or
all federal, state, local or foreign income, gross receipts, severance,
property, production, sales, use, license, excise, franchise, employment,
withholding, transfer or other taxes, together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions or
penalties; and (C) "Tax Returns" means all federal, state, local and foreign
returns required to be filed with respect to Taxes.
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(ii) Except as disclosed on Schedule 2.2(o)(ii), (a) all Tax Returns
that are required to be filed on or before the Closing Date by or with respect
to MC Holding or Dura have been or will be timely filed; (b) all Tax Returns
referred to in clause (a) are accurate and complete in all material respects;
(c) all Taxes shown on the Tax Returns referred in clause (a) have been or will
be timely paid, except as otherwise disclosed in the MC Holding Financial
Statements; and (d) there are no (and have been no) written tax sharing or other
agreements regarding the allocation of liability for Taxes (or any item of
deduction, income or credit) to which MC Holding or Dura is or has been a party.
(iii) Except as disclosed on Schedule 2.2(o)(iii), each of MC Holding
and Dura has withheld amounts from its respective employees and has filed all
federal, foreign, state and local returns and reports with respect to employee
income tax withholding and social security and payroll and unemployment Taxes
for all periods (or portions thereof) ending on or before the Closing, in
compliance with the provisions of the Code and other applicable federal,
foreign, state and local laws, except for such amounts the failure to withhold
which, and such returns and reports the failure to file which, in the aggregate,
will not have a Material Adverse Effect on the MC Holding Group.
(iv) Except as set forth on Schedule 2.2(o)(iv), on the date hereof
there are no claims, investigations, actions or proceedings pending or, to the
knowledge of MC Holding, threatened against MC Holding or Dura by any taxing
authority, other than claims, investigations, actions or proceedings which,
individually or in the aggregate, would not be reasonably likely to have a
Material Adverse Effect on the MC Holding Group; there are no Liens for Taxes
upon the assets of MC Holding or Dura; and there has been neither
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any waiver of any applicable statute of limitations nor any consent for the
extension of the time for the assessment of any Tax against MC Holding or Dura.
(v) Neither MC Holding nor Dura has made or become obligated to
make, or will, as a result of any event connected with the transactions
contemplated by this Agreement, or any other transaction contemplated herein or
in connection herewith, make or become obligated to make, any "excess parachute
payment" as defined in Section 280G of the Code (without regard to subsection
(b)(4) thereof).
(p) Brokers and Finders. Neither MC Holding nor Dura, or any officers or
directors of any of them, has employed any broker or finder or incurred any
liability to any person for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby, other than Morgan Stanley
& Co. Incorporated, for whose fees, commissions and expenses the MC Holding
Stockholders shall be responsible to the extent not paid by Newco pursuant to
Section 9.1.
(q) Environmental Matters. MC Holding has delivered to Orscheln complete
and correct copies of all Phase I and Phase II environmental assessments in its
possession or reasonably available to it prepared on or prior to the date hereof
regarding the properties owned or operated by MC Holding or Dura. To the
knowledge of MC Holding, as applicable, and except as set forth on Schedule
2.2(q) hereto:
(i) Each of MC Holding and Dura has complied and is in compliance in
all material respects with Environmental Laws except for such noncompliances
as would not, individually or in the aggregate be material to the MC Holding
Group;
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(ii) Each of MC Holding and Dura has obtained all material permits,
licenses and other authorizations required pursuant to Environmental Laws;
(iii) Neither MC Holding nor Dura has received written notice of any
violation of, or any liability or corrective or remedial obligation under,
any Environmental Laws (including without limitation any such notice
pursuant to CERCLA), except for such violations or liabilities which would
not, individually or in the aggregate, be material to the MC Holding Group;
and
(iv) No facts or circumstances exist (including without limitation
on-site or off-site disposal or release of Hazardous Substances) which
could reasonably be expected to give rise to any material liability
or material corrective or remedial obligation under any Environmental
Laws.
(r) Assets and Business. The assets that each of MC Holding and Dura
owns include all of the properties, assets and rights that are reasonably
necessary to conduct the businesses of MC Holding and Dura, respectively, in
substantially the manner heretofore conducted.
(s) FIRPTA Representation. MC Holding is not, and was not at any time
during the five-year period ending on the Closing Date, a "United States Real
Property Holding Corporation" as such term is defined in Section 897(c)(2) of
the Code.
(t) MC Holding Owned Real Property. With respect to the real property
owned by either MC Holding or Dura (the "MC Holding and Dura Real Property") to
the knowledge of MC Holding: (i) there are no eminent domain or condemnation
proceedings pending or, to the knowledge of MC Holding, threatened affecting any
portion of the MC Holding and Dura
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Real Property; (ii) the current use of the MC Holding and Dura Real Property
does not violate in any material respect any material instrument of record or
agreement affecting the MC Holding and Dura Real Property or any Legal
Requirements (excluding, for all purposes of this Section 2.2(t), any
Environmental Laws)); (iii) all buildings, structures and other improvements
located on the MC Holding and Dura Real Property, including, without limitation,
all material components thereof, are in sufficient operating conditions and
repair sufficient to operate the business of the MC Holding Group, subject to
the provision of usual and customary maintenance provided in the ordinary course
of business with respect to buildings, structures and improvements of like age
and construction and all water, gas, electrical, steam, compressed air,
telecommunication, sanitary and storm sewage lines and other utilities and
systems serving the MC Holding and Dura Real Property are sufficient to enable
the continued operation of the MC Holding and Dura Real Property as it is now
operated in connection with the conduct of the business of the MC Holding Group;
and (iv) all material certificates of occupancy, permits, licenses, approvals
and other authorizations required in connection with the operation of the
business on the MC Holding and Dura Real Property required to have been issued
to enable the MC Holding and Dura Real Property to be lawfully occupied and used
for all of the purposes for which it is currently occupied and used in
connection with the operation of the business of the MC Holding Group have been
lawfully issued and are, as of the date hereof, in full force and effect.
(u) MC Holding and Dura Leased Real Property. With respect to the
leasehold interests in real property held by MC Holding and Dura (collectively,
the "MC Holding and Dura Leased Real Property") and the leases with respect
thereto (the "MC Holding and Dura Leases"): (i) true, correct
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and complete copies of each of the MC Holding and Dura Leases have been
delivered to Orscheln and none of the MC Holding and Dura Leases has been
modified in any material respect, except to the extent that such modifications
are in writing and have been delivered or made available to Orscheln; (ii)
except as disclosed on Schedule 2.2(u), neither MC Holding nor Dura has
assigned, subleased, transferred, conveyed, mortgaged or otherwise encumbered
any material interest in the MC Holding and Dura Leased Real Property or any of
the MC Holding and Dura Leases; (iii) the MC Holding and Dura Leases are legal
and valid agreements and are in full force and effect except where the
invalidity or unenforceability would not be material to the business of the MC
Holding Group; (iv) there are no material defaults by either the landlord or the
tenant under any material MC Holding and Dura Lease; and (v) there are no
material disputes, oral agreements or forbearance agreements in effect with
respect to any of the MC and Dura Holding Leases.
(v) Contracts. (i) Except as set forth in Schedule 2.2 (v), to the
knowledge of MC Holding, neither MC Holding nor Dura is a party to any written:
(A) contract with any labor union or contract for the employment of
any officer, individual employee or other person on a full-time or part-time
basis that is not terminable at will or result in a liability of Newco, MC
Holding or Dura in excess of $25,000;
(B) agreement or indenture relating to the borrowing of money or the
mortgaging, pledging or otherwise placing a lien on any of the assets of MC
Holding or Dura;
(C) agreement or commitment with respect to the lending or investment
of funds to or in other persons or entities, except advances to employees in the
ordinary course of business and consistent with past practice;
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(D) guarantee or any obligation for borrowed money or otherwise, other
than endorsements made for collection in the ordinary course of business;
(E) any lease or agreement under which MC Holding or Dura is lessee of
or holds or operates any personal property owned by any other party for which
the annual rental exceeds $25,000;
(F) any lease or agreement under which it is lessor of or permits any
third party to hold or operate any property, real or personal, owned or
controlled by it for which the annual rental exceeds $25,000;
(G) material license or royalty agreements;
(H) agreement, arrangement or understanding with any officer, director,
partner, stockholder or other insider or affiliate of MC Holding or Dura (other
than for employment in customary terms); or
(I) contract that prohibits either MC Holding or Dura from operating or
conducting its business anywhere in the world.
(ii) To the knowledge of MC Holding, true and correct copies of all
written contracts specified on Schedule 2.2(v), together with all amendments,
waivers or other changes thereto, have been made available to Orscheln, or one
or more of its representatives.
(iii) To the knowledge of MC Holding, all of the contracts, agreements and
instruments set forth on Schedule 2.2(v) are valid, binding and enforceable in
accordance with their respective terms, except where the invalidity or
unenforceability of such contracts, agreements or instruments would not,
individually or in the aggregate, be material to Newco or the MC Holding Group.
MC Holding or Dura, as applicable, has performed all material obligations
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required to be performed by it under the contracts, agreements and instruments
listed on Schedule 2.2(v) and is not in default or in breach of nor in receipt
of any claim of default or breach under any material contract, agreement or
instrument listed in Schedule 2.2(v) to which MC Holding or Dura is subject; no
event has occurred which with the passage of time or the giving of notice or
both would result in a default, breach or event of noncompliance under any
material contract, agreement or instrument to which MC Holding or Dura is
subject and that is listed in Schedule 2.2(v); and MC Holding does not have
knowledge of any breach by the other parties to any material contract or
commitment listed in Schedule 2.2(v) to which it is a party and that would
result in a loss to Newco or the MC Holding Group in excess of $100,000.
2.3 Representations and Warranties of the MC Holding Stockholders. Each
MC Holding Stockholder, severally and not jointly, hereby represents and
warrants to Orscheln and Newco that:
(a) Concerning the Shares of MC Holding Common Stock. Such MC Holding
Stockholder owns the number of the issued and outstanding MC Holding Shares set
forth opposite its name on Schedule 1.1. The MC Holding Shares being transferred
to Newco by such MC Holding Stockholder are owned by such MC Holding
Stockholder, free and clear of any Encumbrances. Such MC Holding Stockholder has
full right, power and authority to sell and transfer the MC Holding Shares being
transferred to Newco by such MC Holding Stockholder at the Closing, and upon
delivery of the certificates for such MC Holding Shares and payment therefor
pursuant hereto, good and valid title to such shares of MC Holding Common Stock,
free and clear of all Encumbrances, will pass to Newco.
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(b) FIRPTA Representation. Such MC Holding Stockholder is not, and was
not at any time during the five-year period ending on the Closing Date, a
"United States Real Property Holding Corporation" as such term is defined in
Section 897(c)(2) of the Code.
(c) Securities Act. The Newco Shares to be acquired by such MC Holding
Stockholder pursuant to this Agreement are being acquired by such MC Holding
Stockholder for its own account for investment only and not with a view to or in
connection with any public disposition thereof or with any present intention of
selling, distributing or otherwise disposing of such Newco Shares, and such MC
Holding Stockholder will not sell or offer to sell or otherwise dispose of such
Newco Shares so acquired in violation of any of the registration requirements of
the Securities Act or any applicable state securities laws.
(d) Governmental Filings; Consents. Other than the filings required to
be made pursuant to the H-S-R Act, no notices, reports or other filings are
required to be made by such MC Holding Stockholder with, nor, except as
contemplated by Section 5.1, are any consents, registrations, approvals, permits
or authorizations required to be obtained by such MC Holding Stockholder from,
any governmental or regulatory authorities or, to the knowledge of such MC
Holding Stockholders, any third party, in connection with the execution,
delivery and performance by such MC Holding Stockholder of this Agreement, the
failure to make or obtain any or all of which would (i) have a Material Adverse
Effect on Newco, (ii) be reasonably likely to prevent or materially delay the
transactions contemplated by this Agreement or (iii) subject Newco or Orscheln
to any material liability, except for such as have been or will be obtained on
or prior to the Closing Date. To the knowledge of such MC Holding
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Stockholder, Schedule 2.3(d) hereto lists all material consents, registrations,
approvals, permits or authorizations that are required to be obtained by such MC
Holding Stockholder from any third party in connection with the execution,
delivery and performance of this Agreement, the failure to make or obtain any or
all of which would (i) have a Material Adverse Effect on Newco, (ii) be
reasonably likely to prevent or materially delay the transactions contemplated
by this Agreement or (iii) subject Newco or Orscheln to any material liability.
(e) Authority; No Violations. Such MC Holding Stockholder has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by such MC Holding Stockholder and constitutes a valid and legally
binding agreement of such MC Holding Stockholder enforceable against such MC
Holding Stockholder in accordance with its terms. The execution, delivery and
performance by such MC Holding Stockholder of this Agreement does not, and will
not, constitute or result in (i) a breach or violation of the certificate of
incorporation or by-laws of such MC Holding Stockholder or (ii) to the knowledge
of such MC Holding Stockholder, a breach or violation of, default under or
creation of Encumbrances on the assets of such MC Holding Stockholder pursuant
to (with or without the giving of notice or the lapse of time or both) any
provision of any Contract to which such MC Holding Stockholder is a party or by
which any properties of such MC Holding Stockholder is bound that is material to
such MC Holding Stockholder or any properties of such MC Holding Stockholder is
subject, except to the extent that, with respect to any Laws or Contracts, any
such breaches, violations, defaults or Encumbrances would not, individually
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or in the aggregate, have a Material Adverse Effect on such MC Holding
Stockholder's ability to transfer the MC Holding Shares owned by it to Newco
pursuant to this Agreement.
(f) Brokers and Finders. Such MC Holding Stockholder has not employed
any broker or finder or incurred any liability to any person for any brokerage
fees, commissions or finders' fees in connection with the transactions
contemplated hereby, other than Morgan Stanley & Co. Incorporated, for whose
fees, commissions and expenses the MC Holding Stockholders shall be responsible
to the extent not paid by Newco pursuant to Section 9.1.
2.4 No Other Representations or Warranties. Except for the
representations and warranties contained in this Agreement, neither MC Holding,
any of its officers, directors, employees, agents or representatives, nor either
of the MC Holding Stockholders makes any other representation or warranty with
respect to this Agreement or the transactions contemplated hereby,
notwithstanding the delivery or disclosure to Orscheln or any of its officers,
directors, employees, agents or representatives or any other person of any
documentation or other information by MC Holding or either of the MC Holding
Stockholders or any officers, directors, employees, agents or representatives of
any of them.
ARTICLE III
COVENANTS OF ORSCHELN
3.1 Interim Operation of Orscheln. Except as set forth on Schedule 3.1
hereto or as otherwise contemplated or permitted by this Agreement, from the
date hereof to the Closing Date, Orscheln will continue to operate its business,
including, without limitation, the collection of accounts receivable, inventory
control and payment of accounts
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payable, in the ordinary course consistent with past practice and will comply
with the provisions of Section 3.4 hereof. Without limiting the foregoing,
except as otherwise contemplated by this Agreement or Schedule 3.1 hereto or as
otherwise agreed by MC Holding either orally or in writing, Orscheln shall not:
(i) sell, transfer, distribute, lease, license, mortgage, pledge,
dispose of or encumber any assets (other than any of the Orscheln Excluded
Assets), or incur or modify any indebtedness or other liability (other than
any of the Orscheln Excluded Liabilities) other than in the ordinary course
of business consistent with past practice, or authorize any single or series
of related capital expenditures in excess of $1,000,000 or make any
acquisition of, or investment in, assets or stock of any other person, in
each case other than in the ordinary course of business consistent with past
practice;
(ii) settle or compromise any material claims against Orscheln that
relate to the Orscheln Transferred Assets (other than the payment of claims
on insurance policies or under reinsurance treaties or agreements, in each
case in the ordinary course of business consistent with past practice) or
litigation against Orscheln that relates to the Orscheln Transferred Assets
or, except in the ordinary course of business consistent with past practice,
waive, release or assign any material rights or claims that relate to the
Orscheln Transferred Assets;
(iii) enter into, terminate or amend in any material respect any
material contract, agreement or lease that relates to the Orscheln
Transferred Assets,
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other than in the ordinary course of its business consistent with past
practice;
(iv) except as set forth in Schedule 3.1, grant any severance or
termination pay to, or enter into any employment or severance agreement
with, any Orscheln Transferred Business Employee other than in the ordinary
course of business consistent with past practice, or establish, adopt,
enter into, amend or make any new grants or awards under any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance, or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any Orscheln Transferred Business Employee,
expect in the ordinary course of business consistent with past practice;
(v) make any change in accounting principles, practices or methods,
except as required in connection with the transactions contemplated by this
Agreement, by law or by GAAP; or
(vi) enter into an agreement to do any of the foregoing.
3.2 Records. After the Closing Date, (i) Orscheln will make available
to Newco all Records (as defined below) relating to the Orscheln Transferred
Business that are in the possession of, or reasonably available to, Orscheln or
affiliated companies of Orscheln and (ii) Newco will make available to Orscheln
all Records relating to Orscheln or the Orscheln Transferred Business that are
in the possession of, or reasonably available to, Newco. Such Records shall be
held and maintained by Orscheln and Newco for a period of five (5) years
following the Closing. During the period of such retention, Orscheln and Newco
shall keep
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such Records available in Moberly, Missouri at reasonable places for inspection
and copying by each other or their agents during normal business hours.
Following such 5-year period, Orscheln or Newco may destroy all or any part of
such Records after first offering the Records to be destroyed to Newco or
Orscheln.
"Records" of any person means any tangible thing on which information
(including financial, accounting and operating data) is recorded or being held
for informational purposes in the possession or control of such person on which
information is recorded in any form, whether written, taped, computerized, or
otherwise recorded on any medium and any parts, samples, models, prototypes or
other materials held by such person for informational or reference purposes.
3.3 Transfer Taxes: Fees and Expenses. Orscheln shall be liable for
and shall pay, and shall hold Newco harmless against, (i) all stamp, transfer,
documents, sales, use, registration and all other taxes and fees (including any
penalties and interest) resulting directly from the transfer of the Orscheln
Transferred Assets by Orscheln to Newco and (ii) all fees and expenses of all
internal legal counsel, financial advisers, accountants and brokers incurred by
Orscheln incident to preparing for, entering into and carrying out this
Agreement and the transactions contemplated hereby, to the extent such fees are
not paid by Newco pursuant to Section 9.1.
3.4 Affirmative Covenants. From the date hereof until the Closing
Date, unless MC Holding otherwise agrees either orally or in writing, except as
otherwise contemplated by this Agreement, Orscheln will:
(i) use its best efforts to cause its current material insurance (or
reinsurance) policies covering the Orscheln Transferred Assets not to be
canceled or
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terminated or any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement policies providing
coverage equal to or greater than the coverage under the canceled, terminated or
lapsed policies for substantially similar premiums are in full force and effect;
(ii) keep in full force and effect its corporate existence and all
material rights, material franchises and material Intellectual Property rights
relating or pertaining to the Orscheln Transferred Business;
(iii) use its best efforts to carry on the Orscheln Transferred
Business substantially in the same manner as presently conducted and to keep the
organization and properties of the Orscheln Transferred Business intact (except
for the Orscheln Excluded Assets);
(iv) maintain the Orscheln Transferred Assets in customary repair,
order and condition in the ordinary course of business consistent with past
practice;
(v) except as may be required or advisable in connection with the
transactions contemplated by this Agreement, maintain the books, accounts and
records of Orscheln in accordance with past practice as used in the preparation
of the Orscheln Financial Statements;
(vi) encourage those Orscheln Transferred Business Employees of
Orscheln who are mutually agreed upon by Orscheln and MC Holding to accept the
offer of employment made by Newco;
(vii) deliver to Newco a list of all Orscheln Transferred Business
Employees who have been terminated by Orscheln within 60 days prior to the
Closing Date;
(viii) promptly (once Orscheln has knowledge thereof) inform MC
Holding in writing of any inaccura-
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cies in the representations and warranties contained in Section 2.1 hereof
or any breach of any covenant hereunder by Orscheln; and
(ix) comply with all legal requirements and contractual obligations
applicable to the operations of the Orscheln Transferred Business, except
where the failure to so comply would not have a Material Adverse Effect on
the Orscheln Transferred Business.
ARTICLE IV
COVENANTS OF MC HOLDING AND THE
MC HOLDING STOCKHOLDERS
4.1 Interim Operation of MC Holding. Except as set forth on Schedule
4.1 hereto or as otherwise contemplated or permitted by this Agreement, from the
date hereof to the Closing Date, MC Holding will continue to operate its
business, including, without limitation, the collection of accounts receivable,
inventory control and payment of accounts payable in the ordinary course
consistent with past practice and will comply with the provisions of Section 4.4
hereof. Without limiting the foregoing, except as otherwise contemplated by this
Agreement or Schedule 4.1 hereto or as otherwise agreed by Orscheln either
orally or in writing, MC Holding shall not, and the MC Holding Stockholders
shall not permit MC Holding to:
(i) amend its certificate of incorporation or by-laws; split, combine
or reclassify the outstanding shares of MC Holding Common Stock; except for
the issuance of up to 1,000 shares of MC Holding Common Stock upon the
exercise of an outstanding stock option held by a person who will be bound
by this Agreement, issue, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible or exchangeable
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for, or options, warrants, calls, commitments or rights of any kind to acquire,
capital stock of any class of MC Holding; purchase, redeem or otherwise acquire
any outstanding shares of MC Holding Common Stock; or declare, set aside or pay
any dividend payable in cash, stock or property with respect to any shares of MC
Holding Common Stock;
(ii) sell, transfer, distribute, lease, license, mortgage, pledge,
dispose of or encumber any assets, or incur or modify any indebtedness or other
liability other than in the ordinary course of business consistent with past
practice, or authorize any single or series of related capital expenditures in
excess of $1,000,000 or make any acquisition of, or investment in, assets or
stock of any other person, in each case other than in the ordinary course of
business consistent with past practice;
(iii) except as set forth in Schedule 4.1, grant any severance or
termination pay to, or enter into any employment or severance agreement with,
any director, officer or employee of MC Holding other than in the ordinary
course of business consistent with past practice, or establish, adopt, enter
into, amend or make any new grants or awards under any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any of its directors, officers or employees, other than in the ordinary course
of business consistent with past practice;
(iv) settle or compromise any material claims against MC Holding
(other than the payment of claims on
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insurance policies or under reinsurance treaties or agreements, in each
case in the ordinary course of business consistent with past practice) or
litigation against MC Holding or, except in the ordinary course of business
consistent with past practice, waive, release or assign any material rights
or claims;
(v) enter into, terminate or amend in any material respect any
material contract, agreement or lease, other than in the ordinary course of
its business consistent with past practice;
(vi) make any tax election or cause any insurance policy naming it as
a beneficiary or a loss payable payee to be canceled or terminated without
notice, except in the ordinary course of business consistent with past
practice;
(vii) make any change in accounting principles, practices or methods,
except as required by law or by GAAP; or
(viii) enter into an agreement to do any of the foregoing.
4.2 Interim Operation of Dura. Except as set forth on Schedule 4.2
hereto or as otherwise contemplated or permitted by this Agreement, from the
date hereof to the Closing Date, MC Holding will cause Dura to continue to
operate its business including, without limitation, the collection of accounts
receivable, inventory control and the payments of accounts payable, in the
ordinary course consistent with past practice and to comply with the provisions
of Section 4.3 hereof. Without limiting the foregoing, except as otherwise
contemplated by this Agreement or Schedule 4.2 hereto or as otherwise agreed by
Orscheln either orally or in writing, MC Holding shall not permit Dura to:
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(i) amend its certificate of incorporation or by-laws; split, combine
or reclassify the outstanding shares of Dura Common Stock; issue, sell, pledge,
dispose of or encumber any additional shares of, or securities convertible or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, capital stock of any class of Dura; purchase, redeem or otherwise
acquire any outstanding shares of Dura Common Stock; or declare, set aside or
pay any dividend payable in cash, stock or property with respect to any shares
of Dura Common Stock;
(ii) sell, transfer, distribute, lease, license, mortgage, pledge,
dispose of or encumber any assets, or incur or modify any indebtedness or other
liability other than in the ordinary course of business consistent with past
practice, or authorize any single or series of related capital expenditures in
excess of $1,000,000 or make any acquisition of, or investment in, assets or
stock of any other person, in each case other than in the ordinary course of
business consistent with past practice;
(iii) except as set forth in Schedule 4.2, grant any severance or
termination pay to, or enter into any employment or severance agreement with,
any director, officer or employee of Dura other than in the ordinary course of
business consistent with past practice, or establish, adopt, enter into, amend
or make any new grants or awards under any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any of
its directors, officers
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or employees, other than in the ordinary course of business consistent with
past practice;
(iv) settle or compromise any material claims against Dura (other than
the payment of claims on insurance policies or under reinsurance treaties
or agreements, in each case in the ordinary course of business consistent
with past practice) or litigation against Dura or, except in the ordinary
course of business consistent with past practice, waive, release or assign
any material rights or claims;
(v) enter into, terminate or amend in any material respect any
material contract, agreement or lease, other than in the ordinary course of
its business consistent with past practice;
(vi) make any tax election or cause any insurance policy naming it as
a beneficiary or a loss payable payee to be canceled or terminated without
notice, except in the ordinary course of business consistent with past
practice;
(vii) make any change in accounting principles, practices or methods,
except as required by law or by GAAP; or
(viii) enter into an agreement to do any of the foregoing.
4.3 Affirmative Covenants. From the date hereof until the Closing
Date, unless Orscheln otherwise agrees either orally or in writing, except
as otherwise contemplated by this Agreement, MC Holding will, and will
cause Dura to:
(i) use its best efforts to cause the current material insurance (or
reinsurance) policies covering the assets of MC Holding and Dura not to be
canceled or
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terminated or any of the coverage thereunder to lapse unless simultaneously
with such termination, cancellation or lapse, replacement policies
providing coverage equal to or greater than the coverage under the
canceled, terminated or lapsed policies for substantially similar premiums
are in full force and effect;
(ii) keep in full force and effect its corporate existence and all
material rights, material franchises and material Intellectual Property
rights;
(iii) use its best efforts to carry on the businesses of MC Holding
and Dura substantially in the same manner as presently conducted and to
keep the organization and properties of MC Holding and Dura intact;
(iv) maintain the assets of MC Holding and Dura in customary repair,
order and condition in the ordinary course of business consistent with past
practice;
(v) except as may be required or advisable in connection with the
transactions contemplated by this Agreement maintain the books, accounts
and records of MC Holding and Dura in accordance with past practice as used
in the preparation of the MC Holding Financial Statements;
(vi) promptly (once MC Holding or Dura has knowledge thereof) inform
Orscheln in writing of any inaccuracies in the representations and
warranties contained in Section 2.2 hereof or any breach of any covenant
hereunder by MC Holding;
(vii) comply with all legal requirements and contractual obligations
applicable to the operations of the business of MC Holding and Dura, except
where the failure to so comply would not have a Material Adverse Effect on
the MC Holding Group; and
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(viii) cancel all options to purchase shares of MC Holding Common
Stock outstanding prior to the Closing and obtain from each holder of
outstanding options to purchase shares of MC Holding Common Stock a consent
to such cancellation and enter into a counterpart to the Management
Stockholders Contribution Agreement with the Optionholder to effect the
foregoing in exchange for the issue by Newco to the Optionholder of an
option to purchase 1,000 shares of Class A Common Stock.
4.4 Transfer Taxes; Fees and Expenses. The MC Holding Stockholders shall
be liable for and shall pay, and shall hold Newco harmless against, (i) all
stamp, transfer, documentary, sales, use, registration and other such taxes and
fees (including any penalties and interest) resulting directly from the transfer
of the MC Holding Shares by the MC Holding Stockholders to Newco and (ii) all
fees and expenses of all internal legal counsel, financial advisers, accountants
and brokers incurred by MC Holding or the MC Holding Stockholders incident to
preparing for, entering into and carrying out this Agreement and the
transactions contemplated hereby, to the extent such fees are not paid by Newco
pursuant to Section 9.1.
ARTICLE V
OTHER COVENANTS OF THE PARTIES
5.1 Filings; Other Action. Subject to the terms and conditions herein
provided, Orscheln, MC Holding and Newco shall: (a) promptly make their
respective required filings and thereafter make any other required submissions
under any applicable laws with respect to the transactions contemplated by this
Agreement, including pursuant to the H-S-R Act; (b) use all reasonable efforts
to obtain, and
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cooperate with other parties in obtaining, all other authorizations, consents,
orders and approvals (or effective waivers thereof) of governmental entities and
third parties, and take all reasonable actions to avoid the entry of any Order
(as defined in Section 6.1(d)); and (c) use all reasonable efforts to take, or
cause to be taken, all other action and do, or cause to be done, all other
things necessary, proper or appropriate under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement as
soon as practicable. Orscheln, MC Holding and Newco shall use reasonable efforts
to obtain all consents or approvals (or effective waivers thereof) of all third
parties and lenders whose consent or approval known to such party to be required
for the consummation of this Agreement.
Subject to the terms and conditions herein provided, each of the MC Holding
Stockholders shall promptly make its respective required filings and thereafter
make any other required submissions under any applicable laws with respect to
the transactions contemplated by this Agreement, including pursuant to the H-S-R
Act. Each MC Holding Stockholder shall use reasonable efforts to obtain all
consents or approvals (or effective waivers thereof) of all third parties and
whose consent or approval known to such party to be required for the
consummation by such MC Holding Stockholder of this Agreement.
5.2 Access and Confidentiality. So long as this Agreement remains in
effect, upon reasonable notice and subject to such reasonable conditions to
access relating to numbers of persons, times and other matters as Orscheln and
MC Holding shall require in order to avoid material disruption of the business
or operations of Orscheln, MC Holding or Dura, as the case may be, Orscheln, on
the one hand, and
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MC Holding, on the other hand, shall give MC Holding or Orscheln, as the case
may be, and their representatives access at reasonable times to all of the
properties, books, contracts and records of Orscheln or MC Holding and Dura
relating to such party or parties, and furnish to them all information with
respect to the properties, assets and business of Orscheln or MC Holding and
Dura as the other party or parties shall from time to time reasonably request.
In the event that this Agreement is terminated, each party shall promptly
deliver to the other party or parties all documents and other materials
(including all copies, summaries and abstracts thereof and notes relating
thereto) obtained or prepared by such party or parties or on their behalf from
such party or parties any of its or their respective agents, employees, officers
or representatives as a result hereof or in connection herewith, whether
obtained before or after the execution hereof. At all times prior to the
Closing, and at all times thereafter in the event that this Agreement is
terminated, each party shall keep confidential and direct its directors,
officers, employees, counsel, accountants and representatives to keep
confidential any information so obtained and will not use any such documents or
other materials for any purpose other than the transactions contemplated by this
Agreement, except as otherwise required by law. So long as this Agreement is in
effect, (A) MC Holding shall not, and MC Holding shall not permit Dura to,
directly or indirectly participate in, solicit, encourage or initiate any
discussion with, or negotiate or otherwise deal with, or provide any information
to, any person, corporation, partnership, organization or other entity other
than Orscheln and its employees, agents and accounting and legal
representatives, concerning any disposition or sale of MC Holding or Dura
(whether by sale of assets, sale of the stock, merger, consolidation or other-
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wise), or accept any offer or enter into any agreement concerning any such
transaction and (B) Orscheln shall not directly or indirectly participate in,
solicit, encourage or initiate any discussion with, or negotiate or otherwise
deal with, or provide any information to, any person, corporation, partnership,
organization or other entity other than the MC Holding Stockholders, MC Holding,
Dura and their employees, agents and accounting and legal representatives,
concerning any disposition or sale of the Orscheln Transferred Assets or the
Orscheln Transferred Business (whether by sale of assets, sale of the stock,
merger, consolidation or otherwise), or accept any offer or enter into any
agreement concerning any such transaction.
5.3 Public Disclosure. Except as required by applicable law, neither
Orscheln nor MC Holding shall, and MC Holding shall not permit Dura to, disclose
or permit their respective officers, directors or agents to disclose the
existence or terms of this Agreement to any third party without the prior
written consent of the other party or parties, as the case may be, which consent
shall not be unreasonably withheld, provided that the parties may disclose the
terms hereof to their agents, lenders, financial advisers, accountants and
attorneys, who shall agree to maintain such information confidentially. Neither
Orscheln nor MC Holding shall, or permit their respective officers, directors or
agents to, and MC Holding shall not permit Dura or any of its officers,
directors or agents to, make any press release or other public announcement
regarding this Agreement without the prior written consent of the other party or
parties, as the case may be, as to the form, timing and content thereof, except
to the extent that, in the case of any release or announcement required by law,
it is not practicable to obtain such written consent prior to the time such
release or announcement is required to be made.
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5.4 Interim Operation of Newco. From the date of this Agreement to the
Closing Date, except as contemplated in connection with the transactions
contemplated hereby, Newco shall not:
(i) amend its certificate of incorporation or by-laws; split,
combine or reclassify the outstanding shares of Newco Common Stock; issue,
sell, pledge, dispose of or encumber any shares of, or securities
convertible or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, capital stock of any class of Newco;
purchase, redeem or otherwise acquire any shares of Newco Common Stock; or
declare, set aside or pay any dividend payable in cash, stock or property
with respect to the Newco Common Stock; or
(ii) enter into any contracts or agreements, incur any
liabilities or engage in any business activities.
5.5 Ancillary Agreements. At or prior to the Closing, Orscheln, MC
Holding and Newco shall enter into, or, if applicable, MC Holding shall cause
Dura to enter into, the agreements described, listed or included in Schedule 5.5
hereto (the "Ancillary Agreements") upon such terms and provisions as are
mutually agreed to by the parties. Each of Orscheln, MC Holding and Newco agrees
to negotiate, or cause to be negotiated, the final terms of such Ancillary
Agreements in good faith.
5.6 Employees. Newco will offer employment at the Closing Date to all
Orscheln employees that are working primarily in the Orscheln Transferred
Business prior to the Closing Date and that are listed on Schedule 5.6 hereto.
In addition, at the time subsequent to the Closing Date of the transfer to a
Newco facility of a manufacturing process per-
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formed at the ORBCO facility of Orscheln, Newco will offer employment to each
Orscheln employee that is working primarily with respect to such process. The
employees described in the two preceding sentences, including, but not limited
to, those employees listed on Schedule 5.6 hereto, are referred to herein as the
"Orscheln Transferred Business Employees." Newco covenants and agrees with
Orscheln that it will not take any action that would cause Orscheln to incur any
liability to or with respect to the Orscheln Transferred Business Employees for
violation of the Worker Adjustment and Retraining Act (the "WARN Act"), arising,
or alleged to have arisen, out of Newco's ownership or operation of the Orscheln
Transferred Assets after the Closing Date, and Newco will indemnify Orscheln and
its officers, directors, and controlling persons, against and hold Orscheln and
such persons harmless from and in respect of any and all Losses arising out of,
based upon or resulting from the failure by Newco to offer employment to, or the
termination by Newco of, any such Orscheln Transferred Business Employee
(including, without limitation, any liabilities under the WARN Act) irrespective
of any limitations in Article IX hereof. Newco shall employ each of the Orscheln
Transferred Business Employees who accept such offer for a period of not less
than 60 days, subject to termination with cause, as determined by Newco in its
sole discretion, in a position and with wages or salaries substantially
equivalent to those which they now have.
5.7 Employee Benefit Plans.
(a) Actions of Newco. Newco will offer to all Orscheln Transferred
Business Employees coverage with respect to such employees and their dependents,
as of the date of hire of such Orscheln Transferred Business Employees, under
group health and dental plans providing benefits which
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are substantially comparable in the aggregate to those provided immediately
prior to such date of hire to such persons under Orscheln Affiliate Plans, and
which (i) waive any and all waiting periods for eligibility and participation,
(ii) contain no limitations of any kind with respect to any pre-existing
condition of any such person and (iii) credit each such person with deductibles
and co-payments incurred under the Orscheln Affiliate Plans for the calendar
year in which such date of hire occurs. Each of MC Holding and Orscheln agrees
to use its best efforts to cause Newco to continue such coverage through
December 31, 1994.
Newco shall credit the Orscheln Transferred Business Employees
employed by Newco, for purposes of determining eligibility for participation in
Newco benefit plans and vesting of benefits under such plans, with all previous
service recognized by Orscheln for such purposes and shall credit the Orscheln
Transferred Business Employees employed by Newco with all vacation accrued under
any policies of Orscheln. Newco shall offer continued health coverage to any
Orscheln Transferred Business Employee or "qualified beneficiary" thereof
(within the meaning of Section 4980B of the Code) who becomes entitled to such
coverage under Section 601 et seq. of ERISA ("COBRA") as a result of the
transactions contemplated by this Agreement.
Newco agrees to indemnify and hold harmless Orscheln from and against
all Losses (as defined in Section 8.2(i)) arising from or relating to claims
made on or behalf of the Orscheln Transferred Business Employees with respect to
Newco's failure to comply with this Section 5.7 and with respect to any claims
for health, dental, vision, disability and life insurance, and other welfare
plan benefits which arise after the Closing Date.
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(b) Actions of Orscheln. Schedule 5.7(b) sets forth a list of each
employee benefit plan maintained, sponsored or contributed to by Orscheln (the
Orscheln Plans). No additional benefits will be accrued or provided for the
transferred employees under the Orscheln Plans on or after the Closing Date;
provided, however, that (i) all claims of such employees for expenses which were
presented to Orscheln prior to the date of their transfer from Orscheln to Newco
and are payable under the terms and conditions of any Orscheln Affiliate Plan
providing hospital/medical/surgical, disability, vision or dental benefits to
such employees shall be paid and (ii) any former Orscheln employee, or other
"qualified beneficiary" (within the meaning of COBRA) with respect thereto, who
has made prior to the Closing Date an effective election to continue health care
coverage under an Orscheln Plan pursuant to COBRA shall be allowed to maintain
such coverage under such Orscheln Plan to the extent required by law. The
consummation of the transactions contemplated by this Agreement shall not
constitute a "separation from service" (within the meaning of Section 401(k) of
the Code) or other termination of employment for purposes of the Orscheln
Industries Retirement Program (the "Orscheln 401(k) Plan").
(c) 401(k) Plans. (i) As soon as practicable following the Closing
Date, Newco shall adopt a defined contribution plan (the "Newco 401(k) Plan")
and a related funding arrangement which (A) satisfies the requirements of
Section 401(k) of the Code, (B) is intended to be qualified and tax-exempt under
Sections 401(a) and 501(a) of the Code ("Tax-Qualified") and (C) contains
provisions regarding eligibility to participate which result in the immediate
participation therein of each Orscheln Transferred Business Employee who had an
account balance in the Orscheln 401(k) Plan as of the date such person first
becomes employed by
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Newco. The optional forms of benefit, early retirement benefit provisions and
other "section 411(d) (6) protected benefits" (within the meaning of Treas.
Reg. (S) 1.411(d)-4) that are applicable to the account balances of each
Orscheln Transferred Business Employee under the Orscheln 401(k) Plan will be
applicable to that portion of the account balance of each such person under the
Newco 401(k) Plan represented by the assets transferred pursuant to clause (iii)
below and earnings thereon. Promptly following the adoption of the Newco 401(k)
Plan, Newco shall use its best efforts to cause the Internal Revenue Service to
issue a favorable determination letter with respect to the Newco 401(k) Plan
confirming that it is Tax-Qualified.
(ii) Promptly following the Closing Date, Orscheln shall use its best
efforts to cause the Internal Revenue Service to issue a favorable determination
letter with respect to the Orscheln 401(k) Plan confirming that it continues to
be Tax-Qualified.
(iii) All Orscheln 401(k) Plan accounts of Orscheln Transferred
Business Employees shall be valued as of the last day of the month containing
the date on which the last of the determination letters on the Orscheln 401(k)
Plan and the Newco 401(k) Plan is issued (the "Valuation Date"). As soon as
practicable after the Valuation Date, the assets of such accounts shall be
liquidated, and the proceeds invested in high quality, liquid, interest-bearing
short-term investments reasonably acceptable to Newco. As soon as practicable
following such liquidation, Orscheln shall cause to be transferred from the
Orscheln 401(k) Plan to the Newco 401(k) Plan, and Newco shall cause the Newco
401(k) Plan to accept, in cash, the account balances of all persons who are
Orscheln Transferred Business Employees and who are employed by Newco on the
date of such transfer,
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whether or not vested, including any actual earnings on such accounts after
liquidation and before such transfer, but decreased by (A) payments made to such
persons from the Orscheln 401(k) Plan after liquidation and before such transfer
and (B) any expenses of the Orscheln 401(k) Plan properly attributable to such
assets during such period. Notwithstanding the above, the amount transferred
shall be in no event less than the amount necessary to satisfy the requirements
of Section 414(1) of the Code.
(iv) Effective as of the date of transfer of assets described in
clause (iii) above, the Newco 401(k) Plan shall assume the liability of the
Orscheln 401(k) Plan for the accrued benefits of Orscheln Transferred Business
Employees whose accounts are so transferred, and the Orscheln 401(k) Plan,
Orscheln and any affiliate thereof shall have no further liability therefor.
(v) During the period following the Closing Date and preceding the
transfer of assets and liabilities pursuant to this Section 5.7(d), Newco shall
cooperate with and assist Orscheln or its designee in the continued
administration of the Orscheln 401(k) Plan with respect to Orscheln Transferred
Business Employees who are employed by Newco.
(vi) If some of the Orscheln Transferred Business Employees have not
gone to work for Newco by the Valuation Date, then procedures similar to those
described in clause (iii) above shall be undertaken with respect to the transfer
of the Orscheln 401(k) Plan account balances of such persons to the Newco 401(k)
Plan as soon as practicable following their employment by Newco.
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5.8 Covenants Relating to Taxes.
---------------------------
(a) Tax Treatment. Orscheln, MC Holding and the MC Holding
Stockholders agree (i) to cooperate with each other and to take all reasonable
action necessary to ensure that the transactions described in Section 1.1 and
1.2 hereof qualify as tax free exchanges under Section 351 of the Code (except
to the extent of (a) any cash received by Orscheln and (b) the fair market value
of any options to purchase Class A Common Stock received by Orscheln or the
Optionholder) and (ii) not to take a position on any Tax Return (including any
Tax Return of Newco) which is inconsistent with such qualification.
(b) Assistance and Cooperation. After the Closing Date, Orscheln and
MC Holding shall, and Orscheln and MC Holding shall cause Newco to:
(i) to the extent reasonably necessary, assist (and cause their
respective affiliates to assist) the other party or parties, as the case may
be, in preparing any income Tax Returns or reports for the most recent tax
year of each party, in each case at the expense of the requesting party; and
(ii) cooperate fully in preparing for any audits of, or disputes
with taxing authorities regarding, any income Tax Returns of Orscheln to the
extent related to the Orscheln Transferred Assets.
5.9 Payment of Fees and Expenses. Contemporaneously with the Closing,
Newco shall pay the fees and expenses specified in Section 9.1. In the event the
Closing does not occur, each party will be responsible for and pay its own fees
and expenses.
5.10 Notification of Certain Matters. Orscheln, on the one hand, and
MC Holding and the MC Holding Stock-
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holders, on the other hand, each agrees to give notice to the other party or
parties, as applicable, as soon as practicable after it shall become aware
thereof of (i) the occurrence, or failure to occur, of any event the occurrence
or failure of which could reasonably be expected to cause any representation or
warranty of such party contained in this Agreement to be untrue or inaccurate in
any material respect on and as if made as of the Closing Date, and (ii) any
failure on its part to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it
hereunder prior to the Closing Date.
5.11 Merger, etc. Each of Newco, MC Holding, the MC Holding
Stockholders and Orscheln agrees that before August 19, 1997 it will not permit
Newco to merge or consolidate with or into Dura or MC Holding, nor permit Dura
to merge or consolidate with or into Newco or MC Holding, nor permit MC Holding
to merge or consolidate with or into Dura or Newco, nor permit Dura or MC
Holding to be liquidated, or enter into any agreement to do any of the
foregoing. MC Holding agrees that before August 19, 1997 Dura will not merge or
consolidate with or into Newco, nor permit Newco to merge or consolidate with or
into Dura, or enter into any agreement to do any of the foregoing.
ARTICLE VI
CONDITIONS
6.1 Conditions to Obligations of Orscheln. The obligations of Orscheln
to consummate the transactions contemplated by this Agreement are subject to the
fulfillment of each of the following conditions, any or all of which may be
waived in whole or in part by Orscheln to the extent permitted by applicable
law, provided that no such waiver shall
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be effective against Orscheln unless set forth in a writing signed by Orscheln:
(a) Representations and Warranties True; No Material Adverse Effect;
Compliance. Each of the representations and warranties contained in Sections 2.2
and 2.3 shall be true and correct in all material respects as of the date
hereof, and each of the covenants and agreements of MC Holding, the MC Holding
Stockholders and Newco to be performed on or prior to the Closing Date under
this Agreement shall have been duly performed in all material respects. There
shall not have occurred, during the period beginning on the date of this
Agreement and ending on the Closing Date, any event or events, other than in the
ordinary course of business, which, individually or in the aggregate, have had,
or are reasonably likely to have, a Material Adverse Effect on MC Holding. At
the Closing, Orscheln shall have received a certificate dated as of the Closing
Date of an executive officer of each of MC Holding, Onex and J2R certifying as
to itself as to the fulfillment of the conditions set forth in this Section
6.1(a).
(b) Transfer of the MC Holding Shares to Newco. The MC Holding
Stockholders and the MC Management Stockholders shall have transferred all of
the outstanding MC Holding Shares to Newco.
(c) Governmental and Other Consents. The waiting period under the
H-S-R Act shall have expired or been terminated. All consents referred to in
Section 5.1 or required from any governmental authority or third party in
connection with the execution and delivery of this Agreement by MC Holding,
the MC Holding Stockholders or Newco or the consummation by MC Holding, the
MC Holding Stockholders or Newco of the transactions contemplated hereby
shall have been made
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or obtained. Complete and correct copies of all such consents shall have been
delivered to Orscheln.
(d) No Order. No court or governmental or regulatory authority of
competent jurisdiction shall have issued, promulgated, enforced or entered any
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) (collectively, "Order") which is in effect,
pending or threatened and which makes or, if adversely determined, would make
the transfer of the Orscheln Transferred Assets or the Newco Shares illegal or
prohibits or prevents consummation of the transactions contemplated by this
Agreement.
(e) Legal Opinions. (1) Orscheln shall have received from Kirkland &
Ellis a legal opinion, dated the Closing Date and in substantially the form
attached as Appendix A.
(2) Orscheln shall have received from legal counsel for the MC Holding
Stockholders, reasonably acceptable to Orscheln, one or more legal opinions,
dated the Closing Date and in substantially the form attached as Appendix B.
(f) Other Agreements. MC Holding, Dura, Newco, Orscheln and the other
parties named therein shall have executed and delivered each of the Ancillary
Agreements in the forms agreed to by MC Holding, Newco and Orscheln. Orscheln,
MC Holding, each of the MC Holding Stockholders, each of the MC Management
Stockholders and Newco shall have executed and delivered a Stockholders
Agreement substantially in the form of Exhibit A hereto, and Orscheln, Newco and
the MC Holding Stockholders shall have executed and delivered a Registration
Rights Agreement substantially in the form of Exhibit B hereto. Each of the
stockholders of MC Holding other than the MC Holding Stockholders (collectively,
the "MC Management Stockholders") shall have executed
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and delivered an MC Management Stockholders Contribution Agreement substantially
in the form of Exhibit E hereto.
(g) Financing. Newco shall have obtained the financing arrangements
necessary to borrow (a) the funds necessary to finance the payment by Newco of
the Cash Consideration to Orscheln and payment by Newco of the expenses of
Orscheln and MC Holding specified in 9.1, (b) the funds necessary to refinance
current funded indebtedness of Dura and (c) an amount sufficient for working
capital purposes on terms and conditions satisfactory to Orscheln.
(h) Certificate of Incorporation and By-Laws of Newco. The
Certificate of Incorporation and By-Laws of Newco shall be in the form of
Exhibits C and D hereto, respectively.
(i) Resolutions. MC Holding, each of the MC Holding Stockholders and
Newco shall have delivered to Orscheln certified copies of the resolutions of
the board of directors and stockholders of MC Holding, each of the MC Holding
Stockholders and Newco, respectively, authorizing the execution and delivery of
this Agreement, the Stockholders Agreement and, if applicable, the Ancillary
Agreements and the consummation of transactions contemplated hereby and thereby.
(j) FIRPTA Certificate. Orscheln shall have received from MC Holding
a statement, dated not more than thirty days prior to the Closing Date,
conforming to the requirements of Treasury Regulation Section 1.897-2(h)(1) and
certifying that the stock of MC Holding is not a "United States real property
interest" as defined in Section 897 of the Code.
6.2 Conditions to Obligations of MC Holding and the MC Holding
Stockholders. The obligations of MC Holding
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and the MC Holding Stockholders to consummate the transactions contemplated by
this Agreement are subject to the fulfillment of each of the following
conditions, any or all of which may be waived in whole or in part by MC Holding
and the MC Holding Stockholders to the extent permitted by applicable law;
provided that no such waiver shall be effective against any party unless set
forth in a writing signed by such party:
(a) Representations and Warranties True; No Material Adverse Effect;
Compliance. Each of the representations and warranties contained in Section 2.1
shall be true and correct in all material respects as of the date hereof, and
each of the covenants and agreements of Orscheln and Newco to be performed on or
prior to the Closing Date under this Agreement shall have been duly performed in
all material respects. There shall not have occurred, during the period
beginning on the date of this Agreement and ending on the Closing Date, any
event or events, other than in the ordinary course of business, which,
individually or in the aggregate, have had, or are reasonably likely to have, a
Material Adverse Effect on the Orscheln Transferred Business. At the Closing,
each of MC Holding and the MC Holding Stockholders shall have received a
certificate dated as of the Closing Date and executed by a senior officer of
Orscheln certifying as to the fulfillment of the conditions set forth in this
Section 6.2(a).
(b) Transfer of Orscheln Transferred Assets. Orscheln shall have
transferred the Orscheln Transferred Assets to Newco by execution and delivery
to Newco of such instruments of sale and transfer as are reasonably satisfactory
in form and substance to MC Holding.
(c) Governmental and Other Consents. The waiting period under the
H-S-R Act shall have expired or been
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terminated. All consents referred to in Section 5.1 or required from any
governmental authority or third party in connection with the execution and
delivery of this Agreement by Orscheln or Newco or the consummation by Orscheln
or Newco of the transactions contemplated hereby shall have been made or
obtained. Complete and correct copies of all such consents shall have been
delivered to MC Holding and the MC Holding Stockholders.
(d) No Order. No court or governmental or regulatory authority of
competent jurisdiction shall have issued, promulgated, enforced or entered any
Order which is in effect, pending or threatened and which makes or, if adversely
determined, would make the transfer of the Orscheln Transferred Assets or the
Newco Shares illegal or prohibits or prevents consummation of the transactions
contemplated by this Agreement.
(e) Legal Opinion. MC Holding and the MC Holding Stockholders shall
have received from James L. O'Loughlin, counsel for Orscheln, a legal opinion,
dated the Closing Date and in substantially the form attached as Appendix C.
(f) Other Aqreements. MC Holding, Dura, Newco, Orscheln and the
other parties named therein shall have executed and delivered each of the
Ancillary Agreements in the forms agreed to by MC Holding, Newco and Orscheln.
Orscheln, MC Holding, each of the MC Holding Stockholders, each of the MC
Management Stockholders and Newco shall have executed and delivered a
Stockholders Agreement substantially in the form of Exhibit A hereto, and
Orscheln, Newco and the MC Holding Stockholders shall have executed and
delivered a Registration Rights Agreement substantially in the form of Exhibit B
hereto. Each of the MC Management Stockholders shall have executed and delivered
an MC Management
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Stockholders Contribution Agreement substantially in the form of Exhibit E
hereto.
(g) Financing. Newco shall have obtained the financing arrangements
described in Section 6.1(g) on terms and conditions satisfactory to MC Holding.
(h) Certificate of Incorporation and By-Laws of Newco. The
Certificate of Incorporation and By-Laws of Newco shall be in the form of
Exhibits C and D hereto, respectively.
(i) Resolutions. Orscheln and Newco shall have delivered to MC
Holding certified copies of the resolutions of the board of directors and
stockholders of Orscheln and Newco, respectively, authorizing the execution and
delivery of this Agreement, the Stockholders Agreement and the Ancillary
Agreements and the other agreements contemplated hereby and the consummation of
the transactions contemplated hereby and thereby.
(j) Title Policies. Newco shall have received, at the sole cost and
expense of Newco, for each of the Orscheln Transferred Real Property sites and
Orscheln Transferred Leased Real Property sites an ALTA Title Owner's Policy (or
Leasehold Policy, as the case may be) of title insurance Form B-1990 (the "Title
Policies") with deletion of creditor's rights exception issued by a title
insurer (the "Title Company") satisfactory to MC Holding in the amount of the
fair market value of such property, insuring title to such property and Newco
subject only to such exceptions to title approved by MC Holding in accordance
with the terms of this Agreement (the "Permitted Exceptions"). The Title
Policies shall contain: (i) an "Extended Coverage Endorsement" insuring over the
general exceptions contained in such policies; (ii) an ALTA Zoning Endorsement
3.1 (with parking) (or equivalent); (iii) an endorsement insuring that the
property
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described in such Title Policy is the parcel shown on the Survey (as hereinafter
defined) with respect to such property; (iv) an endorsement insuring that each
street adjacent to such property is a public street and that there is direct and
unencumbered access, ingress and egress to such street from such property; (v)
if any parcel of property contains more than one (1) record parcel, a contiguity
endorsement insuring that all such record parcels are contiguous to one another;
(vi) an Owner's Comprehensive Endorsement, if available; and (vii) a tax parcel
endorsement.
(k) Real Property Surveys. Newco shall have received, at the sole cost
and expense of Newco, a current ALTA/ACSM survey ("Survey") of each parcel of
Orscheln Transferred Real Property or Leased Real Property made in accordance
with the 1992 ALTA/ACSM standards including items 1 through 13 of Table A
thereof made by a surveyor licensed in the jurisdiction in which such parcel of
Property is located and certified to Newco, Orscheln, MC Holding, any lender and
the Title Company as having been so made, disclosing the location of all
improvements, easements, partywalls, sidewalks, roadways, utility lines and
other matters required to be shown on the surveys and showing each such parcel
of property to be free from encroachments of improvements located thereon onto
adjacent property and to be free from encroachments of improvements located on
property adjacent onto such parcel of Property and showing the location of all
Permitted Exceptions.
(l) FIRPTA Certificate. Newco and MC Holding shall have received from
Orscheln an affidavit as of the Closing Date sworn to under the penalty of
perjury setting forth the name, address and federal tax identification number of
Orscheln and stating that Orscheln is not a "foreign person" within the meaning
of Section 1445 of the Code.
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ARTICLE VII
TERMINATION
7.1 Termination. (a) This Agreement may be terminated at any time
prior to the Closing: (i) by the mutual written consent of Orscheln, MC Holding
and the MC Holding Stockholders holding not less than a majority of the shares
of outstanding capital stock of MC Holding; (ii) by Orscheln, MC Holding or the
MC Holding Stockholders holding not less than a majority of the shares of
outstanding capital stock of MC Holding, upon the entry of a final,
nonappealable and permanent Order prohibiting the consummation of the
transactions contemplated hereby; or (iii) by Orscheln, on the one hand, or by
MC Holding or the MC Holding Stockholders holding not less than a majority of
the capital stock of MC Holding, on the other hand, if the conditions set forth
in Article VII hereof have not been satisfied or waived on or prior to August
31, 1994 or if the Closing shall not have occurred by August 31, 1994, in each
case otherwise than by reason of the failure by the party or parties seeking
termination to perform and fulfill its or their agreements hereunder. Any
termination pursuant to clause (iii) shall be by written notice given by
Orscheln, MC Holding or the MC Holding Stockholders holding not less than a
majority of the capital stock of MC Holding to the other party or parties, as
the case may be, at least ten days prior to the effective date thereof.
(b) Either Orscheln, on the one hand, or MC Holding and the MC Holding
Stockholders holding not less than a majority of the capital stock of MC
Holding, on the other hand, may terminate this Agreement prior to the Closing as
a result of a material breach of this Agreement by the other party or parties,
as the case may be, to this Agreement, if such breach has not been cured within
ten days
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after written notice of such breach has been provided to such other party or
parties, as applicable, but any such termination shall be subject to the
provisions of Sections 5.2, 5.3 and 7.2.
7.2 Effect of Termination. In the event of any termination of this
Agreement pursuant to Section 7.1(a), this Agreement shall forthwith become void
and no party hereto (or the directors or officers of any party) shall have any
liability or further obligation to the other parties hereto, except that
Sections 5.2, 5.3, 7.1(b), and 9.12 shall survive any such termination to the
extent provided therein.
ARTICLE VIII
INDEMNIFICATION
8.1 Survival of Representations, Warranties and Certain Covenants.
The representations and warranties of Orscheln, MC Holding and the MC
Holding Stockholders, and the covenants of Orscheln, MC Holding and the MC
Holding Stockholders with respect to the period prior to the Closing Date, made
in or in connection with this Agreement (other than the covenants contained in
Sections 3.3 and 4.4 hereof) or any certificate delivered at the Closing shall
terminate at the Closing Date, and thereafter none of Orscheln, MC Holding, the
MC Holding Stockholders, Newco or any officers, directors or affiliates of any
of them shall have any liability with respect thereto.
8.2 Indemnification by Newco.
(i) Newco shall indemnify Orscheln and each of the MC Holding
Stockholders (collectively, the "Newco Indemnified Parties") against and hold
each Newco Indemnified
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Party harmless from and in respect of any and all losses, claims, damages,
liabilities, and reasonable costs and expenses (including, without limitation,
expenses of investigation and fees and disbursements of counsel) of any nature
whatsoever (whether known or unknown as of the date hereof) (collectively,
"Losses"), to the extent arising out of, based upon or resulting from (a) the
Orscheln Assumed Liabilities, (b) except with respect to the Orscheln Excluded
Liabilities, any action, claim or other judicial or administrative proceeding to
the extent relating to the Orscheln Transferred Assets or the Orscheln
Transferred Business or operations to which Orscheln is or was a party or
pursuant to which Orscheln incurred or became liable for a Loss and (c) any
action, claim or other judicial or administrative proceeding to which MC Holding
or Dura is or was a party or pursuant to which MC Holding or Dura incurred or
became liable for a Loss.
(ii) Newco shall indemnify Orscheln and its stockholders, directors,
officers and affiliates and hold them harmless from and in respect of any and
all Losses arising out of, resulting from or relating to claims, whether founded
upon negligence, breach of warranty, strict liability in tort and/or other
similar legal theory, seeking compensation or recovery for or relating to injury
to person or damage to property occurring prior to or after the Closing Date and
arising out of a defect or alleged defect of a product designed, manufactured or
sold by Orscheln in connection with its conduct of the Orscheln Transferred
Business on or before the Closing Date, but only to the extent that the Loss
incurred by Orscheln or Orscheln's liability with respect thereto is not fully
paid or discharged by Orscheln's insurance policies after Orscheln has used
reasonable efforts to collect from the insurance carriers thereon and, following
such efforts, has assigned its rights
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against such carriers in respect of such Loss to Newco (it being understood that
Orscheln makes no representation or warranty whatsoever as to the amount or
terms and provisions of its insurance coverage that may be available after the
Closing Date); provided, however, that in no event shall Newco have any
liability under this clause (ii) in respect of any liability or obligation
described in Section 1.2(b)(iv)(V).
(iii) Newco agrees that, prior to any dissolution of Newco subsequent
to the Closing, it will establish a reserve adequate to secure the performance
by Newco of its indemnification obligations under this Section 8.2 in an amount
satisfactory to Orscheln and the MC Holding Stockholders owning not less than a
majority of the shares of capital stock of MC Holding outstanding immediately
prior to the Closing.
8.3 Indemnification by Orscheln.
Orscheln shall indemnify Newco and each of the MC Holding Stockholders
(collectively, the "Orscheln Indemnified Parties") against and hold each
Orscheln Indemnified Party harmless from and in respect of any and all Losses,
to the extent arising out of, based upon or resulting from (a) the Orscheln
Excluded Liabilities or (b) except for the Orscheln Assumed Liabilities, any
action, claim or other judicial or administrative proceeding to the extent
relating to the Orscheln Excluded Assets or the Orscheln Retained Business.
8.4 Defense of Claims. In the case of any claim for indemnification
under Section 8.2 or 8.3 arising from a claim of a third party, the party
against whom a claim, suit or demand is made, shall give prompt written notice
to the other party or parties hereto of any claim, suit or demand of which such
person has knowledge and, if applicable, as to
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which it may request indemnification hereunder. The indemnifying person shall
have the right to defend and to direct the defense against (and, with respect to
any indemnification to be provided by Newco pursuant to Section 8.3 above, upon
receipt of written request of Orscheln, Newco will also defend and direct the
defense of) any such claim, suit or demand, in its name or in the name of the
indemnified person, as the case may be, at the expense of the indemnifying
person, and with counsel selected by the indemnifying person who shall be
reasonably satisfactory to the indemnified person. The indemnified person shall
have the right to be represented by separate counsel at the expense of the
indemnifying person if (i) such claim, suit or demand seeks an order, injunction
or other equitable relief against the indemnified person or (ii) the indemnified
person shall have reasonably concluded that there is a conflict of interest
between the indemnified person and the indemnifying person in the conduct of the
defense of such claim, suit or demand. The indemnified person shall, at the
expense of the indemnifying person, cooperate in the defense of such claim, suit
or demand. The indemnified person shall have the right to participate in the
defense of any claim, suit or demand with counsel selected by it, but in such
event the fees and disbursements of such counsel shall be at the expense of the
indemnified person except in the case of a claim, suit or demand described in
clause (i) or (ii) above or in case the indemnifying person shall not in fact
have employed counsel to assume the defense of such claim, suit or demand. No
indemnifying person shall settle any claim, suit or demand for which an
indemnified person has sought indemnification under Section 8.2 or 8.3 without
the prior written consent of such indemnified person (which consent shall not be
unreasonably withheld), but no indemnifying person shall have any
indemnification obligations with respect to any such
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claim, suit or demand which shall be settled by the indemnified person without
the prior written consent of the indemnifying person (which consent shall not be
unreasonably withheld) other than a claim, suit or demand as to which the
indemnifying person shall not in fact have employed counsel to assume the
defense of such claim, suit or demand within a reasonable time after notice as
provided in this Section 8.4.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Payment of Expenses. Upon consummation of the transactions contemplated
by this Agreement to occur on the Closing Date, Newco will pay all fees and
expenses of all legal counsel, financial advisers, accountants, brokers,
consultants and appraisers incurred by MC Holding and the MC Holding
Stockholders, on the one hand, associated with, and Orscheln, on the other hand,
in each case associated with or incident to preparing for, entering into and
carrying out this Agreement and the transactions contemplated hereby, including,
without limitation, in connection with any investigation, or survey of the
properties, business, operations or affairs of, MC Holding, Dura or Orscheln;
provided, however, that the amount payable on behalf of or reimbursed to each
party shall be limited to the lesser of the total of such fees and expenses
incurred by either Orscheln, on the one hand, or MC Holding and the MC Holding
Stockholders, on the other hand, as the case may be, and the party or parties
incurring expenses (in each case excluding fees or expenses which Newco is
obligated to pay or reimburse pursuant to any provisions hereof other than this
Section 9.1 or pursuant to the penultimate sentence of this paragraph) in excess
of such lesser amount shall be responsible for its or their own
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fees and expenses in excess of such lesser amount; and provided, further, that
all closing fees and expenses paid or reimbursed to Hidden Creek Industries and
all fees and expenses incurred by Dura (in each case excluding fees or expenses
which Newco is obligated to pay or reimburse pursuant to any provisions hereof
other than this Section 9.1 or pursuant to the penultimate sentence of this
paragraph) shall be added to the fees and expenses incurred by MC Holding and
the MC Holding Stockholders for purposes of the foregoing calculations. Each
party agrees that (a) Orscheln and the MC Holding Stockholders will receive at
the Closing from Newco an advance of up to $1,200,000 against Newco's
reimbursement obligations hereunder and (b) each party will, as soon as
practicable, submit to Newco its final calculations of the fees and expenses to
be reimbursed by Newco to it pursuant to this Section 9.1. In addition, Newco
shall pay all fees and expenses incurred in connection with Newco obtaining
financing to consummate the transactions contemplated by this Agreement. Each
party hereto will be responsible for any fees and expenses payable to lenders in
connection with any prepayment of debt incurred by such party on or prior to the
Closing Date.
9.2 Modification and Amendment. The parties hereto may modify or amend
this Agreement only by written agreement among Orscheln, MC Holding, the MC
Holding Stockholders and Newco.
9.3 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed an original instrument, and all
such counterparts shall together constitute the same agreement.
9.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the
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State of Missouri without regard to the conflicts of laws principles thereof.
9.5 Notices. Any notice, request, instruction or other communication
to be given hereunder by any party to any other shall be in writing and shall be
deemed to have been duly given (i) on the date of delivery if delivered
personally, or by telecopy or telefacsimile, (ii) on the first business day
following the date of dispatch if delivered by Federal Express or other next-day
courier service, or (iii) on the third business day following the date of
mailing if delivered by registered or certified mail, return receipt requested,
postage prepaid. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice.
(a) If to Orscheln:
Orscheln Co.
2000 U.S. Highway 63 South
P.O. Box 280
Moberly, Missouri 65270
Attn: James L. O'Loughlin, Esq.
Vice President & General Counsel
Telecopy: (816) 269-4530
with copies to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: Richard R. Howe, Esq.
Telecopy: (212) 558-3111
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(b) If to MC Holding:
MC Holding Corp.
c/o Hidden Creek Industries
4508 IDS Center
Minneapolis, Minnesota 55402
Attention: Sankey A. (Tony) Johnson
Chief Executive Officer
Telecopy: (612) 332-2012
with copies to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Jeffrey C. Hammes, Esq.
Telecopy: (312) 861-2200
(c) If to the MC Holding Stockholders:
[Name of Stockholder]
c/o Hidden Creek Industries
4508 IDS Center
Minneapolis, Minnesota 55402
Attention: Sankey A. (Tony) Johnson
Chief Executive Officer
Telecopy: (612) 332-2012
with copies to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Jeffrey C. Hammes, Esq.
Telecopy: (312) 861-2200
(d) If to Newco:
Dura Automotive Systems, Inc.
c/o Hidden Creek Industries
4508 IDS Center
Minneapolis, Minnesota 55402
Attention: Robert (Bob) R. Hibbs
VP - Corporate Development
Telecopy: (612) 332-2012
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with copies to:
Orscheln Co.
2000 U.S. Highway 63 South
P.O. Box 280
Moberly, Missouri 65270
Attn: James L. O'Loughlin, Esq.
Vice President & General Counsel
Telecopy: (816) 269-4530
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Jeffrey C. Hammes, Esq.
Telecopy: (312) 861-2200
and
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Richard R. Howe, Esq.
Telecopy: (212) 558-3111
9.6 Entire Agreement. This Agreement, including the Schedules hereto
and the documents, certificates and instruments referred to herein and the
confidentiality letter between Orscheln and Hidden Creek constitutes the entire
agreement of the parties hereto and supersedes all other prior agreements,
understandings, representations and warranties among the parties with respect to
the subject matter hereof and shall be binding upon and inure to the benefit of
the parties hereto and their permitted respective successors and assigns.
9.7 Assignment. This Agreement and the rights hereunder shall not be
assigned or transferred by any party without the prior written consent of the
other parties hereto, except that without such prior written consent MC Holding
and Newco shall be permitted to assign their rights hereunder to the lenders
under the f inancing arrangements referred to in Section 6.1(g). Any purported
assignment or
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transfer made in violation of this Section 9.7 shall be null and void and shall
be of no effect.
9.8 Captions; Interpretation. The Article, Section and paragraph
captions herein are for convenience of reference only, do not constitute part of
this Agreement and shall not limit or otherwise affect any of the provisions
hereof. For all purposes of this Agreement, "To the knowledge of Orscheln" means
to the actual knowledge of the President or any Vice President of Orscheln, "To
the knowledge of MC Holding" means the actual knowledge of the President or any
Vice President of MC Holding and the actual knowledge of the President or any
Vice President of Dura and "To the knowledge of an MC Holding Stockholder" means
the actual knowledge of the President or any Vice President of such MC Holding
Stockholder. The terms "hereby," "hereof," "hereto," "herein," "hereunder,"
and any similar terms, as used in this Agreement shall refer to this Agreement
and the attached Exhibits and Schedules. An appropriate feminine or neuter
pronoun shall be substituted for a pronoun of masculine form or vice versa in
any place or places in which the context may require such substitution or
substitutions.
9.9 Schedules. The parties agree that the inclusion of any item on any
Schedule to this Agreement shall not be construed as an indication that such
item is material in any respect to the party with respect to which such Schedule
relates.
9.10 Litigation Arising from Activities Prior to the Closing. It is
recognized that, in the future, claims or litigation may arise relating to
Orscheln or Dura or the business of either of them and the conduct thereof,
which may relate directly or indirectly to the period prior to the Closing or
the period subsequent to the Closing, or both.
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Each of the parties agrees, therefore, that, to the extent reasonable under the
circumstances, it will at the expense of the party requesting assistance or
cooperation (except to the extent such party is entitled to indemnification
under Article VIII) assist and provide information, records, documents and other
resources to any other party with respect to any such claims, litigation or
potential litigation in which such other party is or may be involved including
applicable engineering or other consulting services so that such matters can be
conducted capably and in a manner consistent with the past practices of the
party requesting assistance.
9.11 Further Assurances. From time to time, as and when requested by
any party hereto, the other parties shall execute and deliver, or cause to be
executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions, as such other party may
reasonably deem necessary or desirable to consummate the transactions or carry
out the intents and purposes contemplated by this Agreement.
9.12 Arbitration. Each of the parties agrees to submit to binding
arbitration any and all differences and disputes which may arise between them,
their heirs, successors, assigns, employees, officers, directors, affiliates,
subsidiaries, or shareholders which are related to this Agreement, any other
agreement between the parties, including the Ancillary Agreements, or otherwise
arising between the parties. Prior to initiating arbitration, the parties shall
first meet face-to-face to effect a resolution of the differences. Any
differences which the parties are unable to resolve in said face-to-face meeting
shall be heard and finally settled in Chicago, Illinois, or in any other
location mutually agreed upon by the parties, by binding arbitration in
accordance with the Commercial Arbitration Rules
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of the American Arbitration Association. Such arbitration shall be initiated in
the Chicago office of the American Arbitration Association. Any award entered in
any such arbitration shall be final, binding, and may be entered and enforced in
any court of competent jurisdiction. The arbitrator shall make such orders,
conduct and schedule all proceedings in connection with the arbitration so that
final arbitration commences no less than thirty (30) days and concludes no later
than seventy-five (75) days after a party files the initial notice of
arbitration, and so that the final arbitration award is made and delivered to
the parties within ninety (90) days after the filing of the initial notice of
arbitration. Nothing herein contained shall be construed as preventing any party
from instituting legal or equitable action in any jurisdiction against any of
the other parties for temporary or similar provisional relief to the full extent
permitted under the laws applicable to this Agreement, or any such other written
agreement between the parties or the performance hereof or thereof or otherwise
pending final settlement of any dispute, difference or question by arbitration.
Any such provisional relief may be modified or amended in any way by the
arbitrator at any time after his appointment.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the date first above written.
THIS AGREEMENT IS SUBJECT TO A BINDING ARBITRATION AGREEMENT.
ORSCHELN CO.
By: /s/ William L. Orscheln
--------------------------------------
Name: William L. Orscheln
Title: President
MC HOLDING CORP.
By: /s/ Robert Hibbs
--------------------------------------
Name: Robert Hibbs
Title: Vice President
ONEX U.S. INVESTMENTS, INC.
By:
--------------------------------------
Name:
Title:
J2R CORPORATION
By: /s/ Robert Hibbs
--------------------------------------
Name: Robert Hibbs
Title: Vice President
DURA AUTOMOTIVE HOLDING, INC.
By: /s/ Robert Hibbs
--------------------------------------
Name: Robert Hibbs
Title: Vice President
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the date first above written.
THIS AGREEMENT IS SUBJECT TO A BINDING ARBITRATION AGREEMENT.
ORSCHELN CO.
By:
--------------------------------------
Name: William L. Orscheln
Title: President
MC HOLDING CORP.
By:
--------------------------------------
Name:
Title:
ONEX U.S. INVESTMENTS, INC.
By: /s/ Eric Rosen
--------------------------------------
Name:
Title: Vice President
J2R CORPORATION
By:
--------------------------------------
Name:
Title:
DURA AUTOMOTIVE HOLDING, INC.
By:
--------------------------------------
Name:
Title:
<PAGE>
Exhibit 10.2
MANAGEMENT CONTRIBUTION AGREEMENT
AGREEMENT (hereinafter called this "Agreement"), dated as of August
31, 1994, by and among Dura Automotive Holding, Inc., a Delaware corporation
("Newco"), Kim B. Clark (the "Optionholder") and the undersigned (the
"Management Stockholders"). Except as otherwise defined herein, all capitalized
terms shall have the meanings set forth in the JV Agreement (as defined below).
RECITALS
WHEREAS, all of the issued and outstanding shares of capital stock of
MC Holding are collectively owned by the MC Holding Stockholders and the
Management Stockholders;
WHEREAS, the Optionholder owns an option to purchase certain shares of
capital stock of MC Holding and such option constitutes all of the options to
purchase shares of capital stock of MC Holding outstanding on the date hereof;
WHEREAS, Orscheln owns the Orscheln Transferred Assets;
WHEREAS, MC Holding owns all of the issued and outstanding shares of
capital stock of Dura Automotive Systems, Inc., formerly known as Dura
Mechanical Components, Inc., a Delaware corporation ("Dura");
WHEREAS, the Optionholder owns an option (the "Option") to purchase
1000 shares of capital stock of MC Holding, and such option constitutes all of
the options to purchase shares of capital stock of MC Holding outstanding on the
date hereof;
WHEREAS, Orscheln, on the one hand, and MC Holding and the MC Holding
Stockholders, on the other hand, desire, upon the terms and subject to the
conditions of the Joint Venture Agreement
<PAGE>
dated as of the dated hereof by and among each of them and certain other parties
thereto (the "JV Agreement"), to form a joint venture through (i) the
contribution by the MC Holding Stockholders to Newco of all of the issued and
outstanding shares of MC Holding Common Stock (the "MC Holding Shares") owned by
each of them, (ii) cash contributions of the MC Holding Stockholders and (ii)
the contribution by Orscheln of the Orscheln Transferred Assets to Newco;
WHEREAS, each of the Management Stockholders desires, subject to the
terms and conditions of this Agreement, to contribute to Newco all of the shares
of issued and outstanding shares of MC Holding Common Stock owned by each of
them (the "Management Shares"). The execution, delivery and performance of this
Agreement is a condition to the consummation of the transactions contemplated by
the JV Agreement;
WHEREAS, in consideration for the contributions referred to above, (i)
Newco will issue to the MC Holding Stockholders and the Management Stockholders
an aggregate of 28,038.91 shares of Class A Common Stock, 100,000 shares of
Class B Common Stock and 25,000 shares of Class C Common Stock, and Newco shall
issue to Orscheln 125,213.65 shares of Newco Common Stock and an option to
purchase an aggregate of 818.18 shares of Class A Common Stock, (ii) Newco will
issue to the Optionholder an option to purchase an aggregate of 1000 shares of
Class A Common Stock pursuant to a Stock Option Agreement, dated as of even date
herewith, (iii) Orscheln shall receive from Newco the amount of cash
consideration set forth in the JV Agreement and (iv) Newco shall assume certain
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<PAGE>
notes payable, other funded indebtedness and certain other liabilities of
Orscheln as set forth in the JV Agreement; and
WHEREAS, Orscheln will retain, and not transfer to Newco, the Orscheln
Excluded Assets and Newco will not assume the Orscheln Excluded Liabilities;
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
TRANSFER TO NEWCO OF THE MANAGEMENT SHARES
1.1 Transfer of the Management Shares and the Option to Newco;
Issuance of Newco Shares and the Option to Purchase Newco Shares to the
Management Stockholders and the Optionholder. Upon the terms and subject to the
conditions of this Agreement, and based on the representations, warranties and
agreements contained herein, each of the Management Stockholders agrees to
transfer and contribute to Newco, and Newco agrees to receive, at the Closing
each of the Management Shares held by such Management Stockholder. In addition,
upon the terms and subject to the conditions of this Agreement, the Optionholder
agrees to transfer and contribute to Newco, and Newco agrees to receive, at the
Closing the Option. In consideration of such contributions, Newco agrees,
subject to the conditions of this Agreement, to issue to each of the Management
Stockholders and to the Optionholder the number of Newco Shares or an option to
purchase the number of shares of Class A Common Stock, as applicable, equal to
the number of Newco Shares, or an option to
-3-
<PAGE>
purchase the number of shares of Class A Common Stock, as applicable, set forth
opposite such Management Stockholder's or the Optionholder's name on Schedule
1.1 hereto. The options to purchase shares of Class A Common Stock to be issued
by newco to the Optionholder shall have the terms and provisions set forth on
Schedule 1.1 hereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Management Stockholders.
Each Management Stockholder, severally and not jointly, hereby represents and
warrants to Newco that:
(a) Concerning the Shares of MC Holding Common Stock. Such Management
Stockholder owns the number of the issued and outstanding Management Shares set
forth opposite his or her name on Schedule 2.1 hereto. The Management Shares
being transferred to Newco by such Management Stockholder have been duly
authorized and validly issued, are fully paid and nonassessable, and are owned
by such Management Stockholder, free and clear of any Encumbrances. Such
Management Stockholder has full right, power and authority to sell and transfer
the Management Shares being transferred to Newco by such Management Stockholder
at the Closing, and upon delivery of the certificates for such Management Shares
and payment therefor pursuant hereto, good and valid title to such Management
Shares, free and clear of all Encumbrances, will pass to Newco.
(b) FIRPTA Representation. Such Management Stockholder is not a
"foreign person" within the meaning of Section 1445(a) of
-4-
<PAGE>
the Code regarding withholding of tax on certain dispositions by foreign
persons.
(c) Securities Act. The Newco Shares to be acquired by such Management
Stockholder pursuant to this Agreement are being acquired by such Management
Stockholder for its own account for investment only and not with a view to or in
connection with any public disposition thereof or with any present intention of
selling, distributing or otherwise disposing of such Newco Shares, and such
Management Stockholder will not offer to sell or otherwise dispose of such Newco
Shares so acquired in violation of any of the registration requirements of the
Securities Act or any applicable state securities laws.
(d) Governmental Filings; Consents. Other than the filings required to
be made pursuant to the H-S-R Act, no notices, reports or other filings are
required to be made by such Management Stockholder with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
such Management Stockholder from, any governmental or regulatory authorities or,
to the knowledge of such Management Stockholder, any third party in connection
with the execution, delivery and performance by such Management Stockholder of
this Agreement, the failure to make or obtain any or all of which would (i) have
a Material Adverse Effect on Newco, (ii) be reasonably likely to prevent or
materially delay the transactions contemplated by this Agreement or (iii)
subject Newco or Orscheln to any material liability, except for such as have
been or will be obtained on or prior to the Closing Date. To the knowledge of
such Management
-5-
<PAGE>
Stockholder, Schedule 2.1(d) hereto lists all material consents, registrations,
approvals, permits or authorizations that are required to be obtained by such
Management Stockholder from any third party in connection with the execution,
delivery and performance of this Agreement, the failure to make or obtain any or
all of which would (A) have a Material Adverse Effect on Newco, (B) be
reasonably likely to prevent or materially delay the transactions contemplated
by this Agreement or (C) subject Newco or Orscheln to any material liability.
(e) Authority; No Violations. This Agreement has been duly executed
and delivered by such Management Stockholder and constitutes a valid and legally
binding agreement of such Management Stockholder enforceable against such
Management Stockholder in accordance with its terms. To the knowledge of such
Management Stockholder, the execution, delivery and performance by such
Management Stockholder of this Agreement does not, and will not, constitute or
result in a breach or violation of, default under or creation of any
Encumbrances on the assets of such Management Stockholder pursuant to (with or
without the giving of notice or the lapse of time or both) any provision of any
Contract to which such Management Stockholder is a party or by which any
properties of such Management Stockholder is bound that is material to such
Management Stockholder or any Law to which such Management Stockholder or any of
his or her properties is subject, except to the extent that, with respect to any
Laws or Contracts, any such breaches, violations, defaults or Encumbrances would
not, individually or in the aggregate, have a Material Adverse Effect on
-6-
<PAGE>
such Management Stockholder's ability to transfer the Management Shares owned by
it to Newco pursuant to this Agreement.
(f) Brokers and Finders. Such Management Stockholder has not employed
any broker or finder or incurred any liability to any person for any brokerage
fees, commissions or finders' fees in connection with the transactions
contemplated hereby.
2.2 No Other Representations and Warranties. Except for the
representations and warranties contained in this Agreement, the Management
Stockholders make no other representation or warranty with respect to this
Agreement or the transactions contemplated hereby, notwithstanding the delivery
or disclosure to any person of any documentation or other information.
-7-
<PAGE>
ARTICLE III
COVENANTS
3.1 Filings; Other Action. Each Management Stockholder, severally and
not jointly, hereby agrees that, subject to the terms and conditions provided
herein, such Management Stockholder shall (a) promptly make his or her
respective required filings and thereafter make any other required submissions
under any applicable laws with respect to the transactions contemplated by this
Agreement, including pursuant to the H-S-R Act, and (b) use reasonable efforts
to obtain all consents or approvals (or effective waivers thereof) of all third
parties whose consent or approval is required for the consummation by such
Management Stockholder of this Agreement.
ARTICLE IV
CONDITIONS
4.1 Conditions. The obligations of Newco, each Management Stockholder
and the Optionholder to consummate the transactions contemplated by this
Agreement are subject to the consummation of the transactions contemplated by
the JV Agreement.
ARTICLE V
TERMINATION
5.1 Termination. This Agreement may be terminated at any time prior
to the Closing if the conditions set forth in Article III hereof have not have
not been satisfied prior to August 31, 1994 or if the Closing shall not have
occurred by August 31, 1994, in each case otherwise than by reason of the
failure by the
-8-
<PAGE>
party or parties seeking termination to perform and fulfill its or their
agreements hereunder.
ARTICLE VI
INDEMNIFICATION
6.1 Survival of Representations and Warranties. The representations
and warranties of the Management Stockholders made in or in connection with this
Agreement or any certificate delivered at the Closing shall terminate at the
Closing Date, and thereafter none of them shall have any liability with respect
thereto.
ARTICLE VII
MISCELLANEOUS AND GENERAL
7.1 Execution of Agreement by Optionholder. This Agreement shall
become effective with respect to the Optionholder if executed and delivered by
the Optionholder within 30 days after the date hereof and shall become effective
at such time as if executed and delivered by the Optionholder as of the date
hereof; provided, however, that if the Optionholder does not execute and deliver
this Agreement within 30 days of the date hereof, the provisions of this
Agreement which do not relate to the Optionholder shall continue in full force
and effect and shall not be affected by the failure of the Optionholder to so
execute and deliver this Agreement.
7.2 Modification and Amendment. The parties hereto may modify or
amend this Agreement only by written agreement among the Management Stockholders
and Newco; provided that any modification or amendment which affects the rights
or the obligations of the
-9-
<PAGE>
Optionholder hereunder shall also require the written consent of the
Optionholder.
7.3 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed an original instrument, and all
such counterparts shall together constitute the same agreement.
7.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois without regard to the
conflicts of laws principles thereof.
7.5 Notices. Any notice, request, instruction or other communication
to be given hereunder by any party to any other shall be in writing and shall be
deemed to have been duly given (i) on the date of delivery if delivered
personally, or by telecopy or telefacsimile, (ii) on the first business day
following the date of dispatch if delivered by Federal Express or other next-day
courier service, or (iii) on the third business day following the date of
mailing if delivered by registered or certified mail, return receipt requested,
postage prepaid. All notices hereunder shall be delivered as set forth below or
pursuant to such other instructions
-10-
<PAGE>
as may be designated in writing by the party to receive such notice.
(a) If to the Management Stockholders:
[Name of Management Stockholder]
c/o Hidden Creek Industries
4508 IDS Center
Minneapolis, MN 55402
Attention: Scott D. Rued
(b) If to the Optionholder:
Professor Kim B. Clark
Harvard Business School
T89 Morgan Hall
Soldiers Field Park
Boston, MA 02163
(c) If to Newco:
Dura Automotive Holding, Inc.
c/o Hidden Creek Industries
4508 IDS Center
Minneapolis, MN 55402
Attention: Robert R. Hibbs
Telecopy: (612) 332-2012
with copies to:
Orscheln Co.
2000 U.S. Highway 63 South
P.O. Box 280
Moberly, Missouri 65270
Attention: James L. O'Loughlin, Esq.
Vice President & General Counsel
Telecopy: (816) 269-4530
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois
Attention: Jeffrey C. Hammes, Esq.
Telecopy: (312) 861-2200
and
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Attention: Richard R. Howe, Esq.
Telecopy: (212) 558-3588
-11-
<PAGE>
7.6 Entire Agreement. This Agreement, including the Schedules hereto
and the documents, certificates and instruments referred to herein, constitutes
the entire agreement of the parties hereto and supersedes all other prior
agreements, understandings, representations and warranties among the parties
with respect to the subject matter hereof and shall be binding upon and inure to
the benefit of the parties hereto and their permitted respective successors and
assigns.
7.7 Assignment. This Agreement and the rights hereunder shall not be
assigned or transferred by any party without the prior written consent of the
other parties hereto. Any purported assignment or transfer made in violation of
this Section 7.7 shall be null and void and shall be of no effect.
7.8 Captions; Interpretation. The Article, Section and paragraph
captions herein are for convenience of reference only, do not constitute part of
this Agreement and shall not limit or otherwise affect any of the provisions
hereof. For all purposes of this Agreement, "To the knowledge of" any party
means to the actual knowledge of any such party. The terms "hereby," "hereof,"
"hereto," "herein," "hereunder," and any similar terms used in this Agreement
shall refer to this Agreement and the attached Schedules. An appropriate
feminine or neuter pronoun shall be substituted for a pronoun of masculine form
or vice versa in any place or places in which the context may require such
substitution or substitutions.
7.9 Further Assurances. From time to time, as and when requested by
any party hereto, the other parties shall execute and
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<PAGE>
deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions, as such other party may reasonably deem necessary or desirable to
consummate the transactions or carry out the intents and purposes contemplated
by this Agreement.
7.10 Arbitration. Each of the parties agrees to submit to binding
arbitration any and all differences and disputes which may arise between them,
their heirs, successors, assigns, employees, officers, directors, affiliates,
subsidiaries, or shareholders which are related to this Agreement, or otherwise
arising between the parties. Prior to initiating arbitration, the parties shall
first meet face-to-face to effect a resolution of the differences. Any
differences which the parties are unable to resolve in said face-to-face meeting
shall be heard and finally settled in Chicago, Illinois, or in any other
location mutually agreed upon by the parties, by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. Such arbitration shall be initiated in the Chicago, Illinois office
of the American Arbitration Association. Any award entered in any such
arbitration shall be final, binding, and may be entered and enforced in any
court of competent jurisdiction. The arbitrator shall make such orders, conduct
and schedule all proceedings in connection with the arbitration so that final
arbitration commences no less than thirty (30) days and concludes no later than
seventy-five (75) days after a party files the initial notice of arbitration,
and so that the final arbitration award is made and delivered to the parties
within ninety (90) days
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<PAGE>
after the filing of the initial notice of arbitration. Nothing herein contained
shall be construed as preventing any party from instituting legal or equitable
action in any jurisdiction against any of the other parties for temporary or
similar provisional relief to the full extent permitted under the laws
applicable to this Agreement, or any such other written agreement between the
parties or the performance hereof or thereof or otherwise pending final
settlement of any dispute, difference or question by arbitration. Any such
provisional relief may be modified or amended in any way by the arbitrator at
any time after his appointment.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the date first above written.
-----------------------------------
David R. Bovee
-----------------------------------
Joe A. Bubenzer
-----------------------------------
Miles G. Doolittle
-----------------------------------
Douglas Elliott
-----------------------------------
John A. Fritz
-----------------------------------
Anthony R. Gurney
-----------------------------------
Michael S. Hettle
-----------------------------------
Henry L. Huber
-----------------------------------
Milton D. Kniss
-----------------------------------
Carl W. Kucsera
-----------------------------------
Michael J. Kukla
-----------------------------------
Alfred C. Liddell
-----------------------------------
J. Frank Mack
<PAGE>
-----------------------------------
Michael McCabe
-----------------------------------
William C. Oldenburg
-----------------------------------
Sandra Pritchard
-----------------------------------
Earl Proctor
-----------------------------------
Keith R. Przybylski
-----------------------------------
David A. Skrzyniarz
-----------------------------------
Karl F. Storrie
-----------------------------------
John B. Truckey
-----------------------------------
George E. Whitehead
<PAGE>
-----------------------------------
S.A. Johnson
-----------------------------------
Scott D. Rued
-----------------------------------
Robert R. Hibbs
-----------------------------------
Mary L. Johnson
<PAGE>
-----------------------------------
Kim B. Clark
Dura Automotive Holding, Inc.
-----------------------------------
By:
Its:
<PAGE>
SCHEDULE 1.1
NEWCO SHARES TO BE RECEIVED
BY EACH MANAGEMENT STOCKHOLDER
<TABLE>
<CAPTION>
MANAGEMENT STOCKHOLDER SHARES
- ---------------------- ------
<S> <C>
S.A. Johnson 3,385.42
Scott D. Rued 2,604.17
Robert R. Hibbs 1,302.08
Mary L. Johnson 520.83
David R. Bovee 2,343.75
Joe A. Bubenzer 2,032.00
Miles G. Doolittle 520.83
Douglas Elliott 104.17
John A. Fritz 156.25
Anthony R. Gurney 208.33
Michael S. Hettle 520.83
Henry L. Huber 520.83
Milton D. Kniss 520.83
Carl W. Kucsera 2,343.75
Michael J. Kukla 260.42
Alfred C. Liddell 260.42
J. Frank Mack 520.83
Michael McCabe 79.00
William C. Oldenburg 520.83
Sandra Pritchard 275.00
Earl Proctor 781.25
Keith R. Przybylski 80.00
David A. Skrzyniarz 104.17
Karl F. Storrie 7,916.67
John B. Truckey 52.08
George E. Whitehead 104.17
</TABLE>
<PAGE>
OPTIONS
<TABLE>
<CAPTION>
Optionholder Number of Shares
- ------------ ----------------
<S> <C>
Kim B. Clark 1,000.00
</TABLE>
The option is to purchase 1000 shares of Class A Common Stock at a
price $25.62 per share. The option terminates on the earlier of (i) the
termination of the Optionholder's services as a consultant and advisor to the
Company for any reason and (ii) September 31, 2003.
<PAGE>
SCHEDULE 2.1
MANAGEMENT SHARES
<TABLE>
<CAPTION>
MANAGEMENT STOCKHOLDER SHARES
- ---------------------- ------
<S> <C>
S.A. Johnson 3,385.42
Scott D. Rued 2,604.17
Robert R. Hibbs 1,302.08
Mary L. Johnson 520.83
David R. Bovee 2,343.75
Joe A. Bubenzer 2,032.00
Miles G. Doolittle 520.83
Douglas Elliott 104.17
John A. Fritz 156.25
Anthony R. Gurney 208.33
Michael S. Hettle 520.83
Henry L. Huber 520.83
Milton D. Kniss 520.83
Carl W. Kucsera 2,343.75
Michael J. Kukla 260.42
Alfred C. Liddell 260.42
J. Frank Mack 520.83
Michael McCabe 79.00
William C. Oldenburg 520.83
Sandra Pritchard 275.00
Earl Proctor 781.25
Keith R. Przybylski 80.00
David A. Skrzyniarz 104.17
Karl F. Storrie 7,916.67
John B. Truckey 52.08
George E. Whitehead 104.17
</TABLE>
<PAGE>
SCHEDULE 2.1(d)
CONSENTS, ETC.
None.
<PAGE>
Exhibit 10.3
MANAGEMENT AGREEMENT
--------------------
MANAGEMENT AGREEMENT, dated as of August 31, 1994, by and between
Hidden Creek Industries, a New York general partnership ("Hidden Creek"), and
Dura Automotive Systems, Inc., a Delaware corporation ("Dura").
BACKGROUND
----------
Dura desires to receive financial and management consulting services
from Hidden Creek and thereby obtain the benefit of the experience of Hidden
Creek in business and financial management generally and its knowledge of Dura
and Dura's financial affairs in particular. Hidden Creek is willing to provide
financial and management consulting services to Dura. Accordingly, the
compensation arrangements set forth in this Agreement are designed to compensate
Hidden Creek for such services.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective agreements hereinafter set forth and the mutual benefits to be
derived herefrom, Hidden Creek and Dura hereby agree as follows:
TERMS
-----
1. Engagement. Dura hereby engages Hidden Creek as a financial and
management consultant, and Hidden Creek hereby agrees to provide financial and
management consulting services to Dura, all on the terms and subject to the
conditions set forth below.
2. Services of Hidden Creek. Hidden Creek hereby agrees during the
term of this engagement to consult with Dura's board of directors (the "Board")
and management of Dura and its subsidiaries in such manner and on such business
and financial matters as may be reasonably requested from time to time by the
Board, including but not limited to:
(i) corporate strategy;
(ii) budgeting of future corporate investments;
(iii) acquisition and divestiture strategies; and
(iv) debt and equity financings.
Members of the Hidden Creek Group will be available to serve on the Board and
will devote such time and attention to Dura's affairs as reasonably necessary to
accomplish the purposes of this Agreement. For purposes of this Agreement, the
"Hidden Creek Group" means S.A. Johnson, Scott D. Rued, Robert Hibbs and such
other persons as may be designated by Hidden Creek from time to time, which
persons shall be reasonably acceptable to Dura.
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<PAGE>
3. Compensation. (a) Dura agrees to pay to Hidden Creek as
compensation for services rendered to Dura with respect to the consummation of
the transactions contemplated by the Joint Venture Agreement, dated as of the
date hereof, among Orscheln Co., MC Holding Corp., Onex U.S. Investments, Inc.,
J2R Corporation and Dura (the "Joint Venture Agreement"), a closing fee in the
amount of $500,000.00 payable upon the Closing (as defined in the Joint Venture
Agreement), and (b) Dura agrees to pay to Hidden Creek as compensation for
services to be rendered by Hidden Creek hereunder through the first anniversary
of the date hereof, a fee equal to $600,000.00 per year (the "Management Fee"),
payable monthly in advance in an amount equal to $50,000.00 per month,
commencing on the first day of the first month following the Closing; provided,
however, that in the event the Closing does not occur on the last day of the
month, then (i) Hidden Creek shall be entitled to receive a Management Fee for
the period beginning on the date on which the Closing occurred until the first
day of the month following the Closing in an amount equal to the product of (x)
$50,000.00 multiplied by (y) a ratio, the numerator of which is equal to the
number of days from and including the date on which the Closing occurred until
the first day of the month immediately following the Closing, and the
denominator of which is equal to the number of days in the month in which the
Closing occurred and (ii) the final monthly payment required to be made during
the initial term of this Agreement shall equal the difference between (x)
$50,000.00 minus (y) the amount calculated pursuant to clause (i) above. The
Management Fee payable by Dura to the Company for each year of this Agreement
after the first anniversary hereof shall be determined by mutual agreement of
Dura and Hidden Creek in accordance with the Stockholders Agreement (as defined
in the Joint Venture Agreement). Dura shall promptly reimburse Hidden Creek for
such reasonable travel expenses and other direct out-of-pocket expenses as may
be incurred by Hidden Creek, its officers and employees in connection with the
acquisition and the rendering of services hereunder.
4. Term. This Agreement shall be in effect for an initial term of
one year commencing on the date hereof and shall automatically be extended on
each anniversary hereof for another year if and only if the parties hereto agree
on the compensation to be paid by Dura to Hidden Creek for services to be
rendered hereunder to Dura during such additional year, and such compensation is
approved by Supermajority Approval (as defined in the Stockholders Agreement);
provided, however, that this Agreement shall terminate on the first to occur of
(a) the date of the sale of all or substantially all of Dura's assets, (b) the
date of the sale of all of the issued and outstanding capital stock of Dura or
(c) Hidden Creek's giving Dura 30 days' prior written notice of termination. No
termination of this Agreement, whether pursuant to this paragraph or otherwise,
shall affect Dura's obligations with respect to the fees, costs and expense
incurred by Hidden Creek in rendering services hereunder and not reimbursed by
Dura as of the effective date of such termination.
-2-
<PAGE>
5. Indemnification. Dura agrees to indemnify and hold harmless, to
the fullest extent which it is empowered to do so by the General Corporation Law
of the State of Delaware as the same exists or may hereafter be amended, Hidden
Creek, its officers, employees, fiduciaries and agents, and such indemnification
shall inure to the benefit of each of their respective heirs, executors and
administrators, from and against any and all loss, liability, suits, claims,
costs, damages and expenses (including attorneys' fees) incurred in relation to
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, arising from their performance hereunder, except as a result of
their gross negligence or intentional wrongdoing.
6. Hidden Creek as Independent Contractor. Hidden Creek and Dura
agree that Hidden Creek shall perform services hereunder as an independent
contractor, retaining control over and responsibility for its own operations and
personnel. Neither Hidden Creek nor its employees shall be considered employees
or agents of Dura as a result of this Agreement nor shall any of them have
authority to contract in the name of or bind Dura, except as expressly agreed to
in writing by Dura.
7. Notices. Any notice, report or payment required to permitted to
be given or made under this Agreement by one party to the other shall be deemed
to have been duly given or made if personally delivered or, if mailed, when
mailed by registered or certified mail, postage prepaid, to the other party at
the following addresses (or at such other address as shall be given in writing
by one party to the other):
If to Hidden Creek:
Hidden Creek Industries
4806 IDS Center
Minneapolis, MN 55402
Attention: Scott D. Rued
If to Dura:
Dura Automotive Industries, Inc.
1708 Northwood Drive
Troy, MI 488084-5353
Attention: President
8. Entire Agreement; Modification. This Agreement (a) contains the
complete and entire understanding and agreement of Hidden Creek and Dura with
respect to the subject matter hereof; (b) supersedes all prior and
contemporaneous understandings, conditions and agreements, oral or written,
express or implied, respecting the engagement of Hidden Creek in connection with
the subject matter hereof; and (c) may not be modified except by an instrument
in writing executed by Hidden Creek and Dura.
-3-
<PAGE>
9. Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach of that provision or any other provision
hereby.
10. Assignment. Neither Hidden Creek nor Dura may assign its rights
or obligations under this Agreement without the express written consent of the
other.
11. Governing Law. This Agreement shall be deemed to be a contract
made under, and is to be governed and construed in accordance with the internal
laws (and not the law of conflicts) of the State of Michigan.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have placed their hands and
seals as of the date written above.
HIDDEN CREEK INDUSTRIES
By: J2R Corporation
Its: General Partner
By _________________________________
Title:
DURA AUTOMOTIVE SYSTEMS, INC.
By _________________________________
Title:
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Exhibit 10.4
STOCK OPTION AGREEMENT
----------------------
STOCK OPTION AGREEMENT dated as of August 31, 1994 (this "Agreement")
among Dura Automotive Holding, Inc. a Delaware corporation (the "Company"), and
Orscheln Co., a Delaware corporation ("Orscheln").
Pursuant to a Joint Venture Agreement, dated as of the date hereof
(the "Joint Venture Agreement"), by and among the Company, Orscheln, MC Holding
Corp., Onex U.S. Investments, Inc. ("Onex") and J2R Corporation ("J2R"), in
exchange for the contribution by Orscheln of the Orscheln Transferred Assets (as
defined in the Joint Venture Agreement) to the Company, the Company has agreed
to issue to Orscheln a stock option (the "Option") to purchase 818.18 shares, as
adjusted below, of the Company's Class A Common Stock, par value $.01 per share
(the "Class A Common").
1. Stock Option. The Option is to purchase 818.18 shares of the
Class A Common (the "Option Shares") at a price per share of $25.62 (the "Option
Price"). The number of Option Shares and the Option Price will be equitably
adjusted for any stock split, stock dividend or reclassification or
recapitalization of the Class A Common which occurs subsequent to the date of
this Agreement. The Option will expire on the date (the "Expiration Date") which
is the earlier of (a) the date on which Orscheln ceases to own any outstanding
Class A Common and (b) the Clark Option Expiration Date, provided that Orscheln
will have the right to exercise the Option after the Expiration Date with
respect to Option Shares until the earlier of (x) with respect to those Option
Shares which are the subject of a Repurchase Notice (as defined in paragraph 4),
30 days after the date on which the Company delivers the Repurchase Notice
pursuant to paragraph 4 hereof, or (y) twelve months after the Expiration Date
if no Repurchase Notice is delivered. The Option is not intended to be an
"incentive stock option" within the meaning of Section 422A of the Internal
Revenue Code of 1986, as amended.
2. Additional Terms. The Option is also subject to the following
provisions:
(a) Procedures for Exercise. Upon its receipt of notice (an
"Exercise Notice") from the Company that any portion of the Clark Option has
been exercised, Orscheln may exercise the Option with respect to a number of
Option Shares equal to the product of (i) the quotient of (A) the number of
Clark Option Shares with respect to which the Clark Option has been exercised
(as indicated in the Exercise Notice), divided by (B) 1000, multiplied by (ii)
818.18 (as each such number is equitably adjusted for any stock split, stock
dividend or reclassification or recapitalization of the Class A Common which
occurs subsequent to the date of this Agreement), by delivering written notice
of exercise to the Company within 10 days of receipt of such Exercise Notice,
together with
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(x) a written acknowledgement that Orscheln has read and has been afforded an
opportunity to ask questions of management of the Company regarding all
financial and other information provided to Orscheln regarding the Company and
(y) payment in full by delivery of a cashier's or certified check in the amount
of the Option Price plus the amount of any additional federal and state income
taxes required to be withheld by reason of the exercise of the Option. As a
condition to any exercise of the Option, Orscheln will permit the Company to
deliver to it all financial and other information regarding the Company and its
subsidiaries which it believes necessary to enable Orscheln to make an informed
investment decision.
(b) Securities Laws Restrictions. Orscheln represents that when it
exercises the Option it will be purchasing Option Shares for its own account and
not on behalf of any other person. Orscheln understands and acknowledges that
federal and state securities laws govern and restrict Orscheln's right to offer,
sell or otherwise dispose of any Option Shares unless Orscheln's offer, sale or
other disposition thereof is registered under the Securities Act of 1933, as
amended (the "1933 Act"), and any applicable state securities laws or, in the
opinion of the Company's counsel, such offer, sale or other disposition is
exempt from registration thereunder. Orscheln agrees that it will not offer,
sell or otherwise dispose of any Option Shares in any manner which would (i)
require the Company to file any registration statement (or similar filing under
state law) with the Securities and Exchange Commission or to amend or supplement
any such filing or (ii) violate or cause the Company to violate the 1933 Act,
the rules and regulations promulgated thereunder or any other state or federal
law. Orscheln further understands that the certificates for any Option Shares
that Orscheln purchases will bear the legend set forth in paragraph 3(b) or such
other legend as the Company deems necessary or desirable to assure compliance
with the 1933 Act and other applicable laws, rules and regulations.
3. Restrictions on Transfer.
(a) Transfer of Option Shares. Orscheln will not sell, pledge or
otherwise dispose of any interest in Option Shares except pursuant to the
provisions of the Stockholders Agreement, dated as of the date hereof (the
"Stockholders Agreement"), by and among the Company, Orscheln, Onex, J2R and
certain other stockholders party thereto.
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(b) Additional Restrictions on Transfer.
(i) The certificates representing the Option Shares will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN APPLICABLE EXEMPTION FROM
REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO CERTAIN REPURCHASE OPTIONS AND OTHER
AGREEMENTS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF AUGUST
31, 1994 BETWEEN THE ISSUER AND ORSCHELN CO., A COPY OF WHICH
AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF WITHOUT CHARGE AT THE
PRINCIPAL PLACE OF BUSINESS OF THE ISSUER."
(ii) No holder of Option Shares may sell, transfer or dispose of any
Option Shares (except pursuant to an effective registration statement under the
1933 Act) without first delivering to the Company an opinion of counsel
reasonably acceptable in form and substance to the Company that registration
under the 1933 Act is not required in connection with such transfer.
4. Repurchase Option.
(a) The following term is defined as followed:
"Fair Market Value" of each Option Share means the market value agreed
upon by Orscheln and the Board of Directors of the Company (the "Board"). If
Orscheln and the Board are unable to agree upon the market value, then Orscheln
and the Board will split the cost of a mutually acceptable business appraiser
whose determination will be binding.
(b) In the event that (i) Orscheln no longer owns any outstanding
Class A Common or (ii) the Company has exercised all or any portion of the Clark
Repurchase Option pursuant to the terms of the Clark Option Agreement, the
Option Shares, whether held by Orscheln or one or more transferees, will be
subject to repurchase by the Company pursuant to the terms and conditions set
forth in this paragraph 4 (the "Repurchase Option").
(c) If Orscheln no longer owns any outstanding Class A Common, then
on or after the Expiration Date the Company may elect to purchase all or any
portion of the Option Shares at a price per share equal to the Fair Market Value
thereof as determined on the Expiration Date.
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(d) If the Company has exercised all or any portion of the Clark
Repurchase Option pursuant to the terms of the Clark Option Agreement, then the
Company may elect to purchase a number of Option Shares equal to the product of
(i) the quotient of (A) the number of Clark Option Shares with respect to which
the Company has exercised the Clark Repurchase Option pursuant to the Clark
Option Agreement, divided by (B) the total number of Clark Option Shares with
respect to which the Company could have exercised such Clark Repurchase Option,
multiplied by (ii) the total number of Option Shares.
(e) The Company may elect to exercise its right to purchase all or a
portion of the Option Shares by delivering written notice (the "Repurchase
Notice") to the holder or holders of the Option or Option Shares. The Repurchase
Notice will set forth the number of each class of Option Shares to be acquired
from such holder, the aggregate consideration to be paid for such shares and the
time and place for the closing of the transaction. If any Option Shares are held
by transferees of Orscheln, the Company shall purchase the shares elected to be
purchased from such holder(s) of such Option Shares, pro rata according to the
number of such Option Shares held by such holder(s) at the time of delivery of
such Repurchase Notice (determined as nearly as practicable to the nearest
share).
(f) The closing of the transactions contemplated by this paragraph 4
shall take place on the date designated by the Company in the Repurchase Notice,
which date shall not be more than 30 days after the delivery of the Repurchase
Notice. The Company will pay for the Option Shares to be purchased pursuant to
the Repurchase Option by check payable to the holder thereof. The Company will
be entitled to receive representations and warranties that such seller has good
and marketable title to the Option Shares to be transferred free and clear of
all liens, claims and other encumbrances.
(g) The Repurchase Option provided for in this paragraph 4 shall
terminate only upon the consummation of an Approved Sale of the Company or upon
the initial public offering of the Company's equity securities.
5. Non-Transferability of Option. The Option is not transferable by
Orscheln except in accordance with the provisions of the Stockholders Agreement.
6. Effect of Transfers in Violation of Agreement. The Company shall
not be required (a) to transfer on its books any Option Shares which have been
sold or transferred in violation of any of the provisions set forth in this
Agreement or (b) to treat as owner of such shares, to accord the right to vote
as such owner or to pay dividends to any transferee to whom such shares have
been transferred in violation of this Agreement.
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7. Notice. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit with the United States Post Office, postage prepaid or sent by overnight
delivery service at the addresses as shown below:
To the Company:
Dura Automotive Holding, Inc.
c/o Hidden Creek Industries
4508 IDS Center
Minneapolis, MN 55402
Attn: Scott D. Rued
To Orscheln:
Orscheln Co.
2000 U.S. Highway 63 South, P.O. Box 280
Moberly, MO 65270
Attn: James L. O'Loughlin
or at such other address as such party may designated by 10 days' advance
written notice to the other party.
8. Successors and Assigns. The agreements contained in this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by Orscheln, the Company and their respective successors and assigns.
9. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, without giving effect to
any choice of law or conflict of law, rules or provisions (whether of the State
of Delaware or any other jurisdiction) that would cause the application of laws
of any jurisdiction other than the State of Delaware.
10. Defined Terms. The following terms shall have the meanings set
forth below:
"Common Stock" shall mean the Company's Class A Common, Class B Common
Stock, par value $0.01 per share, and Class C Common, par value $0.01 per share,
collectively.
"Clark Option" shall mean the "Option" as defined in the Clark Option
Agreement.
"Clark Option Shares" shall mean the "Option Shares" as defined in the
Clark Option Agreement.
"Clark Option Agreement" shall mean the Stock Option Agreement, dated
as of the date hereof, between the Company and Kim B. Clark.
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"Clark Option Expiration Date" shall mean the "Expiration Date" as
defined in the Clark Option Agreement.
"Clark Repurchase Option" shall mean the "Repurchase Option" as
defined in the Clark Option Agreement.
11. Entire Agreement. This Agreement constitutes the entire
understanding between Orscheln and the Company and supersedes all other
agreements, whether written or oral, with respect to the grant of the Option and
the acquisition by Orscheln of Option Shares.
12. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
13. Counterparts. This Agreement may be executed on separate
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
14. Remedies. Each of the parties to this Agreement will be entitled
to enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
15. Amendments and Waivers. Any provision of this Agreement may be
amended or waived only with the prior written consent of the Company and
Orscheln.
* * * * *
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
DURA AUTOMOTIVE HOLDING, INC.
By: _______________________________
Its: ______________________________
ORSCHELN CO.
By: _______________________________
Its: ______________________________
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EXHIBIT 10.5
STOCK OPTION AGREEMENT
----------------------
STOCK OPTION AGREEMENT dated as of August 31, 1994 (this "Agreement")
among Dura Automotive Holding, Inc. a Delaware corporation (the "Company"), and
Kim B. Clark ("Consultant").
Pursuant to the 1992 Stock Purchase and Option Plan of MC Holding
Corp. ("MC Holding"), MC Holding and Consultant in September 1993 entered into a
Stock Option Agreement which granted Consultant a stock option (the "Original
Option") to purchase 1,000 shares, subject to certain adjustments, of MC
Holding's Class A Common Stock, par value $.01 per share. Pursuant to a Joint
Venture Agreement, dated as of the date hereof, by and among the Company, MC
Holding, Orscheln Co. ("Orscheln"), Onex U.S. Investments, Inc. ("Onex") and J2R
Corporation ("J2R"), the Original Option will be terminated in exchange for the
issuance to the Consultant of a stock option (the "Option") to purchase 1,000
shares, as adjusted below, of the Company's Class A Common Stock, par value $.01
per share (the "Class A Common").
1. Stock Option. The Option is to purchase 1,000 shares of the Class
A Common (the "Option Shares") at a price per share of $25.62 (the "Option
Price"). The number of Option Shares and the Option Price will be equitably
adjusted for any stock split, stock dividend or reclassification or
recapitalization of the Class A Common which occurs subsequent to the date of
this Agreement. The Option will expire on the date (the "Expiration Date")
which is the earlier of (i) the termination of Consultant's services as a
consultant and advisor to the Company or its subsidiaries for any reason and
(ii) September 30, 2003, provided that Consultant (or Consultant's estate, if
applicable) will have the right to exercise the Option after the Expiration Date
with respect to Option Shares until the earlier of (a) with respect to those
Option Shares which are the subject of a Repurchase Notice (as defined in
paragraph 4), 30 days after the date on which the Company delivers the
Repurchase Notice pursuant to paragraph 4 hereof, or (b) twelve months after the
Expiration Date if no Repurchase Notice is delivered. The Option is not
intended to be an "incentive stock option" within the meaning of Section 422A of
the Internal Revenue Code of 1986, as amended.
2. Additional Terms. The Option is also subject to the following
provisions:
(a) Procedures for Exercise. At any time and from time to time after
the date hereof and prior to the Expiration Date (or during the period
thereafter established by Section 1 hereof), Consultant may exercise all or a
portion of the Option with respect to the Option Shares by delivering written
notice of exercise to the Company, together with (i) a written acknowledgement
that Consultant has read and has been afforded an opportunity to ask questions
of management of the Company regarding all financial and
<PAGE>
other information provided to Consultant regarding the Company and (ii) payment
in full by delivery of a cashier's or certified check in the amount of the
Option Price plus the amount of any additional federal and state income taxes
required to be withheld by reason of the exercise of the Option. As a condition
to any exercise of the Option, Consultant will permit the Company to deliver to
him all financial and other information regarding the Company and its
subsidiaries which it believes necessary to enable Consultant to make an
informed investment decision.
(b) Securities Laws Restrictions. Consultant represents that when he
exercises the Option he will be purchasing Option Shares for his own account and
not on behalf of any other person. Consultant understands and acknowledges that
federal and state securities laws govern and restrict Consultant's right to
offer, sell or otherwise dispose of any Option Shares unless Consultant's offer,
sale or other disposition thereof is registered under the Securities Act of
1933, as amended (the "1933 Act"), and any applicable state securities laws or,
in the opinion of the Company's counsel, such offer, sale or other disposition
is exempt from registration thereunder. Consultant agrees that he will not
offer, sell or otherwise dispose of any Option Shares in any manner which would
(i) require the Company to file any registration statement (or similar filing
under state law) with the Securities and Exchange Commission or to amend or
supplement any such filing or (ii) violate or cause the Company to violate the
1933 Act, the rules and regulations promulgated thereunder or any other state or
federal law. Consultant further understands that the certificates for any
Option Shares that Consultant purchases will bear the legend set forth in
paragraph 3(b) or such other legend as the Company deems necessary or desirable
to assure compliance with the 1933 Act and other applicable laws, rules and
regulations.
3. Restrictions on Transfer.
(a) Transfer of Option Shares.
(i) Consultant will not sell, pledge or otherwise dispose of any
interest in Option Shares except pursuant to (A) the provisions of paragraphs
3(c) or 4 below or (B) the provisions of paragraph 3(a)(ii) below.
(ii) The restriction contained in this paragraph 3(a) will not apply
with respect to transfers of Option Shares pursuant to applicable laws of
descent and distribution, provided that the restrictions contained in this
paragraph 3(a) will continue to be applicable to Option Shares after any such
transfer and the transferees of such Option Shares shall agree in writing to be
bound by the provisions of this Agreement. Any transferee of Option Shares
pursuant to a transfer in accordance with the provisions of this subparagraph
3(a) is herein referred to as a "Permitted Transferee." Upon the transfer of
Option Shares pursuant to this subparagraph 3(a), the Permitted Transferee(s)
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will deliver a written notice (the "Transfer Notice") to the Company. The
Transfer Notice will disclose in reasonable detail the identity of the Permitted
Transferee(s).
(b) Additional Restrictions on Transfer.
(i) The certificates representing the Option Shares will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN APPLICABLE EXEMPTION FROM
REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO CERTAIN REPURCHASE OPTIONS AND OTHER
AGREEMENTS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF AUGUST
31, 1994 BETWEEN THE ISSUER AND A CERTAIN CONSULTANT OF THE ISSUER, A
COPY OF WHICH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF WITHOUT
CHARGE AT THE PRINCIPAL PLACE OF BUSINESS OF THE ISSUER."
(ii) No holder of Option Shares may sell, transfer or dispose of any
Option Shares (except pursuant to an effective registration statement under the
1933 Act) without first delivering to the Company an opinion of counsel
reasonably acceptable in form and substance to the Company that registration
under the 1933 Act is not required in connection with such transfer.
(c) Sale of the Company.
(i) If a sale of the Company (whether by merger, consolidation, sale
of all or substantially all of its assets or sale of all of the outstanding
Common Stock) is approved (the "Approved Sale") in accordance with the terms of
the Stockholders Agreement, dated as of the date hereof, by and among the
Company, Onex, J2R, Orscheln and certain other stockholders party thereto,
Consultant will consent to and raise no objections against the Approved Sale of
the Company, and if the Approved Sale of the Company is structured as a sale of
stock, Consultant will agree to sell all of Consultant's Option Shares and
rights to acquire Option Shares on the terms and conditions approved by the
Board of Directors of the Company (the "Board") and the holders of a majority of
the Common Stock then outstanding. Consultant will take all necessary and
desirable actions in connection with the consummation of the Approved Sale of
the Company.
(ii) If the Company or the holders of the Company's securities enter
into any negotiation or transaction for which
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Rule 506 (or any similar rule then in effect) promulgated by the Securities
Exchange Commission may be available with respect to such negotiation or
transaction (including a merger, consolidation or other reorganization),
Consultant will, at the request of the Company, appoint a purchaser
representative (as such term is defined in Rule 501) reasonably acceptable to
the Company. If Consultant appoints the purchaser representative designated by
the Company, the Company will pay the fees of such purchaser representative, but
if Consultant declines to appoint the purchaser representative designated by the
Company Consultant will appoint another purchaser representative (reasonably
acceptable to the Company), and Consultant will be responsible for the fees of
the purchaser representative so appointed.
(d) Termination of Restrictions. The provisions of this paragraph 3
(with the exception of paragraph (b)) will terminate when the Company has sold
shares of its Common Stock pursuant to a public offering registered under the
Securities Act.
4. Repurchase Option.
(a) The following term is defined as followed:
"Fair Market Value" of each Option Share means the market value agreed
upon by Consultant and the Board. If Consultant and the Board are unable to
agree upon the market value, then Consultant and the Board will split the cost
of a mutually acceptable business appraiser whose determination will be binding.
(b) In the event that Consultant is no longer a consultant to the
Company for any reason, the Option Shares, whether held by Consultant or one or
more transferees, will be subject to repurchase by the Company and the Investors
pursuant to the terms and conditions set forth in this paragraph 4 (the
"Repurchase Option").
(c) If Consultant is no longer a consultant to the Company for any
reason, then on or after the Expiration Date the Company may elect to purchase
all or any portion of the Option Shares at a price per share equal to the Fair
Market Value thereof as determined on the Expiration Date.
(d) The Company may elect to exercise the right to purchase all or any
portion of the Option Shares by delivering written notice (the "Repurchase
Notice") to the holder or holders of the Option or Option Shares. The
Repurchase Notice will set forth the number of each class of Option Shares to be
acquired from such holder, the aggregate consideration to be paid for such
shares and the time and place for the closing of the transaction. If any Option
Shares are held by transferees of Consultant, the Company shall purchase the
shares elected to be purchased from such holder(s) of such Option Shares, pro
rata according to the number of such Option Shares held by such holder(s) at the
time of
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delivery of such Repurchase Notice (determined as nearly as practicable to the
nearest share). If any Option Shares are held by Permitted Transferees of
Consultant, the Company shall purchase the shares elected to be purchased from
such holder(s) of such Option Shares, pro rata according to the number of such
Option Shares held by such holder(s) at the time of delivery of such Repurchase
Notice (determined as nearly as practicable to the nearest share).
(e) (i) If for any reason the Company does not elect to purchase all
of the Option Shares pursuant to the Repurchase Option prior to the 90th day
following the Expiration Date, the Investors shall be entitled to exercise the
Repurchase Option, in the manner set forth in this paragraph 4 and on the same
terms as those available to the Company, for the Option Shares the Company has
not elected to purchase (the "Available Shares"). As soon as practicable after
the Company determines that there will be any Available Shares, the Company
shall deliver written notice (the "Option Notice") to the Investors setting
forth the number of Available Shares and the price for each Available Share.
(ii) Each of the Investors will initially be permitted to purchase
its pro rata share (based upon the aggregate number of shares of Common Stock
then held by such Investors) of the Available Shares. Each Investor may elect to
purchase any number of the Available Shares (subject to the preceding sentence)
by delivering written notice to the Company within 30 days after receipt of the
Option Notice from the Company (such 30-day period being referred to herein as
the "Investor Election Period").
(iii) As soon as practicable but in any event within five (5) days
after the expiration of the Investor Election Period, purchase Available Shares
of any Available Share which Investors have not elected to purchase and each of
the electing Investors shall be entitled to purchase the remaining Available
Shares on the same terms as described above (the "Second Option Notice");
provided that if in the aggregate such Investors elect to purchase more than the
remaining Available Shares, such remaining Available Shares purchased by each
such Investor will be reduced on a pro rata basis based upon the aggregate
number of shares of Common Stock then held by such Investors. Each Investor may
elect to purchase any of the remaining Available Shares available to such
Investor by delivering written notice to the Company within 10 days after the
delivery of the Second Option Notice (with such 10-day period referred to herein
as the "Second Investor Election Period"). As soon as practicable but in any
event within five (5) business days after the later of the expiration of the
Investor Election Period or the Second Investor Election Period (if any) the
Company shall, if necessary, notify the holder(s) of Option Shares as to the
number of Option Shares being purchased from the holder(s) by the Investors (the
"Supplemental Repurchase Notice").
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At the time the Company delivers a Supplemental Repurchase Notice to the
holder(s) of Option Shares, the Company shall also deliver to each electing
Investor written notice setting forth the number of Option Shares the Company
and each Investor will acquire, the aggregate purchase price to be paid and the
time and place of the closing of the transaction.
(f) The closing of the transactions contemplated by this paragraph 4
shall take place on the date designated by the Company in the Repurchase Notice
or the Supplemental Repurchase Notice, as the case may be, which date shall not
be more than 30 days after the delivery of the later of the Repurchase Notice or
Supplemental Repurchase Notice. The Company and/or the Investors, as the case
may be, will pay for the Option Shares to be purchased pursuant to the
Repurchase Option by check payable to the holder thereof. The Company and/or
the Investors, as the case may be, will be entitled to receive representations
and warranties that such seller has good and marketable title to the Option
Shares to be transferred free and clear of all liens, claims and other
encumbrances.
(g) The Repurchase Option provided for in this paragraph 4 shall
terminate only upon the consummation of an Approved Sale of the Company or upon
the initial public offering of the Company's equity securities.
5. Non-Transferability of Option. The Option is personal to
Consultant and is not transferable by Consultant. Only Consultant can exercise
the Option, provided that if Consultant dies prior to the last date the Option
can be exercised as provided in paragraph 1 hereof, Consultant's estate shall
have the right to exercise the Option as permitted by paragraph 1 hereof.
6. Effect of Transfers in Violation of Agreement. The Company shall
not be required (a) to transfer on its books any Option Shares which have been
sold or transferred in violation of any of the provisions set forth in this
Agreement or (b) to treat as owner of such shares, to accord the right to vote
as such owner or to pay dividends to any transferee to whom such shares have
been transferred in violation of this Agreement.
7. Notice. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit with the United States Post Office, postage prepaid or sent by overnight
delivery service to the Investors at the addresses indicated in the Stockholders
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Agreement and to the other recipients hereto at the addresses as shown below:
To the Company:
Dura Automotive Holding, Inc.
c/o Hidden Creek Industries
4508 IDS Center
Minneapolis, MN 55402
Attn: Scott D. Rued
To Consultant
Professor Kim B. Clark
Harvard Business School
T89 Morgan Hall
Soldiers Field Park
Boston, MA 02163
or at such other address as such party may designated by 10 days' advance
written notice to the other party.
8. Successors and Assigns. The agreements contained in this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by Consultant, the Company and their respective successors and assigns.
9. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, without giving effect to
any choice of law or conflict of law, rules or provisions (whether of the State
of Delaware or any other jurisdiction) that would cause the application of laws
of any jurisdiction other than the State of Delaware.
10. Defined Terms. The following terms shall have the meanings set
forth below:
"Common Stock" shall mean the Company's Class A Common, Class B Common
Stock, par value $0.01 per share, and Class C Common, par value $0.01 per share,
collectively.
"Investors" shall mean the parties signatory to that certain Investor
Stockholders Agreement dated as of August 31, 1994 by and among the Company,
Onex, J2R and certain other parties identified therein (the "Stockholders
Agreement").
11. Entire Agreement. This Agreement constitutes the entire
understanding between Consultant and the Company and supersedes all other
agreements, whether written or oral, with respect to the grant of the Option and
the acquisition by Consultant of Option Shares. Consultant agrees that all
rights to acquire shares of the Company's or MC Holding's equity securities
- 7 -
<PAGE>
previously granted to Consultant, including the Original Option, are terminated
and cancelled and of no further force and effect.
12. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
13. Counterparts. This Agreement may be executed on separate
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
14. Remedies. Each of the parties to this Agreement will be entitled
to enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
15. Third Party Beneficiaries. The parties hereto acknowledge and
agree that the Investors are third party beneficiaries of this Agreement and
this Agreement shall inure to the benefit of and be enforceable by the Investors
and their respective successors and assigns.
16. Amendments and Waivers. Any provision of this Agreement may be
amended or waived only with the prior written consent of the Company and
Consultant; provided, however, that any amendment or waiver which adversely
affects the rights of the Investors hereunder shall require the prior written
consent of the Investors who hold a majority of the Class A Common held by the
Investors.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
DURA AUTOMOTIVE HOLDING, INC.
By:
--------------------------
Its:
-------------------------
------------------------------
KIM B. CLARK
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<PAGE>
Exhibit 10.6
THE PAYMENT OF PRINCIPAL AND INTEREST ON THIS NOTE IS SUBJECT TO
CERTAIN SUBORDINATION PROVISIONS SET FORTH IN SECTION 3 HEREIN. THIS
NOTE WAS ORIGINALLY ISSUED ON AUGUST 31, 1994, AND HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
COMPARABLE STATE SECURITIES LAW. THE TRANSFER OF THIS NOTE IS SUBJECT
TO THE CONDITIONS ON TRANSFER SPECIFIED IN THE STOCKHOLDERS AGREEMENT,
DATED AS OF THE DATE HEREOF, BY AND AMONG THE ISSUER HEREOF (THE
"COMPANY"), THE INITIAL HOLDER HEREOF AND OTHERS, AND THE COMPANY
RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITY UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. UPON
WRITTEN REQUEST, A COPY OF SUCH CONDITIONS WILL BE FURNISHED BY THE
COMPANY TO THE HOLDER HEREOF WITHOUT CHARGE.
SUBORDINATED
PROMISSORY NOTE
---------------
August 31, 1994 $2,000,000
Dura Automotive Holding, Inc., a Delaware corporation (the "Company")
hereby promises to pay to the order of Orscheln Co., a Delaware corporation, or
its permitted assigns (the "Holder") the principal amount of Two Million Dollars
($2,000,000), together with interest thereon calculated from the date hereof in
accordance with the provisions of this Note. Certain defined terms used herein
are set forth in Section 5 hereof. To the extent this Note (this "Note") is
hereafter divided into two or more Notes, this Note and all other such Notes are
collectively referred to as the "Notes."
1. Payment of Interest. Interest shall accrue at the rate of six and
ninety-three one-hundredths percent (6.93%) per annum, compounded semi-annually,
on the unpaid principal amount of this Note outstanding from time to time,
commencing on the date hereof. Subject to the provisions of Section 2(c) and
Section 3 hereof, the Company shall pay to the Holder semi-annually, in arrears,
all accrued interest on each December 31 and June 30 during the term hereof
(each such date being hereinafter referred to as an "Interest Payment Date"),
beginning December 31, 1994. Any accrued interest which for any reason has not
theretofore been paid shall be paid in full on the date on which all remaining
principal on this Note is paid. Interest shall accrue on any principal payment
due under this Note, and, unless otherwise prohibited under applicable law, on
any interest which has not been paid on the date on which it is due, until such
time as payment therefor is actually delivered to the Holder.
2. Payment of Principal on Note.
(a) Scheduled Payment. The Company shall repay the entire unpaid
principal amount of this Note on December 31, 2001.
<PAGE>
(b) Optional Prepayments. Subject to the provisions of Section 3
hereof, the Company may, at any time and from time to time, without premium or
penalty, prepay all or a portion of the outstanding principal amount of this
Note; provided, however, that any prepayment shall first be applied to any
accrued but unpaid interest.
(c) Time of Payment. If any payment of principal or interest on this
Note shall become due on a Saturday, Sunday, or legal holiday under the laws of
the State of Michigan, such payment shall be made on the next succeeding
business day and such extension of time shall in such case be included in
computing interest in connection with such payment.
3. Subordination; Restrictions on Payment.
(a) Anything in this Note to the contrary notwithstanding, the
obligations of the Company in respect of the principal, interest, fees and
charges on this Note shall be subordinate and junior in right of payment, to the
extent and in the manner hereinafter set forth, to all Superior Debt.
(b) In the event that the Company makes a general assignment for the
benefit of creditors; or an order, judgment or decree is entered adjudicating
the Company bankrupt or insolvent; or any order for relief with respect to the
Company is entered under the Federal Bankruptcy Code; or the Company petitions
or applies to any tribunal for the appointment of a custodian, trustee, receiver
or liquidator of the Company or of any substantial part of the assets of the
Company, or commences any proceeding relating to the Company under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction; or any such petition or
application is filed, or any such proceeding is commenced, against the Company
and either (A) the Company by any act indicates its approval thereof, consent
thereto or acquiescence therein or (B) such petition, application or proceeding
is not dismissed within 90 days (collectively referred to as an "Insolvency
Event"), or upon any acceleration of Superior Debt, then
(i) the holders of Superior Debt shall be entitled to receive payment
in full in cash of all principal, premium, interest, fees and charges then
due on all Superior Debt (including interest, fees and charges accruing
thereon after the commencement of any such proceedings) before the Holder
is entitled to receive any payment on account of principal, interest or
other amounts due (or past due) upon this Note, and the holders of Superior
Debt shall be entitled to receive for application in payment thereof any
payment or distribution of any kind or character, whether in cash, property
or securities or by set-off or otherwise, which may be payable or
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<PAGE>
deliverable in any such proceedings in respect of this Note; and
(ii) any payment or distribution of assets of the Company, of any kind
or character, whether in cash, property or securities, to which the Holder
would be entitled except for the provisions of this Section 3(b) shall be
paid or delivered by the Company directly to the holders of all Superior
Debt in the manner provided in Section 3(f) below, for application in
payment thereof until all Superior Debt (including interest, fees and
charges accrued thereon after the date of commencement of such proceedings)
shall have been paid in full in cash.
(c) Except as permitted under the Credit Agreement, until all Superior
Debt shall have been paid in full in cash, the Company shall not, directly or
indirectly, make any payment of any amount payable with respect to this Note,
except accrued but unpaid interest and scheduled principal payments; provided
that no payment of principal or interest (whether or not accrued) or
distribution of any kind with respect to this Note shall be made if there shall
have occurred and be continuing or there would exist as a result of such a
payment or distribution any default or event of default under any of the terms
of any agreement relating to, or instrument evidencing, any Superior Debt which
(whether with or without notice, lapse of time or both) would permit the holder
of such Superior Debt to accelerate all or any portion of such Superior Debt
(collectively, the "Blockage Events"). The Company shall use reasonable efforts
to notify the Holder in writing of the occurrence of a Blockage Event; provided
that, notwithstanding anything to the contrary in this Note, the failure of the
Company to so notify the Holder of the occurrence of a Blockage Event shall have
no effect on the obligations of the Company or the Holder during the continuance
of such Blockage Event as set forth herein. Upon termination of a Blockage Event
(so long as no other Blockage Event has occurred and is continuing), the Company
shall resume making payments of principal when due and payments of accrued but
unpaid interest pursuant to the terms and conditions of this Note.
(d) Any amendment or modification of the terms of Section 3 of this
Note shall not be effective against any Person who was a holder of Superior Debt
prior to or at the time of such amendment or modification unless such holder of
Superior Debt so consents.
(e) The holders of Superior Debt may, at any time, in their
discretion, renew, amend, extend or otherwise modify the terms and provisions of
Superior Debt so held or exercise any of their rights under the Superior Debt
including, without limitation, the waiver of defaults thereunder and the
amendment of any of the terms or provisions thereof (or any notice evidencing or
creating the same), all without notice to or assent from the Holder. No
- 3 -
<PAGE>
compromise, alteration, amendment, renewal or other change of, or waiver,
consent or other action in respect of any liability or obligation under or in
respect of, any terms, covenants or conditions of the Superior Debt (or any
instrument evidencing or creating the same), whether or not such release is in
accordance with the provisions of the Superior Debt (or any instrument
evidencing or creating the same), shall in any way alter or affect any of the
subordination provisions of this Note.
(f) If, notwithstanding the provisions of Section 3 of this Note, any
payment or distribution of any character (whether in cash, securities or other
property) or any security shall be received by the Holder in contravention of
this Section 3 and before all the Superior Debt shall have been paid in full in
cash, such payment, distribution or security shall be held in trust for the
benefit of, and shall be immediately paid over or delivered or transferred to,
the holders of Superior Debt or their duly appointed agents for application of
payment according to the priorities of such Superior Debt and ratably among the
holders of any class of Superior Debt. Such payments received by the Holder and
delivered to the holders of the Superior Debt shall be deemed not to be a
payment on this Note for any reason whatsoever and the indebtedness under this
Note shall remain as if such erroneous payment had never been paid by the
Company or received by the Holder. In the event of the failure of any Holder to
endorse or assign any such payment, distribution or security, each holder of any
Superior Debt is hereby irrevocably authorized to endorse or assign the same.
(g) No present or future holder of Superior Debt shall be prejudiced
in its right to enforce the provisions of Section 3 of this Note by any act or
failure to act on the part of the Company.
(h) If there shall exist (i) any Blockage Event, or (ii) any Event of
Default under Section 4 below, the Holder shall not take or continue any action,
or exercise or continue to exercise any rights, remedies or powers under the
terms of this Note, or exercise or continue to exercise any other right or
remedy at law or equity that such holder might otherwise possess, to collect any
amount due and payable in respect of this Note, including, without limitation,
the acceleration of this Note (and if this Note has already been accelerated,
the holder will, immediately upon becoming aware of the occurrence of such
Blockage Event or Event of Default, reverse such acceleration), the commencement
of any foreclosure on any lien or security interest, the filing of any petition
in bankruptcy or the taking advantage of any other insolvency law of any
jurisdiction, unless and until the Superior Debt shall have been fully and
finally paid (whether in cash or such other form of consideration acceptable to
the holders of Superior Debt in their sole discretion) and satisfied, unless
- 4 -
<PAGE>
(i) one or more of the holders of the Superior Debt shall have
accelerated the maturity of Superior Debt in an amount in excess of
$1,000,000, in which case the Holder shall be entitled to accelerate the
maturity hereof but shall not be entitled to take any other action
described above unless otherwise permitted to do so by Section (h)(ii)
below and, provided further, that the Holder acknowledges and agrees that
the acceleration of this Note shall immediately be reversed if and when (A)
one or more holders of Superior Debt take similar action which results in
the aggregate amount of Superior Debt to be accelerated to be less than
$1,000,000 or (B) such Superior Debt is fully and finally paid (whether in
cash or such other form of consideration acceptable to the holders of
Superior Debt in their sole discretion), or
(ii) one or more of the holders of the Superior Debt shall have
commenced any action or taken any judicial action to enforce their rights
as provided in their respective agreements relating to, or instruments
evidencing, their Superior Debt in connection with an Insolvency Event
(other than an action to dismiss a proceeding commenced against the
Company).
Notwithstanding the foregoing or any permissible action taken by the Holder, the
Holder shall not be entitled to receive any payment in contravention of the
other provisions of this Section 3, including without limitation Sections 3(b),
3(c) and 3(f). Notwithstanding anything to the contrary in this Section 3(h),
the Holder may take such steps as are necessary to avoid a loss of its rights
through the running of any applicable statute of limitations, or as a result of
any other statute or rule which limits the time for filing claims, or making
proofs of claims, or would otherwise cause a claim to be time-barred.
(i) If any payment or distribution to which any Holder would otherwise
have been entitled but for the provisions of this Section 3 shall have been
applied, pursuant to the provisions of this Section 3, to the payment of
Superior Debt, then and in such case and to such extent, the Holder (A) shall be
entitled to receive from the holders of such Superior Debt at the time
outstanding any payments or distributions received by such holders of Superior
Debt in excess of the amount sufficient to pay all Superior Debt in full
(whether or not then due and whether such payment was in cash or such other form
of consideration acceptable to the holders of Superior Debt in their sole
discretion), (B) following payment in full of the Superior Debt (whether in cash
or such other form of consideration acceptable to the holders of Superior Debt
in their sole discretion), shall be entitled to receive any and all further
payments or distributions applicable to Superior Debt, and (C) following payment
in full of the Superior Debt (whether in cash or such other form of
consideration acceptable to the holders of Superior Debt in their sole
- 5-
<PAGE>
discretion), shall be subrogated to the rights of the holders of the Superior
Debt to receive distributions applicable to the Superior Debt, in each case
until this Note shall have been paid in full in cash or such other consideration
acceptable to the Holder in its sole discretion. If any Holder has been
subrogated to the rights of the holders of Superior Debt due to the operation of
this Section 3(i), the Company agrees to take all such reasonable actions as are
requested by such Holder in order to cause such holder to be able to obtain
payments from the Company with respect to such subrogation rights as soon as
possible.
(j) The provisions of this Section 3 (other than paragraph 3(k) below)
are solely for the purpose of defining the relative rights of the holders of
Superior Debt, on the one hand, and the Holder on the other, against the Company
and its assets, and nothing herein is intended to or shall impair, as between
the Company and the Holder, the obligations of the Company which are absolute
and unconditional, to pay to the holder the principal and interest on this Note
as and when they become due and payable in accordance with their terms, or is
intended to or will affect the relative rights of the Holder and creditors of
the Company other than the holders of the Superior Debt, nor, except as provided
in this Section 3, will anything herein or therein prevent the Holder from
exercising all remedies otherwise permitted by applicable law upon default under
this Note, subject to the rights, if any, under this Section 3 of the holders of
Superior Debt in respect of cash, property or securities of the Company received
upon the exercise of any such remedy and subject to this Section 3.
(k) Notwithstanding anything herein to the contrary, unless otherwise
agreed by the holder of each Other Note, the Company shall not pay any principal
or interest on this Note unless MC Holding Corp. shall simultaneously pay to the
holder of each Other Note an equal percentage of the outstanding principal
amount thereof and the same percentage of all accrued but unpaid interest
thereon.
4. Events of Default.
(a) Definition. For purposes of this Note, an Event of Default shall
be deemed to have occurred if:
(i) the Company shall default in the payment of principal of this Note
on the date when due, whether at maturity, by acceleration or otherwise; or
(ii) the Company makes a general assignment for the benefit of
creditors; or an order, judgment or decree is entered adjudicating the
Company bankrupt or insolvent; or any order for relief with respect to the
Company is entered under the Federal Bankruptcy Code; or the Company
petitions or applies to any tribunal for the appointment of a custodian,
- 6 -
<PAGE>
trustee, receiver or liquidator of the Company of any substantial part of
the assets of the Company, or commences any proceeding relating to the
Company under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction;
or any such petition or application is filed, or any such proceeding is
commenced, against the Company and either (A) the Company by any act
indicates its approval thereof, consent thereto or acquiescence therein or
(B) such petition, application or proceeding is not dismissed within 90
days.
(b) Consequences of Events of Default. The provisions of this Section
4(b) are expressly subject to Section 3 hereof.
(i) If an Event of Default has occurred and is continuing, after
20 days prior written notice to the Company, the holder or holders of Notes
representing a majority of the aggregate principal amount of Notes then
outstanding may declare all or any portion of the outstanding principal
amount of the Notes due and payable and demand immediate payment of all or
any portion of the outstanding principal amount of the Notes. If the
holder or holders of Notes representing a majority of the aggregate
principal amount of Notes then outstanding demand immediate payment of all
or any portion of the Notes, the Company shall, subject to the provisions
of Section 3 hereof, immediately pay to such holders the principal amount
of the Notes requested to be paid plus accrued interest thereon.
(ii) After 20 days prior written notice to the Company, each
holder of the Note shall be entitled to exercise any other rights which
such holder may have been afforded under any contract or agreement at any
time and any other rights which such holder may have pursuant to applicable
law.
5. Definitions.
"Credit Agreement" shall mean the Credit Agreement, dated as of August
31, 1994, by and among Dura Automotive Systems, Inc., certain commercial lending
institutions identified therein, and The Bank of Nova Scotia, Comerica Bank and
The Chase Manhattan Bank, N.A., as Co-Agents for the Lenders, and Continental
Bank, as Agent for the Lenders, as the same may be amended, modified or
supplemented from time to time.
"Debt" shall mean (i) indebtedness for money borrowed, including,
without limitation, principal, interest accruing before and after any Insolvency
Event, premiums, penalties, fees or expenses, and regardless of whether direct
or indirect, now existing or hereafter arising, absolute or contingent, secured
or unsecured, or long or short term, (ii) reimbursement obligations under
letters of credit, bankers acceptances and similar
-7-
<PAGE>
obligations, (iii) obligations arising under guarantees executed by the Company
or any of its Subsidiaries of items described in (i) and/or (ii) above, and (iv)
renewals, extensions, refundings, deferrals, restructurings, amendments and
modifications of the items described in (i), (ii) and/or (iii) above.
"Other Notes" means collectively the Subordinated Promissory Notes,
each dated as of the date hereof, issued by MC Holding Corp. to each of Onex
Ohio Holdings, Inc. and J2R Corporation in the aggregate principal amounts of
$1,800,000 and $200,000, respectively, and each note into which any of the
foregoing is divided.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, association or other business entity if
such Person or Persons shall be allocated a majority of partnership, association
or other business entity gains or losses or shall be or control any managing
director or general partner of such partnership, association or other business
entity.
"Superior Debt" means all Debt of the Company and/or any of its
Subsidiaries (other than the Debt evidenced by this Note and the Other Notes);
provided that any Debt which by its terms is expressly junior to this Note shall
not have the rights extended to holders of Superior Debt.
6. Amendment and Waiver. Except as otherwise expressly provided
herein, the provisions of this Note may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holder or holders of Notes representing a majority of the aggregate principal
amount of Notes then outstanding.
-8-
<PAGE>
7. Cancellation. After all principal and accrued interest at any
time owed on this Note has been paid in full, this Note shall be surrendered to
the Company for cancellation and shall not be reissued.
8. Place of Payment; Notices. Payments of principal and interest
and any notice hereunder are to be made by Company check and are to be delivered
to the following address:
Orscheln Co.
2000 U.S. Highway 63 South
P.O. Box 280
Moberly, MO 65270
Attn: James L. O'Loughlin
or to such other address as specified by prior written notice to the Company.
Notices sent by the Company shall be deemed received when delivered personally
or one (1) day after being sent by Federal Express or other overnight carrier or
five (5) days after being sent by certified or registered mail.
9. Governing Law. All questions concerning the construction,
validity and interpretation of this Note will be governed by and construed in
accordance with the domestic laws of the State of Michigan, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Michigan or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Michigan.
10. Waiver of Presentment, Demand and Dishonor. The Company hereby
waives presentment for payment, protest, demand, notice of protest, notice of
nonpayment and diligence with respect to this Note, and waives and renounces all
rights to the benefits of any statute of limitations or any moratorium,
appraisement, exemption, or homestead now provided or that hereafter may be
provided by any federal or applicable state statute, including but not limited
to exemptions provided by or allowed under the Federal Bankruptcy Code, both as
to itself and as to all of its property, whether real or personal, against the
enforcement and collection of the obligations evidenced by this Note and any and
all extensions, renewals, and modifications hereof.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the Company has executed and delivered this Note
on the date first above written.
DURA AUTOMOTIVE HOLDING, INC.
By __________________________
Its __________________________
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<PAGE>
EXHIBIT 10.7
THE PAYMENT OF PRINCIPAL AND INTEREST ON THIS NOTE IS SUBJECT TO CERTAIN
SUBORDINATION PROVISIONS SET FORTH IN SECTION 3 HEREIN. THIS NOTE WAS ORIGINALLY
ISSUED ON AUGUST 31, 1994, AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY COMPARABLE STATE SECURITIES LAW. THE TRANSFER OF
THIS NOTE IS SUBJECT TO THE CONDITIONS ON TRANSFER SPECIFIED IN THE STOCKHOLDERS
AGREEMENT, DATED AS OF THE DATE HEREOF, BY AND AMONG THE ISSUER HEREOF (THE
"COMPANY"), THE INITIAL HOLDER HEREOF AND OTHERS, AND THE COMPANY RESERVES THE
RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITY UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED WITH RESPECT TO SUCH TRANSFER. UPON WRITTEN REQUEST, A COPY OF SUCH
CONDITIONS WILL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF WITHOUT CHARGE.
SUBORDINATED
PROMISSORY NOTE
---------------
August 31, 1994 $1,800,000
MC Holding Corp., a Delaware corporation (the "Company") hereby
promises to pay to the order of Onex Ohio Holdings, Inc., a Delaware
corporation, or its permitted assigns (the "Holder") the principal amount of One
Million Eight Hundred Thousand Dollars ($1,800,000), together with interest
thereon calculated from the date hereof in accordance with the provisions of
this Note. Certain defined terms used herein are set forth in Section 5 hereof.
To the extent this Note (this "Note") is hereafter divided into two or more
Notes, this Note and all other such Notes are collectively referred to as the
"Notes."
1. Payment of Interest. Interest shall accrue at the rate of six and
ninety-three one-hundredths percent (6.93%) per annum, compounded semi-annually,
on the unpaid principal amount of this Note outstanding from time to time,
commencing on the date hereof. Subject to the provisions of Section 2(c) and
Section 3 hereof, the Company shall pay to the Holder semi-annually, in arrears,
all accrued interest on each December 31 and June 30 during the term hereof
(each such date being hereinafter referred to as an "Interest Payment Date"),
beginning December 31, 1994. Any accrued interest which for any reason has not
theretofore been paid shall be paid in full on the date on which all remaining
principal on this Note is paid. Interest shall accrue on any principal payment
due under this Note, and, unless otherwise prohibited under applicable law, on
any interest which has not been paid on the date on which it is due, until such
time as payment therefor is actually delivered to the Holder.
2. Payment of Principal on Note.
(a) Scheduled Payment. The Company shall repay the entire unpaid
principal amount of this Note on December 31, 2001.
(b) Optional Prepayments. Subject to the provisions of Section 3
hereof, the Company may, at any time and from time to
<PAGE>
time, without premium or penalty, prepay all or a portion of the outstanding
principal amount of this Note; provided, however, that any prepayment shall
first be applied to any accrued but unpaid interest.
(c) Time of Payment. If any payment of principal or interest on this
Note shall become due on a Saturday, Sunday, or legal holiday under the laws of
the State of Michigan, such payment shall be made on the next succeeding
business day and such extension of time shall in such case be included in
computing interest in connection with such payment.
3. Subordination; Restrictions on Payment.
(a) Anything in this Note to the contrary notwithstanding, the
obligations of the Company in respect of the principal, interest, fees and
charges on this Note shall be subordinate and junior in right of payment, to the
extent and in the manner hereinafter set forth, to all Superior Debt.
(b) In the event that the Company makes a general assignment for the
benefit of creditors; or an order, judgment or decree is entered adjudicating
the Company bankrupt or insolvent; or any order for relief with respect to the
Company is entered under the Federal Bankruptcy Code; or the Company petitions
or applies to any tribunal for the appointment of a custodian, trustee, receiver
or liquidator of the Company or of any substantial part of the assets of the
Company, or commences any proceeding relating to the Company under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction; or any such petition or
application is filed, or any such proceeding is commenced, against the Company
and either (A) the Company by any act indicates its approval thereof, consent
thereto or acquiescence therein or (B) such petition, application or proceeding
is not dismissed within 90 days (collectively referred to as an "Insolvency
Event"), or upon any acceleration of Superior Debt, then
(i) the holders of Superior Debt shall be entitled to receive payment
in full in cash of all principal, premium, interest, fees and charges then
due on all Superior Debt (including interest, fees and charges accruing
thereon after the commencement of any such proceedings) before the Holder
is entitled to receive any payment on account of principal, interest or
other amounts due (or past due) upon this Note, and the holders of Superior
Debt shall be entitled to receive for application in payment thereof any
payment or distribution of any kind or character, whether in cash, property
or securities or by set-off or otherwise, which may be payable or
deliverable in any such proceedings in respect of this Note; and
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<PAGE>
(ii) any payment or distribution of assets of the Company, of any kind
or character, whether in cash, property or securities, to which the Holder
would be entitled except for the provisions of this Section 3(b) shall be
paid or delivered by the Company directly to the holders of all Superior
Debt in the manner provided in Section 3(f) below, for application in
payment thereof until all Superior Debt (including interest, fees and
charges accrued thereon after the date of commencement of such proceedings)
shall have been paid in full in cash.
(c) Except as permitted under the Credit Agreement, until all Superior
Debt shall have been paid in full in cash, the Company shall not, directly or
indirectly, make any payment of any amount payable with respect to this Note,
except accrued but unpaid interest and scheduled principal payments; provided
that no payment of principal or interest (whether or not accrued) or
distribution of any kind with respect to this Note shall be made if there shall
have occurred and be continuing or there would exist as a result of such a
payment or distribution any default or event of default under any of the terms
of any agreement relating to, or instrument evidencing, any Superior Debt which
(whether with or without notice, lapse of time or both) would permit the holder
of such Superior Debt to accelerate all or any portion of such Superior Debt
(collectively, the "Blockage Events"). The Company shall use reasonable efforts
to notify the Holder in writing of the occurrence of a Blockage Event; provided
that, notwithstanding anything to the contrary in this Note, the failure of the
Company to so notify the Holder of the occurrence of a Blockage Event shall have
no effect on the obligations of the Company or the Holder during the continuance
of such Blockage Event as set forth herein. Upon termination of a Blockage
Event (so long as no other Blockage Event has occurred and is continuing), the
Company shall resume making payments of principal when due and payments of
accrued but unpaid interest pursuant to the terms and conditions of this Note.
(d) Any amendment or modification of the terms of Section 3 of this
Note shall not be effective against any Person who was a holder of Superior Debt
prior to or at the time of such amendment or modification unless such holder of
Superior Debt so consents.
(e) The holders of Superior Debt may, at any time, in their
discretion, renew, amend, extend or otherwise modify the terms and provisions of
Superior Debt so held or exercise any of their rights under the Superior Debt
including, without limitation, the waiver of defaults thereunder and the
amendment of any of the terms or provisions thereof (or any notice evidencing or
creating the same), all without notice to or assent from the Holder. No
compromise, alteration, amendment, renewal or other change of, or waiver,
consent or other action in respect of any liability or obligation under or in
respect of, any terms, covenants or
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<PAGE>
conditions of the Superior Debt (or any instrument evidencing or creating the
same), whether or not such release is in accordance with the provisions of the
Superior Debt (or any instrument evidencing or creating the same), shall in any
way alter or affect any of the subordination provisions of this Note.
(f) If, notwithstanding the provisions of Section 3 of this Note, any
payment or distribution of any character (whether in cash, securities or other
property) or any security shall be received by the Holder in contravention of
this Section 3 and before all the Superior Debt shall have been paid in full in
cash, such payment, distribution or security shall be held in trust for the
benefit of, and shall be immediately paid over or delivered or transferred to,
the holders of Superior Debt or their duly appointed agents for application of
payment according to the priorities of such Superior Debt and ratably among the
holders of any class of Superior Debt. Such payments received by the Holder and
delivered to the holders of the Superior Debt shall be deemed not to be a
payment on this Note for any reason whatsoever and the indebtedness under this
Note shall remain as if such erroneous payment had never been paid by the
Company or received by the Holder. In the event of the failure of any Holder to
endorse or assign any such payment, distribution or security, each holder of any
Superior Debt is hereby irrevocably authorized to endorse or assign the same.
(g) No present or future holder of Superior Debt shall be prejudiced
in its right to enforce the provisions of Section 3 of this Note by any act or
failure to act on the part of the Company.
(h) If there shall exist (i) any Blockage Event, or (ii) any Event of
Default under Section 4 below, the Holder shall not take or continue any action,
or exercise or continue to exercise any rights, remedies or powers under the
terms of this Note, or exercise or continue to exercise any other right or
remedy at law or equity that such holder might otherwise possess, to collect any
amount due and payable in respect of this Note, including, without limitation,
the acceleration of this Note (and if this Note has already been accelerated,
the holder will, immediately upon becoming aware of the occurrence of such
Blockage Event or Event of Default, reverse such acceleration), the commencement
of any foreclosure on any lien or security interest, the filing of any petition
in bankruptcy or the taking advantage of any other insolvency law of any
jurisdiction, unless and until the Superior Debt shall have been fully and
finally paid (whether in cash or such other form of consideration acceptable to
the holders of Superior Debt in their sole discretion) and satisfied, unless
(i) one or more of the holders of the Superior Debt shall have
accelerated the maturity of Superior Debt in an amount in excess of
$1,000,000, in which case the Holder shall
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<PAGE>
be entitled to accelerate the maturity hereof but shall not be entitled to
take any other action described above unless otherwise permitted to do so
by Section (h)(ii) below and, provided further, that the Holder
acknowledges and agrees that the acceleration of this Note shall
immediately be reversed if and when (A) one or more holders of Superior
Debt take similar action which results in the aggregate amount of Superior
Debt to be accelerated to be less than $1,000,000 or (B) such Superior Debt
is fully and finally paid (whether in cash or such other form of
consideration acceptable to the holders of Superior Debt in their sole
discretion), or
(ii) one or more of the holders of the Superior Debt shall have
commenced any action or taken any judicial action to enforce their rights
as provided in their respective agreements relating to, or instruments
evidencing, their Superior Debt in connection with an Insolvency Event
(other than an action to dismiss a proceeding commenced against the
Company).
Notwithstanding the foregoing or any permissible action taken by the Holder, the
Holder shall not be entitled to receive any payment in contravention of the
other provisions of this Section 3, including without limitation Sections 3(b),
3(c) and 3(f). Notwithstanding anything to the contrary in this Section 3(h),
the Holder may take such steps as are necessary to avoid a loss of its rights
through the running of any applicable statute of limitations, or as a result of
any other statute or rule which limits the time for filing claims, or making
proofs of claims, or would otherwise cause a claim to be time-barred.
(i) If any payment or distribution to which any Holder would otherwise
have been entitled but for the provisions of this Section 3 shall have been
applied, pursuant to the provisions of this Section 3, to the payment of
Superior Debt, then and in such case and to such extent, the Holder (A) shall be
entitled to receive from the holders of such Superior Debt at the time
outstanding any payments or distributions received by such holders of Superior
Debt in excess of the amount sufficient to pay all Superior Debt in full
(whether or not then due and whether such payment was in cash or such other form
of consideration acceptable to the holders of Superior Debt in their sole
discretion), (B) following payment in full of the Superior Debt (whether in cash
or such other form of consideration acceptable to the holders of Superior Debt
in their sole discretion), shall be entitled to receive any and all further
payments or distributions applicable to Superior Debt, and (C) following payment
in full of the Superior Debt (whether in cash or such other form of
consideration acceptable to the holders of Superior Debt in their sole
discretion), shall be subrogated to the rights of the holders of the Superior
Debt to receive distributions applicable to the Superior Debt, in each case
until this Note shall have been paid in
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<PAGE>
full in cash or such other consideration acceptable to the Holder in its sole
discretion. If any Holder has been subrogated to the rights of the holders of
Superior Debt due to the operation of this Section 3(i), the Company agrees to
take all such reasonable actions as are requested by such Holder in order to
cause such holder to be able to obtain payments from the Company with respect to
such subrogation rights as soon as possible.
(j) The provisions of this Section 3 (other than paragraph 3(k) below)
are solely for the purpose of defining the relative rights of the holders of
Superior Debt, on the one hand, and the Holder on the other, against the Company
and its assets, and nothing herein is intended to or shall impair, as between
the Company and the Holder, the obligations of the Company which are absolute
and unconditional, to pay to the holder the principal and interest on this Note
as and when they become due and payable in accordance with their terms, or is
intended to or will affect the relative rights of the Holder and creditors of
the Company other than the holders of the Superior Debt, nor, except as provided
in this Section 3, will anything herein or therein prevent the Holder from
exercising all remedies otherwise permitted by applicable law upon default under
this Note, subject to the rights, if any, under this Section 3 of the holders of
Superior Debt in respect of cash, property or securities of the Company received
upon the exercise of any such remedy and subject to this Section 3.
(k) Notwithstanding anything herein to the contrary, unless otherwise
agreed by the holder of each Other Note, the Company shall not pay any principal
or interest on this Note unless Dura Automotive Holding, Inc. and the Company
shall simultaneously pay to the holder of each Other Note an equal percentage of
the outstanding principal amount thereof and the same percentage of all accrued
but unpaid interest thereon.
4. Events of Default.
(a) Definition. For purposes of this Note, an Event of Default shall
be deemed to have occurred if:
(i) the Company shall default in the payment of principal of this Note
on the date when due, whether at maturity, by acceleration or otherwise; or
(ii) the Company makes a general assignment for the benefit of
creditors; or an order, judgment or decree is entered adjudicating the
Company bankrupt or insolvent; or any order for relief with respect to the
Company is entered under the Federal Bankruptcy Code; or the Company
petitions or applies to any tribunal for the appointment of a custodian,
trustee, receiver or liquidator of the Company of any substantial part of
the assets of the Company, or commences any proceeding relating to the
Company under any bankruptcy,
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<PAGE>
reorganization, arrangement, insolvency, readjustment of debt, dissolution
or liquidation law of any jurisdiction; or any such petition or application
is filed, or any such proceeding is commenced, against the Company and
either (A) the Company by any act indicates its approval thereof, consent
thereto or acquiescence therein or (B) such petition, application or
proceeding is not dismissed within 90 days.
(b) Consequences of Events of Default. The provisions of this Section
4(b) are expressly subject to Section 3 hereof.
(i) If an Event of Default has occurred and is continuing, after
20 days prior written notice to the Company, the holder or holders of Notes
representing a majority of the aggregate principal amount of Notes then
outstanding may declare all or any portion of the outstanding principal
amount of the Notes due and payable and demand immediate payment of all or
any portion of the outstanding principal amount of the Notes. If the
holder or holders of Notes representing a majority of the aggregate
principal amount of Notes then outstanding demand immediate payment of all
or any portion of the Notes, the Company shall, subject to the provisions
of Section 3 hereof, immediately pay to such holders the principal amount
of the Notes requested to be paid plus accrued interest thereon.
(ii) After 20 days prior written notice to the Company, each
holder of the Note shall be entitled to exercise any other rights which
such holder may have been afforded under any contract or agreement at any
time and any other rights which such holder may have pursuant to applicable
law.
5. Definitions.
"Credit Agreement" shall mean the Credit Agreement, dated as of August
31, 1994, by and among Dura Automotive Systems, Inc., certain commercial lending
institutions identified therein, and The Bank of Nova Scotia, Comerica Bank and
The Chase Manhattan Bank, N.A., as Co-Agents for the Lenders, and Continental
Bank, as Agent for the Lenders, as the same may be amended, modified or
supplemented from time to time.
"Debt" shall mean (i) indebtedness for money borrowed, including,
without limitation, principal, interest accruing before and after any Insolvency
Event, premiums, penalties, fees or expenses, and regardless of whether direct
or indirect, now existing or hereafter arising, absolute or contingent, secured
or unsecured, or long or short term, (ii) reimbursement obligations under
letters of credit, bankers acceptances and similar obligations, (iii)
obligations arising under guarantees executed by the Company or any of its
Subsidiaries of items described in (i) and/or (ii) above, and (iv) renewals,
extensions, refundings,
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<PAGE>
deferrals, restructurings, amendments and modifications of the items described
in (i), (ii) and/or (iii) above.
"Other Notes" means collectively the Subordinated Promissory Notes,
each dated as of the date hereof, issued by Dura Automotive Holding, Inc. to
Orscheln Co. in the aggregate principal amount of $2,000,000 and by the Company
to J2R Corporation in the aggregate principal amount of $200,000, and each note
into which any of the foregoing is divided.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, association or other business entity if
such Person or Persons shall be allocated a majority of partnership, association
or other business entity gains or losses or shall be or control any managing
director or general partner of such partnership, association or other business
entity.
"Superior Debt" means all Debt of the Company and/or any of its
Subsidiaries (other than the Debt evidenced by this Note and the Other Notes);
provided that any Debt which by its terms is expressly junior to this Note shall
not have the rights extended to holders of Superior Debt.
6. Amendment and Waiver. Except as otherwise expressly provided
herein, the provisions of this Note may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holder or holders of Notes representing a majority of the aggregate principal
amount of Notes then outstanding.
7. Cancellation. After all principal and accrued interest at any
time owed on this Note has been paid in full, this
-8-
<PAGE>
Note shall be surrendered to the Company for cancellation and shall not be
reissued.
8. Place of Payment; Notices. Payments of principal and interest
and any notice hereunder are to be made by Company check and are to be delivered
to the following address:
Onex Ohio Holdings, Inc.
421 Leader Street
Marion, OH 43302
Attn: President
or to such other address as specified by prior written notice to the Company.
Notices sent by the Company shall be deemed received when delivered personally
or one (1) day after being sent by Federal Express or other overnight carrier or
five (5) days after being sent by certified or registered mail.
9. Governing Law. All questions concerning the construction,
validity and interpretation of this Note will be governed by and construed in
accordance with the domestic laws of the State of Michigan, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Michigan or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Michigan.
10. Waiver of Presentment, Demand and Dishonor. The Company hereby
waives presentment for payment, protest, demand, notice of protest, notice of
nonpayment and diligence with respect to this Note, and waives and renounces all
rights to the benefits of any statute of limitations or any moratorium,
appraisement, exemption, or homestead now provided or that hereafter may be
provided by any federal or applicable state statute, including but not limited
to exemptions provided by or allowed under the Federal Bankruptcy Code, both as
to itself and as to all of its property, whether real or personal, against the
enforcement and collection of the obligations evidenced by this Note and any and
all extensions, renewals, and modifications hereof.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the Company has executed and delivered this Note
on the date first above written.
MC HOLDING CORP.
By __________________________
Its __________________________
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<PAGE>
Exhibit 10.8
THE PAYMENT OF PRINCIPAL AND INTEREST ON THIS NOTE IS SUBJECT TO CERTAIN
SUBORDINATION PROVISIONS SET FORTH IN SECTION 3 HEREIN. THIS NOTE WAS
ORIGINALLY ISSUED ON AUGUST 31, 1994, AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY COMPARABLE STATE SECURITIES LAW. THE
TRANSFER OF THIS NOTE IS SUBJECT TO THE CONDITIONS ON TRANSFER SPECIFIED IN THE
STOCKHOLDERS AGREEMENT, DATED AS OF THE DATE HEREOF, BY AND AMONG THE ISSUER
HEREOF (THE "COMPANY"), THE INITIAL HOLDER HEREOF AND OTHERS, AND THE COMPANY
RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITY UNTIL SUCH CONDITIONS
HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. UPON WRITTEN REQUEST, A COPY
OF SUCH CONDITIONS WILL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF WITHOUT
CHARGE.
SUBORDINATED
PROMISSORY NOTE
---------------
August 31, 1994 $200,000
MC Holding Corp., a Delaware corporation (the "Company") hereby
promises to pay to the order of J2R Corporation, a Delaware corporation, or its
permitted assigns (the "Holder") the principal amount of Two Hundred Thousand
Dollars ($200,000), together with interest thereon calculated from the date
hereof in accordance with the provisions of this Note. Certain defined terms
used herein are set forth in Section 5 hereof. To the extent this Note (this
"Note") is hereafter divided into two or more Notes, this Note and all other
such Notes are collectively referred to as the "Notes."
1. Payment of Interest. Interest shall accrue at the rate of six and
ninety-three one-hundredths percent (6.93%) per annum, compounded semi-annually,
on the unpaid principal amount of this Note outstanding from time to time,
commencing on the date hereof. Subject to the provisions of Section 2(c) and
Section 3 hereof, the Company shall pay to the Holder semi-annually, in arrears,
all accrued interest on each December 31 and June 30 during the term hereof
(each such date being hereinafter referred to as an "Interest Payment Date"),
beginning December 31, 1994. Any accrued interest which for any reason has not
theretofore been paid shall be paid in full on the date on which all remaining
principal on this Note is paid. Interest shall accrue on any principal payment
due under this Note, and, unless otherwise prohibited under applicable law, on
any interest which has not been paid on the date on which it is due, until such
time as payment therefor is actually delivered to the Holder.
2. Payment of Principal on Note.
-----------------------------
(a) Scheduled Payment. The Company shall repay the entire unpaid
principal amount of this Note on December 31, 2001.
(b) Optional Prepayments. Subject to the provisions of Section 3
hereof, the Company may, at any time and from time to time, without premium or
penalty, prepay all or a portion of the
<PAGE>
outstanding principal amount of this Note; provided, however, that any
prepayment shall first be applied to any accrued but unpaid interest.
(c) Time of Payment. If any payment of principal or interest on this
Note shall become due on a Saturday, Sunday, or legal holiday under the laws of
the State of Michigan, such payment shall be made on the next succeeding
business day and such extension of time shall in such case be included in
computing interest in connection with such payment.
3. Subordination; Restrictions on Payment.
---------------------------------------
(a) Anything in this Note to the contrary notwithstanding, the
obligations of the Company in respect of the principal, interest, fees and
charges on this Note shall be subordinate and junior in right of payment, to the
extent and in the manner hereinafter set forth, to all Superior Debt.
(b) In the event that the Company makes a general assignment for the
benefit of creditors; or an order, judgment or decree is entered adjudicating
the Company bankrupt or insolvent; or any order for relief with respect to the
Company is entered under the Federal Bankruptcy Code; or the Company petitions
or applies to any tribunal for the appointment of a custodian, trustee, receiver
or liquidator of the Company or of any substantial part of the assets of the
Company, or commences any proceeding relating to the Company under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction; or any such petition or
application is filed, or any such proceeding is commenced, against the Company
and either (A) the Company by any act indicates its approval thereof, consent
thereto or acquiescence therein or (B) such petition, application or proceeding
is not dismissed within 90 days (collectively referred to as an "Insolvency
Event"), or upon any acceleration of Superior Debt, then
(i) the holders of Superior Debt shall be entitled to receive payment
in full in cash of all principal, premium, interest, fees and charges then
due on all Superior Debt (including interest, fees and charges accruing
thereon after the commencement of any such proceedings) before the Holder
is entitled to receive any payment on account of principal, interest or
other amounts due (or past due) upon this Note, and the holders of Superior
Debt shall be entitled to receive for application in payment thereof any
payment or distribution of any kind or character, whether in cash, property
or securities or by set-off or otherwise, which may be payable or
deliverable in any such proceedings in respect of this Note; and
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<PAGE>
(ii) any payment or distribution of assets of the Company, of any kind or
character, whether in cash, property or securities, to which the Holder
would be entitled except for the provisions of this Section 3(b) shall be
paid or delivered by the Company directly to the holders of all Superior
Debt in the manner provided in Section 3(f) below, for application in
payment thereof until all Superior Debt (including interest, fees and
charges accrued thereon after the date of commencement of such proceedings)
shall have been paid in full in cash.
(c) Except as permitted under the Credit Agreement, until all Superior
Debt shall have been paid in full in cash, the Company shall not, directly or
indirectly, make any payment of any amount payable with respect to this Note,
except accrued but unpaid interest and scheduled principal payments; provided
that no payment of principal or interest (whether or not accrued) or
distribution of any kind with respect to this Note shall be made if there shall
have occurred and be continuing or there would exist as a result of such a
payment or distribution any default or event of default under any of the terms
of any agreement relating to, or instrument evidencing, any Superior Debt which
(whether with or without notice, lapse of time or both) would permit the holder
of such Superior Debt to accelerate all or any portion of such Superior Debt
(collectively, the "Blockage Events"). The Company shall use reasonable efforts
to notify the Holder in writing of the occurrence of a Blockage Event; provided
that, notwithstanding anything to the contrary in this Note, the failure of the
Company to so notify the Holder of the occurrence of a Blockage Event shall have
no effect on the obligations of the Company or the Holder during the continuance
of such Blockage Event as set forth herein. Upon termination of a Blockage
Event (so long as no other Blockage Event has occurred and is continuing), the
Company shall resume making payments of principal when due and payments of
accrued but unpaid interest pursuant to the terms and conditions of this Note.
(d) Any amendment or modification of the terms of Section 3 of this
Note shall not be effective against any Person who was a holder of Superior Debt
prior to or at the time of such amendment or modification unless such holder of
Superior Debt so consents.
(e) The holders of Superior Debt may, at any time, in their
discretion, renew, amend, extend or otherwise modify the terms and provisions of
Superior Debt so held or exercise any of their rights under the Superior Debt
including, without limitation, the waiver of defaults thereunder and the
amendment of any of the terms or provisions thereof (or any notice evidencing or
creating the same), all without notice to or assent from the Holder. No
compromise, alteration, amendment, renewal or other change of, or waiver,
consent or other action in respect of any liability or obligation under or in
respect of, any terms, covenants or
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<PAGE>
conditions of the Superior Debt (or any instrument evidencing or creating the
same), whether or not such release is in accordance with the provisions of the
Superior Debt (or any instrument evidencing or creating the same), shall in any
way alter or affect any of the subordination provisions of this Note.
(f) If, notwithstanding the provisions of Section 3 of this Note, any
payment or distribution of any character (whether in cash, securities or other
property) or any security shall be received by the Holder in contravention of
this Section 3 and before all the Superior Debt shall have been paid in full in
cash, such payment, distribution or security shall be held in trust for the
benefit of, and shall be immediately paid over or delivered or transferred to,
the holders of Superior Debt or their duly appointed agents for application of
payment according to the priorities of such Superior Debt and ratably among the
holders of any class of Superior Debt. Such payments received by the Holder and
delivered to the holders of the Superior Debt shall be deemed not to be a
payment on this Note for any reason whatsoever and the indebtedness under this
Note shall remain as if such erroneous payment had never been paid by the
Company or received by the Holder. In the event of the failure of any Holder to
endorse or assign any such payment, distribution or security, each holder of any
Superior Debt is hereby irrevocably authorized to endorse or assign the same.
(g) No present or future holder of Superior Debt shall be prejudiced
in its right to enforce the provisions of Section 3 of this Note by any act or
failure to act on the part of the Company.
(h) If there shall exist (i) any Blockage Event, or (ii) any Event of
Default under Section 4 below, the Holder shall not take or continue any action,
or exercise or continue to exercise any rights, remedies or powers under the
terms of this Note, or exercise or continue to exercise any other right or
remedy at law or equity that such holder might otherwise possess, to collect any
amount due and payable in respect of this Note, including, without limitation,
the acceleration of this Note (and if this Note has already been accelerated,
the holder will, immediately upon becoming aware of the occurrence of such
Blockage Event or Event of Default, reverse such acceleration), the commencement
of any foreclosure on any lien or security interest, the filing of any petition
in bankruptcy or the taking advantage of any other insolvency law of any
jurisdiction, unless and until the Superior Debt shall have been fully and
finally paid (whether in cash or such other form of consideration acceptable to
the holders of Superior Debt in their sole discretion) and satisfied, unless
(i) one or more of the holders of the Superior Debt shall have
accelerated the maturity of Superior Debt in an amount in excess of
$1,000,000, in which case the Holder shall
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<PAGE>
be entitled to accelerate the maturity hereof but shall not be entitled to
take any other action described above unless otherwise permitted to do so
by Section (h)(ii) below and, provided further, that the Holder
acknowledges and agrees that the acceleration of this Note shall
immediately be reversed if and when (A) one or more holders of Superior
Debt take similar action which results in the aggregate amount of Superior
Debt to be accelerated to be less than $1,000,000 or (B) such Superior Debt
is fully and finally paid (whether in cash or such other form of
consideration acceptable to the holders of Superior Debt in their sole
discretion), or
(ii) one or more of the holders of the Superior Debt shall have
commenced any action or taken any judicial action to enforce their rights
as provided in their respective agreements relating to, or instruments
evidencing, their Superior Debt in connection with an Insolvency Event
(other than an action to dismiss a proceeding commenced against the
Company).
Notwithstanding the foregoing or any permissible action taken by the Holder, the
Holder shall not be entitled to receive any payment in contravention of the
other provisions of this Section 3, including without limitation Sections 3(b),
3(c) and 3(f). Notwithstanding anything to the contrary in this Section 3(h),
the Holder may take such steps as are necessary to avoid a loss of its rights
through the running of any applicable statute of limitations, or as a result of
any other statute or rule which limits the time for filing claims, or making
proofs of claims, or would otherwise cause a claim to be time-barred.
(i) If any payment or distribution to which any Holder would otherwise
have been entitled but for the provisions of this Section 3 shall have been
applied, pursuant to the provisions of this Section 3, to the payment of
Superior Debt, then and in such case and to such extent, the Holder (A) shall be
entitled to receive from the holders of such Superior Debt at the time
outstanding any payments or distributions received by such holders of Superior
Debt in excess of the amount sufficient to pay all Superior Debt in full
(whether or not then due and whether such payment was in cash or such other form
of consideration acceptable to the holders of Superior Debt in their sole
discretion), (B) following payment in full of the Superior Debt (whether in cash
or such other form of consideration acceptable to the holders of Superior Debt
in their sole discretion), shall be entitled to receive any and all further
payments or distributions applicable to Superior Debt, and (C) following payment
in full of the Superior Debt (whether in cash or such other form of
consideration acceptable to the holders of Superior Debt in their sole
discretion), shall be subrogated to the rights of the holders of the Superior
Debt to receive distributions applicable to the Superior Debt, in each case
until this Note shall have been paid in
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<PAGE>
full in cash or such other consideration acceptable to the Holder in its sole
discretion. If any Holder has been subrogated to the rights of the holders of
Superior Debt due to the operation of this Section 3(i), the Company agrees to
take all such reasonable actions as are requested by such Holder in order to
cause such holder to be able to obtain payments from the Company with respect to
such subrogation rights as soon as possible.
(j) The provisions of this Section 3 (other than paragraph 3(k) below)
are solely for the purpose of defining the relative rights of the holders of
Superior Debt, on the one hand, and the Holder on the other, against the Company
and its assets, and nothing herein is intended to or shall impair, as between
the Company and the Holder, the obligations of the Company which are absolute
and unconditional, to pay to the holder the principal and interest on this Note
as and when they become due and payable in accordance with their terms, or is
intended to or will affect the relative rights of the Holder and creditors of
the Company other than the holders of the Superior Debt, nor, except as provided
in this Section 3, will anything herein or therein prevent the Holder from
exercising all remedies otherwise permitted by applicable law upon default under
this Note, subject to the rights, if any, under this Section 3 of the holders of
Superior Debt in respect of cash, property or securities of the Company received
upon the exercise of any such remedy and subject to this Section 3.
(k) Notwithstanding anything herein to the contrary, unless otherwise
agreed by the holder of each Other Note, the Company shall not pay any principal
or interest on this Note unless Dura Automotive Holding, Inc. and the Company
shall simultaneously pay to the holder of each Other Note an equal percentage of
the outstanding principal amount thereof and the same percentage of all accrued
but unpaid interest thereon.
4. Events of Default.
-----------------
(a) Definition. For purposes of this Note, an Event of Default shall
be deemed to have occurred if:
(i) the Company shall default in the payment of principal of this Note
on the date when due, whether at maturity, by acceleration or otherwise; or
(ii) the Company makes a general assignment for the benefit of
creditors; or an order, judgment or decree is entered adjudicating the
Company bankrupt or insolvent; or any order for relief with respect to the
Company is entered under the Federal Bankruptcy Code; or the Company
petitions or applies to any tribunal for the appointment of a custodian,
trustee, receiver or liquidator of the Company of any substantial part of
the assets of the Company, or commences any proceeding relating to the
Company under any bankruptcy,
-6-
<PAGE>
reorganization, arrangement, insolvency, readjustment of debt, dissolution
or liquidation law of any jurisdiction; or any such petition or application
is filed, or any such proceeding is commenced, against the Company and
either (A) the Company by any act indicates its approval thereof, consent
thereto or acquiescence therein or (B) such petition, application or
proceeding is not dismissed within 90 days.
(b) Consequences of Events of Default. The provisions of this Section
4(b) are expressly subject to Section 3 hereof.
(i) If an Event of Default has occurred and is continuing, after
20 days prior written notice to the Company, the holder or holders of Notes
representing a majority of the aggregate principal amount of Notes then
outstanding may declare all or any portion of the outstanding principal
amount of the Notes due and payable and demand immediate payment of all or
any portion of the outstanding principal amount of the Notes. If the holder
or holders of Notes representing a majority of the aggregate principal
amount of Notes then outstanding demand immediate payment of all or any
portion of the Notes, the Company shall, subject to the provisions of
Section 3 hereof, immediately pay to such holders the principal amount of
the Notes requested to be paid plus accrued interest thereon.
(ii) After 20 days prior written notice to the Company, each
holder of the Note shall be entitled to exercise any other rights which
such holder may have been afforded under any contract or agreement at any
time and any other rights which such holder may have pursuant to applicable
law.
5. Definitions.
-----------
"Credit Agreement" shall mean the Credit Agreement, dated as of August
31, 1994, by and among Dura Automotive Systems, Inc., certain commercial lending
institutions identified therein, and The Bank of Nova Scotia, Comerica Bank and
The Chase Manhattan Bank, N.A., as Co-Agents for the Lenders, and Continental
Bank, as Agent for the Lenders, as the same may be amended, modified or
supplemented from time to time.
"Debt" shall mean (i) indebtedness for money borrowed, including,
without limitation, principal, interest accruing before and after any Insolvency
Event, premiums, penalties, fees or expenses, and regardless of whether direct
or indirect, now existing or hereafter arising, absolute or contingent, secured
or unsecured, or long or short term, (ii) reimbursement obligations under
letters of credit, bankers acceptances and similar obligations, (iii)
obligations arising under guarantees executed by the Company or any of its
Subsidiaries of items described in (i) and/or (ii) above, and (iv) renewals,
extensions, refundings,
-7-
<PAGE>
deferrals, restructurings, amendments and modifications of the items described
in (i), (ii) and/or (iii) above.
"Other Notes" means collectively the Subordinated Promissory Notes,
each dated as of the date hereof, issued by Dura Automotive Holding, Inc. to
Orscheln Co. in the aggregate principal amount of $2,000,000 and by the Company
to Onex Ohio Holdings, Inc. in the aggregate principal amount of $1,800,000, and
each note into which any of the foregoing is divided.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, association or other business entity if
such Person or Persons shall be allocated a majority of partnership, association
or other business entity gains or losses or shall be or control any managing
director or general partner of such partnership, association or other business
entity.
"Superior Debt" means all Debt of the Company and/or any of its
Subsidiaries (other than the Debt evidenced by this Note and the Other Notes);
provided that any Debt which by its terms is expressly junior to this Note shall
not have the rights extended to holders of Superior Debt.
6. Amendment and Waiver. Except as otherwise expressly provided
herein, the provisions of this Note may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holder or holders of Notes representing a majority of the aggregate principal
amount of Notes then outstanding.
7. Cancellation. After all principal and accrued interest at any
time owed on this Note has been paid in full, this
-8-
<PAGE>
Note shall be surrendered to the Company for cancellation and shall not be
reissued.
8. Place of Payment; Notices. Payments of principal and interest and
any notice hereunder are to be made by Company check and are to be delivered to
the following address:
J2R Corporation
c/o Hidden Creek Industries
4508 IDS Center
Minneapolis, MN 55402
Attn: Scott D. Rued
or to such other address as specified by prior written notice to the Company.
Notices sent by the Company shall be deemed received when delivered personally
or one (1) day after being sent by Federal Express or other overnight carrier or
five (5) days after being sent by certified or registered mail.
9. Governing Law. All questions concerning the construction,
validity and interpretation of this Note will be governed by and construed in
accordance with the domestic laws of the State of Michigan, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Michigan or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Michigan.
10. Waiver of Presentment, Demand and Dishonor. The Company hereby
waives presentment for payment, protest, demand, notice of protest, notice of
nonpayment and diligence with respect to this Note, and waives and renounces all
rights to the benefits of any statute of limitations or any moratorium,
appraisement, exemption, or homestead now provided or that hereafter may be
provided by any federal or applicable state statute, including but not limited
to exemptions provided by or allowed under the Federal Bankruptcy Code, both as
to itself and as to all of its property, whether real or personal, against the
enforcement and collection of the obligations evidenced by this Note and any and
all extensions, renewals, and modifications hereof.
* * * * *
-9-
<PAGE>
IN WITNESS WHEREOF, the Company has executed and delivered this Note
on the date first above written.
MC HOLDING CORP.
By __________________________
Its __________________________
-10-
<PAGE>
[LETTERHEAD OF FORD MOTOR COMPANY]
EXHIBIT 10.16
August 25, 1994
Mr. Karl F. Storrie
Dura Automotive Systems, Inc.
1708 Northwood Avenue
Troy, Michigan 48084-5521
Dear Mr. Storrie:
This letter describes the understanding reached between Ford Motor Company
(Ford) and Dura Automotive Systems, Inc. (Dura) with respect to certain parking
brake assemblies designed, manufactured and supplied by Orscheln and installed
on 1992-93-94 Ford F-150, F-250, F-350, Bronco; 1993-94 Ranger and Explorer
vehicles and 1993-94 Mazda B-Series/Navajo vehicles assembled by Ford.
A concern has arisen regarding the parking brake assemblies of the above
vehicles as a result of an investigation by the National Highway Safety
Administration that possibly may lead to a recall of the vehicles by Ford.
Therefore, Ford and Dura have agreed that if the merger between Dura and
Orscheln is finalized and Ford initiates a recall of the parking brake
assemblies of the vehicles identified above, Dura will reimburse Ford for 50% of
the costs Ford incurs as a result of the campaign, provided that Dura's share of
the costs shall not exceed $6 million.
If the foregoing accurately reflects our understanding, please, so indicate by
signing the enclosed copy of this letter in the space provided and returning it
to me.
Very truly yours,
FORD MOTOR COMPANY
By /s/ R.A. Freitag for
_____________________________
D. A. Pugh, Purchasing Agent
Brake & Cable Components
Chassis Parts Purchasing Dept.
ACCEPTED:
DURA AUTOMOTIVE SYSTEMS
By /s/ Karl F. Storrie
___________________
Its President & CEO
___________________
<PAGE>
[LOGO]
[LETTERHEAD OF FORD MOTOR COMPANY]
August 25, 1994
Mr. Karl F. Storrie
Dura Automotive Systems, Inc.
1708 Northwood Avenue
Troy, Michigan 48084-5521
Dear Mr. Storrie:
This letter describes the understanding reached between Ford Motor Company
(Ford) and Dura Automotive Systems, Inc. (Dura) with respect to certain parking
brake assemblies designed, manufactured and supplied by Orscheln and installed
on 1992-93-94 Ford F-150, F-250, F-350, Bronco; 1993-94 Ranger and Explorer
vehicles and 1993-94 Mazda B-Series/Navajo vehicles assembled by Ford.
A concern has arisen regarding the parking brake assemblies of the above
vehicles as a result of an investigation by the National Highway Safety
Administration that possibly may lead to a recall of the vehicles by Ford.
Therefore, Ford and Dura have agreed that if the merger between Dura and
Orscheln is finalized and Ford initiates a recall of the parking brake
assemblies of the vehicles identified above, Dura will reimburse Ford for 50% of
the costs Ford incurs as a result of the campaign, provided that Dura's share of
the costs shall not exceed $6 million.
If the foregoing accurately reflects our understanding, please, so indicate by
signing the enclosed copy of this letter in the space provided and returning it
to me.
Very truly yours,
FORD MOTOR COMPANY
By R. A. Freitag for
--------------------
D. A. Pugh, Purchasing Agent
Brake & Cable Components
Chassis Parts Purchasing Dept.
ACCEPTED:
DURA AUTOMOTIVE SYSTEMS
By________________________
Its_______________________
<PAGE>
Exhibit 10.17
PROMISSORY NOTE
---------------
$75,000.00 December 31, 1991
For value received, Karl F. Storrie ("Promisor") promises to pay to the
order of MC Holding Corp., a Delaware corporation (the "Company"), at its
offices at 4508 IDS Center, Minneapolis, Minnesota 55402, or such other place as
the holder hereof designate, the aggregate principal sum of $75,000.00. This
Note was issued in connection with the Subscription Agreement, dated as of even
date hereof, between the Company and the Promisor and in connection with the
Management Stockholders Agreement, dated as of even date hereof, between the
Company, Onex U.S. Investments, Inc., an Ontario corporation, and the
individuals named on Schedule I attached thereto (the "Stockholders Agreement").
Interest will accrue on a daily basis on the outstanding principal amount
of this Note at a rate equal to the lesser of (i) the Base Rate (as defined
below) plus 1-1/2% per annum, computed on the basis of a year of 360 days for
the actual number of days elapsed and (ii) the highest rate per annum permitted
by applicable law, and shall be payable quarterly in arrears on the last day of
each March, June, September and December. The "Base Rate" means, on any date, a
fluctuating rate per annum equal to the rate of interest most recently
established by the Bank of Nova Scotia in New York City as its base rate for
United States Dollar loans.
The principal amount (together with all accrued and unpaid interest
thereon) of this Note shall become due and fully payable on the earlier of (i)
December 31, 1996 and (ii) the date on which the Promisor sells its Pledged
Shares (as defined in the Management Stock Pledge Agreement, dated as of even
date hereof, between the Promisor and the Company) pursuant to Section 2.3 of
the Stockholders Agreement.
The amounts due under this Note are secured by a pledge of the Pledged
Shares. Any cash dividends declared and paid with respect to the Pledged Shares
shall be payable directly to the Company and shall be applied to reduce the
outstanding principal amount of this Note and any cash dividends paid to
Promisor with respect to the Pledged Shares will be promptly remitted to the
Company.
In the event Promisor fails to pay any amounts due hereunder when due,
Promisor shall pay to the holder hereof, in addition to such amounts due, all
costs of collection, including reasonable attorneys fees.
Promisor, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time
<PAGE>
to time and that the holder hereof may accept security for this Note or release
security for this Note, all without in any way affecting the liability of
Promisor hereunder.
Any failure by the Company to exercise any right hereunder shall not be
construed as a waiver of its right to exercise the same or any other right
hereunder at any other time.
This Note and all rights hereunder shall be governed by the internal laws,
not the laws of conflicts, of the State of Delaware. The rights and remedies
conferred upon the Company shall be cumulative and not alternative and shall be
in addition to and not in substitution or derogation of other rights and
remedies conferred by law.
Executed: December 27, 1991
/s/ Karl F. Storrie
-----------------------
Promisor
<PAGE>
EXHIBIT 10.18
ASSET PURCHASE AGREEMENT
ROCKWELL INTERNATIONAL CORPORATION,
DURA AUTOMOTIVE SYSTEMS, INC.
and
DURA AUTOMOTIVE HOLDING, INC.
Execution Copy March 23, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I - PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES..... 1
1.1 Purchased Assets........................................... 1
1.2 Excluded Assets............................................ 3
1.3 Assumption of Liabilities.................................. 4
1.4 Retained Liabilities....................................... 5
ARTICLE II - PURCHASE PRICE; THE CLOSING............................... 7
2.1 Purchase Price............................................. 7
2.2 The Closing Date Statement................................. 7
2.3 Post-Closing Purchase Price Adjustment..................... 10
2.4 Place and Date of Closing.................................. 10
2.5 Allocation of Purchase Price............................... 11
2.6 Transition Period.......................................... 12
ARTICLE III - REPRESENTATIONS AND WARRANTIES........................... 12
3.1 Representations and Warranties of the Seller............... 12
3.1.1 Corporate Status.................................... 12
3.1.2 Authorization....................................... 13
3.1.3 No Conflicts........................................ 13
3.1.4 Special Purpose Financial Statements................ 13
3.1.5 Litigation.......................................... 14
3.1.6 Tax Matters......................................... 14
3.1.7 Proprietary Rights.................................. 15
3.1.8 Compliance with Laws; Governmental Approvals........ 16
3.1.9 Purchased Assets.................................... 16
3.1.10 Material Contracts.................................. 16
3.1.11 Real Property....................................... 18
3.1.12 Environmental Matters............................... 19
3.1.13 Employees, Labor Matters, Etc....................... 20
3.1.14 Employee Benefits................................... 21
3.1.15 Inventory........................................... 22
3.1.16 Absence of Undisclosed Liabilities.................. 22
3.1.17 Brokers, Finders, Etc............................... 22
3.1.18 Conduct of the Business Since January 1, 1995....... 22
3.1.19 Powers of Attorney.................................. 24
3.1.20 Transactions with Affiliates........................ 24
3.1.21 Tooling............................................. 24
3.1.22 Insurance........................................... 24
3.1.23 Product Warranty.................................... 25
3.1.24 Product Liability................................... 25
3.1.25 Guarantees.......................................... 25
3.1.26 Disclosure.......................................... 26
3.2 Representations and Warranties of the Purchaser............ 26
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
3.2.1 Corporate Status........................................... 26
3.2.2 Authorization.............................................. 26
3.2.3 No Conflicts............................................... 26
3.2.4 Litigation................................................. 27
3.2.5 Available Funds............................................ 27
3.2.6 Brokers, Finders, Etc...................................... 27
ARTICLE IV - COVENANTS....................................................... 27
4.1 Covenants of the Seller.......................................... 27
4.1.1 Conduct of Business........................................ 27
4.1.2 Pre-Closing Access and Information......................... 28
4.1.3 Further Actions............................................ 28
4.1.4 Further Assurances......................................... 29
4.1.5 Schedules.................................................. 29
4.1.6 Power of Attorney with Respect to the Purchased Assets..... 29
4.1.7 Exclusive Dealing.......................................... 30
4.1.8 Notification of Certain Matters............................ 30
4.1.9 Non-Compete................................................ 31
4.1.10 Non-Solicitation of Employees............................. 32
4.1.11 Retention Bonus Arrangements.............................. 32
4.1.12 Environmental Investigation............................... 32
4.1.13 Product Liability Insurance............................... 33
4.2 Covenants of the Purchaser....................................... 33
4.2.1 Further Actions............................................ 33
4.2.2 Confidentiality............................................ 34
4.2.3 Further Assurances......................................... 34
4.2.4 Use of Business Names by the Purchaser..................... 34
4.2.5 Purchaser's Knowledge of Business.......................... 35
4.2.6 Post-Closing Access and Information........................ 35
4.2.7 Non-Solicitation........................................... 36
ARTICLE V - CONDITIONS PRECEDENT............................................. 37
5.1 Conditions to Obligations of Each Party.......................... 37
5.1.1 H-S-R Act Notification..................................... 37
5.1.2 No Injunction, Etc......................................... 37
5.1.3 Manufacturing Agreement; Services Agreement................ 37
5.1.4 License Agreement.......................................... 37
5.2 Conditions to Obligations of the Purchaser....................... 38
5.2.1 Representations, Performance............................... 38
5.2.2 Consents................................................... 38
5.2.3 Corporate Authorization.................................... 38
5.2.4 Opinion of Counsel......................................... 39
5.2.5 Side Letter From J2R Corporation
Re: Future Business Opportunities.......................... 39
5.3 Conditions to Obligations of the Seller.......................... 39
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
5.3.1 Representations, Performance.......................... 39
5.3.2 Corporate Authorization............................... 39
5.3.3 Opinion of Counsel.................................... 39
ARTICLE VI - EMPLOYEES AND EMPLOYEE BENEFIT PLANS.................... 40
6.1 Employment of Employees..................................... 40
6.2 Dura Savings Plan........................................... 41
6.3 Dura Pension Plan........................................... 41
6.4 Hourly Profit Sharing Plan.................................. 42
6.5 Continuation and Retiree Medical Coverage................... 42
6.6 Worker Adjustment and Retraining Notification Act ("WARN").. 43
6.7 Seller's Welfare Benefit Services........................... 43
6.8 Seller's Savings Plan....................................... 43
6.9 Purchaser's Responsibility.................................. 44
ARTICLE VII - TERMINATION............................................ 44
7.1 Ability to Terminate........................................ 44
7.2 Effect of Termination....................................... 45
ARTICLE VIII - INDEMNIFICATION AND RELATED MATTERS................... 45
8.1 Survival of Representations and Warranties.................. 45
8.2 General Indemnification..................................... 46
8.3 Environmental Indemnification............................... 47
8.4 Seller's Option to Conduct Required Remediation............. 48
8.5 Indemnification for Warranty Claims, Product Liability,
and Worker's Compensation Claims. .......................... 49
8.6 Notice of Circumstance...................................... 50
8.7 Survival of Indemnification Obligations..................... 51
8.8 Dollar Limitations.......................................... 52
8.9 Adjustment to Indemnification Payment....................... 52
8.10 Waiver of Non-Compensatory Damages.......................... 53
8.11 Mitigation Obligation....................................... 53
8.12 Exclusive Remedy; Waiver and Release........................ 53
8.13 Post-Closing Actions........................................ 54
ARTICLE IX - DEFINITIONS............................................. 54
9.1 Definition of Certain Terms................................. 54
9.2 Other Definitional Provisions............................... 59
ARTICLE X - MISCELLANEOUS............................................ 60
10.1 Expenses.................................................... 60
10.2 Consent of Third Parties.................................... 60
10.3 Severability................................................ 61
10.4 Notices..................................................... 61
10.5 Headings.................................................... 63
10.6 Entire Agreement............................................ 63
10.7 Counterparts................................................ 63
10.8 Disclosure, Business Information............................ 63
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.9 Disclaimer of Warranties......................................... 63
10.10 Governing Law, Etc............................................... 64
10.11 Binding Effect................................................... 64
10.12 Assignment....................................................... 65
10.13 No Third Party Beneficiaries..................................... 65
10.14 Bulk Transfer Laws............................................... 65
10.15 Eminent Domain or Casualty....................................... 65
10.16 Press Releases and Public Announcements.......................... 65
10.17 Confidentiality.................................................. 66
10.18 Amendment, Waivers, Etc. ........................................ 66
</TABLE>
<PAGE>
EXHIBITS
Exhibit 1 .................................................. Transition Timeline
Exhibit 2 .............................................. Manufacturing Agreement
(Window Regulators)
Exhibit 3 .............................................. Manufacturing Agreement
(Non-Window Regulators)
Exhibit 4 ................................................... Services Agreement
Exhibit 5 .......................................... Trademark License Agreement
Exhibit 6 ........................................ Opinion of Counsel for Seller
Exhibit 7 ............................... Side Letter Re: Business Opportunities
Exhibit 8 ..................................... Opinion of Counsel for Purchaser
Exhibit 9 ................... Power of Attorney with Respect to Purchased Assets
SCHEDULES
Schedule 1.1 .................................................. Purchased Assets
Schedule 1.2 ................................................... Excluded Assets
Schedule 2.5 ............................................ Real Estate Allocation
Schedule 3.1.1 ................................................ Corporate Status
Schedule 3.1.3 ....................................................... Conflicts
Schedule 3.1.4 ............................ Special Purpose Financial Statements
Schedule 3.1.5 ...................................................... Litigation
Schedule 3.1.6 ........................................................... Taxes
Schedule 3.1.7 .............................................. Proprietary Rights
Schedule 3.1.8 ............................................ Compliance with Laws
Schedule 3.1.10 ...................................................... Contracts
Schedule 3.1.11 ................................. Owned and Leased Real Property
Schedule 3.1.12 .......................................... Environmental Matters
Schedule 3.1.13 .......................................................... Labor
Schedule 3.1.14 .............................................. Employee Benefits
Schedule 3.1.16 ........................................ Undisclosed Liabilities
Schedule 3.1.18 ........................................ Conduct of the Business
Schedule 3.1.19 ............................................. Powers of Attorney
Schedule 3.1.20 ................................... Transactions with Affiliates
Schedule 3.1.22 ...................................................... Insurance
Schedule 3.1.23 ....................................................... Warranty
Schedule 6.1(a) ............................................. Retained Employees
Schedule 6.1(b) ............................................... Active Employees
ANNEX I .............................. Alternative Dispute Resolution Procedures
<PAGE>
3/23/95
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of March 23,1995, by and among
Rockwell International Corporation, a Delaware corporation (the "Purchaser"),
Dura Automotive Systems, Inc., a Delaware corporation ("Dura") and Dura
Automotive Holding, Inc., a Delaware corporation ("Holding"). Dura and Holding
are collectively referred to herein as the "Seller." The Purchaser and the
Seller are sometimes referred to herein collectively as the "Parties" and
individually as a "Party." Unless otherwise indicated, capitalized terms used,
but not defined, prior to their first usage herein are defined in Section 9.1.
The Seller is engaged in the design, manufacture and sale of window
regulators, window regulator assembly systems and components and related service
parts for use in the automotive industry as conducted at and from two owned
facilities and one leased facility located in Gordonsville, Tennessee (the
"Facilities") together with related product manufacturing and service operations
and related assets located at Matamoros, Mexico, Mancelona and East Jordan,
Michigan, and a dedicated engineering and support staff located at Seller's
headquarters in Troy, Michigan (the "Business").
The Purchaser wishes to purchase and acquire from the Seller, and the
Seller wishes to sell, assign and transfer to the Purchaser, substantially all
of the Business' assets, and the Purchaser has agreed to assume certain
liabilities related thereto, upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants, representations
and warranties made herein, and of the mutual benefits to be derived hereby, the
Parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
1.1 Purchased Assets. Subject to and upon the terms and conditions set
forth in this Agreement, at the Closing, the Seller will sell, transfer, convey,
assign, and deliver to the
<PAGE>
Purchaser, and the Purchaser will purchase and acquire from the Seller, all of
the right, title, and interest in the assets and properties that the Seller
possesses and has the right to transfer in and to all of the assets and
properties used in connection with the Business including, but not limited to,
the following assets, except to the extent set forth in Section 1.2
(collectively, the "Purchased Assets"):
(a) all inventories of raw materials, work in process, finished
products, supplies, processing materials, purchased parts, and accessories
of the Business which are located at the Facilities, as well as all
tooling-in-process of the Business, wherever the same may be located
(collectively, the "Inventories");
(b) all machinery, plant and office equipment (including, the CAD
equipment, laboratory and test equipment located at Troy, Michigan which is
dedicated to the Business), furniture, tools, construction in progress,
dies, molds, gauges, test equipment, vehicles, fixtures and leasehold
improvements used primarily by the Business, together with any rights or
claims of Seller arising out of any breach of any express or implied
warranty by the manufacturers or sellers of any of such assets or any
component part thereof, including, but not limited to the assets listed on
the Purchased Assets Schedule attached hereto;
(c) prepaid engineering costs and employee advances for Transferred
Employees, but excluding any prepaid insurance and capitalized sorting
costs or work order costs; provided, that prepaid and accrued property
taxes will be prorated between the Parties as set forth in Section 10.1(c)
of this Agreement;
(d) all land, buildings and improvements constituting the owned
Facilities;
(e) all financial, accounting, personnel and operating data and
records (other than such data and records which relate to the Excluded
Assets or Retained Liabilities, as defined below) including, without
limitation, all books, records, notes, sales and promotional data,
advertising materials, credit information, cost and pricing information,
customer and supplier lists, business plans, reference catalogs, payroll
and personnel records and other similar property, rights and information;
(f) all Proprietary Rights used primarily in the Business;
2
<PAGE>
(g) all Governmental Approvals related to the operation of the
Business at the Facilities, including all applications therefor;
(h) all of the rights and obligations of the Seller under all
contracts, Leases (as defined in Section 9.1 hereof), license agreements,
purchase orders, sales orders, open bids, franchises, commitments and other
agreements relating primarily to the Business (the "Contracts");
(i) all non-window regulator inventories of raw materials, work in
process and finished products which are located at the Facilities, subject to
Seller's repurchase obligations as set forth in the Manufacturing Agreement (as
defined in Section 2.6);
(j) all benefits of "occurrence basis" insurance coverage, if any,
provided by any insurance policies of Seller or its Affiliates, with respect to
an Assumed Liability (as defined in Section 1.3) to the extent Purchaser incurs
the loss with respect thereto; and
(k) any and all intangibles, including goodwill and going concern
value, related primarily to the Business.
With respect to any and all Purchased Assets located in Matamoros, Mexico not
directly owned by Seller, Seller shall cause its Affiliates to sell, transfer,
convey, assign and deliver such assets to the Purchaser or its designated
Affiliate. On the Closing Date, the Purchased Assets shall be free and clear of
all liens, mortgages, pledges, security interests, charges, encumbrances,
restrictions and claims of every nature, except for Permitted Liens (as defined
in Section 9.1 hereof).
1.2 Excluded Assets. The Seller will retain and not transfer, and the
Purchaser will not purchase or acquire, the following properties, assets and
rights (collectively, the "Excluded Assets"):
(a) all cash and cash equivalents;
(b) all accounts receivable and notes receivable of the Business;
(c) all rights, titles, claims and interests of the Seller under or in
connection with any policy or agreement of insurance or indemnity or bond (but
not including the benefit
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of the "occurrence basis" insurance coverage, if any, other than as provided in
Section 1.1(j) above);
(d) any and all prepaid insurance and capitalized sorting costs or
work order costs, together with any rights of recovery or claims with respect
thereto from the customers and suppliers of the Business;
(e) all qualifications to do business as a foreign corporation, all
arrangements with registered agents relating to foreign qualifications, all
taxpayer and other identification numbers, all seals, minute books, stock
transfer books, blank stock certificates, and other documents relating to the
organization, maintenance, and existence of the Seller as a corporation;
(f) the trademark "DURA-L1TE"; and
(g) all assets set forth on the Excluded Assets Schedule attached
hereto.
1.3 Assumption of Liabilities. From and after the Closing Date, the
Purchaser will assume and agree to pay and discharge, in a timely manner and in
accordance with the terms thereof, all liabilities and obligations of Seller,
based upon, arising out of or otherwise in respect of only those liabilities,
obligations and commitments of the Business (which liabilities, obligations and
commitments set forth in this Section 1.3 are collectively referred to as the
"Assumed Liabilities"):
(i) which arise under or relate to the Contracts, provided, however,
that Purchaser shall not assume or become liable for any liability for, or
obligations to pay, any amount resulting from or arising out of any default by
Seller arising out of or relating to the Contracts prior to the Closing Date;
(ii) which arise out of arrangements with or relate to a Transferred
Employee (as defined in Section 6.1) to the extent specifically provided in
Article VI hereof or specifically assumed in this Section 1.3;
(iii) which arise out of or relate to automotive original equipment
manufacturer ("OEM") product warranty, policy or recall claims or obligations
(being those obligations to repair and/or replace parts and/or products or for
the payment of sums in lieu of such replacement or repair) arising out of the
use of the window regulator products of the
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Business manufactured and sold by Seller prior to the Closing Date ("Warranty
Claims"), subject to Seller's indemnification with respect to Warranty Claims as
set forth in Article VIII hereof;
(iv) which arise out of or relate to any claim, action or litigation
arising, commenced or filed on or after the Closing Date, including, without
limitation, any claim, action or litigation which arises out of or relates to
the use of any Proprietary Rights transferred from Seller to the Purchaser;
(v) which arise out of or relate to Environmental Requirements
(including for this purpose, Environmental Requirements enacted or effective
prior to, on or after the Closing Date), subject to Seller's indemnification and
other obligations with respect to environmental matters as set forth in Article
VIII hereof;
(vi) which arise out of or relate to product liability claims (being
claims for damages for injury to persons or damage to property) alleged to have
been caused by or by reason of a defect in the products or services of the
Business manufactured and sold by Seller prior to the Closing Date, subject to
Seller's indemnification with respect to product liability claims as set forth
in Article VIII hereof.
(vii) which arise from or relate to any worker's compensation claims
made by or on behalf of the Transferred Employees, subject to Seller's
indemnification with respect to worker's compensation claims as set forth in
Article VIII hereof; and
(viii) earned but unpaid payroll, related payroll taxes, holiday pay
and vacation pay related to the Transferred Employees.
1.4 Retained Liabilities. Except as expressly provided in Section 1.3
above, Purchaser shall not be obligated or become liable for any obligation or
liability of Seller, its Affiliates, the Business or the Purchased Assets,
whether known or unknown, fixed, contingent or otherwise, including, without
limitation (which obligations and liabilities set forth in this Section 1.4 are
collectively referred to as the "Retained Liabilities"):
(i) liabilities or obligations associated with or arising out of the
operation of former or current facilities of Seller or its Affiliates other than
the Facilities;
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(ii) liabilities or obligations specifically retained by Seller
pursuant to Article VI of this Agreement, including liabilities or
obligations with respect to employees of the Seller other than the
Transferred Employees;
(iii) liabilities or obligations associated with the Excluded
Assets;
(iv) liabilities or obligations which arise out of or relate to any
claim, action or litigation pending prior to the Closing Date, whether or
not identified on any of the Schedules to this Agreement (including,
without limitation, any claim, action or litigation which arises out of
or relates to the use of the Proprietary Rights transferred from Seller to
Purchaser);
(v) all liabilities or obligations which arise out of or relate to
product liability claims (being claims for damages for injury to persons or
damage to property) alleged to have been caused by or by reason of a defect
in the products or services of the businesses of Seller other than the
Business;
(vi) liabilities or obligations specifically retained by Seller
pursuant to Section 10.1 with respect to transfer taxes and property taxes,
and all liabilities and obligations for income taxes arising in connection
with the consummation of the transactions contemplated by this Agreement
(including any income taxes arising because Seller is transferring the
Purchased Assets);
(vii) all accounts payable of the Business;
(viii) any liability of Seller for any Taxes relating to the Business
or the Purchased Assets for periods up to the Closing (except for payroll
taxes assumed in Section 1.3(viii));
(ix) any bank debt of Seller or its Affiliates; and
(x) all liabilities or obligations which arise from or relate to any
claims for benefits under any medical, dental or other health insurance
plan, life insurance or other death benefit plan provided to or on behalf
of the Transferred Employees by Seller prior to the Closing Date
("Transferred Employee Insurance Claims").
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ARTICLE II
PURCHASE PRICE; THE CLOSING
2.1 Purchase Price. The purchase price for the Purchased Assets (the
"Purchase Price") shall be equal to (a) $18.486 million in cash (as adjusted by
any payment made pursuant to Section 2.2, the "Cash Purchase Price") and (b) the
assumption by the Purchaser of the Assumed Liabilities.
2.2 The Closing Date Statement.
(a) Within 90 days following the Closing Date, Purchaser shall
prepare and deliver to Seller a statement as of the close of business on the day
before the Closing Date setting forth the amounts for the Purchased Assets and
the Assumed Liabilities described in Sections 1.1 and 1.3, respectively, of this
Agreement (the "Closing Date Statement"). The amounts set forth on the Closing
Date Statement shall be determined utilizing the United States generally
accepted accounting principles (GAAP) utilized in the preparation of the January
1, 1995 Special Purpose Financial Statements attached as Schedule 3.1.4 except
as follows:
(i) The Closing Date Statement shall not include any amounts for
intangible assets (except for prepaid engineering costs) or goodwill.
(ii) Except for payroll taxes, the Closing Date Statement shall
not include any amounts for taxes, whether deferred or currently payable,
including income, sales and property taxes.
(iii) The Closing Date Statement shall not include any amounts
for pensions or retiree medical benefits (except for amounts provided pursuant
to Section 6.4).
(iv) The inventory amount set forth on the Closing Date
Statement shall be determined using the standard costs utilized at
January 1, 1995.
(v) At Purchaser's discretion, the inventory quantities included
on the Closing Date Statement shall be determined using the results of a
complete physical inventory conducted by Purchaser on or immediately after the
Closing Date at Purchaser's sole cost and expense.
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(vi) The property, plant and equipment amount set forth on the
Closing Date Statement shall not be reduced for depreciation during the period
January 1, 1995 to the Closing Date.
(vii) The Closing Date Statement shall not include any amounts
for Excluded Assets or Retained Liabilities.
(viii) The Closing Date Statement shall include an amount for
earned holiday pay to the extent such amounts have been earned in accordance
with Seller's policy with respect thereto.
(b) Seller will have 30 days following receipt of the Closing Date
Statement from Purchaser to review such Closing Date Statement to confirm that
it has been prepared in accordance with the provisions of Section 2.2(a). If, in
Seller's judgment, adjustments are necessary in order to confirm that the
Closing Date Statement was prepared in accordance with Section 2.2(a), then
Seller shall, within the 30 days allowed for Seller's review, inform Purchaser
in writing of such proposed adjustments, including the amount, nature and basis
for such adjustments ("Seller's Letter"). To be assertable in Seller's Letter,
an individual proposed adjustment must equal or exceed $25,000; provided that
proposed adjustments arising out of or related to the same facts or
circumstances may be grouped together for such purposes. Proposed individual
adjustments of less than $25,000 can only be asserted to the extent that the
aggregate amount of all such proposed adjustments exceeds $250,000 and then only
to the extent of such excess.
(c) Within 30 days after the receipt of Seller's Letter, duly
authorized representatives of the Parties shall confer and endeavor to mutually
resolve the adjustments which are in dispute between the Parties.
(d) If at the conclusion of the 30 day period following the receipt
of Seller's Letter, there are proposed adjustments that remain in dispute,
Purchaser will have 20 days to advise Seller in writing of Purchaser's position
with respect to each of Seller's proposed adjustments that are in dispute,
including the amount, nature and basis for such dispute ("Purchaser's Letter").
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(e) Within 20 days following the delivery to Seller of Purchaser's
Letter pursuant to Section 2.2(d), either party may engage the Detroit
office of Price Waterhouse (the "Arbitrator") to act as an arbitrator and
to determine, in accordance with Section 2.2(f), whether Purchaser's or
Seller's position regarding the disputed amounts is in accordance with
Section 2.2(a) of the Agreement.
(f) If the provisions of Section 2.2(e) become operable, then the
Arbitrator shall be furnished with a copy of the Agreement, the Closing
Date Statement, Purchaser's Letter and Seller's Letter. Neither Party shall
make any additional submission to the Arbitrator except pursuant to the
Arbitrator's written request. The Arbitrator shall have 45 days to review
these documents and such other information as the Arbitrator deems
appropriate. Within said 45-day period the Arbitrator will furnish both
Parties with its written determination with respect to each of the
unresolved adjustments in dispute submitted for arbitration. In arriving at
its determination, the Arbitrator may select either the Purchaser's
position or Seller's position, or his own determination (provided such
determination is between Purchaser's and Seller's position) with respect to
each such adjustment. The determination of the Arbitrator with respect to
each such adjustment will be conclusive and binding upon the Parties.
Seller and Purchaser intend that the provisions of Section 2.2(e) and
Section 2.2(f) shall be enforceable under the Federal Arbitration Act (9
U.S.C. Section 1 et. seq.). The fee of the Arbitrator shall be borne by the
Seller and Buyer in the same proportion that the dollar amount of the
disputed items lost by a Party bears to the total dollar amount in dispute
in the arbitration.
(g) The Net Asset Value set forth on the Closing Date Statement will
become the Closing Date Net Asset Value unless Seller shall have delivered
the Seller's Letter to the Purchaser within the 30-day period described in
Section 2.2(b). If Seller shall have delivered the Seller's Letter within
the 30-day period described in Section 2.2(b), the Net Asset Value set
forth on the Closing Date Statement as modified by (i) the proposed
adjustments contained in Seller's Letter or (ii) any adjustments agreed to
by the Parties pursuant to Section 2.2(c) will become the Closing Date Net
Asset Value unless Purchaser shall have delivered the Purchaser's Letter to
Seller within the 20-day period described in Section 2.2(d). If Purchaser
shall have delivered the Purchaser's Letter to the Seller, then the Net
Asset Value set forth on the Closing
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Date Statement as modified by the adjustments determined by the Arbitrator
pursuant to Section 2.2(f) will become the Closing Date Net Asset Value.
2.3 Post-Closing Purchase Price Adjustment.
(a) The Purchase Price shall be adjusted, plus or minus, for the
difference between the Closing Date Net Asset Value (as finally determined in
accordance with Section 2.2) and $11.308 million (the "Post-Closing Payment").
(b) Within three (3) business days following the date on which the
amount of the Post-Closing Payment has been finally determined, Purchaser shall
pay to Seller any positive Post-Closing Payment, (i.e., if Closing Date Net
Asset Value exceeds $11.308 million) or Seller shall refund to Purchaser any
negative Post-Closing Payment, (i.e., if Closing Date Net Asset Value is less
than $11.308 million). Any Post-Closing Payment payable pursuant to this Section
2.3(b) shall be paid as an adjustment to the Purchase Price by wire transfer of
immediately available U.S. dollar funds to a bank account designated by Seller
or Purchaser, as the case may be, together with daily compounded interest that
would accrue on such amount (based on a 360-day year), calculated at the prime
rate of Mellon Bank, N.A., Pittsburgh, Pennsylvania as announced from time to
time, for the period beginning on the Closing Date and ending on the date of
such payment.
2.4 Place and Date of Closing. The closing of the purchase and sale of the
Purchased Assets, the assumption of the Assumed Liabilities, and the
transactions relating thereto (collectively, the "Closing") will take place at
the offices of Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois, or
at such other place as is mutually agreeable to the Parties, commencing at 10:00
a.m. local time on the fifth business day following the expiration or
termination of the waiting period under the H-S-R Act, or such other date, place
and time as the Parties may mutually determine. The date and time of the Closing
are herein referred to as the "Closing Date." At the Closing:
(a) the Seller will sell, transfer, convey, assign and deliver to the
Purchaser all of the Purchased Assets and deliver to the Purchaser special
warranty deeds, bills of sale, UCC
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Termination Statements, releases of deeds of trusts, releases from lenders,
assignments of leases and contracts and all other instruments of conveyance
which are necessary to effect transfer of the Purchased Assets so as to
vest in Purchaser good, valid and marketable title to all Purchased Assets,
free and clear of all liens, mortgages, pledges, security interests,
charges, encumbrances, restrictions and claims of every nature, except for
Permitted Liens;
(b) the Purchaser will assume all of the Assumed Liabilities and
deliver to the Seller such instruments of assumption as are necessary in
order for the Purchaser to effect assumption of the Assumed Liabilities;
and
(c) the Purchaser will deliver the Cash Purchase Price to the Seller
by wire transfer of immediately available funds.
2.5 Allocation of Purchase Price.
(a) The Parties agree that the Purchase Price of the purchased real
estate is set forth on the Real Estate Allocation Schedule attached hereto.
(b) With respect to the rest of the Purchased Assets, the
consideration (as defined by Section 1060 of the Code and the regulations
thereunder) less amounts allocated to the purchased real estate as set
forth in the Real Estate Allocation Schedule shall be allocated among the
rest of the Purchased Assets in accordance with their fair market values
pursuant to Section 1060 of the Code. No valuation will be made with
respect to any individual Code Section 197 intangible assets and the
allocation to these intangible assets shall be made by the residual method.
The Parties will not agree to the allocation to each Code Section 197
intangible. Accordingly, each Party shall be free to value any Code Section
197 intangible asset and allocate all or a portion of the consideration
allocated to all of the Code Section 197 intangible assets to said
intangible asset. The Seller and Purchaser shall confer in good faith and
mutually agree upon a valuation schedule sufficient to make the necessary
allocations.
(c) In connection with the determination of the foregoing allocation
schedule, the Parties shall cooperate with each other and provide such
information as any of them shall reasonably request. The Parties will file
all Tax Returns and prepare all financial statements
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(including, but not limited to, the filing of Internal Revenue Service Form
8594) in a manner consistent with such allocation schedule.
2.6 Transition Period. Purchaser and Seller hereby agree to cooperate and
use best efforts to implement the plan to transport (attached hereto as Exhibit
1 the "Transition Timeline"):
(a) all Purchased Assets not located at the Facilities (i.e., located
at Matamoros, Mexico, Mancelona, Michigan, East Jordan, Michigan and Troy,
Michigan (collectively, the "Dura Facilities") to the Facilities; and
(b) all assets constituting the Excluded Assets and located at the
Facilities to the Dura Facilities, in each case during the period beginning
immediately after the Closing and ending on or before the date specified in
Exhibit 1 (the "Transition Period"). The assets and properties referred to
in paragraphs (a) and (b) above are referred to herein collectively as the
"Transition Properties." The Manufacturing Agreements set forth as Exhibits
2 and 3 include the terms and conditions pursuant to which Purchaser and
Seller will manufacture and sell products on behalf of the other during the
Transition Period with respect to the Transition Properties, which
agreements will be entered into on the Closing Date in substantially the
form attached hereto. Attached hereto as Exhibit 4 is the agreement
providing for the transitional arrangements and transitional services the
Parties require from each other after the Closing Date (the "Services
Agreement"), which agreement will be entered into on the Closing Date in
substantially the form attached hereto; provided, that the Services
Agreement may be supplemented with additional services reasonably requested
by either Party between the date hereof and the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Seller. The Seller represents
and warrants to the Purchaser as follows:
3.1.1 Corporate Status. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is duly qualified or
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licensed to do business and is in good standing in each of the jurisdictions
listed on the Corporate Status Schedule attached hereto.
3.1.2 Authorization. The Seller has the corporate power and authority
to execute and deliver this Agreement, to perform fully its obligations
hereunder, and to consummate the transactions contemplated hereby. The execution
and delivery by the Seller of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly authorized by all requisite
corporate action of the Seller. The Seller has duly executed and delivered this
Agreement. This Agreement is a legal, valid and binding obligation of the
Seller, enforceable against it in accordance with its terms, except as such
enforceability may be limited by (a) applicable insolvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and (b) applicable equitable principles (whether considered in a
proceeding at law or in equity).
3.1.3 No Conflicts. The execution, delivery and performance by the
Seller of this Agreement, and the consummation of the transactions contemplated
hereby, do not and will not conflict with or result in a violation of or a
default under (with or without the giving of notice or the lapse of time or
both) (a) any Applicable Law applicable to the Business or the Purchased Assets,
(b) the certificate of incorporation or by-laws or other organizational
documents of the Seller or (c) except as set forth in the Conflicts Schedule
attached hereto, any Contract set forth on the Contract Schedule.
3.1.4 Special Purpose Financial Statements. The Special Purpose
Financial Statements Schedule attached hereto consists of the unaudited
Statement of Net Assets of the Business as of January 1, 1995 (the "Statement of
Net Assets") and the related unaudited statement of operating income for the 12-
month period then ended and the footnotes applicable thereto (collectively, the
"Special Purpose Financial Statements"). The Special Purpose Financial
Statements present fairly in all material respects the aggregate Purchased
Assets and Assumed Liabilities and operating income of the Business as of the
dates and for the periods therein indicated, and have been prepared in
accordance with GAAP, except as set forth in the
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footnotes thereto. The Business is not a separate legal entity and as a result,
the Special Purpose Financial Statements do not purport to, and do not, present
the Purchased Assets and the Assumed Liabilities or the operating income of the
Business as if the Business were a separate stand alone legal entity.
3.1.5 Litigation. Except as set forth on the Litigation Schedule
attached hereto, there is no action, claim, suit, judgment, injunction, order or
decree pending, or to the Seller's Knowledge, threatened, against Seller which
relates to the Business, the Purchased Assets, the Assumed Liabilities or the
transactions contemplated by this Agreement.
3.1.6 Tax Matters. Except as set forth on the Taxes Schedule attached
hereto:
(a) Seller has timely filed all Tax Returns required to be filed by
it with respect to the Business (taking into account all extensions of due
dates) and all Taxes shown as due thereon have been paid;
(b) no deficiency or proposed adjustment which has not been settled
or otherwise resolved for any amount of Tax has been proposed, asserted or
assessed against Seller with respect to the Business or the Purchased
Assets, and Seller has not consented to extend the time in which any Tax
may be assessed or collected, by any taxing authority with respect to the
Business or the Purchased Assets;
(c) Seller has not requested or been granted an extension of time for
filing any Tax Return to a date later than the Closing Date with respect to
any Tax Return which relates exclusively to the Business or the Purchased
Assets and Seller has received no written notification of any action, suit,
taxing authority proceeding or audit now in progress, pending or threatened
against Seller with respect to any Tax with respect to any Tax Return which
relates exclusively to the Business or the Purchased Assets;
(d) Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party with
respect to the Business;
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(e) no claim has been made in writing by a taxing authority in a
jurisdiction where Seller does not file Tax Returns that Seller is or may
be subject to Taxes assessed by such jurisdiction which claim relates to
the Business;
(f) there are no Liens for Taxes (other than for current Taxes either
not yet due and payable or being contested in good faith which Taxes Seller
shall pay, except for payroll taxes referenced in Section 1.3 (viii), as
they become due or are no longer so contested or are reflected on the
Closing Date Statement) upon the Purchased Assets;
(g) Seller is not a "foreign person" within the meaning of Section
1445-2(b)(2) of the Code, and Seller will furnish Buyer at closing with an
affidavit to that effect in the form provided in Section 1.1445(b)(2)(iii)
(B) of the United States Treasury Regulations.
3.1.7 Proprietary Rights. The Proprietary Rights Schedule attached
hereto lists all of the patented, registered or applied for Proprietary Rights
owned by, used by Seller in its manufacturing operation or licensed to Seller
pertaining to the manufacture or design of the products of the Business as
currently conducted, which Schedule includes registration numbers and
registrations by country. Except as indicated on the Proprietary Rights
Schedule, the Seller owns and possesses without restriction as to use, all of
the required rights, title and interest in and to the Proprietary Rights used in
the conduct of the Business. Seller has taken all necessary actions to maintain
and protect each Proprietary Right that it owns or uses in the conduct of the
Business. Except as set forth on the Proprietary Rights Schedule, Seller has not
received any notices of invalidity, infringement or misappropriation from any
third party with respect to any of the Proprietary Rights within the past three
years. To Seller's Knowledge, Seller has not interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Proprietary Rights of
any third parties with respect to the conduct of the Business. To Seller's
Knowledge, no third party has interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Proprietary Rights of Seller used in
the conduct of the Business. Except as set forth on the Proprietary Rights
Schedule, Seller has not granted to any third party a license of any of the
Proprietary Rights used in the Business.
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3.1.8 Compliance with Laws; Governmental Approvals. Except as
disclosed in the Compliance Schedule attached hereto, since December 31, 1991,
the Seller has not received any notice with respect to the Business alleging any
violation of Applicable Law. Seller has no Knowledge of any violation of
Applicable Law with respect to the Business. The Seller holds all Governmental
Approvals necessary for the conduct of the Business. All such Governmental
Approvals are in full force and effect, and the Seller is in compliance with
each such Governmental Approval.
3.1.9 Purchased Assets.
(a) Except as disclosed in the Purchased Assets Schedule attached
hereto, the Seller has good and marketable title to all the Purchased
Assets, free and clear of any and all Liens or other claims other than
Permitted Liens.
(b) The Purchased Assets are in good operating condition and repair,
normal wear and tear excepted. The Purchased Assets constitute all of the
property, real and personal, tangible and intangible, used primarily in
connection with the Business as it is presently conducted. The Purchased
Assets are sufficient to allow the Purchaser to conduct the Business as it
is currently conducted, including, without limitation, all assets necessary
to attain currently existing "capacity planning volumes" in the OEM
Contracts.
3.1.10 Material Contracts. The Contracts Schedule attached hereto
lists the following contracts and other agreements which relate to or affect the
Business to which Seller or its Subsidiary is a party:
(i) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease
payments in excess of $25,000 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products,
other personal property, or for the furnishing or receipt of services
(including temporary employment services), the performance
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of which will extend over a period of more than one year or involve
consideration in excess of $100,000 per annum;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which
Seller has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money or any capitalized lease obligation which involves
payments in any fiscal year in excess of $25,000, any of which will be
assumed by Purchaser hereunder;
(v) any confidentiality or noncompetition agreement which
relates to or affects the Business, including any settlement
agreements or consent decrees with respect to the foregoing;
(vi) except as set forth on the Employee Benefits Schedule, any
profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance, or other material plan or
arrangement for the benefit of the current or former officers and
employees of the Business;
(vii) any collective bargaining agreement, distributor
agreement, or representation or agency agreement;
(viii) any written agreement for the employment of any
individual (other than on an "at will" basis) on a full-time, part-
time, consulting, or other basis providing annual compensation in
excess of $50,000 or providing severance benefits;
(ix) any agreement under which Seller has advanced or loaned an
amount of money to any of the employees of the Business outside the
ordinary course of business; or
(x) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $100,000 per
annum.
The Seller has delivered or made available to the Purchaser a correct and
complete copy of each written agreement as amended to date listed in the
Contracts Schedule. With respect to each agreement described on the Contracts
Schedule: (A) the agreement is legal, valid, binding, enforceable, and in full
force and effect; (B) to Seller's Knowledge, the agreement will continue to be
legal, valid, binding, enforceable and in full force and effect on substantially
similar terms
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following the consummation of the transactions contemplated hereby; (C) Seller
is not in breach or default and, to Seller's Knowledge, no other party is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default or permit termination, modification, or
acceleration under such agreements; and (D) Seller has not repudiated any
provision thereof and, to Seller's Knowledge, no other party has repudiated any
provision thereof.
Except as set forth in the Contracts Schedule, (i) no consent of any third
party is required under any Contract as a result of or in connection with the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby; (ii) no material supplier to or customer of
the Business has given any notice to Seller of any intention to terminate or
modify its relationship with the Business; (iii) since January 1, 1994 the
Business has not ceased doing business with any supplier which accounted for
more than five percent (5%) or more of its purchases; and (iv) the Business
currently has no material problem in obtaining in a timely manner and at market
prices any raw, finished or other materials used in the Business, which failure
to obtain would have a Material Adverse Effect.
3.1.11 Real Property.
(a) Owned Real Property. The Owned and Leased Real Property Schedule
attached hereto sets forth the legal description and common address of each
of the owned Facilities. The Seller has good and marketable title to the
owned Facilities insurable by a title insurance company licensed in the
jurisdiction where the owned Facilities are located, free and clear of all
mortgages, liens, charges, defects and encumbrances other than Permitted
Liens and those exceptions shown on Schedule B - Section II labeled
"Exceptions" to the Title Policies attached hereto as part of the Owned and
Leased Real Property Schedule ("Title Exceptions"). There are no leases,
subleases or licenses granting any person the right of use of any portion
of either owned Facility, except as disclosed on the Owned and Leased Real
Property Schedule. There are no pending condemnation proceedings or
lawsuits, or to Seller's Knowledge, pending administrative actions or
threatened condemnation proceedings, lawsuits or administrative actions
relating to the owned Facilities or other matters which materially
adversely affect the current use
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or occupancy thereof. The owned Facilities are not in violation of applicable
setback requirements, zoning laws, or ordinances, except for Title Exceptions.
(b) Leased Real Property. The Owned and Leased Real Property Schedule
attached hereto contains a complete and correct list of all Leases, setting
forth the address, landlord and tenant for each Lease. Purchaser has received a
complete and correct copy of each such Lease, together with any amendments
thereto. Each lease referred to on the Owned and Leased Real Property Schedule
is a valid and binding agreement enforceable in accordance with its terms.
Except as set forth on the Owned and Leased Real Property Schedule, to Seller's
Knowledge, no party to any lease is in breach or default, and no event has
occurred which, with notice or lapse of time, would constitute a breach or
default.
(c) There are no outstanding options or rights of first refusal to
purchase the owned Facilities and Seller does not hold any right of first
refusal to purchase any of the properties identified on the Owned and Leased
Real Property Schedule, except as disclosed in such lease agreements.
3.1.12 Environmental Matters. Except as set forth on the attached
Environmental Matters Schedule:
(a) The Business has complied and is in compliance with all
Environmental Requirements; and the Facilities with respect to their existing
and, to Seller's Knowledge, their prior uses and the activities thereon, are and
have been in compliance with all Environmental Requirements;
(b) Without limiting the generality of the foregoing, the Business has
obtained and complied, and is in compliance with all permits, licenses and other
authorizations that are required pursuant to Environmental Requirements;
(c) The Seller has not received any written notice, report or
communication regarding any liabilities or potential liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise), including any
investigatory, remedial or corrective obligations relating to the Business or
the ownership, use, maintenance or operation of the Facilities and arising under
Environmental Requirements;
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(d) With respect to the Business or the ownership, maintenance or
operation of the Facilities, neither the Seller nor any other person, including,
without limitation, any previous owner or occupant or user of the Facilities has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled or released any Hazardous Material, nor has any Hazardous
Material been released at, on, onto or from a Facility so as to give rise to
liabilities of the Seller or the Business, whether for response costs, natural
resource damages, attorneys fees or otherwise, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") as
amended, the Solid Waste Disposal Act ("SWDA"), as amended, or any other
Environmental Requirements; to Seller's Knowledge, there is no Hazardous
Material present at the Facilities or which threatens to migrate from other
properties onto the Facilities, the status or condition of which would give rise
to liabilities of the Seller or the Business under Environmental Requirements;
(e) Neither this Agreement nor the consummation of the transactions
that are 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 of the so-called "transaction-triggered" or
"responsible property transfer" Environmental Requirements;
(f) No underground tanks, sumps or pits are, or to Seller's Knowledge,
have ever been located at the Facilities; and
(g) This Section 3.1.12 contains the sole representations and
warranties of the Seller with respect to environmental matters.
3.1.13 Employees, Labor Matters, Etc. Except as set forth on the Labor
Schedule attached hereto, the Seller is not a party to or bound by any
collective bargaining agreement, there are no labor unions or other
organizations representing or purporting to represent any employees employed in
the operation of the Business. Seller has no Knowledge of any organizational
effort presently being made or threatened by or on behalf of any labor union
with respect to employees of the Business.
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3.1.14 Employee Benefits.
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(a) The Employee Benefits Schedule contains a list of all employee
benefit plans and policies maintained by Seller or any of its Affiliates for
employees of the Facilities (the "Employee Plans"). For purposes of this
Agreement, the term "Employee Benefit Plan" means any pension plan (as that term
is defined in Section 3(2) of ERISA) ("Pension Plan") or welfare plan (as that
term is defined in Section 3(1) of ERISA) ("Welfare Plan"), including any
pension, retirement, disability, medical, dental or other health insurance plan,
life insurance or other death benefit plan, profit sharing, deferred
compensation, stock option, bonus or other incentive plan, vacation benefit plan
or severance plan, whether or not funded, and any plan which is a multi-employer
plan as defined in Section 3(37) (A) of ERISA ("Multi-employer Plan").
(b) Neither the Seller nor any predecessor of the Seller has incurred
any liability to the Pension Benefit Guaranty Corporation ("PBGC"), the IRS or
any Multi-employer Plan with respect to any Employee Plan or with respect to any
Employee Plan currently or previously maintained by members of the controlled
group of companies (as defined in Sections 414(b) and (c) of the Code) which
includes the Seller (the "Controlled Group") that has not been satisfied in
full, and no condition exists that presents a risk to the Seller or any member
of the Controlled Group of incurring such a liability, other than liability for
premiums due to PBGC.
(c) Except as set forth on the Employee Benefits Schedule, with
respect to the Facility Plan (as defined in Section 6.4 below):
(i) Seller has received favorable determination letters from the
IRS, copies of which have been delivered or made available to Purchaser, to the
effect that such plan is qualified under Code section 401(a) and that, since the
dates of said letters Seller has taken no action which could adversely affect
the qualification of said plan; and
(ii) No party in interest as defined in Section 3(14) of ERISA,
or disqualified Person as defined in Section 4975 of the Code, with respect to
such plan has engaged in any prohibited transaction within the meaning of
Section 406 of ERISA and Code section 4975, with respect to which Seller has
incurred any material liability for which an exemption has not been received.
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3.1.15 Inventory. The inventory of the Business (excluding
tooling) consists of raw materials and supplies, manufactured and purchased
parts, goods in process, and finished goods, all of which is merchantable and
fit for the purpose for which it was procured or manufactured, and none of which
is slow-moving, obsolete, damaged, or defective, subject only to the reserve for
inventory writedown set forth on the Special Purpose Financial Statements as
adjusted through the passage of time through the Closing Date in accordance with
GAAP.
3.1.16 Absence of Undisclosed Liabilities. To Seller's Knowledge, the
Business is not subject to any known liability or obligation which is currently
existing other than the liabilities or obligations disclosed in this Agreement
and the Schedules attached or as set forth on the Undisclosed Liabilities
Schedule, other than de minimis liabilities or obligations not required to be
disclosed herein.
3.1.17 Brokers, Finders, Etc. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on without
the participation of any Person acting on behalf of the Seller in such manner as
to give rise to any valid claim against the Seller for any brokerage or finder's
commission, fee or similar compensation for which Purchaser could become liable.
3.1.18 Conduct of the Business Since January 1, l995. Except as set
forth in, or permitted or contemplated by this Agreement and except for any
claims, agreements, items or matters disclosed in the Schedules hereto, since
January 1, 1995, there have not been any changes (excluding changes with respect
to general economic conditions or the automotive industry) in the Business, the
Purchased Assets or the Assumed Liabilities which individually, or in the
aggregate, have had a Material Adverse Effect. Except as set forth on the
attached Conduct of the Business Schedule, since January 1, 1995, the Seller has
conducted the Business only in the ordinary and usual course of business and,
with respect to the Business, Seller has not:
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(i) suffered any damage, destruction or casualty loss (whether or
not covered by insurance) which has had a Material Adverse Effect;
(ii) made any capital expenditure in excess of $100,000;
(iii) except in accordance with the ordinary course of business
consistent with prior practices or as otherwise required by any existing plan,
agreement or arrangement, with respect to the employees of the Business who will
become Transferred Employees (as defined in Section 6.1), (A) made any change in
the rate of compensation, commission, bonus or other direct or indirect
remuneration payable or to become payable to any employee or agent of the
Business, or agreed or promised to pay, conditionally or otherwise, any bonus,
extra compensation, pension, retirement payment, allowance, severance or
vacation pay or other employee benefit, to any such person (except as otherwise
disclosed to Purchaser as described in Section 4.1.11 hereof), (B) paid any
pension, retirement allowance or other employee benefit not required by any
existing Employee Plan to any such person, (C) committed itself to any
additional pension, profit sharing, bonus, incentive, deferred compensation,
stock purchase, stock option, stock appreciation, group insurance, severance
pay, retirement or other employee benefit plan, agreement or arrangement (except
as otherwise disclosed to Purchaser as described in Section 4.1.11 hereof)
or (D) entered into any employment agreement with or for the benefit of any such
person;
(iv) executed or otherwise become a party to any collective
bargaining agreement or, to Seller's Knowledge, experienced any organizational
effort presently being made or threatened by or on behalf of any labor union
with respect to the employees of the Business;
(v) sold or transferred any material portion of its assets, other
than in the ordinary course of business;
(vi) amended in any material respect or terminated (other than by
the completion thereof) any material Contract;
(vii) incurred, assumed, created or guaranteed any loan,
liability or other obligation other than in the ordinary course of business;
(viii) subjected any of its properties to any mortgage, pledge,
lien or other encumbrance which has had a Material Adverse Effect;
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(ix) made any change in its accounting methods or principles; or
(x) entered into any agreement or commitment (other than this
Agreement or any arrangement or commitment provided for in this Agreement) to
take any of the types of action described in subclauses (i) through (ix) of this
Section 3.1.18.
3.1.19 Powers of Attorney. The Powers of Attorney Schedule attached
hereto sets forth a true and complete list of the names of all persons, if any,
holding powers of attorney from Seller, with respect to the Business, and a
summary statement of the terms thereof.
3.1.20 Transactions with Affiliates. Except as set forth in the
Transactions with Affiliates Schedule, all commercial transactions between the
Business and the other businesses of Seller and its Affiliates have been arms-
length transactions upon terms and conditions substantially similar to those
upon which transactions between Seller, and its Affiliates and unrelated third-
parties have been conducted.
3.1.21 Tooling. Subject only to the tooling reserves set forth on the
Special Purpose Financial Statements as adjusted for the passage of time through
the Closing Date in accordance with GAAP, all amounts previously expended for
customer tooling, all amounts which relate to outstanding purchase orders to
tooling vendors, and all known additional expenditures for customer tooling are
fully recoverable by the Business from customers, except (i) any amounts
relating to defective tooling to the extent that amounts relating to defective
tooling are recoverable from tooling vendors or (ii) to the extent the failure
to recover such amounts is the result of any engineering or design changes or
other modifications made by Purchaser after the Closing Date.
3.1.22 Insurance. The Insurance Schedule attached hereto sets forth a
complete list of insurance policies which Seller and/or its Affiliates maintain
with respect to the Business. All such policies set forth in the Insurance
Schedule are in full force and effect; all premiums with respect thereto
covering all periods up to the Closing Date have been or will be paid; and
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no notice of cancellation or termination has been received with respect to any
such policy. Within the past two fiscal years ending January 1, 1995, Seller has
not been refused any insurance with respect to the Business nor has coverage
been limited in any material respect.
3.1.23 Product Warranty. Each product manufactured or sold by the
Business has been in conformity with all applicable contractual commitments and
all express and implied warranties. Neither the Seller nor the Business has any
liabilities or obligations for replacement or repair thereof or other damages in
connection therewith, subject only to the reserve for product Warranty Claims
set forth on the Special Purpose Financial Statements as adjusted for the
passage of time through the Closing Date in accordance with GAAP as reflected in
the Special Purpose Financial Statements. The Warranty Schedule attached hereto
describes Seller's typical warranty terms and conditions of sale with respect to
products manufactured and sold by the Business. There are no outstanding product
recalls (defined as a systematic effort by Seller, the OEM or the OEM dealers or
distributors to locate products of the Business in use in the field and to
repair them, modify them, withdraw them from future use, refund their purchase
price, or other similar action); there have been no such product recalls since
December 31, 1991, and to Seller's Knowledge, there is no plan to announce any
such product recalls, with respect to any products or discontinued products of
the Business.
3.1.24 Product Liability. With respect to the Business, Seller has no
liability or obligation arising out of any injury to persons or damage to
property alleged to have been caused by or by reason of a defect in the products
or services of the Business manufactured and sold by Seller prior to the Closing
Date.
3.1.25 Guarantees. Neither the Business nor, with respect to the
Business, the Seller, is a guarantor or otherwise is liable for any liability or
obligation (including indebtedness) of any other Person.
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3.1.26 Disclosure. The representations and warranties contained in
this Section 3.1 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the representations and
warranties contained in this Section 3.1 not misleading.
3.2 Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Seller as follows:
3.2.1 Corporate Status. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
3.2.2 Authorization. The Purchaser has the corporate power and
authority to execute and deliver this Agreement, to perform fully its
obligations hereunder, and to consummate the transactions contemplated hereby.
The execution and delivery by the Purchaser of this Agreement and the
consummation of the transactions contemplated hereby, have been duly authorized
by all requisite corporate action of the Purchaser. The Purchaser has duly
executed and delivered this Agreement. This Agreement is a legal, valid and
binding obligation of the Purchaser, enforceable against it in accordance with
its terms, except as such enforceability may be limited by (a) applicable
insolvency, bankruptcy, reorganization, moratorium or other similar laws
affecting creditors' rights generally and (b) applicable equitable principles
(whether considered in a proceeding at law or in equity).
3.2.3 No Conflicts. The execution, delivery and performance by the
Purchaser of this Agreement, and the consummation of the transactions
contemplated hereby, do not and will not conflict with or result in a violation
of or a default under (with or without the giving of notice or the lapse of time
or both) (a) any Applicable Law applicable to the Purchaser, (b) the certificate
of incorporation or by-laws or other organizational documents of the Purchaser
or (c) any material contract, agreement or other instrument to which the
Purchaser is a party or by which the Purchaser is bound.
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3.2.4 Litigation. There is no action, claim, suit, judgment,
injunction, order or decree pending, or to the Purchaser's knowledge threatened,
against or relating to the Purchaser with respect to the transactions
contemplated by this Agreement.
3.2.5 Available Funds. The Purchaser has, or will have on the Closing
Date, sufficient funds available to pay the Cash Purchase Price on the Closing
Date.
3.2.6 Brokers, Finders, Etc. All negotiations relating to this
Agreement and the transactions contemplated hereby, have been carried on without
the participation of any person acting on behalf of the Purchaser in such manner
as to give rise to any valid claim against the Purchaser for any brokerage or
finder's commission, fee or similar compensation for which Seller could become
liable or obligated.
ARTICLE IV
COVENANTS
4.1 Covenants of the Seller.
4.1.1 Conduct of Business. From the date hereof to the Closing Date,
except as expressly permitted, required or contemplated by this Agreement or as
otherwise consented to by the Purchaser in writing, the Seller will operate the
Business in the ordinary course of business, preserve intact its business
operations and material properties (except for the disposition of inventories in
the ordinary course of business), use reasonable efforts to retain the services
of its present employees and maintain relationships with suppliers, customers
and others having business relationships with the Business, to the extent such
services and relationships are beneficial to the Business.
In addition, from the date hereof to the Closing Date, without the
prior written consent of Purchaser, Seller shall not engage in any transaction
which, if engaged in on or before the Closing Date, would constitute or result
in a breach of the representations and warranties of Seller contained in Section
3.1.18 hereof, provided, that Seller makes no covenant
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or agreement with respect to any representation or warranty set forth in Section
3.1.18(i) or (iv) hereof or any other event or occurrence which cannot be
reasonably controlled by Seller.
4.1.2 Pre-Closing Access and Information. During the term of this
Agreement, the Seller will give the Purchaser and its accountants, counsel,
consultants, employees and agents reasonable access, during normal business
hours and upon reasonable notice, to all documents, records, work papers and
information with respect to all of the Seller's properties, assets, books,
contracts, commitments, reports and records relating to the Business (except for
confidential or privileged documents), as the Purchaser shall from time to time
reasonably request. In addition, the Seller will permit the Purchaser and its
accountants, counsel, consultants, employees and agents reasonable access to
such personnel of the Seller, during normal business hours and upon reasonable
notice, as may be necessary or useful to the Purchaser in its review of the
properties, assets and business affairs of the Business and the above-mentioned
documents, records and information.
4.1.3 Further Actions.
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(a) The Seller agrees to use reasonable efforts to take all
actions and to do all things necessary, proper or advisable to consummate the
transactions contemplated hereby by the Closing Date.
(b) The Seller will, as promptly as practicable, file or supply,
or cause to be filed or supplied, all applications, notifications and
information required to be filed or supplied by the Seller pursuant to
Applicable Law in connection with this Agreement and the consummation of the
other transactions contemplated hereby, including but not limited to filings
pursuant to the H-S-R Act.
(c) The Seller, as promptly as practicable, will use its
reasonable efforts to obtain the H-S-R consent and all Consents set forth on the
Conflicts Schedule and denoted as a required Consent.
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(d) The Seller will coordinate and cooperate with the Purchaser
in exchanging such information and supplying such assistance as may be
reasonably requested by the Purchaser in connection with the filings and other
actions contemplated by Section 4.2.1.
(e) At all times prior to the Closing, the Seller shall promptly
notify the Purchaser in writing of any fact, condition, event or occurrence that
could reasonably be expected to result in the failure of any of the conditions
contained in Article V to be satisfied, promptly upon the Seller becoming aware
of the same.
4.1.4 Further Assurances. Following the Closing and without further
consideration, the Seller shall from time to time, execute and deliver such
additional instruments, documents, conveyances or assurances and take such other
actions as shall be necessary, or otherwise reasonably requested by the
Purchaser, to confirm and assure the transfer of the rights and obligations
provided for in this Agreement to the Purchaser and to render effective the
consummation of the transactions contemplated hereby.
4.1.5 Schedules. The Seller may supplement the Schedules at any time
on or prior to the Closing Date to reflect information that came into existence
after the date hereof and would have been required to be disclosed on one or
more Schedules if such information had been in existence on the date hereof.
Unless the Purchaser exercises its rights to terminate the Agreement pursuant to
Section 7.1(d) below, any such supplement will be deemed to have amended the
Schedules to this Agreement, to have qualified the representations and
warranties contained in Section 3.1, and to have cured any misrepresentation or
breach of warranty that otherwise might have existed hereunder by reason of such
development. Omissions in the Schedules that existed on the date hereof and
which should have been included or misstatements that should have been corrected
but were not, shall not be cured by supplement.
4.1.6 Power of Attorney with Respect to the Purchased Assets. On the
Closing Date, Seller will constitute and appoint Purchaser the true and lawful
attorney of Seller, with full power of substitution, in the name of Seller but
on behalf of and for the benefit of and at
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the sole cost and expense of Purchaser, to institute and prosecute all
proceedings that Purchaser may deem proper in order to collect, assert or
enforce any claim, right or title of any kind in or to the Purchased Assets, to
defend and compromise any action, suit or proceeding in respect of any of the
Purchased Assets and to do all such acts and things in relation thereto as
Purchaser shall deem advisable, which power of attorney shall be substantially
in the form of Exhibit 9 attached hereto. Purchaser shall retain for its own
account any amount collected pursuant to the foregoing powers and Seller
promptly shall pay to Purchaser any amount which shall be received by Seller in
respect of any of the Purchased Assets following the Closing Date.
4.1.7 Exclusive Dealing. During the period from the date of this
Agreement to the Closing Date, Seller shall not, and shall cause its directors,
officers, employees, agents and representatives (including, without limitation,
investment bankers, attorneys and accountants) to refrain from taking any action
to, directly or indirectly, solicit, encourage or initiate any inquiry or
solicit, encourage, initiate or participate in any discussions or negotiations
with, or provide any information to, any person concerning any purchase of the
Business or any merger, joint venture, sale of assets other than in the ordinary
course of business or any similar transaction involving the Business. Seller
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Seller will promptly request each person which has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring the Business to return or destroy all confidential
information heretofore furnished to such person by or on behalf of Seller.
4.1.8 Notification of Certain Matters. Seller and Purchaser each agree
to give prompt notice to each other of (a) its knowledge of the occurrence, or
failure to occur, of any event which could reasonably be expected to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date thereof to the
Closing Date, and (b) its knowledge of any failure on its part to comply with or
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satisfy any material covenant, condition or agreement to be complied with or
satisfied by it hereunder prior to the Closing Date.
4.1.9 Non-Compete.
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(a) Seller covenants that, for a period of five years after the
Closing Date, it will not, directly or indirectly, enter into, engage in, act as
an agent, furnish design or consultant services to, have any interest in or
acquire control of more than a 5% interest in any business engaged in the
development, manufacture or sale in North America of products manufactured or
sold by the Business on the Closing Date; provided, however, that if the Seller
acquires control of any business having operations, a significant portion of
which sell or manufacture in North America products of the Business manufactured
or sold by the Business on the Closing Date, Seller shall not be in violation of
this Section 4.1.9 if Seller divests such operations which sell or manufacture
such products as promptly as practicable and in any event no later than 18
months following such acquisition. For the purposes of this Section 4.1.9 the
term "significant portion" of a business shall mean a portion of a business
which sells or manufactures products of the Business manufactured or sold by the
Business on the Closing Date in an amount equal to more than 15% of such
business' total sales for its last fiscal year.
(b) Seller acknowledges that in the event of its breach of the
foregoing covenant, money damages would be an inadequate remedy. Accordingly,
without prejudice to the rights of Purchaser to also seek such damages or other
remedies available to it and notwithstanding any other provision in the
Agreement to the contrary, Purchaser may seek, and Seller acknowledges and
covenants that it will not contest the appropriateness and availability of,
injunctive or other equitable relief in any proceeding which Purchaser may bring
to enforce the foregoing covenant not to compete on its express and explicit
terms. No waiver of any breach of the foregoing covenant shall be implied from
forbearance or failure of Purchaser to take action thereon.
(c) Seller and Purchaser agree that, if any provision of this
Section 4.1.8 should be adjudicated to be invalid or unenforceable, such
provision shall be deemed deleted herefrom with respect, and only with respect,
to the operation of such provision in the
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particular jurisdiction in which such adjudication was made; provided, however,
that to the extent any such provision may be made valid and enforceable in such
jurisdiction by limitations on the scope of the activities, geographical area or
time period covered, Seller and Purchaser agree that such provision instead
shall be deemed limited to the extent, and only to the extent, necessary to make
such provision enforceable to the fullest extent permissible under the laws and
public policies applied in such jurisdiction.
(d) The restrictions contained herein shall not apply with
respect to the Manufacturing Agreement referenced in Section 2.6.
4.1.10 Non-Solicitation of Employees. Seller shall not for a period of
two years from and after the Closing Date, directly or indirectly or through any
Affiliate, approach, counsel or attempt to induce any person who is then
employed in the Business to leave the employ of the Business, without the prior
written approval of Purchaser. The Parties agree that the placement of "help
wanted" advertisements in publications of general circulation shall not
constitute a solicitation prohibited by this Section 4.1.10. Seller agrees that
any remedy at law for breach by it of this Section 4.1.10 may be inadequate, and
Purchaser may be entitled to injunctive relief in such a case. If it is ever
held that the restrictions placed on Seller by this Section are too onerous and
are not necessary for the protection of Purchaser, the Parties hereto agree that
any court of competent jurisdiction may reduce the duration or scope hereof, or
delete specific words or phrases, and in its reduced form such provision will
then be enforceable and will be enforced.
4.1.11 Retention Bonus Arrangements. Seller has entered into retention
bonus arrangements with certain salaried employees of the Business identified to
Purchaser in letters delivered to Purchaser, and Purchaser is not assuming any
responsibility with respect thereto.
4.1.12 Environmental Investigation. Neither the environmental
indemnification nor the representations and warranties made in Section 3.1.12
shall be affected by any
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investigation by or on behalf of Purchaser, or by any information which
Purchaser may have or obtain with respect thereto.
4.1.13 Product Liability Insurance. Seller hereby covenants and agrees
to purchase at its sole cost and expense "tail" product liability insurance
policies with respect to products manufactured and sold by the Business on and
prior to the Closing Date. Seller's covenant in this Section 4.1.13 shall
continue in full force and effect from the date hereof to and including the
third anniversary of the date hereof.
4.2 Covenants of the Purchaser.
4.2.1 Further Actions.
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(a) The Purchaser agrees to use reasonable efforts to take all
actions and to do all things necessary, proper or advisable to consummate the
transactions contemplated hereby by the Closing Date.
(b) The Purchaser will, as promptly as practicable, file or
supply, or cause to be filed or supplied, all applications, notifications and
information required to be filed or supplied by the Purchaser pursuant to
Applicable Law in connection with this Agreement and the consummation of the
other transactions contemplated hereby, including but not limited to filings
pursuant to the H-S-R Act.
(c) The Purchaser will coordinate and cooperate with the Seller
in exchanging such information and supplying such reasonable assistance as may
be reasonably requested by the Seller in connection with the filings and other
actions contemplated by Section 4.1.3.
(d) At all times prior to the Closing, the Purchaser shall
promptly notify the Seller in writing of any fact, condition, event or
occurrence that could reasonably be expected to result in the failure of any of
the conditions contained in Article V to be satisfied, promptly upon the
Purchaser becoming aware of the same.
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4.2.2 Confidentiality. The Purchaser will treat and hold as such any
Confidential Information it receives from the Seller in the course of the review
of the Business, will not use any of the Confidential Information except in
connection with this Agreement, and, if this Agreement is terminated for any
reason whatsoever, will return to the Seller or destroy and so certify all
tangible embodiments (and all copies) of the Confidential Information which are
in its possession.
4.2.3 Further Assurances. Following the Closing and without further
consideration, the Purchaser shall from time to time, execute and deliver such
additional instruments, documents, conveyances or assurances and take such other
actions as shall be necessary, or otherwise reasonably requested by the Seller
to confirm and assure the transfer of the rights and obligations provided for in
this Agreement to or from the Seller and to render effective the consummation of
the transactions contemplated hereby. In addition, following the Closing, the
Purchaser shall permit the Seller to pursue any claims or rights of recovery
(exclusive of suit or other third party collection methods without the prior
written consent of Purchaser, which will not be unreasonably withheld) which
Seller may have with respect to any capitalized sorting costs or capitalized
work order costs from the customers and suppliers of the Business.
4.2.4 Use of Business Names by the Purchaser. Except as otherwise
provided with respect to the License Agreement provided in Section 5.1.4, to the
extent the trademarks, service marks, trade, corporate or business names of the
Seller or of any of the Seller's Affiliates or divisions (other than the
Business) are used by the Business on stationery, signage, invoices, receipts,
forms, packaging, advertising and promotional materials, products, training and
service literature and materials or computer programs constituting Purchased
Assets ("Marked Materials") or appear on Inventory at the Closing, the Purchaser
may (i) use such Marked Materials after the Closing for a period of 180 days
without altering or modifying such Marked Materials, (ii) sell such Inventory in
the normal course of business until depleted, and (iii) use patterns, molds and
fixtures containing such marks for a period of 12 months after
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Closing without removing or rendering illegible any such trademarks, service
marks, or trade, corporate or business names, but the Purchaser shall not
thereafter use such trademarks, service marks, brand names or trade, corporate
or business names in any other manner without the prior written consent of the
Seller. Immediately upon the expiration of the above referenced periods, the
Purchaser shall remove or render illegible such trademarks, service marks, brand
names or trade, corporate or business names therefrom or clearly and prominently
mark the name of the Purchaser thereon and indicate that the Purchaser is not
affiliated with the Seller or any Affiliate thereof.
4.2.5 Purchaser's Knowledge of Business. The Purchaser hereby agrees
that, to the extent any representation or warranty of the Seller made herein is,
to the knowledge of the Purchaser, untrue or incorrect, if the Purchaser elects
to close, the Purchaser will have no rights under this Agreement to the extent
of such untruth or inaccuracy. For purposes of this Section 4.2.5, knowledge of
the Purchaser means the actual knowledge, after reasonable investigation, of
Sylvio Raymond, Jim Petersen, Phil Backlund and Richard Glasson.
4.2.6 Post-Closing Access and Information.
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(a) Purchaser shall allow Seller and its agents access to all
business records and files of the Business which are transferred to Purchaser in
connection herewith, to the extent necessary or desirable in anticipation of, or
preparation for, existing litigation, tax returns or audits, reports to or
filings with governmental agencies, or other necessary matters, including,
without limitation, any matters relating to the Transition Timeline and
Manufacturing Agreement or to employees of the Seller for which Seller remains
responsible or liable pursuant to the terms of this Agreement, during normal
business hours at Purchaser's principal places of business or at any location
where such records are stored; provided, however, that such access shall not
materially interfere with the normal operations of the Business by Purchaser;
and provided, further, that all such information shall be subject to the
confidentiality provisions of Section 10.17 hereof.
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(b) Seller shall make or cause to be made available to Purchaser all
of its business records and files relating to the operations of the Business and
the Purchased Assets for the same purposes, to the extent applicable, and on the
same terms and conditions as are set forth in clause (a) of this Section 4.2.6.
(c) The Purchaser will retain all books and records relating to the
Business in accordance with its record retention policy as such policy may be
amended from time to time. The Purchaser shall not dispose of or permit the
disposal of any such books and records prior to the time specified in its record
retention policy without first giving 60 days' prior written notice to the
Seller offering to surrender the same to the Seller at the Seller's expense.
(d) Except as otherwise required by this Agreement or the Exhibits
attached hereto, in the event that the Purchaser obtains, either prior to or
after the Closing, any material documents, records or information that, instead
of relating to the Business, relate primarily to the Seller, the Seller's
operations or business, the Purchaser shall (i) promptly notify the Seller of
that fact, (ii) promptly return such document, record or information to the
Seller, (iii) not use any such document, record or information in any way that
is detrimental to the interests of Seller, and (iv) keep the content of such
document, record or information confidential pursuant to the confidentiality
provisions of the Services Agreement attached as Exhibit 4.
4.2.7 Non-Solicitation. If this Agreement is terminated, Purchaser
will not, for a period of two years thereafter, without the prior written
approval of Seller, directly or indirectly, solicit, encourage, entice or induce
any Person (other than secretarial or clerical employees) who is employed by
Seller or any of its Subsidiaries at the date hereof or at any time hereafter
that precedes such termination, to terminate his or her employment with Seller
or any of its Subsidiaries. The parties agree that the placement of "help
wanted" advertisements in publications of general circulation shall not
constitute a solicitation prohibited by this Section 4.2.7. Purchaser agrees
that any remedy at law for breach by it of this Section 4.2.7 may be inadequate,
and Seller may be entitled to injunctive relief in such a case. If it is ever
held that the restrictions placed on Purchaser by this Section 4.2.7 are too
onerous and are not necessary
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for the protection of Seller, the parties hereto agree that any court of
competent jurisdiction may reduce the duration or scope hereof, or delete
specific words or phrases, and in its reduced form such provision will then be
enforceable and will be enforced.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions to Obligations of Each Party. The obligations of the Parties to
consummate the transactions contemplated hereby shall be subject to the
fulfillment on or prior to the Closing Date of the following conditions:
5.1.1 H-S-R Act Notification. In respect of the notifications of the Purchaser
and the Seller pursuant to the H-S-R Act, the applicable waiting period and any
extensions thereof shall have expired or been terminated.
5.1.2 No Injunction, Etc. No action or proceedings shall have been instituted
before a Governmental Authority to restrain or prohibit the consummation of the
transactions contemplated hereby and there shall not be in effect on the Closing
Date any decree or judgment of any court or other Governmental Authority which
prohibits consummation of the transactions contemplated hereby.
5.1.3 Manufacturing Agreement; Services Agreement. The Parties will have
executed each of the Manufacturing Agreement and the Services Agreement, each
substantially in form and substance as set forth on Exhibit 3 and Exhibit 4
attached hereto, respectively.
5.1.4 License Agreement. The Parties will have executed the Trademark License
Agreement substantially in form and substance attached hereto as Exhibit 5
pursuant to which Purchaser shall have the right to a royalty-free non-exclusive
license to use the trademark "DURA-LITE" solely in connection with the operation
of the Business.
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5.2 Conditions to Obligations of the Purchaser. The obligations of the
Purchaser to consummate the transactions contemplated hereby shall be subject
to the fulfillment on or prior to the Closing Date of the following additional
conditions:
5.2.1 Representations, Performance. The representations and
warranties of the Seller contained in this Agreement shall be true and correct
in all material respects at and as of the Closing Date. The Seller shall have
duly performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date. The Seller shall have delivered to the
Purchaser a certificate dated the Closing Date and signed by its duly authorized
officer, to the foregoing effect.
5.2.2 Consents. The Seller shall have obtained and shall have
delivered to the Purchaser signed copies of:
(a) all Governmental Approvals necessary to be obtained by the
Seller in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, unless the failure to
obtain such Governmental Approvals would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect; and
(b) the three (3) Consents listed on the Conflicts Schedule and
denoted as a required consent to be obtained by Seller.
5.2.3 Corporate Authorization. All corporate and other actions
necessary to authorize and effectuate the consummation of the transactions
contemplated hereby by Seller shall have been duly taken on or prior to the
Closing Date, and Seller shall have delivered to Purchaser a certified copy of
the resolutions of the board of directors of Seller authorizing the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.
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5.2.4 Opinion of Counsel. Purchaser shall have been furnished the
opinion, dated the Closing Date, of Kirkland & Ellis, counsel for Seller,
substantially in the form of Exhibit 6 attached hereto.
5.2.5 Side Letter From J2R Corporation Re: Future Business
Opportunities. Seller shall have delivered to Purchaser a letter signed by duly
authorized representatives of J2R Corporation substantially in form and
substance as set forth on Exhibit 7 attached hereto.
5.3 Conditions to Obligations of the Seller. The obligation of the Seller
to consummate the transactions contemplated hereby shall be subject to the
fulfillment, on or prior to the Closing Date, of the following additional
conditions:
5.3.1 Representations, Performance. The representations and
warranties of the Purchaser contained in this Agreement shall be true and
correct in all material respects at and as of the Closing Date. The Purchaser
shall have duly performed and complied in all material respects with all
agreements and conditions required by this Agreement to be performed or complied
with by it prior to or on the Closing Date. The Purchaser shall have delivered
to the Seller a certificate, dated the Closing Date and signed by its duly
authorized officer, to the foregoing effect.
5.3.2 Corporate Authorization. All corporate and other actions
necessary to authorize and effectuate the consummation of the transactions
contemplated hereby by Purchaser shall have been duly taken on or prior to the
Closing Date, and Purchaser shall have delivered to Seller a certificate of the
Secretary or an Assistant Secretary attesting to the true authorization of the
individuals to execute and deliver this Agreement and consummate the
transactions contemplated hereby.
5.3.3 Opinion of Counsel. Purchaser shall have been furnished an
opinion of an Assistant General Counsel of Purchaser, dated the Closing Date,
substantially in the form of Exhibit 8 attached hereto.
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ARTICLE VI
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
6.1 Employment of Employees. Except for the persons listed on the Retained
Employees Schedule, all employees who are actively employed at the owned
Facilities and all engineers and other employees who are actively employed
exclusively by the Business in Troy, Michigan (including employees of the
Business on sick leave, short-term disability leave, layoff, salary continuation
and vacation, but excluding employees of the Business on long-term disability)
shall be offered employment by the Purchaser, which offers shall be for
comparable positions and for wages or salaries which are substantially similar
to such employees' positions, wages or salaries immediately prior to the
Closing. A mutually agreed upon list of active employees is set forth on the
Active Employees Schedule, which Schedule shows each active employee to whom
employment will be offered by name, title, date of hire, social security number
and status if not at work. All persons who are offered such positions and accept
such offers and, therefore, become employees of the Purchaser shall be referred
to herein as "Transferred Employees." Seller shall retain the employee benefit
obligations incurred under the Employee Plans by the Transferred Employees
during the period ending on the Closing Date and shall hold Purchaser harmless
from and against all employee benefit obligations, liabilities and commitments
attributable to such period, unless such obligations have been transferred to or
assumed by Purchaser in this Article VI or Section 1.3.
(a) Effective as of the Closing Date, the Transferred Employees shall
cease to be covered under the Employee Plans of Seller and shall participate
under the Employee Benefit Plans, programs and policies offered to them by the
Purchaser; provided, however, that, as of the Closing Date, the Purchaser shall
provide or establish, or cause to be provided or established, employee benefit
plans and programs which are substantially equivalent in the aggregate to those
Employee Plans provided by Seller to the Transferred Employees immediately prior
to the Closing Date.
(b) The employee benefit plans and programs so provided or established
by the Purchaser shall credit the Transferred Employees covered thereby with all
of the said Transferred Employees' service with the Seller (or any predecessor
or affiliated employers), to
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the extent such service was recognized by Seller for eligibility and vesting
purposes as of the Closing Date.
(c) In the case of any Welfare Plan that is a group medical or dental
insurance or other health care plan, Transferred Employees shall be covered
under such Purchaser Plan without regard to any pre-existing condition
restrictions and with credit for payments made during the current plan year as
to annual maximum out-of-pocket, co-payments and deductibles.
(d) The Purchaser shall be responsible for and hold Seller harmless
from and against all employee benefit obligations, liabilities and commitments
attributable to the period after the Closing Date with respect to the
Transferred Employees.
6.2 Dura Savings Plan. With respect to the Dura Mechanical Components, Inc.
Savings Plan (the "Savings Plan"), except as otherwise provided, Seller agrees
that it shall be solely responsible to Transferred Employees with respect to
benefits accrued thereunder as of the Closing Date. Seller further agrees to
vest the Transferred Employees immediately following the Closing Date in their
respective accounts, if any, under the Savings Plan. Seller shall contribute to
the Savings Plan, in accordance with the terms of said Plan, all amounts
attributable to the Transferred Employees which are owed to or under the Plan as
of the Closing Date. Transferred Employees will be entitled to a distribution of
their account balance in the Savings Plan in accordance with the terms of the
Savings Plan as if such Transferred Employees terminated their employment with
Seller as of the Closing Date.
6.3 Dura Pension Plan. Except as otherwise provided, Seller agrees that it
shall be solely responsible to Transferred Employees with respect to benefits
accrued under the Dura Mechanical Components, Inc. Salaried Employees'
Retirement Plan (the "Pension Plan") as of the Closing Date and shall vest the
Transferred Employees in such accrued benefits as of the Closing Date.
Transferred Employees will be entitled to a distribution of their accrued
benefit from the Pension Plan in accordance with the terms of the Pension Plan
as if such Transferred Employees terminated their employment with Seller as of
the Closing Date. Except as otherwise
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provided in Section 6.1(b) hereof, with respect to any pension plan established
by the Purchaser, the Purchaser shall have no obligation to the said Transferred
Employees with respect to their service with Seller prior to the Closing Date.
6.4 Hourly Profit Sharing Plan. Sponsorship of the Dura Mechanical Components,
Inc. Hourly Employees' Profit Sharing Plan (the "Facility Plan") shall be
assumed as of the Closing Date by the Purchaser, and the Seller shall have no
obligation or commitment under said Plan thereafter; provided that Seller has
fully funded the Facility Plan for all periods prior to the Closing Date, except
to the extent of any accrual set forth on the Closing Date Statement.
Notwithstanding the foregoing, the Seller shall be responsible for and shall
hold Purchaser harmless from and against all liabilities, costs and expenses,
including, without limitation, Tax liabilities, associated with or arising out
of Seller's failure to receive from the Internal Revenue Service a qualification
letter stating that the Facility Plan meets the requirements of Code Section
401(a) and is exempt from federal income taxes, pursuant to code Section 501(a).
Purchaser hereby covenants and agrees to change the name of said plan to a name
which does not include the name "Dura" and to file all necessary documents with
all appropriate Governmental Authorities evidencing the transfer of the
sponsorship of said plan to Purchaser as soon as practicable.
6.5 Continuation and Retiree Medical Coverage. The Seller agrees that it shall
be solely responsible for the provision of health care continuation coverage
required pursuant to the terms of COBRA or similar state statute and retiree
medical coverage for those former employees of the Business (and, in the case
of retiree medical coverage, all employees of the Business) whose entitlement to
such continuation coverage or retiree medical coverage occurred before the
Closing Date. Purchaser shall be responsible for providing "continuation
coverage" under its group health plans to all Transferred Employees and shall
comply with all notice and other requirements under COBRA or similar state
statute so that Seller shall have no liability or obligation with respect to
Transferred Employees under COBRA or a similar state statute as a result of the
transactions contemplated under this Agreement. With respect to the Special
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Retiree Medical Spending Account program, Seller agrees that it shall be solely
responsible for such program and shall retain all responsibility and any and all
potential liability which may now or in the future be related thereto. Purchaser
consents to Seller's termination of the Special Retiree Medical Spending Account
program on or prior to the Closing Date should Seller so elect.
6.6 Worker Adjustment and Retraining Notification Act ("WARN"). The
Purchaser shall comply with all notice and any other requirements under WARN and
any similar state statute so that the Seller shall have no liability or
obligation under WARN or similar state statute as a result of any event
occurring on or after the Closing Date. The Purchaser shall not be liable for
any violation of WARN or similar state statutes which occurred prior to the
Closing Date.
6.7 Seller's Welfare Benefit Services. Prior to the Closing Date, Seller
shall make a request of the vendors and third party administrators ("TPA") of
its insurance programs listed on the Employee Benefit Schedule and marked with a
# sign to extend similar services and coverages to Purchaser after the Closing
Date on behalf of the Transferred Employees and under terms and conditions which
are similar to those extended to Seller. In the event the vendors and TPAs
decline to extend such services and coverages to Purchaser, to the extent
Seller's existing insurance programs permit Seller to extend such services to
Purchaser, Seller agrees to administer such insurance programs on behalf of
Purchaser for a period of 120 days after the Closing Date (or for such longer
period as mutually agreed upon by Seller and Purchaser).
6.8 Seller's Savings Plan. Purchaser agrees to adopt defined contribution
retirement plans which are substantially identical to Seller's Savings Plan.
Seller agrees to administer Purchaser's newly adopted Savings Plan and the
Facility Plan on behalf of Purchaser for a period of 120 days after the Closing
Date (or such longer period as mutually agreed upon by Seller and Purchaser).
Prior to the Closing Date, Seller shall arrange for the vendors and TPAs of its
Savings and Facility Plans to extend similar services to Purchaser after the
Closing Date
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on behalf of the Transferred Employees and under terms and conditions which are
similar to those extended to Seller.
6.9 Purchaser's Responsibility. Purchaser shall be responsible for, and
shall pay or reimburse Seller for all costs related to the plans administered by
Seller on behalf of Purchaser after the Closing Date, including, but not limited
to, the actual claims incurred by the Transferred Employees under such plans,
all insurance premiums applicable to such coverage, and all expenses and costs
incurred by Seller with respect to such services. Purchaser shall indemnify and
hold Seller harmless against any and all Losses with respect to the services
provided under the terms of Sections 6.7 and 6.8.
ARTICLE VII
TERMINATION
7.1 Ability to Terminate. The Parties may terminate this Agreement as
provided below:
(a) the Purchaser and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) the Purchaser may terminate this Agreement by giving written
notice to the Seller if the Closing shall not have occurred on or before May 15,
1995 by reason of the failure of any condition precedent under Section 5.1 or
5.2 (unless the failure results primarily from the Purchaser breaching any
representation, warranty, or covenant contained in this Agreement);
(c) the Seller may terminate this Agreement by giving written notice
to the Purchaser if the Closing shall not have occurred on or before May 15,
1995 by reason of the failure of any condition precedent under Section 5.1 or
5.3 (unless the failure results primarily from the Seller breaching any
representation, warranty, or covenant contained in this Agreement); and
(d) the Purchaser may terminate this Agreement by giving written
notice to the Seller in the event (i) Seller supplements the Schedules such that
the matters disclosed in the supplements have a Material Adverse Effect upon the
Business or Purchased Assets, or (ii) Seller
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has breached any material representation, warranty, or covenant contained in
this Agreement in any material respect, and the breach has continued without
cure for a period of ten (10) days after delivery of written notice thereof from
Purchaser to Seller.
7.2 Effect of Termination. If any Party terminates this Agreement
pursuant to Section 7.1, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to the other Party (except
for any liability of any Party who is in intentional breach of this Agreement);
provided, however, that the confidentiality provisions contained in Section
4.2.2 above shall survive termination.
ARTICLE VIII
INDEMNIFICATION AND RELATED MATTERS
8.1 Survival of Representations and Warranties.
(a) Each and every representation and warranty of Seller contained
in this Agreement shall continue in full force and effect until three (3) years
after the Closing Date and then expire other than Seller's representations and
warranties contained in:
(i) Section 3.1.12 (Environmental Matters), which shall expire
on the first anniversary of the Closing Date; and
(ii) Section 3.1.6 (Tax Matters), Section 3.1.9(a) (Title to
Purchased Assets) and Section 3.1.17 (Brokers, Finders, Etc.) which shall
survive the Closing Date until all applicable statutes of limitation (including
all extensions thereof) have expired and then expire.
(b) Each and every representation and warranty of Purchaser
contained in this Agreement shall continue in full force and effort until three
(3) years after the Closing Date and then expire other than Purchaser's
representations and warranties contained in Section 3.2.6 (Brokers, Finders,
Etc.) which shall survive the Closing Date until all applicable statutes of
limitation (including any extensions thereof) have expired and then expire.
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8.2 General Indemnification.
(a) By the Seller. After the Closing occurs, and subject to the terms
and provisions of this Agreement, Seller will indemnify the Purchaser and hold
it harmless against and defend against any demand, penalty, fine, claim, action
or cause of action, investigation, cost, loss, liability, deficiency, damage or
expense (including reasonable legal fees and expenses) (a "Loss") which the
Purchaser may suffer, sustain or become subject to as a result of:
(i) any breach of any representation or warranty made by the
Seller herein as of the Closing;
(ii) any failure of the Seller to perform any covenant or
agreement hereunder; and
(iii) Seller's failure to pay or discharge the Retained
Liabilities or Seller's ownership, operation or use of the Excluded Assets.
(b) By the Purchaser. After the Closing occurs, and subject to the
terms and provisions of this Agreement, the Purchaser will indemnify the Seller
and hold it harmless against and defend against any Loss which the Seller may
suffer, sustain or become subject to as a result of:
(i) any breach of any representation or warranty made by the
Purchaser herein as of the Closing;
(ii) any failure of the Purchaser to perform any covenant or
agreement hereunder; and
(iii) subject to the provisions of Section 8.5, Purchaser's
failure to assume, pay or discharge the Assumed Liabilities or the operation of
the Business by the Purchaser or the Purchaser's ownership, operation or use of
the Purchased Assets on or after the Closing Date.
(c) The indemnification obligations with respect to Seller and
Purchaser with respect to environmental matters will be governed by Section 8.3
and Section 8.4 and not by this Section 8.2.
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8.3 Environmental Indemnification.
(a) By the Seller.
--------------
(i) Off-Property Disposal. Seller agrees to indemnify, defend,
reimburse and hold harmless Purchaser, its directors, officers, shareholders,
and employees, from and against any and all Environmental Damages incurred by
Purchaser with respect to any off-Property disposal of wastes generated at or
relating in any way to the Business or to the Property occurring prior to the
Closing Date, whether Hazardous Material or otherwise, including but not limited
to any handling or transportation off-site in connection with such disposal.
Seller's obligation under this Section 8.3(a)(i) shall terminate on the seventh
anniversary date of the Closing Date.
(ii) Indemnification with Respect to the Facilities. Seller
agrees to indemnify, defend, reimburse and hold harmless Purchaser, its
directors, officers, shareholders, and employees from and against any and all
Environmental Damages (a) arising from the release or threatened release of
Hazardous Material upon, beneath or in any of the Facilities or migrating or
threatening to migrate from a Facility or (b) arising in any manner whatsoever
out of the violation of any Environmental Requirements pertaining to the
Facilities, either of which conditions (a or b) exist at or prior to the Closing
Date and regardless of whether it arose prior to the present ownership or
operation of any of the Facilities or from the breach of any warranty, covenant
or the inaccuracy of any representation of Seller contained in this Agreement.
The obligation of Seller under this Section shall not be affected by any
investigation by or on behalf of Purchaser, or by any information which
Purchaser may have or obtain with respect thereto, prior to or after the Closing
Date. The Seller's obligation under this Section 8.3(a)(ii) shall terminate on
the seventh anniversary date of the Closing Date.
(b) By the Purchaser.
-----------------
(i) Off-Property Disposal. Purchaser agrees to indemnify, defend,
reimburse and hold harmless Seller, its directors, officers, shareholders, and
employees, from and against any and all Environmental Damages (including for
this purpose Environmental Damages arising from Environmental Requirements
enacted or effective prior to, on, or after the Closing Date) incurred by Seller
with respect to any off-Property disposal of wastes
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generated at or relating in any way to the Business or to the Property occurring
after the Closing Date, whether Hazardous Material or otherwise, including but
not limited to any handling or transportation off-site in connection with such
disposal. Purchaser's obligation under this Section 8.3(b)(i) shall continue
indefinitely and without limitation.
(ii) Indemnification with respect to the Facilities. Purchaser
agrees to indemnify, defend, reimburse and hold harmless Seller, its directors,
officers, shareholders, and employees, from and against any and all
Environmental Damages (including for this purpose Environmental Damages arising
from Environmental Requirements enacted or effective prior to, on or after the
Closing Date) (a) arising from the release or threatened release of Hazardous
Material upon, beneath or in any of the Facilities or migrating or threatening
to migrate from the Facilities or (b) arising in any manner whatsoever out of
the violation of any Environmental Requirements pertaining to any of the
Facilities either of which conditions (a or b) come into existence or are
attributable to events occurring after the Closing Date. Purchaser's obligation
under this Section 8.3(b)(ii) shall continue in all events in full force and
effect forever thereafter and without limitation (subject to any applicable
statute of limitations).
8.4 Seller's Option to Conduct Required Remediation. Notwithstanding
the obligation of Seller to indemnify Purchaser pursuant to Sections 8.3(a)(i)
and 8.3(a)(ii) of this Agreement and for any breach of the representations and
warranties contained in Section 3.1.12 hereof, Seller may, at its option and
upon written notice to Purchaser, undertake principal control over the matter
for which indemnification is claimed, including, without limitation, selection
of remedial measures and negotiations with interested government agencies and
third parties. In the course of addressing any such matter, Seller shall make
reasonable efforts to prevent any unreasonable interference with day-to-day
operations at the Facilities. Should Seller elect to conduct such investigation
and remediation, such actions shall be conducted in accordance with
Environmental Requirements. In such cases, Seller shall pay all costs in
connection with such investigatory and remedial activities, including, without
limitation, all power and utility costs, and any and all taxes or fees that may
be applicable to such activities. Promptly upon completing such investigation
and remediation, Seller shall permanently seal or cap all
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monitoring wells and test holes to industrial standards in compliance with
applicable federal, state and local laws and regulations, remove all associated
equipment, and restore the Property to the maximum extent possible, which shall
include, without limitation, repair of any surface damage, including landscaping
and paving, caused by such investigation or remediation hereunder. The Party
exercising principal control (whether Seller or Purchaser) shall keep the other
Party apprised of major developments relating to such matter and shall, subject
to applicable legal privileges, make all reports, filings, and other documents
relating to such matter available for inspection by the other Party upon
request. The Party exercising principal control shall at least be obligated to
(a) keep the other Party informed on an ongoing and meaningful basis as to the
substance of all discussions with the responsible governmental authorities or
private parties, (b) meet with the other Party and make available its
consultants for meetings for such purposes upon reasonable request, and (c)
consult with the other Party before entering into any agreement with
governmental authorities or private parties or commencing litigation concerning
the scope, performance and completion of response actions or measures. Prior to
commencing any site work, the Party exercising principal control shall provide
the other Party with a description of the work and a schedule for completion of
the work. With respect to any leased property, the Party exercising principal
control is responsible for obtaining any approvals necessary from the landlord
for access to the Property. The Parties agree to reasonably cooperate with one
another in connection with any such matter, including, without limitation,
allowing one another reasonable access to relevant personnel, records, and
Facilities. Any corrective or remedial action taken with respect to any such
matter shall be deemed adequate to the extent such action attains, in a cost
effective manner, standards set forth in Environmental Requirements and provided
that all actions to remediate the Property which are required by any
Governmental Authority have been taken subject to the right of the Party
exercising principal control to contest with such Governmental Authority, in
good faith and in compliance with law, requirements set forth by such
Governmental Authority.
8.5 Indemnification for Warranty Claims, Product Liability, and Worker's
Compensation Claims. Seller agrees to indemnify and hold harmless Purchaser from
and against
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(i) 50% of all Losses arising out of or relating to any Warranty Claims, to the
extent such Warranty Claims exceed $50,000 per calendar year (and any amounts in
excess of $50,000 shall not be subject to the $250,000 basket set forth in
Section 8.8 hereof), (ii) Losses arising out of or relating to product liability
claims (being claims for damages for injury to persons or damage to property)
alleged to have been caused by or by reason of a defect in the products or
services of the Business manufactured and sold by Seller, or (iii) Losses
arising out of or relating to any incurred but unpaid worker's compensation
claims made by or on behalf of the Transferred Employees to the extent such
Losses exceed the corresponding accrual for such worker's compensation claims in
the Closing Date Statement and then only to the extent that such Losses exceed
such amounts; provided, that Purchaser shall not be entitled to the benefit of
any funds or credits made available to Purchaser by the Seller's insurance
carriers and to the extent Purchaser receives any such benefit, such benefit
shall be promptly paid over to Seller. The Seller's obligations under this
Section 8.5 shall terminate (i) with respect to Warranty Claims, on the fourth
anniversary of the Closing Date, and (ii) with respect to product liability
matters, on the third anniversary of the Closing Date. With respect to worker's
compensation claims, if, on the third anniversary of the Closing Date, all
worker's compensation claims related to occurrences on or prior to the Closing
Date have not been closed, the Parties shall in good faith attempt to determine
the ultimate cost of said worker's compensation claims. In the event the Parties
are unable to agree on the ultimate value of said worker's compensation claims,
Purchaser shall have the right to propose its estimate of the ultimate value of
said worker's compensation claims. Within 30 days of Purchaser making its
proposal of the ultimate value of said worker's compensation claims, Seller
shall either accept Purchaser's estimate of the ultimate value of said worker's
compensation claims, in which event the matter shall be considered final and
Seller shall, subject to Section 8.8 hereof, pay to Purchaser the amount due for
the ultimate value of said worker's compensation costs, or Seller shall initiate
the dispute resolution procedure set forth in Annex I attached hereto.
8.6 Notice of Circumstance. Promptly after receipt by Purchaser or
Seller of notice of any action, proceeding, claim or potential claim (any of
which is hereinafter individually referred
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to as a "Circumstance") which could reasonably be expected to give rise to a
right to indemnification pursuant to any provision of this Agreement, such Party
(the "Indemnified Party") shall give the Party who may become obligated to
provide indemnification hereunder (the "Indemnifying Party") within notice
describing the Circumstance in reasonable detail. If notice of a Circumstance is
not given to the Indemnifying Party within a sufficient period of time or
insufficient detail to apprise the Indemnifying Party of the nature of the
Circumstance (in each instance taking into account the facts and circumstances
known by the Indemnified Party with respect to such Circumstance), the
Indemnifying Party shall not be liable to the Party seeking indemnification to
the extent that the Indemnifying Party's position is actually prejudiced as a
result thereof. The Indemnifying Party shall have the right, at its option, to
compromise or defend, at its own expense and by its own counsel, any
Circumstance involving the asserted liability of the Party seeking
indemnification; provided, however, in the case of an indemnification to be
provided by Seller with respect to Taxes, if the issue with respect to which the
defense or compromise is proposed cannot be separated, without cost, expense or
prejudice from other Tax issues of Purchaser with respect to which
indemnification would not be required, Seller and Purchaser shall jointly defend
or prosecute any contest with respect to such Taxes. If any Indemnifying Party
shall undertake to compromise or defend any such asserted liability, it shall
promptly notify the Party seeking indemnification of its intention to do so, and
the Party seeking indemnification agrees to cooperate fully with the
Indemnifying Party and its counsel in the compromise of, or defense against, any
such asserted liability. All costs and expenses incurred in connection with such
cooperation shall be borne by the Indemnifying Party. In any event, the
Indemnified Party shall have the right at its own expense to participate in the
defense of such asserted liability. Under no circumstances shall the Party
seeking indemnification compromise any such asserted liability without the prior
written consent of the Indemnifying Party, unless the Indemnifying Party has
refused or neglected to discharge its obligations hereunder.
8.7 Survival of Indemnification Obligations. Entitlement to indemnification
for breach of the representations, warranties and covenants hereunder shall be
conditioned upon claims
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being made in writing in respect of any such claim for indemnification within
the applicable time periods set forth in Section 8.1, 8.3 and 8.5 hereof and in
case of any claim made by either Party against the other, other than by reason
of a third party claim, some damage or Loss shall be incurred in good faith at
or prior to the date of such notice. Unless otherwise expressly provided herein,
the indemnification obligations for all claims relating to Assumed Liabilities,
Retained Liabilities and breaches of covenants and agreements contained in this
Agreement shall survive the Closing until all applicable statutes of limitation
(including any extension thereof) have expired and then expire with respect to
any unasserted claim.
8.8 Dollar Limitations. The Seller shall not be required to indemnify the
Purchaser with respect to any Loss or any Environmental Damages, unless and
until the aggregate amount of all Losses (including Environmental Damages) for
which Seller is liable under this Article VIII exceeds $250,000 and then only to
the extent such aggregate amount exceeds $250,000. Warranty Claims assumed by
Purchaser shall not be included in the $250,000 threshold amount. The $250,000
threshold amount set forth in this Section 8.8 shall not apply to any Purchaser
Loss relating to (i) Seller's representation and warranty in Section 3.1.17 with
respect to brokers and finders, (ii) Seller's indemnification with respect to
the bulk transfer laws covered in Section 10.14, and (iii) Seller's obligations
with respect to Retained Liabilities, Transition Properties, Transition
Timeline, the Manufacturing Agreement and the Services Agreement and expenses
and tax matters covered in Article X in this Agreement and (iv) Seller's
indemnification with respect to the Facility Plan set forth in Section 6.4.
Notwithstanding anything to the contrary contained herein, the maximum amount of
indemnification for any Losses or any Environmental Damages for which Seller is
required to indemnify the Purchaser shall not exceed an amount equal to $12.5
million, in the aggregate.
8.9 Adjustment to Indemnification Payment.
(a) Any payment made by an Indemnifying Party to an Indemnified Party
pursuant to this Article VIII in respect of any claim shall be reduced by an
amount equal to any Tax benefits attributable to the Indemnified Party to such
claim.
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(b) Any payment made by an Indemnifying Party to an Indemnified Party
pursuant to this Article VIII shall be reduced by an amount equal to any
insurance proceeds payable to the Indemnified Party attributable to such claim;
provided, however, self insurance and deductibles shall not be considered to be
insurance proceeds. The Parties shall be obligated to prosecute, or to cause
their appropriate Affiliates to prosecute, diligently and in good faith any
claim for Losses with any applicable insurer. In any case where an Indemnified
Party or any of its Affiliates recovers from third parties any amount in respect
of a matter with respect to which an Indemnifying Party has indemnified it
pursuant to this Article VIII, such Indemnified Party shall promptly pay over to
the Indemnifying Party the amount so recovered (after deducting therefrom the
full amount of the expenses incurred by it in procuring such recovery and the
amount of its claim against the Indemnifying Party), but not in excess of any
amount previously so paid by the Indemnifying Party to or on behalf of the
Indemnified Party in respect of such matter.
8.10 Waiver of Non-Compensatory Damages. No Indemnified Party shall be
entitled to recover from an Indemnifying Party for any Losses or Environmental
Damages as to which indemnification is provided under this Agreement any amount
in excess of the actual compensatory damages, court costs and reasonable
attorney fees suffered by such Party; and the Purchaser and the Seller waive any
right to recover punitive, special, exemplary and consequential damages arising
in connection with or with respect to Losses under the indemnification
provisions hereof.
8.11 Mitigation Obligation. Each Party entitled to indemnification
hereunder shall take all reasonable steps to mitigate all Losses after becoming
aware of any event which could reasonably be expected to give rise to any Losses
that are indemnifiable or recoverable hereunder or in connection herewith.
8.12 Exclusive Remedy; Waiver and Release. The indemnification provided
under this Article VIII shall be the Purchaser's and the Seller's sole and
exclusive remedies, each against
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the other, with respect to matters arising under this Agreement, of any kind or
nature, or relating to the Business, the Purchased Assets and the ownership,
operation, management, use or control of the Facilities. The Purchaser and the
Seller hereby waive and release any other rights, remedies, causes of action or
claims under Applicable Law (including, without limitation, CERCLA or any other
Environmental Requirement) that they have or that may arise against the other
with respect to matters arising under this Agreement, of any kind or nature, or
relating to the Business, the Purchased Assets and the ownership, operation,
management, use or control of the Facilities.
8.13 Post-Closing Actions. Except as otherwise expressly provided for in
this Agreement, the Seller shall not be responsible for any liability or
obligation resulting from the failure of the Purchaser to comply with Applicable
Law or the rights of third parties after the Closing even if the Business is
operated after the Closing in the same manner in which the Business was operated
prior to Closing.
ARTICLE IX
DEFINITIONS
9.1 Definition of Certain Terms. The terms defined in this Section 9.1,
whenever used in this Agreement (including in the Schedules), shall have the
respective meanings indicated below for all purposes of this Agreement:
"Affiliate" of a Person means a Person that directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first Person. "Control" (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.
"Agreement" means this Asset Purchase Agreement, including the
Schedules and Exhibits hereto.
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"Applicable Law" means all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any Governmental Authority and (ii)
Governmental Approvals.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of the Business that is not already generally available
to the public.
"Consent" means any consent, approval, authorization, waiver, permit,
grant, franchise, concession, agreement, license, exemption or order of
registrations certificate, declaration or filing with, or report or notice to,
any Person, including but not limited to any Governmental Authority, in each
case only if it is material to the Business, the Purchased Assets or the
consummation of the transactions contemplated herein.
"Environmental Damages" means all Losses, as defined in Section
8.2(a), incurred pursuant to "Environmental Requirements", including, without
limitation:
(i) damages for personal injury, or injury to property or natural
resources occurring upon or off of any of the properties used in the Business;
(ii) liability for releases or threatened releases of Hazardous
Material;
(iii) fees incurred for the services of attorneys, consultants,
contractors, experts, laboratories and all other costs incurred in connection
with the investigation or remediation of Hazardous Material pursuant to
Environmental Requirements;
(iv) liability to any third person or governmental agency to
indemnify such person or agency for costs expended in connection with the items
referenced in subparagraphs (i), (ii) and (iii) herein.
"Environmental Requirements" means all applicable common law and
statutes, regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions and franchises (to the extent
having the force and effect of law) of all governmental agencies, departments,
commissions, boards, bureaus, or instrumentalities of the United States, states
and political subdivisions thereof and all applicable judicial, administrative,
and regulatory decrees, judgments, and orders (to the extent having the force
and effect of law) relating to the protection of public health from
environmental hazards, protection of health or safety of
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employees (including occupational safety or health), or the protection of the
environment including, without limitation, all requirements pertaining to
emissions, discharges, releases or threatened releases of Hazardous Material
into air, surface water, groundwater or land, or otherwise relating to the
manufacture, processing, use, treatment, storage, disposal, transport or
handling of Hazardous Material and relating to the remediation of releases or
threatened releases of Hazardous Material, as such of the foregoing are enacted
and in effect on or prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"Governmental Approval" means any consent, approval, authorization,
waiver, permit, grant, franchise, concession, agreement, license, exemption or
order of registration, certificate, declaration or filing with, or report or
notice with or to any Governmental Authority.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any government authority, agency,
department, board, commission or instrumentality of the United States, any State
of the United States or any political subdivision thereof, and any tribunal or
arbitrator(s) of competent jurisdiction, and any self-regulatory organization.
"H-S-R Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended and rules and regulations promulgated thereunder.
"Hazardous Material" means any substance:
(i) the presence of which requires investigation or remediation
under any Environmental Requirements applicable to the Property used in the
Business; or
(ii) which is defined as a "hazardous waste," "hazardous
substance," "pollutant" or "contaminant" under any federal, state or local
statute, regulation, rule or
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ordinance or amendments thereto, applicable to the Property used in the
Business, including, but not limited to, CERCLA; or
(iii) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous and is
or becomes regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States, or other
applicable governmental entity including, without limitation, the States of
Tennessee and Michigan or in Mexico; or
(iv) which contains gasoline, diesel fuel or other petroleum
hydrocarbons, polychlorinated biphenyls (PCBs) (excluding intact light
ballasts), or friable asbestos.
"IRS" means the Internal Revenue Service.
"Known" or "Knowledge" means, with respect to Seller, the actual
personal knowledge, after reasonable investigation, of Karl Storrie, David
Bovee, Joe Bubenzer and Al Liddell.
"Leases" means the real property leases, subleases, licenses and
occupancy agreements pursuant to which the Seller is the lessee, sublessee,
licensee or occupant and that pertain to the Business.
"Lien" means any mortgage, pledge, security interest, easement,
encroachment or encumbrance.
"Material Adverse Effect" means a material adverse effect on the
operations or financial condition of the Business or the ability of Seller to
consummate the transactions contemplated by this Agreement.
"Permitted Liens" means
(i) Liens securing liabilities which are reflected or reserved
against in the Special Purpose Financial Statements to the extent so reflected
or reserved;
(ii) Liens for Taxes not yet due and payable or which are being
contested in good faith and by appropriate proceedings if adequate reserves with
respect thereto are maintained on the Seller's books in accordance with GAAP;
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(iii) statutory liens incurred in the ordinary course of business
that, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the Purchased Assets;
(iv) Title Exceptions; or
(v) Liens that, individually or in the aggregate, do not
materially interfere with the current use of the Purchased Assets.
Notwithstanding the foregoing, Liens incurred in connection with the borrowing
of money by Seller or its Affiliates are not Permitted Liens.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Proprietary Rights" means any and all patents, patent applications,
trademarks, trademark applications and registrations, tradenames, service marks,
service names, copyrights, copyright applications and registrations, commercial
and technical trade secrets, engineering, production and other designs,
drawings, specifications, formulae, technology, computer and electronic data
processing programs and software, inventions, processes, know-how, confidential
information and all other proprietary property, rights and interests.
"Reasonable efforts" means efforts which are commercially reasonable
under the circumstances, excluding the payment of any money or other
consideration to any third party or the commencement of any litigation.
"Subsidiary" means, with respect to any Person, any corporation a
majority of the total voting power of shares of stock of which is entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof which is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or any partnership,
association or other business entity a majority of the partnership or other
similar ownership interest of which is at the time owned or controlled, directly
or indirectly, by that Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes of this definition, a Person is deemed to
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have a majority ownership interest in a partnership, association or other
business entity if such Person is allocated a majority of the gains or losses of
such partnership, association or other business entity or is or controls the
managing director or general partner of such partnership, association or other
business entity.
"Tax" or "Taxes" means any federal, state, local or foreign taxes
including income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Code Section 59A, customers duty, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty or addition thereto,
whether disputed or not.
"Tax Return" means any return, report, declaration, form, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
9.2 Other Definitional Provisions.
(a) Accounting Terms. Accounting terms which are not otherwise defined
in this Agreement have the meanings given to them under GAAP. To the extent that
the definition of accounting term that is defined in this Agreement is
inconsistent with the meaning of such term under GAAP, the definition set forth
in this Agreement will control.
(b) "Hereof," Etc. The terms "hereof," "herein" and "hereunder" and
terms of similar import are references to this Agreement as a whole and not to
any particular provision of this Agreement. Section, Clause, Schedule and
Exhibit references contained in this Agreement are references to Sections,
Clauses, Schedules and Exhibits in or to this Agreement, unless otherwise
specified.
(c) Successor Laws. Any reference to any particular Code section or
any other law or regulation will be interpreted to include any revision of or
successor to that section regardless of how it is numbered or classified.
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ARTICLE X
MISCELLANEOUS
10.1 EXPENSES.
(a) Generally. Except as otherwise provided herein, the Seller, on the
one hand, and the Purchaser, on the other hand, shall bear their respective
expenses, costs and fees (including attorneys' and accountants' fees) in
connection with the transactions contemplated hereby, including the preparation,
execution and delivery of this Agreement and compliance herewith the
("Transaction Expenses"), whether or not the transactions contemplated hereby
shall be consummated.
(b) Transfer Taxes. The Purchaser and the Seller shall each bear one-
half of all sales, use, value added, documentary, stamp, gross receipts,
registration, custom duty, realty transfer, conveyance, excise, recording,
license and other similar taxes and fees ("Transfer Taxes"), arising out of or
in connection with or attributable to the transactions effected pursuant to this
Agreement. The Purchaser shall be responsible for the timely payment to
Governmental Authorities of, and shall prepare and timely file all tax returns
required to be filed in respect of, all Transfer Taxes. The Purchaser's
preparation of any such tax returns shall be subject to the Seller's approval,
which approval shall not be unreasonably withheld. The Purchaser hereby
covenants and agrees to pay all taxes and fees relating to any financing or
mortgaging of the Purchased Assets by Purchaser.
(c) Property Taxes. All property (real and personal) taxes relating to
the Purchased Assets shall be prorated as of closing. An estimate of said taxes
and the applicable transfer taxes shall be added to or deducted from the amount
due at Closing.
10.2 Consent of Third Parties. Notwithstanding anything to the contrary in
this Agreement, this Agreement shall not constitute an agreement to assign or
transfer any Governmental Approval, instrument, contract, lease, permit or other
agreement or arrangement or any claim, right or benefit arising thereunder or
resulting therefrom if an assignment or transfer or an attempt to make such an
assignment or transfer without the consent of a third party would constitute a
breach or violation thereof or affect adversely the rights of the
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Purchaser or the Seller thereunder; and any transfer or assignment to the
Purchaser by the Seller of any interest under any such instrument, contract,
lease, permit or other agreement or arrangement that requires the consent of a
third party shall be made subject to such consent or approval being obtained.
Seller shall use its best efforts (it being understood that such best efforts
shall not include any requirement to offer or grant any financial accommodation
to any third party) and Purchaser shall cooperate in all reasonable respects
with Seller to obtain all Consents. If any such Consent is not obtained
(including, without limitation, OEM or supplier consents), or if an attempted
assignment would be ineffective or would impair Seller's rights under any such
Contract so that Purchaser would not receive all such rights, Seller shall use
its best efforts to provide or cause to be provided to Purchaser the benefits of
any such Contract and Seller shall promptly pay or cause to be paid to Purchaser
when received all monies received by Seller with respect to any such Contract;
and in consideration of Seller providing or causing to be provided to Purchaser
the benefits thereof, Purchaser shall perform and discharge on behalf of Seller
all of such Party's debts, liabilities, obligations or commitments thereunder in
accordance with the provisions thereof.
10.3 Severability. If any covenant, agreement, provision or term of this
Agreement is held to be invalid for any reason whatsoever, then such covenant,
agreement, provision or term will be deemed severable from the remaining
covenants, agreements, provisions and terms of this Agreement and will in no way
affect the validity or enforceability of any other provision of this Agreement.
10.4 Notices. All notices, requests, demands, waivers and other
communication required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been duly given if (i) delivered personally,
(ii) mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or (iii) sent by next-day or overnight mail or
delivery or (iv) sent by telecopy (with verbal confirmation of receipt) or
telegram.
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If to the Seller:
----------------
Dura Automotive Systems, Inc.
1708 Northwood Avenue
Troy, Michigan 48084-5353
Attn: President
Fax No. (810) 362-8394
Confirm No. (810) 362-8399
with a copy,
which will not constitute notice to the Seller, to:
Hidden Creek Industries
4508 IDS Center
Minneapolis, Minnesota 55402
Attn: Scott D. Rued
Fax No. (612) 332-2012
Confirm No. (612) 332-2335
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: Jeffrey C. Hammes
Fax No. (312) 861-2200
Confirm No. (312) 861-2476
If to the Purchaser:
-------------------
Rockwell International Corporation
2135 West Maple Road
Troy, Michigan 48084-7186
Attn: President - Light Vehicle Systems
Fax No. (810) 435-1487
Confirm No. (810) 435-1231
with a copy,
which will not constitute notice to the Purchaser, to:
Rockwell International Corporation
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3123
Attn: Office of the General Counsel
Fax No. (412) 565-2075
Confirm No. (412) 565-5992
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or, in each case, at such other address as may be specified in writing to the
other Parties. All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (i) if by personal delivery
on the date after such delivery, (ii) if by certified or registered mail, on the
seventh business day after the mailing thereof, (iii) if by next-day or
overnight mail or delivery, on the day delivered, (iv) if by telecopy or
telegram, on the next day following the day on which such telecopy or telegram
was sent, provided that a copy is also sent by certified or registered mail.
10.5 Headings. The headings used in this Agreement are for the purpose of
reference only and will not affect the meaning or interpretation of any
provision of this Agreement.
10.6 Entire agreement. This Agreement (including the Schedules and Exhibits
hereto) and other agreements and documents contemplated hereby (when executed
and delivered) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, between the Parties with
respect to the subject matter hereof.
10.7 Counterparts. The Parties may execute this Agreement in separate
counterparts (no one of which need contain the signatures of all Parties), each
of which will be an original and all of which together will constitute one and
the same instrument.
10.8 Disclosure, business information. Any information set forth in any
Schedule attached to this Agreement or incorporated in any Section of this
Agreement from a Schedule shall be considered to have been set forth in each
other Schedule to this Agreement.
10.9 Disclaimer of warranties. It is the explicit intention of each Party
hereto that neither Seller nor any of its Affiliates is making any
representation or warranty whatsoever, express or implied, other than those
expressly made in Section 3.1 hereto. In furtherance and not in limitation of
the foregoing, neither Seller, nor any of its Affiliates makes any
representations or warranties with respect to any projections, forecasts or
forward-looking
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information provided to Purchaser or any of its Affiliates or any of their
respective representatives, other than those, if any, expressly made in Section
3.1. EXCEPT AS TO THOSE MATTERS EXPRESSLY COVERED IN THE REPRESENTATIONS AND
WARRANTIES IN SECTION 3.1, SELLER AND ITS AFFILIATES DISCLAIM ALL OTHER
WARRANTIES, REPRESENTATIONS AND GUARANTEES, WHETHER EXPRESS OR IMPLIED,
INCLUDING ANY REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR
ANY PARTICULAR PURPOSE.
10.10 Governing law, etc. This Agreement will be governed by and construed
in accordance with the domestic laws of the State of Michigan without giving
effect to any choice of law or conflict provision or rule (whether of the State
of Michigan or any other jurisdiction) that would cause the laws of any
jurisdiction other than the State of Michigan to be applied. In furtherance of
the foregoing, the internal law of the State of Michigan will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply. Except for the procedures set
forth in Section 2.2 with respect to the preparation of the Closing Date
Statement, and to the extent deemed necessary by Purchaser or the Seller, as the
case may be, in the enforcement of the covenants in Section 4.1.9 or 4.2.7, any
and all disputes between the Parties arising out of any provisions of this
Agreement and the collateral agreements attached as Exhibits shall be resolved
in accordance with the Alternative Dispute Resolution procedure set forth in
Annex I attached hereto, provided, however, that a Party may seek a preliminary
injunction or other provisional judicial relief if in its judgment such action
is necessary to avoid irreparable damage or to preserve the status quo. Despite
such action the Parties will continue to participate in good faith in the
procedures set forth in Annex I.
10.11 Binding effect. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and permitted assigns.
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10.12 Assignment. This Agreement shall not be assignable or otherwise
transferable by any Party hereto without the prior written consent of the other
Party hereto.
10.13 No Third Party Beneficiaries. Nothing in this Agreement shall confer
any rights upon any Person or entity other than the Parties and their respective
successors and permitted assigns.
10.14 Bulk Transfer Laws. The Purchaser acknowledges that the Seller will
not comply with the provisions of any bulk transfer laws of any jurisdiction in
connection with the transactions contemplated by this Agreement and,
notwithstanding anything to the contrary set forth herein, the failure to so
comply will not constitute a breach under any representation, warranty or of any
covenant of the Seller contained herein. Seller hereby agrees to indemnify,
defend and hold Purchaser harmless from and against any Loss incurred by
Purchaser based upon, arising out of or otherwise in respect of such non-
compliance.
10.15 Eminent Domain or Casualty. If, prior to the Closing Date, any owned
Facility or a portion thereof is taken by eminent domain (or is the subject of a
pending or completed taking which has not been consummated), or if any portion
of the Purchased Assets have been damaged or destroyed by fire or other
casualty, Purchaser shall have the option to cancel and rescind this Agreement
if such taking by eminent domain, damage or destruction has had or could
reasonably be expected to have a Material Adverse Effect.
10.16 Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
other Party which will not be unreasonably withheld.
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10.17 Confidentiality. Seller agrees to use all reasonable efforts from and
after the date of this Agreement to preserve the confidentiality of all
confidential information related to the Business.
10.18 Amendment, Waivers, Etc. No amendment, modification or discharge of
this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the Party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the Party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
Parties of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the Parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder.
66
<PAGE>
IN WITNESS WHEREOF, the Parties have duly executed this Asset Purchase
Agreement as of the date first above written.
DURA AUTOMOTIVE SYSTEMS, INC.
By: /s/ David Bovee
--------------------------
Its: Vice President
-------------------------
DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
--------------------------
Its: Vice President
-------------------------
ROCKWELL INTERNATIONAL
CORPORATION
By: /s/ R.A. Calder
------------------------
R.A. Calder
Its: President - Light Vehicle Systems
---------------------------------
<PAGE>
Exhibit 10.19
SUBSCRIPTION AGREEMENT
----------------------
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is made as of the date of
acceptance on the signature page attached hereto, by and between Dura Automotive
Holding, Inc., a Delaware corporation (the "Company"), and the undersigned (the
"Subscriber"). Unless otherwise indicated, capitalized terms used but not
defined prior to their first usage herein are defined in Section 9 hereof.
The Subscriber is a management employee of Dura Automotive Systems, Inc.,
a Delaware corporation ("Dura"), and/or a subsidiary of Dura, and Holding and
Dura desire that the Subscriber acquire shares of Holding's Class A Non-Voting
Common Stock, par value $.01 per share (the "Class A Non-Voting Common").
Holding, the Subscriber, Onex DHC LLC, a Wyoming limited liability
company, J2R Corporation, a Delaware corporation, Orscheln Co., a Delaware
corporation, and other management stockholders are parties to a Stockholders
Agreement dated as of August 31, 1994 and amended as of May 17, 1995 (the
"Stockholders Agreement").
Holding desires to sell, and the Subscriber desires to purchase, certain
shares of the Class A Non-Voting Common.
Holding and the Subscriber hereby agree as follows:
1. Purchase and Sale of Class A Non-Voting Common. On the terms and
subject to the conditions set forth herein, Holding will sell to the Subscriber,
and the Subscriber will purchase from Holding, the number of shares of Class A
Non-Voting Common set forth on the signature page attached hereto at a purchase
price of $47.45 per share.
2. Closing. The closing (the "Closing") of the purchase and sale
contemplated hereby will take place at such place and time as reasonably
determined by Holding. At the Closing, the Subscriber will deliver to Holding
or its designee immediately available funds in an amount equal to the aggregate
purchase price of the Class A Non-Voting Common purchased by the Subscriber from
Holding hereunder, and Holding will deliver to the Subscriber a certificate or
certificates representing the Class A Non-Voting Common being purchased by the
Subscriber, in each case registered in the name of the Subscriber.
3. Restrictions on Transfers.
(a) Restrictions. Restricted Securities are transferable pursuant to (i)
public offerings registered under the Securities Act, (ii) Rule 144 (or any
similar rule then in force) of the Securities and Exchange Commission if such
rule is available, and (iii) subject to the conditions specified in Section 3(b)
hereof, any other legally available means of transfer.
<PAGE>
(b) Procedure for Transfer. In connection with the transfer of any
Restricted Securities (other than a transfer referred to in clauses (i) or (ii)
of Section 3(a) hereof), the holder thereof will deliver written notice to
Holding describing in reasonable detail the transfer or proposed transfer,
together with an opinion (reasonably satisfactory to Holding) of counsel which
(to Holding's reasonable satisfaction) is knowledgeable in securities law
matters to the effect that such transfer of Restricted Securities may be
effected without registration of such Restricted Securities under the Securities
Act. In addition, if the holder of such Restricted Securities delivers to
Holding an opinion of such counsel to the effect that no subsequent transfer of
such Restricted Securities will require registration under the Securities Act,
Holding will promptly upon such contemplated transfer deliver new certificates
for such Restricted Securities which do not bear the Securities Act Legend set
forth in Section 4(a) hereof. If Holding is not required to deliver new
certificates for such Restricted Securities not bearing such legend, the holder
thereof will not transfer the same until the prospective transferee has
confirmed to Holding in writing its agreement to be bound by the conditions
contained in this Section and Section 4(a) hereof.
4. Subscriber's Representations and Warranties.
(a) Subscriber's Investment Representations. The Subscriber hereby
represents that he or she is acquiring the Restricted Securities purchased
hereunder for his or her own account with the present intention of holding such
securities for investment purposes and that he or she has no intention of
selling such securities in a public distribution in violation of federal or
state securities laws; provided that nothing contained herein will prevent the
Subscriber and the subsequent holders of such securities from transferring such
securities in compliance with the provisions of Section 3 hereof. Each
certificate for Restricted Securities will be conspicuously imprinted with a
legend substantially in the following form (the "Securities Act Legend"):
"The securities represented by this certificate were originally issued on
May __, 1995, and have not been registered under the Securities Act of
1933, as amended (the "Act"). The transfer of such securities is subject
to the conditions specified in the Subscription Agreement dated as of May
__, 1995, between the issuer (the "Company") and the original purchaser
hereof, and the Company reserves the right to refuse to transfer such
securities until such conditions have been fulfilled with respect to such
transfer. Upon written request, a copy of such conditions will be
furnished by the Company to the holder hereof without charge."
Whenever any shares of Class A Non-Voting Common cease to be Restricted
Securities and are not otherwise restricted securities, the holder thereof will
be entitled to receive from Holding, without expense, upon surrender to Holding
of the certificate or certificates representing such shares of Class A Non-
Voting Common, a new certificate or certificates representing such shares of
Class A Non-Voting Common of like tenor but not bearing a legend of the
character set forth above.
-2-
<PAGE>
(b) Other Representations and Warranties of the Subscriber. The
Subscriber hereby represents and warrants to Holding that:
(i) the Subscriber has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Class A Non-Voting Common and has had full access to such other
information concerning Holding, Dura and their subsidiaries and
operations as the Subscriber may have requested;
(ii) the Subscriber has such knowledge and experience in business and
financial matters that the Subscriber is capable of evaluating the merits
and risks of the investment to be made pursuant to this Agreement;
(iii) the Subscriber is able to bear the economic risk of his or her
investment in the Class A Non-Voting Common purchased hereunder for an
indefinite period of time, including the risk of a complete loss of the
Subscriber's investment in such securities, because the Class A Non-
Voting Common has not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the
Securities Act and qualified or registered under state securities laws or
an exemption from such registrations and qualifications is available;
(iv) the Subscriber has received and read a copy of the Private
Placement Memorandum dated May 1995; and
(v) the Subscriber has duly executed and delivered this Agreement,
and this Agreement constitutes a valid and binding obligation of the
Subscriber, enforceable in accordance with its terms.
5. Representations and Warranties of Holding. Holding hereby represents
and warrants to the Subscriber that Holding has duly executed and delivered this
Agreement, and that this Agreement constitutes a valid and binding obligation of
Holding, enforceable in accordance with its terms, subject to the availability
of equitable remedies and to the laws of bankruptcy and other similar laws
affecting creditors' rights generally.
6. Section 83(b) Election. The Subscriber agrees that within 30 days
after he or she purchases the Class A Non-Voting Common pursuant to this
Agreement, the Subscriber will make an effective election with the Internal
Revenue Service under Section 83(b) of the Code.
7. Understanding Among the Parties. The determination of the Subscriber
to purchase the Class A Non-Voting Common pursuant to this Agreement has been
made by the Subscriber independent of Holding and Dura and independent of any
statements or opinion as to the advisability of such purchase or as to the
properties, business, prospects or conditions (financial or otherwise) of
Holding and Dura which may have been made or given by Holding, Dura or by any
agent or employee of Holding or Dura. In addition, it is acknowledged by the
Subscriber that neither Holding nor Dura has acted as an agent of the Subscriber
in connection with making its investment
-3-
<PAGE>
hereunder and that neither Holding nor Dura will be acting as an agent of the
Subscriber in connection with monitoring the Subscriber's investment hereunder.
8. Transfers and Repurchase. The Subscriber acknowledges that the Class A
Non-Voting Common purchased hereunder is subject to repurchase and restrictions
on transfer contained in the Stockholders Agreement. Sales or other transfers of
Class A Non-Voting Common shall be permitted only to the extent allowed pursuant
to the terms of the Stockholders Agreement and this Agreement.
9. Definitions.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"Restricted Securities" means the Class A Non-Voting Common issued
hereunder and any securities issued with respect to such Class A Non-Voting
Common by way of any stock dividend or stock split, or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Restricted Securities, such securities will
cease to be Restricted Securities when they have (a) been effectively registered
under the Securities Act and disposed of in accordance with the registration
statement covering them, (b) become eligible for sale pursuant to Rule 144 (or
any similar rule then in force) of the Securities and Exchange Commission
(excluding Rule 144(k)), or (c) been otherwise transferred and new securities
for them not bearing the Securities Act Legend set forth in Section 4(a) hereof
have been delivered by Holding in accordance with Section 3(b) hereof. Whenever
any particular securities cease to be Restricted Securities, the holder thereof
will be entitled to receive from Holding, without expense, new securities of
like tenor not bearing a Securities Act Legend of the character set forth in
Section 4(a) hereof.
"Rule 144" means Rule 144 promulgated by the Securities and Exchange
Commission under the Securities Act as such rule may be amended from time to
time, or any similar rule then in force.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
agency succeeding to the functions thereof.
10. Miscellaneous.
(a) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and need not contain the
signature of more than one party, but all of which taken together will
constitute one and the same original instrument.
-4-
<PAGE>
(b) Entire Agreement. This document and the documents referred to herein
contain the complete agreement between the parties and supersede any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related to the subject matter hereof in any way.
(c) Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware. In furtherance of the foregoing, the internal law of the State of
Delaware shall control the interpretation and construction of this Agreement,
even though under that jurisdiction's choice of law or conflict of law analysis,
the substantive law of some other jurisdiction would ordinarily apply.
(d) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(e) Successors and Assigns. This Agreement and all of the provisions
hereof will be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
(f) Descriptive Headings. The descriptive headings used in this Agreement
are for convenience of reference only and do not constitute a part of this
Agreement and shall not be deemed to limit, characterize or in any way affect
any provision of this Agreement, and all provisions of this Agreement shall be
enforced and construed as if no descriptive headings had been used in this
Agreement.
(g) Remedies. Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
(h) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended, modified or waived only upon the
prior written consent of Holding and the Subscriber.
-5-
<PAGE>
(i) Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
received by certified mail, return receipt requested, or sent by guaranteed
overnight courier service. Notices, demands and communications will be sent to
the Subscriber at the address indicated on the signature page and to Holding at
the address indicated below:
Notices to Holding:
------------------
Dura Automotive Holding, Inc.
c/o Hidden Creek Industries
4508 IDS Center
Minneapolis, Minnesota 55402
Attention: Scott D. Rued
with a copy to:
--------------
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Jeffrey C. Hammes, Esq.
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
11. Binding Agreement. This Agreement is not binding unless accepted in
writing by Holding, acting in its sole discretion, within 45 business days after
Holding's receipt of this Agreement and the Stockholders Agreement, properly
executed by the Subscriber. Written notice of such written acceptance will be
given to the Subscriber by delivery of this Agreement signed by Holding.
* * * * *
-6-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
May 22, 1995.
/s/ David M. Allison
------------------------------
Signature
DAVID M. ALLISON
------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 300
---
Mailing address:
5924 Rapid City Rd.
------------------------------
Rapid City, MI 49676
------------------------------
------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
---------------------------
Its: Vice President
---------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
25, 1995.
/s/ Bill Bach
-----------------------------------------
Signature
BILL BACH
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 210.75
Mailing address:
Bill Bach
-----------------------------------------
R.2 Box 168
-----------------------------------------
Madison, MO 65263
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-----------------------------------------
Its: Vice President
-----------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
May 26, 1995.
/s/ Richard S. Bigham
-----------------------------------------
Signature
RICHARD S. BIGHAM
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 305
Mailing address:
1354 W. Bear LK Rd NE
-----------------------------------------
Kalkaska MI 49646
-----------------------------------------
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1996 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
--------------------------------------
Its: Vice President
-------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
May 25, 1995.
/s/ Samuel L. Casleton
-----------------------------------------
Signature
SAMUEL L. CASLETON
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 100
Mailing address:
SAMUEL L. CASLETON
-----------------------------------------
1130 Beuth Rd
-----------------------------------------
Moberly, MO 65270
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-----------------------------------------
Its: Vice President
-----------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
31, 1995.
/s/ John D. Hanson
-----------------------------------------
Signature
JOHN D. HANSON
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 400
Mailing address:
6490 NORHAM ROAD
-----------------------------------------
BLOOMFIELD HILLS, MI 48301-1467
-----------------------------------------
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-----------------------------------------
Its: Vice President
-----------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
26, 1995.
/s/ Richard F. Haxel
___________________________
Signature
Richard F. Haxel
___________________________
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 300
______
Mailing address:
339 Circle Drive
___________________________
Moberly, MO 65270
___________________________
___________________________
Dura Automotive Holding, Inc. hereby accepts the foregoing subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: David Bovee
________________________
Its: Vice President
________________________
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
26, 1995.
/s/ William D. Hooton
-----------------------------------------
Signature
William D. Hooton
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 200
Mailing address:
306 W. Carpenter
-----------------------------------------
Huntsville, MO.
-----------------------------------------
65259
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-------------------------------------
Its: Vice President
------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
30, 1995.
/s/ David P. Klosterman
-----------------------------------------
Signature
David P. Klosterman
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 300
Mailing address:
2379 Dorchester 103
-----------------------------------------
Troy, MI 48084
-----------------------------------------
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-------------------------------------
Its: Vice President
------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
26, 1995.
/s/ Milton P. Kniss
-----------------------------------------
Signature
Milton P. Kniss
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 500
Mailing address:
4132 Maple Lane
-----------------------------------------
P.O. Box 257
-----------------------------------------
Bellaire, Mich 49615
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-------------------------------------
Its: Vice President
------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
24, 1995.
/s/ Richard L. Kraus
-----------------------------------------
Signature
Richard L. Kraus
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 300
Mailing address:
1407 Trails End
-----------------------------------------
Moberly, Missouri
-----------------------------------------
65270
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-------------------------------------
Its: Vice President
------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
31, 1995.
/s/ Michael J. Kukla
-----------------------------------------
Signature
Michael J. Kukla
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 105.37
Mailing address:
13131 Log Cabin Point
-----------------------------------------
Fenton, Michigan
-----------------------------------------
48430
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-------------------------------------
Its: Vice President
------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
31, 1995.
/s/ Craig L. Lamiman
-----------------------------------------
Signature
Craig L. Lamiman
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 300
Mailing address:
103 Jonathan Drive
-----------------------------------------
Stamford, CT 06903
-----------------------------------------
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-------------------------------------
Its: Vice President
------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
31, 1995.
/s/ Sean M. McGuire
-----------------------------------------
Signature
Sean M. McGuire
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 632.24
Mailing address:
262 E. Hazelhurst
-----------------------------------------
Ferndale, MI
-----------------------------------------
48084
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-------------------------------------
Its: Vice President
------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
26, 1995.
/s/ Mark O. Messinger
-----------------------------------------
Signature
Mark O. Messinger
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 50
Mailing address:
P.O. Box 597
-----------------------------------------
Moberly, MO 65270
-----------------------------------------
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-------------------------------------
Its: Vice President
------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
30, 1995.
/s/ Paul D. Nordstrom
-----------------------------------------
Signature
Paul D. Nordstrom
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 200
Mailing address:
26988 Westland Rd.
-----------------------------------------
Redford, MI 48240
-----------------------------------------
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-------------------------------------
Its: Vice President
------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
30, 1995.
/s/ David A. Skrzyniarz
-----------------------------------------
Signature
David A. Skrzyniarz
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 200
Mailing address:
28779 Westwood Dr.
-----------------------------------------
New Baltimore, MI 48047
-----------------------------------------
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-------------------------------------
Its: Vice President
------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
31, 1995.
/s/ Douglas Stepanian
-----------------------------------------
Signature
Douglas Stepanian
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 42.15
Mailing address:
2849 N. Main
-----------------------------------------
Central Lk, MI 49622
-----------------------------------------
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-------------------------------------
Its: Vice President
------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
25, 1995.
/s/ Timothy Curtis Stephens
-----------------------------------------
Signature
Timothy Curtis Stephens
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 100
Mailing address:
20 Settlers Trail
-----------------------------------------
Hannibal, Missouri 65401
-----------------------------------------
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-------------------------------------
Its: Vice President
------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
30, 1995.
/s/ Jeffrey E. Tayon
-----------------------------------------
Signature
Jeffrey E. Tayon
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 105.37
Mailing address:
Jeff Tayon
-----------------------------------------
Rt 2 Box 73A
-----------------------------------------
Moberly, MO 65270
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-------------------------------------
Its: Vice President
------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
25, 1995.
/s/ Bobby D. Thompson
-----------------------------------------
Signature
Bobby D. Thompson
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 105.37
Mailing address:
Bobby D. Thompson
-----------------------------------------
RR #1 Box 85
-----------------------------------------
Laclede, MO 64651
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-------------------------------------
Its: Vice President
------------------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of May
24, 1995.
/s/ John Truckey
-----------------------------------------
Signature
John Truckey
-----------------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 316.12
Mailing address:
205 Harbor St.
-----------------------------------------
Bellaire, MI 49615
-----------------------------------------
-----------------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing
subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
-------------------------------------
Its: Vice President
------------------------------------
-7-
<PAGE>
Exhibit 10.20
SUBSCRIPTION AGREEMENT
----------------------
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is made as of the date of
acceptance on the signature page attached hereto, by and between Dura Automotive
Holding, Inc., a Delaware corporation (the "Company"), and the undersigned (the
"Subscriber"). Unless otherwise indicated, capitalized terms used but not
defined prior to their first usage herein are defined in Section 9 hereof.
The Subscriber is a management employee of Dura Automotive Systems, Inc.,
a Delaware corporation ("Dura"), and/or a subsidiary of Dura, and Holding and
Dura desire that the Subscriber acquire shares of Holding's Class A Non-Voting
Common Stock, par value $.01 per share (the "Class A Non-Voting Common").
Holding, the Subscriber, Onex DHC LLC, a Wyoming limited liability
company, J2R Corporation, a Delaware corporation, Orscheln Co., a Delaware
corporation, and other management stockholders are parties to a Stockholders
Agreement dated as of August 31, 1994 and amended as of May 17, 1995 (the
"Stockholders Agreement").
Holding desires to sell, and the Subscriber desires to purchase, certain
shares of the Class A Non-Voting Common.
Holding and the Subscriber hereby agree as follows:
1. Purchase and Sale of Class A Non-Voting Common. On the terms and
subject to the conditions set forth herein, Holding will sell to the Subscriber,
and the Subscriber will purchase from Holding, the number of shares of Class A
Non-Voting Common set forth on the signature page attached hereto at a purchase
price of $32.34 per share.
2. Closing. The closing (the "Closing") of the purchase and sale
contemplated hereby will take place at such place and time as reasonably
determined by Holding. At the Closing, the Subscriber will deliver to Holding or
its designee immediately available funds in an amount equal to the aggregate
purchase price of the Class A Non-Voting Common purchased by the Subscriber from
Holding hereunder, and Holding will deliver to the Subscriber a certificate or
certificates representing the Class A Non-Voting Common being purchased by the
Subscriber, in each case registered in the name of the Subscriber.
3. Restrictions on Transfers.
(a) Restrictions. Restricted Securities are transferable pursuant to (i)
public offerings registered under the Securities Act, (ii) Rule 144 (or any
similar rule then in force) of the Securities and Exchange Commission if such
rule is available, and (iii) subject to the conditions specified in Section 3(b)
hereof, any other legally available means of transfer.
<PAGE>
(b) Procedure for Transfer. In connection with the transfer of any
Restricted Securities (other than a transfer referred to in clauses (i) or (ii)
of Section 3(a) hereof), the holder thereof will deliver written notice to
Holding describing in reasonable detail the transfer or proposed transfer,
together with an opinion (reasonably satisfactory to Holding) of counsel which
(to Holding's reasonable satisfaction) is knowledgeable in securities law
matters to the effect that such transfer of Restricted Securities may be
effected without registration of such Restricted Securities under the Securities
Act. In addition, if the holder of such Restricted Securities delivers to
Holding an opinion of such counsel to the effect that no subsequent transfer of
such Restricted Securities will require registration under the Securities Act,
Holding will promptly upon such contemplated transfer deliver new certificates
for such Restricted Securities which do not bear the Securities Act Legend set
forth in Section 4(a) hereof. If Holding is not required to deliver new
certificates for such Restricted Securities not bearing such legend, the holder
thereof will not transfer the same until the prospective transferee has
confirmed to Holding in writing its agreement to be bound by the conditions
contained in this Section and Section 4(a) hereof.
4. Subscriber's Representations and Warranties.
(a) Subscriber's Investment Representations. The Subscriber hereby
represents that he or she is acquiring the Restricted Securities purchased
hereunder for his or her own account with the present intention of holding such
securities for investment purposes and that he or she has no intention of
selling such securities in a public distribution in violation of federal or
state securities laws; provided that nothing contained herein will prevent the
Subscriber and the subsequent holders of such securities from transferring such
securities in compliance with the provisions of Section 3 hereof. Each
certificate for Restricted Securities will be conspicuously imprinted with a
legend substantially in the following form (the "Securities Act Legend"):
"The securities represented by this certificate were originally issued on
May , 1995, and have not been registered under the Securities Act of
1933, as amended (the "Act"). The transfer of such securities is subject
to the conditions specified in the Subscription Agreement dated as of
May , 1995, between the issuer (the "Company") and the original
purchaser hereof, and the Company reserves the right to refuse to
transfer such securities until such conditions have been fulfilled with
respect to such transfer. Upon written request, a copy of such conditions
will be furnished by the Company to the holder hereof without charge."
Whenever any shares of Class A Non-Voting Common cease to be Restricted
Securities and are not otherwise restricted securities, the holder thereof will
be entitled to receive from Holding, without expense, upon surrender to Holding
of the certificate or certificates representing such shares of Class A Non-
Voting Common, a new certificate or certificates representing such shares of
Class A Non-Voting Common of like tenor but not bearing a legend of the
character set forth above.
-2-
<PAGE>
(b) Other Representations and Warranties of the Subscriber. The
Subscriber hereby represents and warrants to Holding that:
(i) the Subscriber has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Class A Non-Voting Common and has had full access to such other
information concerning Holding, Dura and their subsidiaries and
operations as the Subscriber may have requested;
(ii) the Subscriber has such knowledge and experience in business and
financial matters that the Subscriber is capable of evaluating the merits
and risks of the investment to be made pursuant to this Agreement;
(iii) the Subscriber is able to bear the economic risk of his or her
investment in the Class A Non-Voting Common purchased hereunder for an
indefinite period of time, including the risk of a complete loss of the
Subscriber's investment in such securities, because the Class A Non-
Voting Common has not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the
Securities Act and qualified or registered under state securities laws or
an exemption from such registrations and qualifications is available;
(iv) the Subscriber has received and read a copy of the Private
Placement Memorandum dated May 1995; and
(v) the Subscriber has duly executed and delivered this Agreement,
and this Agreement constitutes a valid and binding obligation of the
Subscriber, enforceable in accordance with its terms.
5. Representations and Warranties of Holding. Holding hereby represents
and warrants to the Subscriber that Holding has duly executed and delivered this
Agreement, and that this Agreement constitutes a valid and binding obligation of
Holding, enforceable in accordance with its terms, subject to the availability
of equitable remedies and to the laws of bankruptcy and other similar laws
affecting creditors' rights generally.
6. Section 83(b) Election. The Subscriber agrees that within 30 days
after he or she purchases the Class A Non-Voting Common pursuant to this
Agreement, the Subscriber will make an effective election with the Internal
Revenue Service under Section 83(b) of the Code.
7. Understanding Among the Parties. The determination of the Subscriber
to purchase the Class A Non-Voting Common pursuant to this Agreement has been
made by the Subscriber independent of Holding and Dura and independent of any
statements or opinion as to the advisability of such purchase or as to the
properties, business, prospects or conditions (financial or otherwise) of
Holding and Dura which may have been made or given by Holding, Dura or by any
agent or employee of Holding or Dura. In addition, it is acknowledged by the
Subscriber that neither Holding nor Dura has acted as an agent of the Subscriber
in connection with making its investment
-3-
<PAGE>
hereunder and that neither Holding nor Dura will be acting as an agent of the
Subscriber in connection with monitoring the Subscriber's investment hereunder.
8. Transfers and Repurchase. The Subscriber acknowledges that the Class A
Non-Voting Common purchased hereunder is subject to repurchase and restrictions
on transfer contained in the Stockholders Agreement. Sales or other transfers of
Class A Non-Voting Common shall be permitted only to the extent allowed pursuant
to the terms of the Stockholders Agreement and this Agreement.
9. Definitions.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"Restricted Securities" means the Class A Non-Voting Common issued
hereunder and any securities issued with respect to such Class A Non-Voting
Common by way of any stock dividend or stock split, or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Restricted Securities, such securities will
cease to be Restricted Securities when they have (a) been effectively registered
under the Securities Act and disposed of in accordance with the registration
statement covering them, (b) become eligible for sale pursuant to Rule 144 (or
any similar rule then in force) of the Securities and Exchange Commission
(excluding Rule 144(k)), or (c) been otherwise transferred and new securities
for them not bearing the Securities Act Legend set forth in Section 4(a) hereof
have been delivered by Holding in accordance with Section 3(b) hereof. Whenever
any particular securities cease to be Restricted Securities, the holder thereof
will be entitled to receive from Holding, without expense, new securities of
like tenor not bearing a Securities Act Legend of the character set forth in
Section 4(a) hereof.
"Rule 144" means Rule 144 promulgated by the Securities and Exchange
Commission under the Securities Act as such rule may be amended from time to
time, or any similar rule then in force.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
agency succeeding to the functions thereof.
10. Miscellaneous.
(a) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and need not contain the
signature of more than one party, but all of which taken together will
constitute one and the same original instrument.
-4-
<PAGE>
(b) Entire Agreement. This document and the documents referred to herein
contain the complete agreement between the parties and supersede any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related to the subject matter hereof in any way.
(c) Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware. In furtherance of the foregoing, the internal law of the State of
Delaware shall control the interpretation and construction of this Agreement,
even though under that jurisdiction's choice of law or conflict of law analysis,
the substantive law of some other jurisdiction would ordinarily apply.
(d) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(e) Successors and Assigns. This Agreement and all of the provisions
hereof will be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
(f) Descriptive Headings. The descriptive headings used in this Agreement
are for convenience of reference only and do not constitute a part of this
Agreement and shall not be deemed to limit, characterize or in any way affect
any provision of this Agreement, and all provisions of this Agreement shall be
enforced and construed as if no descriptive headings had been used in this
Agreement.
(g) Remedies. Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
(h) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended, modified or waived only upon the
prior written consent of Holding and the Subscriber.
-5-
<PAGE>
(i) Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
received by certified mail, return receipt requested, or sent by guaranteed
overnight courier service. Notices, demands and communications will be sent to
the Subscriber at the address indicated on the signature page and to Holding at
the address indicated below:
Notices to Holding:
-------------------
Dura Automotive Holding, Inc.
c/o Hidden Creek Industries
4508 IDS Center
Minneapolis, Minnesota 55402
Attention: Scott D. Rued
with a copy to:
--------------
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Jeffrey C. Hammes, Esq.
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
11. Binding Agreement. This Agreement is not binding unless accepted in
writing by Holding, acting in its sole discretion, within 45 business days after
Holding's receipt of this Agreement and the Stockholders Agreement, properly
executed by the Subscriber. Written notice of such written acceptance will be
given to the Subscriber by delivery of this Agreement signed by Holding.
* * * * *
-6-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
May 27, 1995.
/s/ David P. Klosterman
------------------------------
Signature
DAVID P. KLOSTERMAN
------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 1700
----
Mailing address:
2379 Dorchester 103
------------------------------
Troy, MI 48084
------------------------------
------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
---------------------------
Its: Vice President
---------------------------
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
May 31, 1995.
/s/ Craig L. Lamiman
------------------------------
Signature
CRAIG L. LAMIMAN
------------------------------
Name (please print)
Number of subscribed shares of
Class A Non-Voting Common: 1700
----
Mailing address:
103 Jonathan Drive
------------------------------
Stamford, CT 06903
------------------------------
------------------------------
Dura Automotive Holding, Inc. hereby accepts the foregoing subscription.
Dated: June 26, 1995 DURA AUTOMOTIVE HOLDING, INC.
By: /s/ David Bovee
---------------------------
Its: Vice President
---------------------------
-7-
<PAGE>
[LETTERHEAD OF DURA]
Exhibit 10.21
November 9, 1995
[LOGO OF DURA]
CONFIDENTIAL
------------
Mr. John J. Knappenberger
6209 Turnwood Drive
Jamesville, New York 13078
Dear John:
Congratulations! After an extensive and exhaustive search for a Vice President
of Quality and Materials, we believe you to be the best suited candidate for the
job. We are pleased to invite you to become a vital member of our Leadership
Team, and offer you the position as follows:
Title and Position
- ------------------
VICE PRESIDENT OF QUALITY AND MATERIALS, member of the Leadership Team, and
reporting directly to Karl F. Storrie, President & CEO.
Start Date
- ----------
December 18, 1995, or another mutually acceptable date.
Base Salary
- -----------
$135,000 per year, to be paid twice monthly.
Dura Bonus Program
- ------------------
As a Vice President, your individual bonus factor will be 50% of your annual
salary. The plan provides for multiples of this amount based on Company and
individual performance.
<PAGE>
[LOGO OF DURA]
Mr. J.J. Knappenberger
November 9, 1995
Page 2
Dura Bonus Program (Continued)
- ------------------------------
A copy of the DURA Annual Bonus Plan is enclosed with this letter. As part of
our management objectives program, once you have become familiar with our
strategic plan and our annual business plan, you will be expected to develop and
submit for approval, your personal objectives for 1996.
DURA Equity
- -----------
As you know, we encourage management ownership of the Company and will provide
you the opportunity to purchase up to 1,700 shares of Class A Common Stock of
Dura Automotive Holding, Inc., subject to Board approval. The stock is currently
valued at $64.73 per share. If necessary, a Loan Program will be available to
assist in one-half of your equity investment. You will have the opportunity to
make your purchase for up to six (6) months after your hire date.
Stock Option Buy-Out
- --------------------
In recognition of your leaving Carrier Corporation prior to the vesting of your
UTC stock option, and our interest in management ownership of DURA, we will
compensate you for the loss of the un-vested UTC options you currently hold. See
enclosed Stock Option Buy-Out Agreement. The UTC share price is fixed at $89.50,
as of 11/6/95.
1995 Bonus
- ----------
In recognition of the likelihood that you will also forego your expected UTC
1995 bonus, which would be paid in 1996, we will provide a DURA 1995 bonus of
$45,000, which will be paid in March, 1996.
Executive Perquisites
- ---------------------
Dura Automotive Systems, Inc. offers a Flexible Perquisites Program for its
executives. This is a cash allowance program which allows each participant to
select benefits which are of personal value. The annual dollar amount
established for your position is $15,000.
<PAGE>
[LOGO OF DURA]
Mr. J.J. Knappenberger
November 9, 1995
Page 3
Executive Perquisites (Continued)
- ---------------------------------
A list of the type of uses for this perk is enclosed, which includes an
automobile. We do not define the type of automobile you must use, other than to
suggest it be an appropriate for customer transportation.
A copy of the DURA Executive Flexible Perquisites Program is enclosed.
Benefits
- --------
DURA provides its employees a full array of benefits and insurance programs,
detailed in the enclosed material. Specifically, your medical and life insurance
coverage will be effective on your first day of service. I will arrange a time
for you to meet with Craig Lamiman, who will fully discuss these programs with
you.
Relocation
- ----------
We are anxious for you to join DURA quickly, and recognize your desire to make
this tansition as swift and painless as possible. Our philosophy is to minimize
the executive's concerns regarding relocation, and we will assist you wherever
possible. Our policy, which is detailed in the enclosures, provides for
reimbursement of all reasonable documented costs to sell your current home,
search for and purchase a new home in our area, and transport your family's
belongings. We contract with PHH Homequity for Relocation Services, who will
assist you in your move. In the event that you are unable to sell your home, we
will purchase it through PHH Homequity. We will also assist you with several
options for temporary housing, if necessary.
<PAGE>
[LOGO OF DURA]
Mr. J.J. Knappenberger
November 9, 1995
Page 4
Vacation and Holidays
- ---------------------
At the company officer level, we do not specify a set period of time for
vacations, but strongly encourage you to take time with your family, as
appropriate.
Currently, we have ten (10) paid holidays per year.
401(k) Program
- --------------
We are currently in the process of implementing a new 401(k) Program, the
details of which will be forthcoming. In the meantime, Craig Lamiman will be
able to answer any questions you may have regarding this new Program.
Contract Provisions
- -------------------
In the event that your employment is terminated for any reason other than "For
Cause", DURA will provide a severance of six (6) months, including continuation
of your base salary, benefits and executive perquisites. This provision will
apply to a change of control of company ownership, and the Company will require
any successors to agree and perform to this agreement, until December 31, 1998.
With the Flexible Perquisite Program, your base salary, target bonus, special
allowances, and 401(k) matching contribution, the value of your first year's
annual compensation is in excess of $210,000.
John, we have exciting times ahead of us at DURA, and I am convinced that your
professional skills will significantly add to our ability to carry out our
business strategy, and to fashion an even greater future for DURA. We are
confident that you will make the right decision by joining our senior management
team. The Leadership Team and Tony Johnson join me in welcoming you to Dura
Automotive Systems, Inc.
<PAGE>
[LOGO OF DURA]
Mr. J.J. Knappenberger
November 9, 1995
Page 5
Very best regards,
/s/ Karl F. Storrie
Karl F. Storrie
President & CEO
enclosures
cc: C.L. Lamiman
K.T. Slaughter
<PAGE>
JOHN J. KNAPPENBERGER
---------------------
STOCK OPTION PURCHASE AGREEMENT
-------------------------------
As part of your employment with Dura Automotive Systems, Inc., we will guarantee
the payment of United Technologies Corporation (UTC) stock options, according to
the schedule detailed below:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
NUMBER OF UTC OPTION PRICE VESTING DATE VALUE AT 11/06/95
- ------------- ------------ ------------ -----------------
SHARES
------
===============================================================================
<S> <C> <C> <C>
350 $47.875 2/96 $14,569
1,000 $66.625 2/97 $22,875
1,450 $65.125 2/98 $35,344
-------
- -------------------------------------------------------------------------------
GRAND TOTAL $72,788
- -------------------------------------------------------------------------------
</TABLE>
NOTE: UTC Share Price is fixed at $89.50, as of 11/06/95.
In the event that you leave DURA for reasons other than "For Cause", we will
guarantee the pay-out for a total value of $72,788.
Agreed:
/s/ John J. Knappenberger 11-22-95
- ----------------------------- ----------
John J. Knappenberger Date
/s/ Craig Lamiman
- ----------------------------- ----------
Dura Automotive Systems, Inc. Date
<PAGE>
Exhibit 10.22
LEASE
THIS LEASE, made and entered into as of the 5th day of January, 1988, by
and between the City of MOBERLY, MISSOURI, a municipal corporation, of Randolph
County, Missouri (the "Landlord"), and ORSCHELN CO., a Delaware corporation duly
authorized and qualified to do business in the State of Missouri (the "Tenant"),
WITNESSETH:
WHEREAS, Landlord is a municipality duly organized and existing under the
laws of the State of Missouri, with full lawful power and authority to enter
into this Lease by and through its Governing Body; and
WHEREAS, Landlord, in furtherance of the purposes and pursuant to the
provisions of the laws of Missouri, Sections 100.010 to 100.200, inclusive,
RSMo. 1986 (the "Act"), and in order to further the economic, manufacturing and
industrial development of, and employment in, the City of Moberly and the State
of Missouri, and to further the general welfare of the City of Moberly and the
State of Missouri, hereby proposes and states that it:
(a) has solely from the proceeds of the sale of Bonds (hereinafter
defined), acquired by purchase the real estate referred to in Article I hereof
(said real estate hereinafter referred to as the "Land") and paid for the
construction, purchase and installation of the buildings and fixtures and
machinery and equipment and improvements described in Article III hereof (said
buildings and fixtures and machinery and equipment and improvements being
hereinafter referred to as the "Plant");
(b) has leased the Land and the Plant (the Land and Plant hereafter
referred to as the "Facility") to Wick Leasing Corporation pursuant to a lease
dated November 1, 1970 ("November 1, 1970 Lease") and to Wick Building
Systems, Inc. pursuant to a lease dated October 1, 1976 ("October 1, 1976
Lease");
(c) has consented to the assignment on May 29, 1986 of the November 1, 1970
Lease and the October 1, 1976 Lease to BRISTYE, Inc.; and
(d) has entered into with BRISTYE, Inc. a mutual termination of the
November 1, 1970 Lease and the October 1, 1976 Lease; and
<PAGE>
(e) shall lease the Land and the Plant (the Land and the Plant together
hereinafter referred to as the "Facility") to Tenant for the rentals and upon
the terms and conditions hereinafter set forth; and
(f) has issued, for the purpose of defraying the foregoing costs (set forth
above in paragraph (a)) its General Obligation Bonds, Series of 1970, dated
November 1, 1970, in the aggregate principal amount of Six Hundred Thousand
Dollars ($600,000) (the "1970 Bonds") under and pursuant to and subject to the
provisions of the Act and authorized by an ordinance passed by Landlord (the
"1970 Bond Ordinance") and its General Obligation Industrial Bonds, Series of
October 1, 1976, dated October 1, 1976, in the aggregate principal amount of
One Million Dollars ($1,000,000) (the "1976 Bonds") under and pursuant to and
subject to the provisions of the Act and authorized by an ordinance passed by
Landlord (the "Bond Ordinance") (the 1970 Bond and the 1976 Bond hereinafter
collectively referred to as the "Bonds"); and
WHEREAS, Tenant, pursuant to the foregoing proposals and prior actions of
Landlord, desires to lease the Facility from Landlord, for the rentals and upon
the terms and conditions hereinafter set forth;
WHEREAS, this Lease encompasses all the property previously leased by the
November 1, 1970 Lease and the October 1, 1976 Lease; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein set forth, Landlord and Tenant do hereby covenant and
agree as follows:
ARTICLE I
---------
1.1 Granting of Leasehold. Landlord by these presents hereby rents, leases
and lets unto Tenant and Tenant hereby rents, leases and hires from Landlord,
for the rentals and upon and subject to the terms and conditions hereinafter set
forth, the property described and set forth on Schedule I attached hereto and
made a part hereof for a basic term commencing on the date of this Lease and
ending on September 30, 1996.
ARTICLE II
----------
2.1 Rent. Landlord reserves and Tenant covenants and agrees to pay to the
Landlord's City Treasurer, for the account of Landlord and during the full basic
term, basic rent in the aggregate amount of $780,200 (this aggregate rent
represents the total rent due for the original Facility
-2-
<PAGE>
financed with the 1970 Bonds and the 1976 additions to the Facility financed by
the 1976 Bonds), payable in installments at such times and in such amounts as
set forth on Schedule 2 attached hereto and made a part hereof; provided,
however, that any moneys in the Principal and Interest Account (hereinafter
referred to) at the time an installment of basic rent is due, which moneys are
from a source other than payments of basic rent, and which moneys in excess of
the next maturing principal and/or interest payment due on the Bonds shall be
applied to, and shall to the extent sufficient reduce Tenant's obligation to
pay, such installment of basic rent.
2.2 Additional Rent. Tenant shall pay as additional rent (a) all fees,
charges and expenses of the Fiscal Agent and Paying Agent hereinafter or in the
Bond Ordinance designated, and (b) all Impositions (as defined in Article IV),
and (c) all amounts required under Article XXVII and all other payments of
whatever nature which Tenant has agreed to pay or assume under the provisions of
this Lease, and (d) all costs and expenses incident to the payment of the
principal and interest on the Bonds as the same become due and payable,
including all costs, expenses and premiums, if any, in connection with the
redemption and payment of all outstanding Bonds, and (e) all expenses (including
attorneys' fees) incurred by Landlord in connection with the enforcement of any
rights under this Lease or the Bond Ordinance.
2.3 Rent Payable Without Abatement or Set-Off. Tenant covenants and agrees
with and for the express benefit of Landlord and the holders of the bonds that
all payments of basic rent and additional rent shall be made by Tenant on or
before the date the same become due, and that Tenant shall perform all of its
obligations, covenants and agreements hereunder, without notice or demand, and
without abatement, deduction, set-off, counterclaim, recoupment or defense or
any right of termination or cancellation arising from any circumstance
whatsoever, whether now existing or hereafter arising, and irrespective of
whether the Facility shall have been started or completed, or whether Landlord's
title thereto, or to any part hereof, is defective or nonexistent, and
notwithstanding any damage to, loss, theft or destruction of, the Facility or
any part hereof, any failure of consideration or commercial frustration of
purpose, the taking by eminent domain of title to or of the right of temporary
use of all or any part of the Facility, legal curtailment of Tenant's use
thereof, the eviction or constructive eviction of Tenant, any change in the tax
or other law of the United States of America, the State of Missouri or any
political subdivision of either thereof, any change in Landlord's legal
organization or status, or any default of Landlord hereunder, and regardless of
the inval-
-3-
<PAGE>
idity of any action of the Landlord, and regardless of the invalidity of any
portion of this Lease, and Tenant hereby waives the provisions of any statute or
other law now or hereafter in effect contrary to any of its obligations,
covenants or agreements under this Lease or which releases or purports to
release Tenant therefrom. Nothing in this Lease shall be construed as a waiver
by Tenant of any rights or claims Tenant may have against Landlord under this
Lease or otherwise, but any recovery upon such rights and claims shall be had
from Landlord separately, it being the intent of this Lease that the Tenant
shall be unconditionally and absolutely obligated to perform fully all of its
obligations, agreements and covenants under this Lease (including the obligation
to pay basic rent and additional rent) for the benefit of the holders of the
Bonds.
2.4 Prepayment of Basic Rent. Tenant may at any time prepay all or any part
of the basic rent provided for hereunder.
2.5 Forwarding of Rent Payments, Fidelity Bond for City Treasurer. Landlord
covenants and agrees that it will, upon the receipt of any payment of basic rent
or additional rent as required hereunder, immediately forward said payment to
the Fiscal Agent, hereinafter or in the Bond Ordinances designated, for deposit
in the Principal and Interest Account. Landlord further covenants and agrees
that it will at all times during the life of this Lease maintain at its expense,
a fidelity bond covering the City Treasurer protecting Tenant from the failure
of that officer to forward rental payments received by him pursuant to Section
2.1 hereof to the Fiscal Agent as herein provided. Said fidelity bond shall be a
separate bond apart from any other fidelity bond relating to said officer or any
other officer or employee of Landlord and shall be in an amount not less than
the maximum annual requirement of basic rent to be paid by Tenant hereunder.
Said bond shall be with a surety company approved in writing by Tenant and in a
form also approved in writing by Tenant, none of which approval shall be
unreasonably withheld, shall name Tenant as one of the insureds, and shall be
subject to cancellation only upon ten days' written notice to Landlord and
Tenant.
2.6 Fiscal Agent, Principal and Interest Account, Use of Funds in Account.
Landlord has designated in the 1976 Bond Ordinance and hereby designates United
Missouri Bank of Kansas City, N.A., Kansas City, Missouri as paying agent for
the Bonds as the fiscal agent for the Bonds (herein referred to as the "Fiscal
Agent" or "Paying Agent"). The term Fiscal Agent under this Lease, shall, for
the purpose of this Lease, include not only said bank, but also its successor
and successors, any surviving corporation into which it may be merged, any new
corporation resulting
-4-
<PAGE>
from its consolidation with any other corporation or corporations, the successor
and successors of any such surviving or new corporation, and any corporation
to which the fiduciary business of said bank may at any time be transferred. The
Fiscal Agent shall establish, and shall deposit all payments of basic rent in
the following trust account, the amount to be deposited in such account to be in
accordance with the provisions of the Bond Ordinance and this Lease: "City of
Moberly, Missouri, Principal and Interest Account for General Obligation
Industrial Bonds, Series of October, 1976, and dated October 1, 1976" (herein
called the "Principal and Interest Account"). The funds deposited in said trust
account shall be used and applied by the Fiscal Agent in the manner and for the
purposes set forth in the Bond Ordinance. If at any time the amount in the
Principal and Interest Account shall have become sufficient to pay in full the
principal of (including redemption premium, if any) and interest on all
outstanding Bonds, either at maturity or on earlier redemption, and all costs,
expenses and premiums in connection with the call, redemption and payment of all
outstanding Bonds, then in that event (i) all of the Bonds then outstanding as
soon as the Bonds are subject to redemption shall be called for redemption by
the Landlord and all moneys held in the Principal and Interest Account by the
Fiscal Agent shall be used to pay the principal (including redemption premium,
if any) of and all interest on the Bonds so called for redemption and all costs,
expenses and premiums incurred in connection with the call, redemption and
payment of said outstanding Bonds, and (ii) no further basic rent shall be
payable hereunder during the basic term.
ARTICLE III
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3.1 Construction Contracts. It is recognized by the parties hereto that
prior to the execution hereof Wick Building Systems, Inc., the former Tenant
("Wick") entered into a contract or contracts for the construction of buildings
and improvements on the Land in accordance with plans and specifications
prepared by or at the direction of Wick. Said contracts are hereinafter referred
to as the "Construction Contracts". Prior to the execution hereof, certain work
has been performed on and to the Facility pursuant to said Construction
Contracts or otherwise. Wick assigned, conveyed and transferred to Landlord the
Land and Wick's rights, titles, interests and estates in and to all buildings,
improvements and work performed or in progress on the Land. Said assignment,
conveyance and transfer, and Landlord's acquisition from Wick were subject to
said Construction Contracts. The Construction Contracts were fully performed by
the contractor(s) thereunder in accordance with the terms thereof, and said
buildings and improvements were constructed and completed in accordance with the
Construction Contracts. The construction of said buildings and
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improvements in accordance with said Construction Contracts resulted in a
Facility suitable for use by Tenant for its purposes.
3.2 Machinery and Equipment. Landlord warrants and covenants that certain
machinery and equipment was necessary in the construction and completion of the
Plant for Wick and Landlord did purchase and pay for, solely from the
Construction Fund, such items of machinery and equipment and the installation
costs thereof.
3.3 Facility Property of Landlord. All work and materials on the buildings
and improvements made by Tenant shall be deemed to be, or constitute a part of
the Plant, and the Plant as repaired, rebuilt, rearranged, restored or replaced
by Tenant under the provisions of this Lease, except as otherwise specifically
provided herein, shall immediately when erected or installed become the absolute
property of Landlord to the same extent as if same had been erected or installed
prior to the execution of this Lease.
3.4 Machinery and Equipment Purchased by Tenant. All items of machinery or
equipment, no part of the purchase price of which has been paid for from the
proceeds of the Bonds, shall not be deemed a part of the Facility.
ARTICLE IV
----------
4.1 Impositions. Tenant shall, during the life of this Lease, bear, pay and
discharge, before the delinquency thereof, all taxes and assessments, general
and special, if any, which may be lawfully taxed, charged, levied, assessed or
imposed upon or against or be payable for or in respect of the Facility, or any
part thereof, or any improvements at any time thereof, or Tenant's interest in
the Facility under this Lease, or on account of the leasing by Landlord to
Tenant of all or parts thereof, including any new lawful taxes and assessments
not of the kind enumerated above to the extent that the same are lawfully made,
levied or assessed in lieu of or in addition to taxes or assessments now
customarily levied against real property, and further including all water and
sewer charges, assessments and other governmental charges and impositions
whatsoever, foreseen or unforeseen, which if not paid when due would impair the
security of the Bonds or encumber Landlord's title to the Facility (all of the
foregoing being herein referred to as "Impositions"). In the event any special
assessment taxes are lawfully levied and assessed which may be paid in
installments, Tenant shall be required to pay only such installments thereof as
become due and payable during the life of this Lease as and when the same become
due and payable.
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Landlord covenants that without Tenant's written consent it will not unless
required by law take any action which may reasonably be construed as tending to
cause or induce the levying or assessment of any Imposition (other than special
assessments levied on account of special benefits and water and sewer charges)
which Tenant would be required to pay under this Article and that should any
such levy or assessment be threatened or occur Landlord shall, at Tenant's
request, fully cooperate with Tenant in all reasonable ways to prevent any such
levy or assessment.
4.2 Receipted Statements. Within thirty (30) days after the last day for
payment, without penalty or interest, of any Imposition which Tenant is required
to bear, pay and discharge pursuant to the terms hereof, Tenant shall deliver to
Landlord a photostatic copy of the statement issued therefor duly receipted to
show the payment thereof.
4.3 Landlord May Not Sell. Landlord covenants that, without Tenant's
written consent, it will not, unless required by law, sell or otherwise part
with its fee interest in the Facility at any time during the life of this Lease;
provided, however, that Landlord may, at Tenant's request, grant easements over
the land.
4.4 Contest of Impositions. Tenant shall have the right, in its or
Landlord's name, to contest the validity or amount of any Imposition which
Tenant is required to bear, pay and discharge pursuant to the terms of this
Article by appropriate legal proceedings instituted at least ten (10) days
before the Imposition complained of becomes delinquent if, and provided, Tenant
(i) before instituting any such contest, gives Landlord written notice of its
intention so to do and, if requested in writing by Landlord, deposits with
Landlord a bond in favor of Landlord, with a surety company acceptable to
Landlord as surety, in a penal sum of at least twice the amount of the
Imposition so contested conditioned upon the payment, if so adjudged, of the
contested Imposition, together with all interest and penalties accruing thereon
and costs of suit, and (ii) Tenant diligently prosecutes any such contest, at
all times effectively stays or prevents any official or judicial sale of the
Facility, or any part thereof, interest therein, under execution or otherwise,
and (iii) promptly pays any final judgement enforcing the Imposition so
contested and thereafter promptly procures record release or satisfaction
thereof. Tenant shall hold Landlord whole and harmless from any costs and
expenses Landlord may incur related to any such contest.
ARTICLE V
5.1 Insurance. Tenant shall throughout the life
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of this Lease, at its sole cost and expense, keep the Plant constantly insured
against loss or damage by fire, lightning and all other risks covered by the
extended coverage insurance endorsement then in use in the State of Missouri in
an amount equal to the full insurable value thereof (subject to reasonable loss
deductible provisions) in such insurance company or companies authorized to do
business in the State of Missouri as may be selected by Tenant and approved in
writing by Landlord. The term "full insurable value" shall mean the full actual
replacement cost less physical depreciation and said "full insurable value"
shall be determined from time to time at the request of Landlord or Tenant, but
not more frequently than once every 24 months, by one of the insurers or an
appraiser or appraisal company to be selected and paid by Tenant, subject to
Landlord's approval. Nothing in this Article V or any other portion of this
Lease shall be construed to prevent Tenant from including the Facility under
Tenant's blanket forms of insurance coverage, provided that each and all of the
requirements of this Article V be complied with under such blanket coverage,
including but not limited to the requirements that Landlord and Paying Agent be
named as additional named insureds with respect to the Facility, that the
proceeds with respect to any loss to the Facility be paid to the Paying Agent as
Insurance Trustee, and that certificates evidencing the amount and type of
insurance required under this Article V be delivered to Landlord and the Paying
Agent. Not less than 15 days prior to the expiration of the insurance policies
required, Tenant shall deliver to the Landlord the original or certificate in
respect of the policies provided for in this Article each bearing notation
evidencing proof of payment of premiums or other evidence of such payment
satisfactory to Landlord and until the Bonds an interest thereof are fully paid
to the Paying Agent. All policies of such insurance and all renewals thereof
shall name Landlord, Tenant and, until the Bonds and interest thereon are fully
paid, the Paying Agent as insureds or additional named insureds as their
respective interests may appear, shall contain a provision that such insurance
may not be cancelled by the issuer thereof without at least ten (10) days'
written notice to Landlord and Tenant, and until the Bonds and the interest
thereon have been fully paid shall be payable to the Paying Agent, as "Insurance
Trustee". Landlord and Tenant hereby agree that each will do anything necessary
to cause any such payment to be made to Insurance Trustee, be it the endorsement
of checks or otherwise, as long as such payment is required by this Lease to be
made to Insurance Trustee. The proceeds of such policies shall be used and
applied in the manner set forth in Article XXI hereof. Any charges made by the
Fiscal Agent for its services as Insurance Trustee shall be paid by Tenant. The
sole obligation of the Insurance Trustee shall be to make disbursements from the
insurance proceeds in accordance with the provisions of Article XXI hereof.
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5.2 Owner's Title Insurance Policy. Landlord has purchased a policy of
title insurance in the amount of $970,000. Landlord and Tenant agree that any
and all proceeds therefrom during the life of this lease if received before the
Bonds and interest thereon have been paid in full, shall be paid into and become
a part of the Principal and Interest Account, and if received after the Bonds
and interest thereon have been paid in full, shall belong and be paid to Tenant.
ARTICLE VI
----------
6.1 Use of Premises. Subject to the provisions of this Article, Tenant
shall have the right to use the Facility for any and all purposes allowed by law
and contemplated by the Constitution of Missouri and the Act. Tenant shall
comply with all statutes, laws, ordinances, orders, judgments, decrees,
regulations, directions and requirements of all federal, state, local and other
governments or governmental authorities, now or hereafter applicable to the
Facility or to any adjoining public ways, as to the manner of use or the
condition of the Facility or of adjoining public ways. Tenant shall comply with
the mandatory requirements, rules and regulations of all insurers under the
policies required to be carried under the provisions of Article V. Tenant shall
pay all costs, expenses, claims, fines, penalties and damages that may, in any
manner, arise out of, or be imposed as a result of, the failure of Tenant to
comply with the provisions of this Article.
ARTICLE VII
-----------
7.1 Assignment and Sublease. Tenant will not assign, mortgage, pledge,
sell or in any other manner transfer, convey or dispose of this Lease or any
interest therein or part thereof, whether voluntary, involuntary or by operation
of law, without the prior written consent thereto of Landlord; provided,
however, that if at the time Tenant is not in default hereunder, Tenant may,
without Landlord's consent, sublease the Facility or any part thereof to any
other party, or assign this Lease to a corporation into which Tenant is
hereafter merged. No assignment, mortgage, pledge, sale, other transfer,
conveyance, disposition or sublease shall release or discharge Tenant from its
duties and obligations under this Lease. Any consent by Landlord to any of the
aforesaid acts shall be held to apply only to the specific transaction thereby
authorized; such consent shall not be construed as a waiver or release of the
duty of Tenant, or the successors or assigns of Tenant, to obtain from Landlord
consent to any other such acts.
7.2 Dissolution or Liquidation. Tenant shall not
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initiate any proceedings of any kind whatsoever to dissolve or liquidate without
securing the prior written consent thereto of Landlord. This restriction against
dissolution or liquidation shall not prevent a merger or reorganization of
Tenant into another corporation or a consolidation by Tenant with another
corporation, nor shall said restriction prevent a liquidation of Tenant under
Sections 331, 332, 333 and 337 of the Internal Revenue Code as now existing or
as hereafter amended, followed by dissolution, providing that the succeeding or
resulting corporation, as the case may be, assumes in writing the covenants and
obligations hereunder.
ARTICLE VIII
------------
8.1 Repairs and Maintenance. Tenant covenants and agrees that it will,
during the life of this Lease, keep and maintain the Facility and all parts
thereof in good condition and repair, and that during said period of time it
will keep the Facility and all parts thereof free from filth, nuisance or
conditions unreasonably increasing the danger of fire.
ARTICLE IX
----------
9.1 Alteration of Plant. Tenant shall have and is hereby given the right,
at its sole cost and expense, to make such additions, changes and alterations in
and to any part of the Plant as Tenant from time to time may deem necessary or
advisable; provided, however, Tenant shall not make any addition, change or
alteration which will adversely affect the structural strength of any part of
the Plant, and provided further that Tenant shall not make any addition, change
or alteration which would change the character of the Plant so that the Facility
would not constitute a "facility" as defined in the Act. All additions, changes
and alterations made by Tenant pursuant to the authority of this Article shall
(a) be made in a workmanlike manner and in strict compliance with all laws and
ordinances applicable thereto, (b) when commenced, be prosecuted to completion
with due diligence, and (c) when completed, be deemed a part of the Plant;
provided, however, that additions of machinery and equipment to the Plant by
Tenant, not purchased or acquired from funds deposited with the Paying Agent or
Insurance Trustee hereunder and not constituting repairs, renewals or
replacements of items constituting a part of the Plant, shall remain the
property of Tenant and may be removed by Tenant prior to the termination of this
Lease; provided further, however, that all such additional machinery and
equipment which remain on the land after the termination of this Lease for any
cause other than the purchase of the Facility pursuant to Article XVI hereof
shall, upon and in the event of such termination, become the separate
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and absolute property of Landlord.
ARTICLE X
---------
10.1 Additional Improvements. Tenant shall have and is hereby given the
right, at its sole cost and expense, to construct on the Land not then occupied
by buildings or improvements such additional buildings and improvements as
Tenant from time to time may deem necessary or advisable. All additional
buildings and improvements constructed on the Land by Tenant pursuant to the
authority of this Article shall, during the life of this Lease, remain the
property of Tenant and may be added to, altered or razed and removed by Tenant
at any time during the life of this Lease. Tenant covenants and agrees (a) to
make all repairs and restorations, if any, required to be made to the Facility
because of the construction of, addition to, alteration or removal of said
additional building or improvements, (b) to keep and maintain said additional
buildings and improvements in good condition and repair, ordinary wear and tear
and damages by fire or other casualty excepted, (c) to promptly and with due
diligence either raze and remove from the Land in a good, workmanlike manner, or
repair, replace or restore such of said additional buildings or improvements as
may from time to time be damaged by fire or other casualty, and (d) that all
additional buildings and improvements constructed by Tenant on the Land pursuant
to this Article which remain in place on the Land after the termination of this
Lease for any cause other than the purchase of the Facility pursuant to Article
XVI hereof shall, upon and in the event of such termination, become the separate
and absolute property of Landlord.
ARTICLE XI
----------
11.1 Securing of Permits and Authorizations. Tenant shall not do, or
permit others under its control to do, any work in or about the Facility or
related to any repair, rebuilding, restoration, replacement, alteration of or
addition to the Facility, on any part thereof, unless all requisite municipal
and other governmental permits and authorizations shall have been procured and
paid for. All such work shall be done in a good and workmanlike manner and in
compliance with all applicable building, zoning, and other laws, ordinances,
governmental regulations and requirements and in accordance with the
requirements, rules and regulations of all insurers under the policies required
to be carried under the provisions of Article V.
11.2 Mechanic's Liens. Tenant shall not do or suffer anything to be done
whereby the Facility, or any part thereof, may be encumbered by any mechanic's
or other similar lien and if, whenever and as often as any mechanic's or
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other similar lien is filed against the Facility, or any part thereof,
purporting to be for or on account of any labor done or materials or services
furnished in connection with any work in, on or about the Facility done by, for
or under the authority of Tenant or anyone claiming by, through or under Tenant,
Tenant shall discharge the same of record within sixty (60) days after the date
of filing. Notice is hereby given that Landlord does not authorize or consent to
and shall not be liable for any labor or materials furnished Tenant or anyone
claiming by, through or under Tenant upon credit, and that no mechanic's or
similar lien for any such labor, services or materials shall attach to or affect
the reversionary or other estate of Landlord in and to the Facility or any part
thereof.
11.3 Contest of Liens. Tenant, notwithstanding the above, shall have the
right to contest any such mechanic's or other similar lien if within said sixty
(60) day period stated above it (i) notifies Landlord in writing of its
intention so to do and, if requested by Landlord, deposits with Landlord a bond
in favor of Landlord, with a surety company acceptable to Landlord as surety, in
the penal sum of at least twice the amount of the lien claim so contested,
indemnifying and protecting Landlord from and against any liability, loss,
damage, cost and expense of whatever kind of nature growing out of or in any way
connected with said asserted lien and the contest thereof and (ii) diligently
prosecutes such contest, at all times effectively staying or preventing any
official or judicial sale of the Facility, or any part thereof or interest
therein, under execution or otherwise, and (iii) pays or otherwise satisfies any
final judgment adjudging or enforcing such contested lien claim and thereafter
promptly procures record release or satisfaction thereof.
ARTICLE XII
-----------
12.1 Utilities. All utilities and utility service used by Tenant in, on or
about the facility shall be paid for by Tenant and shall be contracted for by
Tenant in Tenant's own name and Tenant shall, at its sole cost and expense,
procure any and all permits, licenses or authorizations necessary in connection
therewith.
ARTICLE XIII
------------
13.1 Indemnity. Tenant shall and covenants and agrees to indemnify,
protect, defend and save Landlord harmless from and against any and all claims,
demands, liabilities and costs, including attorneys' fees, arising from damage
or injury, actual or claimed, of whatsoever kind or character (exclusive of
those arising from the negligence of Landlord), to property or persons,
occurring or allegedly
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occurring in, on or about the Facility during the life of this Lease, and upon
written notice from Landlord, Tenant shall defend Landlord in any action or
proceeding brought thereon.
13.2 Public Liability Insurance. Tenant further covenants and agrees to
maintain at all times during the life of this Lease public liability insurance
(including coverage for all losses whatsoever arising from the ownership,
maintenance, operation or use of any automobile, truck or other motor vehicle),
under which Landlord shall be named an additional named insured, properly
protecting and indemnifying Landlord in an amount not less than $1,000,000 for
bodily injury (including death) in any one occurrence and not less than $50,000
for property damage. The policies of said insurance shall contain a provision
that such insurance may not be cancelled by the issuer thereof without at least
thirty (30) days' advance written notice to Landlord and Tenant. Such policies
or copies or certificates thereof shall be furnished to Landlord.
ARTICLE XIV
-----------
14.1 Access to Premises. Landlord, for itself and its duly authorized
representative and agents, reserves the right to enter the Facility at all
reasonable times during the life of this Lease for the purpose of (a) examining
and inspecting the same, (b) performing such work in and about the Facility made
necessary by reason of Tenant's default under any of the provision of this
Lease, and (c) exhibiting the Facility to prospective purchasers, lessees or
mortgagees. Landlord may, during the progress of said work mentioned in (b)
above, keep and store on the Land or the Plant all necessary materials, supplies
and equipment and shall not be liable for necessary inconvenience, annoyances,
disturbance, loss of business or other damage suffered by reason of the
performance of any such work or the storage of materials, supplies and
equipment.
ARTICLE XV
----------
15.1 Options to Extend Term. Tenant shall have and is hereby given the
rights and options to extend the terms of this Lease for three (3) consecutive
periods of five (5) years each, provided that (a) Tenant shall give Landlord
written notice of its intention to exercise each such option at least ninety
(90) days but not more than one hundred eighty (180) days prior to the
expiration of the then current term of this Lease, and (b) Tenant is not in
default hereunder in the payment of basic rent or additional rent at the time it
gives Landlord such notice or at the time the extended term begins. In the event
Tenant exercises any of such options, the terms, covenants, conditions and
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provisions set forth in this Lease shall be in full force and effect and binding
upon the Landlord and Tenant during each and all said extended terms except that
Tenant covenants and agrees to pay to Landlord on or before December 31 of each
and every year during said extended term, as rent, in lieu of the basic rent
provided for under Article II of this Lease, annual rent in the sum of One
Dollar ($1.00).
ARTICLE XVI
-----------
16.1 Option to Purchase Facility. Tenant shall have the right and option to
purchase the Facility at any time during the life of this Lease or any extension
thereof. Tenant shall exercise its aforesaid option by giving Landlord written
notice of Tenant's election to exercise its option and specifying the date, time
and place of closing, which date (the "Closing Date") shall neither be earlier
than sixty (60) days nor later than ninety (90) days after the notice is given;
provided, however, that Tenant may not exercise its said option if Tenant is in
default hereunder at the time said notice is given and may not purchase the
Facility on the Closing Date if Tenant is in default hereunder on the Closing
Date.
16.2 Quality of Title and Purchase Price. If said notice of election to
purchase be given as aforesaid, Landlord shall and covenants and agrees to sell
and convey the Facility to Tenant on the Closing Date free and clear of all
liens and encumbrances whatsoever, except: (a) those to which the title was
subject on the date of commencement of the term of this Lease, or became subject
to with Tenant's written consent, or which resulted from any failure of Tenant
to perform any of its agreements or obligations under this Lease, (b) taxes and
assessments, general and special, if any, and (c) the rights, titles and
interests of any party having condemned or who is attempting to condemn title
to, or the use for a limited period of, all or any part of the Facility, for the
price and sum as follows (which Tenant shall and covenants and agrees to pay in
cash at the time of delivery of Landlord's deed to the Facility to Tenant as
hereinafter provided):
(i) The full amount which is required, when added to the amount in the
Principal and Interest Account on the Closing Date, to provide the
Paying Agent with funds necessary to redeem and pay in full (aa) the
principal of all of the outstanding Bonds, (bb) all interest due
thereof in accordance with the terms of the Bond Ordinance, and (cc)
all costs, expenses and premiums incident to the redemption and
payment of the Bonds in full, plus
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(ii) $10.00
Nothing in this Article shall release or discharge Tenant from its duty or
obligation under this Lease to make any payment of basic rent or additional rent
which, in accordance with the terms of this Lease, becomes due and payable prior
to the Closing Date, or its duty and obligation to fully perform and observe all
covenants and conditions herein stated to be performed and observed by Tenant
prior to the Closing Date.
16.3 Closing of Purchase. On the Closing Date Landlord shall deliver to
Tenant its special warranty deed, properly executed and conveying the Facility
to Tenant free and clear of all liens and encumbrances whatsoever, except as
stated above, or conveying such other title to the Facility as may be acceptable
to Tenant, and then and there Tenant shall pay the full purchase price for the
Facility as follows: (a) the amount specified in "(i)" of Section 16.2 shall be
paid to the Paying Agent who shall deposit the same in the Principal and
Interest Account, and (b) the amount specified in "(ii)" of said Section 16.2
shall be paid to the Landlord; provided, however, nothing herein shall require
Landlord to deliver its said special warranty deed to Tenant until after all
duties and obligations of Tenant under this Lease to the date of such delivery
have been fully performed and satisfied. Upon the delivery to Tenant of
Landlord's said special warranty deed, and payment of the purchase price by
Tenant, this Lease shall, ipso facto, terminate.
16.4 Effect of Failure to Complete Purchase. If for any reason whatsoever
the purchase of the Facility by Tenant pursuant to valid notice of election to
purchase given as aforesaid is not effected on the Closing Date, this Lease
shall be and remain in full force and effect according to its terms the same as
though no notice of election to purchase had been given, except that:
(a) If such purchase is not effected on the Closing Date because of the
failure or refusal of Tenant to pay the purchase price for the
Facility or because of the failure or refusal of Tenant to fully
perform and observe all of the covenants and conditions herein
contained on Tenant's part to be performed or observed to the Closing
Date, Tenant shall be deemed to be in default under this Lease and
Landlord shall have such rights and Tenant shall have such duties and
obligations as are stated in Article XXIII hereof with like effect as
though written notice of default had been given under said Article
XXIII and the grace period for the
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correction of such default had expired and said default remains
unsatisfied.
(b) If such purchase is not effected on the Closing Date because on said
date Landlord does not have and is unable to convey to Tenant such
title to the Facility as Tenant is required to accept, Tenant shall
have the right to cancel this Lease forthwith if, but only if, the
principal of and interest on the Bonds and all costs incident to the
redemption and payment of the Bonds have been paid in full, and in the
event of such cancellation, notwithstanding Article XXV hereof, to
remove from the Facility all furniture, trade fixtures, machinery and
equipment, buildings and improvements then owned by Tenant installed
and in place on or about the Facility for the period of sixty (60)
days after the date of such cancellation. All repairs to and
restorations of the Facility required to be made because of such
removal shall be made by and at the sole cost and expense of Tenant.
Tenant shall have the sole responsibility and bear the sole risk of
loss for all such furniture, trade fixtures, machinery and equipment,
buildings and improvements, during said sixty (60) day period.
16.5 Application of Condemnation Awards if Tenant Purchases Facility. The
right of Tenant to exercise an option to purchase the Facility under the
provision of this Article shall remain unimpaired notwithstanding any
condemnation of title to, or the use for a limited period of, all or any part of
the Facility, and the provisions of Articles XVIII, XIX and XX shall be
construed in the light of the effect of said option exercised by Tenant, and if
Tenant shall exercise its said option and pay the purchase price as provided in
this Article, all of the condemnation awards received by Landlord after the
payment of said purchase price, less all attorneys' fees and other expenses and
costs incurred by Landlord in connection with such condemnation, shall belong
and be paid to Tenant, notwithstanding any other provision in Articles XVIII,
XIX and XX.
ARTICLE XVII
------------
17.1 Option to Purchase Portions of Land. Tenant shall have and is hereby
given the right and option to purchase, at any time and from time to time during
the life of the Lease, a part or parts of the real property constituting the
Land; provided, however, Tenant must furnish Landlord with the certificate of an
Independent Engineer, dated not
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more than 30 days prior to the date of the purchase and stating that, in the
opinion of the person signing such certificate, (a) the portion of the Land with
respect to which the option is exercised is not needed for the operation of the
Facility for the purposes hereinabove stated and (b) the purchaser will not
impair the usefulness of the Facility as a manufacturing plant or other
enterprise permitted by the Act and will not destroy the means of ingress
thereto and egress therefrom. Tenant shall exercise this option by giving
Landlord written notice of tenant's election to exercise its option and
specifying the legal description of the real property Tenant proposes to
purchase and the date, time and place of closing, which date shall neither be
earlier than forty-five (45) days nor later than sixty (60) days after the
notice is given; provided, however, that Tenant may not exercise this option if
Tenant is in default hereunder at the time said notice is given and may not
purchase said real property on the specified date if Tenant is in default
hereunder on said date. The option hereby given shall include the right to
purchase a perpetual easement for right-of-way to and from the public roadway
and the right to purchase such land as is necessary to assure that there will
always be access between the real property purchased pursuant to this Article
XVII and the public roadway, and this option shall also include the right to
purchase such easements or land as are necessary to afford access between the
real property so purchased and railroad tracks.
17.2 Quality of Title - Purchase Price. If said notice of election to
purchase is given as aforesaid, Landlord shall sell and convey the real property
described in Tenant's aforesaid notice to Tenant on the specified date, free and
clear of all liens and encumbrances whatsoever, except (a) those to which the
title was subject on the date of commencement of the term of this Lease, or
became subject to with Tenant's written consent, or which resulted from any
failure of Tenant to perform any of its agreements or obligations under this
lease, (b) taxes and assessments, general or special, if any, and (c) the
rights, titles and interests of any party having condemned or who is attempting
to condemn title to, or the use for a limited period of, all or any part of the
real property described in Tenant's aforesaid notice, for $3,500.00 per acre.
17.3 Closing of Purchase. If Landlord has title to the real property, free
and clear of all liens and encumbrances whatsoever except as stated above, or
has such other title to the real property as may be acceptable to Tenant, then
on the specified date Landlord shall deliver to Tenant its special warranty
deed, properly executed and conveying the real property to Tenant, free and
clear of all liens and encumbrances whatsoever except as stated above, and then
and there Tenant shall pay the aforesaid purchase price for the
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real property, said purchase price to be paid to the Fiscal Agent for the
account of the Landlord and deposited by the Fiscal Agent in the Principal and
Interest Account; provided, however, nothing herein shall require Landlord to
deliver its said special warranty deed to Tenant until after all duties and
obligations of Tenant under this Lease to the date of such delivery have been
fully performed and satisfied.
17.4 Effect of Purchase on Lease. The exercise by Tenant of the option
granted under this Article XVII and the purchase and sale and conveyance of a
portion or portions of the real property constituting a part of the Land
pursuant hereto shall in no way whatsoever affect this Lease with respect to the
remaining parts of the Facility, and all the terms and provisions hereof shall
remain in full force and effect with respect to the remaining part of the
Facility the same as though no notice of election to purchase has been given,
and specifically, but not in limitation of the generality of the foregoing, such
shall not affect, alter, diminish, reduce or abate Tenant's obligations to pay
all of the basic rent and additional rent required hereunder.
17.5 Effect of Failure to Complete Purchase. If for any reason whatsoever
the purchase by Tenant of the real property described in said notice is not
effected on the specified date this Lease shall be and remain in full force and
effect according to its terms the same as though no notice of election to
purchase had been given.
ARTICLE XVIII
-------------
18.1 Eminent Domain as to Substantially All of the Facility. If during the
life of this Lease title to substantially all of the Facility be condemned by
any authority having the power of eminent domain, this Lease shall (except as to
the following provisions of this Article), ipso facto, terminate on the date
possession of substantially all of the Facility is required to be surrendered to
the condemning authority. A condemnation which in Tenant's judgment renders the
Facility untenantable or impairs the efficient utilization of the Facility by
Tenant shall be deemed a condemnation of substantially all the Facility;
provided, however, Tenant agrees to be reasonable in exercising its judgment.
18.2 Disposition of Awards Received Prior to Payment of Bonds. All awards
received from the condemnation during the life of this Lease, and before the
Bonds and interest thereon have been paid in full, of title to substantially all
of the Facility shall, when received, become the absolute property of Landlord,
and Tenant hereby assigns and transfers to Landlord any and all awards granted
in connection with such condemnation, and, after deducting all
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attorneys' fees and other expenses and costs incurred by Landlord in connection
with such condemnation, such awards shall be forthwith delivered and paid over
by the Landlord to the Paying Agent and deposited in the Principal and Interest
Account. All of the Bonds then outstanding shall as soon as thereafter as
practicable be called for redemption, and all moneys then held in the Principal
and Interest Account by the Paying Agent shall be used for the purposes of
paying the principal of and all interest accrued on the Bonds so called for
redemption and all costs and expenses incurred in connection with the call,
redemption and payment of said outstanding Bonds. If the funds then held by the
Paying Agent in the Principal and Interest Account are insufficient in amount
for the purposes aforesaid, Tenant shall be obligated to pay, and it does hereby
covenant and agree to pay, to the Paying Agent as additional rent, upon demand
therefor, such further sums of money, in cash, as may be required for such
purposes.
18.3 Disposition of Awards Received After Payment of Bonds. All awards
received from the condemnation during the life of this Lease, and after the
Bonds and interest thereon have been paid in full, of title to substantially all
of the Facility shall be applied as follows: (a) Landlord shall receive an
amount equal to all attorneys' fees and other expenses and costs incurred by
Landlord in connection with such condemnation and any sums of money then due and
owing by Tenant under the terms of this Lease, and (b) the balance shall belong
and be paid to Tenant.
ARTICLE XIX
-----------
19.1 Eminent Domain as to Less than Substantially All. If during the life
of this Lease title to less than substantially all of the Facility be condemned
by any authority having the power of eminent domain, this Lease shall not be
thereby terminated and neither the term nor any of the obligations (including
the payment of rentals) of either party under this Lease shall be reduced or
affected in any way.
19.2 Disposition of Awards Received Prior to Payment of Bonds and if Plant
is Not Damaged. If no part of the Plant is condemned or damaged as a result of
the condemnation during the life of this Lease of title to less than
substantially all of the Facility, all awards received from such condemnation
before the Bonds and interest thereon have been paid in full shall, when
received, become the absolute property of Landlord, and Tenant hereby assigns
and transfers to Landlord any and all awards granted in connection with such
condemnation, and, after deducting all attorneys' fees and costs incurred by
Landlord in connection with such condemnation, such awards shall be forthwith
delivered and
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paid over by the Landlord to the Paying Agent and deposited in the Principal and
Interest Account.
19.3 Disposition of Awards Received Prior to Payment of Bonds and
if Part of Plant is Damaged. If any part of the Plant is condemned or damaged as
a result of the condemnation at any time during the life of this Lease of title
to less than substantially all of the Facility, Tenant shall promptly repair or
rebuild the Plant, or rearrange the Facility facilities, so as to make the same
suitable for Tenant's use hereunder, and all awards received from such
condemnation of title to less than substantially all of the Facility before the
Bonds and interest thereon have been paid in full shall, when received, become
the absolute property of Landlord, and Tenant hereby assigns and transfers to
Landlord any and all awards granted in connection with such condemnation, and,
after deducting all attorneys' fees and costs incurred by Landlord in connection
with such condemnation, such awards shall be forthwith delivered and paid over
to the Paying Agent and deposited in a special account to be designated
"Orscheln Co. Construction Account" (the "Construction Account"). Before
commencing any such repairing, rebuilding or rearranging, there shall be
delivered to Landlord performance and labor and material payment bonds with
respect to such work and in the full amount of the contract covering such work
made by the person, firm or corporation which contracts to do such work as the
principal and a surety company, or companies, satisfactory to Landlord as surety
and in form satisfactory to Landlord. Said bonds shall name the Landlord and
Tenant as dual obligees and all amounts received by the Landlord and/or Tenant
under said bonds shall be paid into the Construction Account and become a part
thereof. Funds out of the Construction Account shall be paid to Tenant from time
to time upon receipt by the Paying Agent of:
A certificate signed by both the Tenant and an architect or engineer
selected by Tenant and approved in writing by the Landlord:
(a) requesting payment of a specified amount of such funds and directing
to whom such amount shall be paid;
(b) stating that the amount requested either has been paid by Tenant, or
is justly due to contractors, subcontractors, materialmen, engineers,
architects or other persons (whose names and addresses shall be
stated) who have performed necessary and appropriate work or furnished
necessary and appropriate materials in the repair or rebuilding of the
Plant or rearranging of the Facility facilities, and giving
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a brief description of such work and materials and the several amounts
so paid or due to each of said persons in respect thereof, and stating
that the fair value of such work or materials is not exceeded by the
amount requested to be withdrawn;
(c) stating that, except for the amounts, if any, stated in said
certificates pursuant to the foregoing subparagraph (b), there are no
outstanding indebtednesses which are then due and payable for labor,
wages, materials, supplies or services in connection with the repair
or rebuilding of the Plant or rearranging of the Facility facilities
which, if unpaid, might become the basis of a vendors', mechanics',
laborers; or materialmen's statutory or other similar lien upon the
Facility or any part therof; and
(d) stating that no part of the several amounts paid or due, as stated in
said certificate pursuant to subparagraph (b) of this paragraph, has
been or is being made the basis for the withdrawal of any moneys in
any previous or then pending application pursuant to this paragraph.
The sole obligation of Landlord under this paragraph shall be to cause the
Paying Agent to make such disbursements upon receipt of such certificates.
19.4 Deficiency in Construction Account. If the amount in the Construction
Account shall be insufficient to pay in full the cost of such repairing or
rebuilding of the Plant or rearranging of the Facility facilities, Tenant shall
nevertheless proceed to complete the work and as Additional Rent shall provide
and furnish all other moneys necessary to complete all such repairs, rebuilding
or rearranging.
19.5 Surplus in Construction Account. Any balance remaining in the
Construction Account over and above the cost of the repair or rebuilding of the
Plant or rearranging of the Facility facilities shall, upon receipt by the
Paying Agent of a certificate by the architect or engineer aforesaid to the
effect that the work has been completed and that no liens exist, be forthwith
deposited by the Paying Agent in the Principal and Interest Account.
19.6 Disposition of Awards Received After Payment of Bonds. All awards
Received from the condemnation during the life of this Lease, and after the
Bonds and interest
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thereon have been paid in full, of title to less than substantially all of the
Facility shall be applied in the same manner as provided in Section 18.3.
ARTICLE XX
----------
20.1 Eminent Domain as to Use. If during the life of this Lease the use,
for a limited period, of all or part of the Facility be condemned by any
authority having the power of eminent domain, this Lease shall not be thereby
terminated and neither the term nor any of the obligations (including the
payment of rentals) of either party under this Lease shall be reduced or
affected in any way.
20.2 Disposition of Awards Received Prior to Payment of Bonds. All awards
received for the condemnation during the life of this Lease, and before the
Bonds and interest thereon have been paid in full, of the use, for a limited
period, of all or part of the Facility, whether by way of damages, rent or
otherwise, shall, when received, become the absolute property of Landlord, and
Tenant hereby assigns and transfers to Landlord any and all awards granted in
connection with such condemnation, and, after deducting all attorneys' fees and
costs incurred by Landlord in connection with such condemnation, such awards
shall be forthwith delivered and paid over to the Paying Agent and deposited in
the Principal and Interest Account.
20.3 Disposition of Awards Received After Payment of Bonds. All awards
received for the condemnation during the life of this Lease, and after the Bonds
and interest thereon have been paid in full, of the use, for a limited period,
of all or part of the Facility, whether by way of damages, rent or otherwise,
shall be applied as follows: Landlord shall receive therefrom the amount of all
reasonable attorneys' fees and costs and expenses incurred by Landlord in
connection with such condemnation and any sum or sums of money then due and
owing by Tenant to Landlord under the terms of this lease; and the balance of
such awards shall belong to and be paid to Tenant.
20.4 Restoration of Facility. If the period of condemnation of the use,
for limited period, of all or part of the Facility shall end before the Bonds
and interest thereon have been paid in full, Tenant shall, upon being restored
to possession, restore the Facility as nearly as may be possible to the
condition existing immediately prior to such condemnation.
ARTICLE XXI
-----------
21.1 Damage or Destruction by Fire or Other Casualty. If at any time
during the life of this Lease the
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Facility or any part thereof is damaged or destroyed by fire or other casualty,
Tenant shall, unless Tenant purchases the Facility as provided for in Article
XVI, proceed with due diligence to repair, restore, rebuild or replace said
damaged or destroyed Plant to as good condition as it was in immediately prior
to such damage or destruction, subject to such alterations as Tenant may elect
to make as permitted in Article IX. Before commencing the work of repairing,
restoring, rebuilding or replacing the Plant as above provided, there shall be
delivered to Landlord performance and labor and material payment bonds with
respect to such work and in the full amount of the contract covering such work
made by the person, firm or corporation which contracts to do such work as
principal and a surety company or companies satisfactory to Landlord as surety
and in form satisfactory to Landlord. Said bonds shall name the Landlord and
Tenant as dual obligees and all amounts received by the Landlord and/or Tenant
under said bonds before the Bonds and interest thereon have been paid in full
shall be paid over to the Insurance Trustee and become a part of the insurance
moneys.
21.2 Use of Insurance Moneys Upon Exercise of Option to Purchase. In the
event that such damage or destruction occurs before the Bonds and interest
thereon have been paid in full and Tenant shall have elected to exercise an
option to purchase the Facility, all of the insurance moneys collected by the
Insurance Trustee on account of such damage or destruction on the policy or
policies of insurance maintained by Tenant pursuant to Article V hereof shall,
concurrently with the purchase of the Facility by Tenant, become the absolute
property of Landlord and be forthwith delivered and paid over to the Paying
Agent and deposited in the Principal and Interest Account. For purposes of this
Lease a fire or other casualty which in Tenant's judgment renders the Plant
untenantable for a period of four (4) months or which impairs the efficient
utilization of the Plant by Tenant for a period of four (4) months shall be
deemed a damage or destruction of substantially all of the Plant; provided,
however, Tenant agrees to be reasonable in exercising its judgment.
21.3 Use of Insurance Moneys if Option to Purchase Not Exercised. In the
event that such damage or destruction occurs before the Bonds and interest
thereon have been paid in full and Tenant does not purchase the Facility as
aforesaid, funds out of the insurance moneys collected by the Insurance Trustee
shall be paid to Tenant by the Insurance Trustee upon receipt by the Insurance
Trustee of the certificates described in Section 19.3 hereof with respect to the
Construction Account there referred to, provided that the words "repair or
rebuilding of the Plant or rearranging of the Facility facilities" there used in
describing said certificates shall for the purposes of this paragraph refer to
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<PAGE>
"repairing, restoring, rebuilding or replacing of the Plant." All insurance
moneys not required to be used for such purposes shall, upon receipt by the
Insurance Trustee of a certificate by the architect or engineer mentioned in
Article XIX to the effect that the work has been completed and that no liens
exist, become the absolute property of Landlord and be forthwith deposited by
the Paying Agent in the Principal and Interest Account. If the insurance moneys
so collected by the Insurance Trustee are insufficient in amount to pay in full
the cost of all repairs, restorations, rebuilding and replacements of said
damaged or destroyed Plant, Tenant shall provide and furnish all other moneys
necessary to fully complete all such repairs, restorations, rebuilding and
replacements.
21.4 Application of Insurance Moneys in Event of Tenant's Default. Anything
in this Article to the contrary notwithstanding, Landlord shall have the right
at any time and from time to time to notify the Insurance Trustee to withhold
payment of all or any part of the insurance moneys to Tenant in the event (a)
Tenant is in default in the payment of basic rent or additional rent, (b)
Landlord has given notice to Tenant of any other default on Tenant's part under
this Lease, or (c) a default described under Section 23.1(c) has occurred. After
receipt of such notice from the Landlord, the Insurance Trustee shall not pay
any part of the insurance moneys to Tenant without Landlord's prior written
consent. In the event Tenant shall cure the defaults specified in (a) and (b)
above or a default specified in (c) above shall cease to exist, Landlord shall
so notify the Insurance Trustee and after receipt of such notice, the Insurance
Trustee shall make payments from the insurance moneys to Tenant in accordance
with the provisions of this Article; provided, however, that if this Lease is
terminated or Landlord otherwise reenters and takes possession of the Facility
without terminating this Lease under the provisions of Article XXIII the
Landlord may direct the Insurance Trustee to pay all of the insurance moneys
then held by it to the Paying Agent for deposit in the Principal and Interest
Account and upon such payment to the Paying Agent all duties, responsibilities
and obligations of the Insurance Trustee with respect to such insurance moneys
and all rights of the Tenant in and to such insurance moneys, shall cease.
21.5 Application of Insurance Moneys After Payment of Bonds. If such damage
or destruction to the Plant occurs during the life of this Lease but after the
Bonds and interest thereon have been paid in full (or provision made for the
payment thereof in accordance with the terms of the Bond Ordinances), all of the
insurance proceeds shall become the absolute property of Tenant and be forthwith
delivered and paid over to Tenant.
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ARTICLE XXII
------------
22.1 Termination by Reason of Change of Circumstance. If at any time during
the life of this Lease as a result of changes in the Constitution of the State
of Missouri, or of legislative or administrative action by the State of Missouri
or any political subdivision thereof, or by the United States, or by reason of
any action instituted in any court, this Lease shall become void or
unenforceable, or impossible of performance without unreasonable delay, or in
any other way, by reason of such change of circumstances, unreasonable burdens
or excessive liabilities are imposed upon the Tenant, then in any of such events
Tenant shall have the option to terminate this Lease by giving Landlord notice
of such termination within ninety (90) days after Tenant has actual knowledge of
the change giving rise to such option. In the event that such change shall take
place before the Bonds and interest thereon have been paid in full and Tenant
shall elect to terminate this Lease, then prior to such termination all of the
Bonds then outstanding shall as soon thereafter as practicable be called for
redemption, and all moneys then held in the Principal and Interest Account by
the Fiscal Agent shall be available for use to pay the principal of and all
interest accrued on the Bonds so called for redemption and all reasonable costs
and expenses incurred in connection with the call, redemption and payment of
said outstanding Bonds. If the funds then held by the Paying Agent in the
Principal and Interest Account are insufficient in amount for the purpose
aforesaid, Tenant shall be obligated to pay, and it does hereby covenant and
agree to pay, to the Paying Agent, as additional rent, upon demand therefor,
such further sums of money, in cash as may be required for such purposes. Upon
the payment of all outstanding Bonds and redemption premiums and interest, the
Lease shall terminate.
ARTICLE XXIII
-------------
23.1 Default Provisions. This Lease is made on condition that if:
(a) Tenant defaults in the due and punctual payment of basic rent or
additional rent; or
(b) Tenant defaults in the keeping or performance of any other covenant or
obligation herein contained on Tenant's part to be kept or performed,
and Tenant fails to remedy the same within thirty (30) days after
Landlord or the Paying Agent has given Tenant written notice
specifying such default (or within such addi-
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tional period, if any, as may be reasonably required to cure such
default if it is of such nature that it cannot be cured within said
thirty (30) day period because of governmental restriction or other
cause beyond the control of the Tenant); or
(c) Tenant shall file a voluntary petition under the Bankruptcy
Act, as amended, or an involuntary petition under the Bankruptcy Act,
as amended, is filed against Tenant, and Tenant, after full hearing,
is adjudged to be bankrupt, insolvent or unable to pay its debts as
they mature; or Tenant makes an assignment for the benefit of its
creditors; or a trustee or receiver, after full hearing, is appointed
or retained to take charge of and manage any substantial part of the
assets of Tenant; or any execution or attachment shall issue against
Tenant whereupon the Facility, or any part thereof, or any interest
therein of Tenant under this Lease shall be taken or attempted to be
taken and the same is not released prior to judicial sale thereunder
(each of the events described in this subparagraph being deemed a
default under the provisions of this Lease);
the Landlord may at Landlord's election (subject, however to any restrictions
against acceleration of the maturity of the Bonds or termination of this Lease
in the Bond Ordinance), then or at any time thereafter, and while such default
shall continue, take any one or more of the following actions: (i) after
affording Tenant a ten (10) day opportunity to cure such default, cause all
accounts payable with respect to the Bonds for the remainder of the term of the
Lease to become due and payable, as provided in the Bond Ordinance or (ii) give
Tenant written notice of intention to terminate this Lease on a date specified
therein, which date shall not be earlier than ten (10) days after such notice
is given, and if all defaults have not then been cured, on the date specified,
Tenant's rights to possession of the Facility shall cease and this Lease shall
thereupon be terminated, and Landlord may re-enter and take possession of the
Facility as of Landlord's former estate; or (iii) without terminating this
Lease, re-enter the Facility or take possession thereof pursuant to legal
proceedings or pursuant to any notice provided for by law, having elected to
re-enter or take possession of the Facility without terminating this Lease,
Landlord shall use reasonable diligence to relet the Facility, or parts thereof,
for such term or terms and at such rental and upon such other terms and
conditions as Landlord may deem advisable, with the right to
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make alternations and repairs to the Plant, and no such re-entry or taking of
possession of the Facility by Landlord shall be construed as an election on
Landlord's part to terminate this Lease, and no such re-entry or taking of
possession by Landlord shall relieve Tenant of its obligation to pay basic rent
or additional rent (at the time or times provided herein), or of any of its
other obligations under this Lease, all of which shall survive such re-entry or
taking of possession, and Tenant shall continue to pay the basic rent and
additional rent provided for in this Lease until the end of the term, whether or
not the Facility shall have been relet, less the net proceeds, if any, of any
reletting of the Facility after deducting all of Landlord's reasonable expenses
in or in connection with such reletting, including without limitation all
repossession costs, brokerage commissions, legal expenses, expenses of
employees, alteration costs and expenses of preparation for reletting. Said net
proceeds of any reletting shall be deposited in the Principal and Interest
Account. Having elected to re-enter or take possession of the Facility without
terminating this Lease, Landlord may (subject, however, to any restrictions
against termination of this Lease in the Bond Ordinance), by notice to Tenant
given at any time thereafter while Tenant is in default in the payment of basic
rent or additional rent or in the performance of any other obligation under this
Lease, elect to terminate this Lease on a date to be specified in such notice,
which date shall be not earlier than ten (10) days after re-entry under (iii)
above, and if all defaults shall not have then been cured, on the date
specified, this Lease shall thereupon be terminated. If in accordance with any
of the foregoing provisions of this Article Landlord shall have the right to
elect to re-enter and take possession of the Facility, Landlord may enter and
expel Tenant and those claiming through or under Tenant and remove the property
and effects of both or either (forcibly if necessary) without being guilty of
any manner of trespass and without prejudice to any remedies for arrears of rent
or preceding breach of covenant. Landlord may take whatever action at law or in
equity which may appear necessary or desirable to collect rent then due and
thereafter to become due, or to enforce performance and observance of any
obligation, agreement or covenant of Tenant under this Lease.
23.2 Survival of Obligations. Tenant covenants and agrees with Landlord
and the holders of the Bonds that its obligations under this Lease shall survive
the cancellation and termination of this Lease, for any cause, and that Tenant
shall continue to pay the basic rent and additional rent and perform all other
obligations provided for in this Lease, all at the time or times provided in
this Lease.
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ARTICLE XXIV
24.1 Performance of Tenant's Obligations by Landlord. If Tenant shall fail
to keep or perform any of its obligations as provided in this Lease in respect
of (a) maintenance of insurance, (b) payments under Article IV, (c) repairs and
maintenance of the Facility, (d) compliance with legal or insurance
requirements, (e) keeping the Facility lien free, or in the making of any other
payment or performance of any other obligation, then Landlord may (but shall not
be obligated so to do) upon the continuance of such failure on Tenant's part for
thirty (30) days after written notice of such failure is given Tenant by
Landlord or Paying Agent and without waiving or releasing Tenant from any
obligation hereunder, as an additional but not exclusive remedy, make any such
payment or perform any such obligation, and all sums so paid by Landlord and all
necessary incidental costs and expenses incurred by Landlord in performing such
obligation shall be deemed additional rent and shall be paid to Landlord on
demand, and if not so paid by Tenant, Landlord shall have the same rights and
remedies provided for in Article XXIII in the case of default by Tenant in the
payment of basic rent.
ARTICLE XXV
25.1 Surrender of Possession. Upon accrual of Landlord's right of re-entry
because of Tenant's default hereunder or upon the expiration or termination of
this Lease by lapse of time or otherwise, Tenant shall peacefully surrender
possession of the Facility to Landlord in good condition and repair, ordinary
wear and tear excepted; provided, however, Tenant shall have the right, prior to
the termination of this Lease, to remove from the leased premises the buildings
and improvements, machinery, equipment, furniture and trade fixtures which
Tenant owns under the terms of this Lease. All repairs to and restorations of
the Facility required to be made because of such removal shall be made by and at
the sole cost and expense of Tenant. All buildings and improvements, machinery,
equipment, furniture and trade fixtures owned by Tenant and which are not so
removed from the Facility prior to the termination of this Lease shall become
the separate and absolute property of Landlord.
ARTICLE XXVI
26.1 Notices. All notices required or desired to be given hereunder shall
be in writing and all such notices and other written documents required or
desired to be given hereunder shall be deemed duly served and delivered for all
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purposes (a) upon Landlord, if delivered in person to its duly elected,
qualified and acting Mayor or Clerk or if a copy thereof be mailed by certified
or registered mail, postage prepaid, addressed to Landlord at the public office
of its duly elected, qualified and acting Clerk or at such other place as
Landlord from time to time may designate in writing to Tenant and (b) upon
Tenant, if delivered in person to any executive officer of Tenant or if a copy
thereof be mailed by certified or registered mail, postage prepaid, addressed to
Tenant at Moberly, Missouri or at such other place as Tenant from time to time
may designate in writing to Landlord. All notices given by certified or
registered mail as aforesaid shall be deemed duly given as of the date they are
so mailed.
ARTICLE XXVII
27.1 Net Lease. The parties hereto agree (a) that this Lease is intended to
be a Net Lease, (b) that the payments of basic rent are designed to provide
Landlord and its Paying Agent with funds adequate in amount to pay all principal
of and interest on the Bonds as the same become due and payable, and (c) that to
the extent that the payments of basic rent are not sufficient to provide
Landlord and its Paying Agent with funds sufficient for the purposes aforesaid,
Tenant shall be obligated to pay, and it does hereby covenant and agree to pay,
upon demand therefor, as additional rent, such further sums of money, in cash,
as may from time to time be required for such purposes.
27.2 Funds Held by Paying Agent After Payment of Bonds. If after the
principal of and interest on the Bonds and all costs incident to the payment of
the Bonds have been paid in full the Paying Agent holds unexpended funds
received in accordance with the terms hereof, such unexpended funds shall,
except as otherwise provided in this Lease and the Bond Ordinance and after
payment therefrom to Landlord of any sums of money then due and owing by Tenant
under the terms of this Lease, be the absolute property of and be paid over
forthwith to Tenant.
ARTICLE XXVIII
28.1 Rights and Remedies. The rights and remedies reserved by Landlord and
Tenant hereunder and those provided by law shall be construed as cumulative and
continuing rights. No one of them shall be exhausted by the exercise thereof on
one or more occasions. Landlord and Tenant shall each be entitled to specific
performance, and injunctive or other equitable relief for any breach or
threatened breach of any of the provisions of this Lease, notwithstanding the
availability of an adequate remedy at law, and each party hereby waives the
right to raise such defense in any pro-
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ceeding in equity.
28.2 Waiver of Breach. No waiver of any breach of any covenant or agreement
herein contained shall operate as a waiver of any subsequent breach of the same
covenant or agreement or as a waiver of any breach of any other covenant or
agreement, and in case of a breach by either party of any covenant, agreement or
undertaking, the nondefaulting party may nevertheless accept from the other any
payment or payments or performance hereunder without in any way waiving its
right to exercise any of its rights and remedies provided for herein or
otherwise with respect to any such default or defaults which were in existence
at the time such payment or payments or performance were accepted by it.
28.3 Abandonment by Tenant. If Tenant vacates or abandons the Facility,
Landlord shall have all the same rights and remedies against Tenant by reason
thereof as are herein granted to Landlord upon and by reason of a default of the
Tenant.
28.4 Landlord Shall Not Unreasonably Withhold Consents and Approvals.
Wherever in this Lease it is provided that the Landlord shall, may, or must give
its approval or consent, or execute supplemental agreements, exhibits or
schedules, Landlord shall not unreasonably, arbitrarily or unnecessarily
withhold or refuse to give such approvals or consents or refuse to execute such
supplemental agreements, exhibits or schedules.
28.5 Independent Engineer. "Independent Engineer" means an engineer or
engineering firm registered and qualified to practice the profession of
engineering under the laws of Missouri and who or which is not a full-time
employee of either the Landlord or the Tenant and who shall be reasonably
satisfactory to the Tenant.
ARTICLE XXIX
29.1 Quiet Enjoyment and Possession. Landlord covenants that so long as
Tenant shall not be in default under this Lease, Tenant shall and may peaceably
and quietly have, hold and enjoy the Facility leased hereunder and that Landlord
will defend Tenant's enjoyment and possession thereof against all parties.
29.2 Due Organization of Landlord. Landlord covenants that it is a
municipal corporation duly organized and existing under the laws of the State of
Missouri, with lawful power and authority to enter into this Lease, acting by
and through its duly authorized officials.
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<PAGE>
29.3 Additional Covenants of Tenant. Tenant covenants that it is a
corporation duly organized and existing under the laws of the State of Delaware,
duly authorized and qualified to do business in the State of Missouri, with
lawful power and authority to enter into this Lease, acting by and through its
duly authorized officers. The execution of this Lease and the performance of the
terms of this Lease by Tenant will not result in a breach of any of the terms
of, or constitute a default under, any indenture, mortgage, deed of trust, lease
or other agreement or instrument to which Tenant is a party or by which it or
any of its property is bound, or the Tenant's Articles of Incorporation or
Bylaws, or any order, rule or regulation applicable to Tenant or its property of
any court or other governmental body.
29.4 Amendments. This Lease may be amended, changed or modified in the
following manner:
(a) With respect to any amendment, change or modification which will
materially adversely affect the security of the holders of any of the
Bonds, by an agreement in writing executed by the Landlord and Tenant
and consented to in writing by the holders of 75% of the aggregate
principal amount of the Bonds then outstanding;
(b) With respect to any amendment, change or modification which reduces
the basic rent or additional rent, or any amendment which reduces the
percentage of bondholders whose consent is required for any such
amendment, change or modification, by an agreement in writing executed
by Landlord and Tenant and consented to in writing by the holders of
100% of the aggregate principal amount of the Bonds then outstanding;
and
(c) With respect to all other amendments, changes or modifications by an
agreement in writing executed by Landlord and Tenant.
No amendment to this Lease which constitutes a change in the plan relating
to the project as defined in Sections 100.010 to 100.200 RSMo. 1936, shall be
made unless such change is submitted to an approved by the Division of Commerce
and Industrial Development and by the governing body of Landlord.
29.5 Construction and Enforcement. This Lease shall be construed and
enforced in accordance with the laws of Missouri. Wherever in this Lease it is
provided that
-31-
<PAGE>
either party shall or will make any payment or perform or refrain from
performing any actor or obligation, each such provision shall, even though not
so expressed, be construed as an express covenant to make such payment or to
perform, or not to perform, as the case may be, such acts or obligation.
29.6 Security Interests. The Landlord and the Tenant agree to enter into
all instruments (including financing statements and statements of continuation)
necessary for perfection of and continuance of the perfection of the security
interest of the Landlord in the property hereby leased. The Paying Agent agrees
to file or cause to be filed all such instruments required to be so filed and
shall continue or cause to be continued the liens of such instruments for so
long as the Bonds shall be outstanding.
29.7 Invalidity of Provisions of Lease. If for any reason any provision
hereof shall be determined to be invalid or unenforceable, the validity and
effect of the other provisions hereof shall not be affected thereby.
29.8 Covenants Run With Leased Property and Premises. The covenants,
agreements and conditions herein contained shall run with the property and
premises hereby leased and shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
29.9 Section Headings. The section headings shall not be treated as a part
of this Lease or as affecting the true meaning of the provisions hereof.
29.10 Execution of Counterparts. This Lease may be executed simultaneously
in two or more counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same instrument.
-32-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed these presents as of
the day and year first above written.
CITY OF MOBERLY, MISSOURI
By: /s/ Jack Valentine
------------------------
Jack Valentine
Mayor
(SEAL)
ATTEST:
/s/ C.A. Kehoe
- ---------------------------
City Clerk
LANDLORD
ORSCHELN CO.
By: /s/ John C. Jorgensen
------------------------
John C. Jorgensen
President
(SEAL)
ATTEST:
/s/ Shirley Loesch
- ---------------------------
Assistant Secretary
TENANT
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<PAGE>
NOTARIAL WORDING FOR LEASE
STATE OF MISSOURI )
) SS.
COUNTY OF RANDOLPH )
On this 11th day of December, 1987, before me, appeared Jack Valentine, to
me personally known, who being by me duly sworn, did say that he is the Mayor of
the City of Moberly, Missouri, and that the seal affixed to the foregoing
instrument is the corporate seal of said City and that said instrument was
signed and sealed in behalf of said City by authority of its governing body and
said Jack Valentine acknowledged said instrument to be the free act and deed of
said City.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal at my office in Moberly, Missouri, the day and year last above written.
/s/ Marion E. Lamb
---------------------------------
Notary Public within and for said
County and State
Typed Name: Marion E. Lamb
---------------------
My commission expires Jan. 15, 1988
-----------------------------
-34-
<PAGE>
NOTARIAL WORDING FOR LEASE
STATE OF MISSOURI )
) SS.
COUNTY OF RANDOLPH )
On this 29th of December, 1987, before me, appeared John C. Jorgensen,
to me personally known, who being by me duly sworn, did say that he is the
President of Orscheln Co., a Delaware corporation, and that the seal affixed to
the foregoing instrument is the corporate seal of said corporation and that said
instrument was signed and sealed in behalf of said corporation by authority of
its Board of Directors, and said John C. Jorgensen acknowledged said instrument
to be the free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal at my office in Moberly, Missouri, the day and year last above written.
/s/ Ardyth H. Delaney
---------------------------------
Notary Public within and for said
County and State
Typed Name: Ardyth H. Delaney
---------------------
My commission expires August 3, 1990
-----------------------------
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<PAGE>
SCHEDULE 1 TO LEASE DATED JANUARY 5, 1988
BY AND BETWEEN THE CITY OF MOBERLY, MISSOURI
AND ORSCHELN CO. TO ORDINANCE NO.
-------------------
(a) The following described real property situated in Randolph County,
Missouri:
TRACT A: Beginning at an iron pin, the NE corner of the SE 1/4 of Section
26, T54, R14, thence S 0/0/16'W 723.7' to an iron pin on the north line of
Fowler Road, a 70' dedicated street; thence N 89/0/38'W 35' to a point;
thence S 0/0/16'W 70' to an iron pin, the NE corner of the existing Wick
Homes property; thence N 89/0/39'W 290.63' to a point; thence S 33/0/03'E
50.30' to an iron pin and the true point of beginning; thence S 33/0/03'E
152.82' to an existing chain link fence corner post; thence S 0/0/19'W
230.47' to the NE corner of the existing Wick Homes plant building; thence
N 89/0/39'W 400.0' to an iron pin; thence N 0/0/21'E 177.31' to an iron
pin; thence N 60/0/33'E 363.66' to the true point of beginning. Said parcel
being located in the SE 1/4 of Section 26, T54, R14, Randolph County,
Missouri and contains 2.51 acres more or less.
TRACT B: Beginning at an iron pin, the NE corner of the SE 1/4 of Section
26, T54, R14, thence S 0/0/16'W 723.7' to an iron pin on the north line of
Fowler Road, a 70' dedicated street; thence N 89/0/39'W 35' to a point;
thence S 0/0/16'W 864.69' to an iron pin and the true point of beginning;
thence S 0/0/16'W 134.99' to an iron pin, thence N 89/0/44'W 78.97' to an
iron pin; thence N 44/0/31'W 89.98' to an iron pin; thence N 45/0/29'E
100.93' to an iron pin; thence S 89/0/44'E 70.64' to the true point of
beginning. Said parcel being located in the SE 1/4 of Section 26, T54, R14,
Randolph County, Missouri and contains 0.34 acres more or less.
TRACT C: Beginning at the NE corner of the SE 1/4 of Section 26, Township
54, Range 14, thence North 89/0/28' West 1154.2' to an iron pin on the East
right of way line of Old Sugar Creek Road, thence along the East right of
way line of Old Sugar Creek Road South 0/0/59' West 797.2' to an iron pin.
Said point being on the South line of a 70 foot dedicated public
<PAGE>
street, and commonly called an extension of Fowler Road, thence South
89/0/39' East along the South line of said dedicated 70 foot street a
distance of 429.0 feet to the true point of beginning, thence S 0/0/16'
West 1110.2 feet more or less to the North line of a 70 foot dedicated
street, thence 100 feet East along the North line of the dedicated street a
distance of 100 feet to a point, thence North 0/0/16' East 1110.2 feet more
or less to the South line of a dedicated 70 foot street sometimes called an
extension of Fowler Road, thence West along the South line of said
dedicated public street a distance of 100 feet to the true point of
beginning. The land herein conveyed lies adjacent to and directly West of
the land conveyed to the City of Moberly, Missouri, October 8, 1970 and
recorded in Book 8M at Page 651 of the Recorder's Office of Randolph
County, Missouri, and being a part of the SE 1/4 of Section 26, Township
54, Range 14 and containing 2.5486 acres more or less in Randolph County,
Missouri.
TRACT D: Begin at a point 793 feet south 0/0/16' West and 35 feet North
89/0/39' West of N.E. corner of SE 1/4 of Section 26, Township 54, Range
14, thence 1110 feet south 0/0/16' West, thence 600 feet West, thence
1112.78 feet North 0/0/16' East to South line of Fowler Road projected
West, thence 600' South 89/0/39' East to point of beginning, being a part
of SE 1/4 of Section 26, Township 54, Range 14 and containing 15.31 acres,
more or less in Randolph County, Missouri. Subject to: (i) easements,
restrictions and reservations now of record, (ii) the rights of the public
in and to any part of the premises lying or being in public roads, alleys
or highways and (iii) taxes and assessments, general and special, not now
due or payable; and
Also described as:
A tract of land lying in the Southeast Quarter of Section 26, Township 54
North, Range 14 West, being in the City of Moberly, Randolph County,
Missouri; and being more particularly described as follows:
Beginning at an iron pipe (found) the Northeast corner of said Southeast
Quarter of Section 26;
(2)
<PAGE>
Thence along the East line of said Southeast Quarter S 0/0/16'00" W, 792.75
feet (793 feet, Deed) to a point on the South right-of-way line of Fowler
Road extended;
Thence along the South right-of-way line of Fowler Road extended N
89/0/38'40"W, 34.77 feet (35 feet, Deed) to an iron pipe (found) on the
West right-of-way line of Robertson Road and the TRUE POINT OF BEGINNING;
Thence along the West right-of-way line of Robertson Road S
0/0/17'19"W, 1110.18 feet (1110 feet, Deed) to an iron pipe (found) at
the intersection with the North right-of-way line of Hunthausen Road;
Thence along the North right-of-way line of Hunthausen Road N
89/0/39'04"W, 699.83 feet (700 feet, Deed) to a 1/2" rebar (found);
Thence, leaving said right-of-way line, N 0/0/16'19"E, 1110.26 feet
(1110.2 feet, Deed) to a 1/2" rebar (found) on the South right-of-way
line of Fowler Road;
Thence along the South right-of-way line of Fowler Road S
89/0/38'40"E, 700.10 feet, (700 feet, Deed) to the TRUE POINT OF
BEGINNING.
The basis of bearing is the East line of Section 26 shown by a survey
recorded in Book 13, Page 104 of the Randolph County, Missouri records.
This tract is subject to a Guy Anchor Easement recorded in Book 257, Page
161 of the Randolph County, Missouri Records.
The aforedescribed tract is the same as Tract C described in a Corporate
Warranty Deed recorded in Book 34M, Page 233, and a tract described in a
deed recorded in Book 8M, Page 651 both of the Randolph County, Missouri
Records and contains 17.84 acres more or less. (b) All buildings and
improvements and machinery and equipment purchased, constructed, installed
or located thereon pursuant to Article III of said Lease.
(3)
<PAGE>
SCHEDULE 2 TO LEASE DATED JANUARY 5, 1988
BY AND BETWEEN THE CITY OF MOBERLY, MISSOURI
AND ORSCHELN CO.
<TABLE>
<CAPTION>
Installments of Basic Rent
--------------------------
Year March 20 September 20
---- -------- ------------
Interest Interest
pd. twice pd. twice
yr. yr.
<S> <C> <C>
1988 17,700 67,700
1989 16,200 71,200
1990 14,550 74,550
1991 12,750 72,750
1992 10,950 75,950
1993 9,000 79,000
1994 6,900 81,900
1995 4,650 79,650
1996 2,400 82,400
</TABLE>
<PAGE>
Exhibit 10.23
NET LEASE
THIS LEASE is made as of the 16th day of March, 1995, by and between
FIRST INDUSTRIAL FINANCING PARTNERSHIP, L.P., a Delaware Limited Partnership
("Landlord"), whose address is 150 North Wacker, Suite 150, Chicago, IL 60606,
and DURA AUTOMOTIVE SYSTEMS, INC., a Delaware corporation ("Tenant"), whose
address is 1708 Northwood, Troy, Michigan 48084.
SECTION 1
THE PREMISES
1.01 Landlord hereby leases to Tenant the real property located in the
City of Rochester Hills, County of Oakland, and State of Michigan, more
particularly described in Exhibit "A" attached to, and made an integral part of,
this Lease (the "Land"), together with the building and other improvements on
the Land depicted on Exhibit "A-1", including without limitation those described
in Section 2 (the "Improvements") (the Land and the Improvements collectively
will constitute and be referred to in this Lease as the "Premises").
SECTION 2
CONSTRUCTION OF IMPROVEMENTS
2.01 Landlord agrees to commence certain improvements to the building
on the Land, beginning on May 1, 1995 or when S.I. Handling Systems vacates the
Premises (defined in Section 3.01), substantially in accordance with Exhibit "B"
attached to and made an integral part of this Lease (the "Plans"). No minor
change from the Plans which may become necessary during the preparation of the
Premises for Tenant will invalidate, change or affect this Lease.
2.02 The preparation of the Premises under Section 2.01 will begin on
or before May 1, 1995. If in good faith Landlord is delayed in such preparation
by any delay caused by Tenant, labor dispute, strike, lockout, fire,
unavailability of material, weather or other casualty, beyond its reasonable
control, then the period of delay necessarily caused by such occurrence will not
effect the Commencement Date of this Lease.
SECTION 3
THE TERM
3.01 The Term will commence (the "Commencement Date") on June 15,
1995. This Lease is subject to a fully executed "Lease Termination Agreement"
between S.I. Handling Systems (the building's current Tenant) and First
Industrial Financing Partnership, L.P. In the event of a holdover by S.I.
Handling Systems, Inc., the Tenant's rent for the holdover period shall abate.
The initial Term will be ten (10) years, from and after the Commencement Date.
If the Commencement Date is other than the first day of a calendar month, the
Term will be extended to terminate at the end of the calendar month in which it
would otherwise terminate under the preceding sentence.
3.02 The date shown in Section 2.02 represents Landlord's estimate of
the date the Premises will be ready to commence construction. Landlord agrees to
use its best efforts to complete all work, and to tender possession to Tenant
with all due diligence. If Landlord for any reason is delayed in accordance with
Section 2.02, Tenant may not terminate this Lease, and Landlord will have no
liability for damages.
3.03 The Premises will be conclusively deemed "ready for occupancy"
under Section 3.01 in accordance with Section 2.02.
<PAGE>
Landlord will require its workmen to cooperate with Tenant's installers of
equipment, trade fixtures, furnishings and decorations attached to the
Improvements to the maximum extent possible, provided that it does not delay or
interfere with Landlord's preparation of the Premises. On the Commencement Date
Tenant will have accepted the Premises and acknowledged that they are in the
condition called for in this Lease.
3.04 If Landlord permits Tenant to enter into possession of the
Premises, prior to the Commencement Date, Tenant agrees that such occupancy will
be deemed to be under all the provisions of this Lease.
3.05 Upon request by Landlord, Tenant will execute a written
instrument confirming the Commencement Date and the expiration date of the Term.
SECTION 4
THE BASE RENT
4.01 Tenant agrees to pay to Landlord, as minimum net rental for the
original Term of this Lease, the total amount of Three Million Four Hundred
Twenty-Nine Thousand Two Hundred Ninety-Six and 58/100 Dollars ($3,429,296.58),
in monthly installments of Months 1-20 @ $28,087.06; Months 21-36 @ $26,749.58;
Months 37-72 @ $28,087.06; Months 73-108 @ $29,424.54; Months 109-120 @
$30,762.04 Dollars ($ ).
4.02 In the event the Commencement Date is other than the first day of
a calendar month, the rental for the partial first calendar month of the Term
will be prorated accordingly.
4.03 Landlord and Tenant acknowledge and agree that this is a net
lease, and that it must yield, net, to Landlord during the original Term, not
less than the minimum net rent shown in Section 4.01. All costs, expenses and
charges of every nature relating to the Premises which may be attributable to,
or become due during, the Term will be paid by Tenant, and Tenant will indemnify
and hold harmless Landlord from and against such costs, expenses and charges.
Notwithstanding the foregoing, Landlord agrees to pay all commissions and other
amounts owing to The Manhattan Company or other brokers or agents in the
connection with this lease.
SECTION 5
LATE CHARGES AND INTEREST
5.01 Any rent or other sums, if any, payable by Tenant to Landlord
under this Lease which are not paid within five (5) days after they are due, and
any rent or other sums received and accepted by Landlord more than five (5) days
after they are due, will be subject to a late charge of five (5%) percent of the
amount due. Such late charges will be due and payable as additional rent on or
before the next Rent Day.
5.02 Any rent, late charges or other sums payable by Tenant to
Landlord under this Lease not paid within thirty (30) days after the same are
due will bear interest at a per annum rate equal to the greater of eleven (11%)
percent or four percentage points above the effective prime interest rate per
annum charged by Comerica Bank to its best commercial customers on the date when
the rent, late charges or other sums became due, but not in excess of the
maximum interest rate permitted by law. Such interest will be due and payable as
additional rent on or before the next Rent Day, and will accrue from the date
that such rent, late charges or other sums are payable under the provisions of
this Lease until actually paid by Tenant.
5.03 Any default in the payment of rent, late charges or other sums
will not be considered cured unless and until the late charges and interest due
hereunder are paid by Tenant to Landlord. If Tenant defaults in paying such late
charges and/or interest, Landlord will have the same remedies as on default in
the payment of rent. The obligation hereunder to pay late charges and interest
will exist in addition to, and not in the place of, the other default provisions
of this Lease.
<PAGE>
SECTION 6
TAXES, ASSESSMENTS AND UTILITIES
6.01 Tenant agrees to pay as additional rent for the Premises all
taxes and assessments, general and special, all water rates and all other
governmental impositions which may be levied on the Premises or any part
thereof, or on any building or improvements at any time situated thereon, during
or pertaining to the Term and any extensions thereof. All such taxes,
assessments, water rates and other impositions will be paid by Tenant before
they become delinquent. The property taxes and assessments for the first and
last years of the Term or any extension thereof, will be prorated between
Landlord and Tenant so that Tenant will be responsible for any such tax or
assessment attributable to the period during which Tenant has possession of the
Premises.
The so-called "due-date" method of proration will be used, it being
presumed that taxes and assessments are payable in advance. In the event that
during the Term or any extension thereof (i) the real property taxes levied or
assessed against the Premises are reduced or eliminated, whether the cause is a
judicial determination of unconstitutionality, a change in the nature of the
taxes imposed or otherwise, and (ii) there is levied, assessed or otherwise
imposed on the Landlord, in substitution for all or part of the tax thus reduced
or eliminated, a tax (the "Substitute Tax") which imposes a burden upon Landlord
by reason of its ownership of the Premises, then to the extent of such burden
the Substitute Tax will be deemed a real estate tax for purposes of this
paragraph.
6.02 Tenant agrees to pay all charges made against the Premises for
gas, heat, electricity and all other utilities as and when due during the
continuance of this Lease.
6.03 In the event that payment of any or all of the foregoing taxes,
assessments and utilities are to be made from an escrowed fund required to be
established by Landlord as Mortgagor under the terms of any first mortgage on
the Premises, then Landlord will so notify Tenant. Tenant will not be required
to pay directly such taxes, assessments and utilities as are paid from the
escrowed fund, but will instead, as additional rent, pay to Landlord on the
first day of each month of the Term an amount equal to the amount required to be
paid by Landlord under the terms of such first mortgage to the escrowed fund on
account of such charges. If the actual taxes, assessments and utilities, when
due, exceed the total amounts from time to time paid therefor by Tenant, then
Tenant will pay on demand any deficiency to Landlord. If such payments by
Tenant, over the Term, exceed the amount of taxes, assessments and utilities
paid therefrom, such excess will be refunded by Landlord to Tenant at the
expiration of the Term, or when such excess is refunded by the mortgagee to
Landlord, whichever first occurs.
6.04 Tenant also agrees to pay as additional rent for the Premises all
dues and assessments levied against or in regard to the Premises by Rochester
Hills Executive Park, a Michigan non-profit corporation until the termination of
the Term and of any extended term of this Lease. Tenant will pay all such dues
and assessments before they become delinquent. Such dues and assessments which
relate to specific periods of time which periods include the Commencement Date
and/or the termination date of this Lease or any extension thereof, will be
prorated between Landlord and Tenant so that Tenant will be responsible for any
such dues and assessments attributable to the period during which Tenant has
possession of the Premises.
SECTION 7
USE OF PREMISES
7.01 The Premises during the continuance of this Lease may be used and
occupied for*
only and for no other purpose without the prior written consent of Landlord.
Tenant agrees that it will not use or permit any person to use the Premises or
any part thereof for any use or purposes in violation of the laws of the United
States, the laws, ordinances or other regulations of the State and municipality
in which the Premises are located, or of any other lawful authorities,
- --------------------------------------------------------------------------------
*the uses set forth in the Declaration of Covenants & Restrictions dated
December 23, 1992, recorded in Liber 13241, pp. 370-382, inclusive, Oakland
County Records ("Declaration").
3
<PAGE>
(a copy of which is attached hereto as Exhibit "C", to which Declaration this
Lease is hereby expressly made subject). During the Term or any extended term,
Tenant will keep the Premises and every part thereof and all buildings at any
time situated thereon in a clean and wholesome condition and generally will
comply with all applicable lawful health and police regulations. All signs and
advertising displayed in and about the Premises will be such only as to
advertise the business carried on upon the Premises and Landlord will control
the location, character and size thereof. No signs will be displayed except as
approved in writing by Landlord, and no awning will be installed or used on the
exterior of the building unless approved in writing by Landlord.
4
<PAGE>
ALTERNATE
SECTION 8
INSURANCE
(TENANT TO OBTAIN)
8.01 Tenant, at its sole expense, will obtain and maintain at all
times until termination of this Lease and surrender of the Premises to Landlord,
a primary policy of insurance covering the Premises and providing the insurance
protection described in this Section 8.
8.02 The liability coverage under the primary policy will name
Landlord and Landlord's mortgagee as additional insured parties, and will
provide comprehensive general public liability insurance including blanket
contractual coverage against claims for or arising out of bodily injury, death
or property damage, occurring in, on or about the Premises or property in, on or
about the streets, sidewalks or properties adjacent to the Premises. The limits
of coverage will be, initially, if dual limits are provided, not less than Two
Million Dollars ($2,000,000.00) with respect to injury or death of a single
person, not less than Two Million Dollars ($2,000,000.00) with respect to any
one occurrence and not less than One Million Dollars ($1,000,000.00) with
respect to any one occurrence of property damage, or, in the alternative, a
single limit policy in the amount of Two Million Dollars ($2,000,000.00), and
thereafter in such reasonably appropriate increased amounts as may be reasonably
determined by Landlord or Landlord's mortgagee; provided, however, that the
amount of coverage will not be increased more frequently than at one (1) year
intervals. The policy will contain cross-liability endorsements.
8.03 The primary policy will insure the Improvements, as defined in
Section 1.01 hereof (but not any personal property, fixtures or equipment of
Tenant) for full replacement cost against loss by fire, with standard extended
risk coverage, vandalism, malicious mischief, sprinkler leakage and all other
risk perils. The named insureds will be Landlord and Landlord's mortgagee,
only. The initial amount of this insurance will be Two Million Six Hundred
Thousand and 00/100 Dollars ($2,600,000.00), subject to increases due to newly
constructed tenant improvements within the Leased Premises, but such amounts
shall be increased upon notice to Tenant on the recommendation or requirement of
Landlord or Landlord's mortgagee, in order to reflect increases in the
replacement cost of the Improvements.
8.04 The primary policy also will provide loss of rents coverage
sufficient, as reasonably determined by Landlord, to cover the net rental and
all other charges which are the obligation of Tenant under this Lease for a 12-
month period from the date of any loss or casualty.
8.05 The insurance policy or policies to be provided by Tenant
hereunder shall be issued by an insurance company or companies having an A.M.
Best Company rating of not less than "A". Each policy procured by Tenant under
this Section 8 must provide for at least thirty (30) days' written notice to
Landlord of any cancellation. At Landlord's option, either certificates of
insurance or the original policy or policies will be delivered by Tenant to
Landlord prior to the effective date thereof, together with receipts evidencing
payment of the premiums therefor. Tenant will deliver certificates of renewal
for such policies to Landlord at Least thirty (30) days prior to the expiration
dates thereof. The insurance provided by Tenant under this Section 8 may be in
the form of a blanket insurance policy covering other properties as well as the
Premises; provided, however, that any such policy or policies of blanket
insurance (i) must specify therein.
5
<PAGE>
or Tenant must furnish Landlord with a written statement from the insurers
under such policy or policies specifying, the amount of the total insurance
allocated to the Premises, which amounts will not be less than the amounts
required by Subsections 8.02, 8.03 and 8.04 hereof, and (ii) such amounts so
specified must be sufficient to prevent Landlord or Landlord's mortgagee from
becoming, co-insurer within the terms of the applicable policy or policies, and
provided further, however, that any such policy or policies of blanket insurance
must, as to the Premises, otherwise comply as to endorsements and coverage with
the other provisions of this Section 8.
8.06 Except with respect to the insurance required by Subsection 8.02,
neither Landlord nor Tenant may take out separate insurance concurrent in form
or contributing in the event of loss with that required under this Section 8
unless Landlord and Tenant are included therein as the insured payable as
provided in this Lease. Each party will notify the other immediately of the
placing of any such separate insurance.
8.07 If Tenant fails to provide all or any of the insurance required
by this Section 8, or subsequently fails to maintain such insurance in
accordance with the requirements of this Section, Landlord may (but will not be
required to) procure or renew such insurance, and any amounts paid by Landlord
for such insurance will be additional rental due and payable on or before the
next Rent Day, together with late charges and interest as provided in Section 5.
8.08 In the event of loss under any policy or policies provided by
Tenant to Landlord under this Section 8, other than the liability policy
required by Subsection 8.02, the insurance proceeds will be payable to Landlord
or Landlord's mortgagee; thereafter, such proceeds, with the exception of the
loss of rents insurance proceeds, will be used for the expense of repairing or
rebuilding the Improvements which have been damaged or destroyed if Landlord and
its mortgagee are satisfied that the amount of insurance proceeds are and will
be at all times sufficient to pay for the completion of the repairs or
rebuilding.
8.09 If Landlord's mortgagee under any first mortgage on the Premises
at any time requires, pursuant to the terms of the mortgage, that payment of
insurance premiums be made from an escrowed fund, then Landlord will so notify
Tenant. In such event, Tenant will not directly pay the insurance premiums, but
instead will pay to Landlord, as additional rent, the amounts which landlord
must pay into the escrowed fund on account of such premiums. If the actual
premiums, when due, exceed the total payments from time to time made by Tenant
under the previous sentence, then Tenant upon demand will pay any deficiency to
Landlord. If the payments made by Tenant under this Subsection over the Term
exceed the amount of premiums paid from such fund, Landlord will refund the
excess to Tenant at the expiration of the Term, or at the time such excess is
refunded by the mortgagee to Landlord, whichever occurs first.
SECTION 9
DAMAGE BY FIRE OR OTHER CASUALTY
9.01 It is understood and agreed that if the Premises are damaged or
destroyed in whole or in part by fire or other casualty during the Term, the
Landlord, if there are sufficient insurance proceeds, as supplemented, if
necessary, by a deposit tendered by Tenant pursuant to Section 9.02 hereof, will
repair and restore the same to good tenantable condition with reasonable
dispatch. The rent and all other charges which are the obligation of Tenant
under this Lease will abate, if and to the extent covered by loss of rents
insurance proceeds, for the period the premises are untenantable.
9.02 If Tenant has elected, under Alternate Section 8, to carry its
own insurance, and the insurance proceeds therefrom are insufficient, in
Landlord's judgment, to cover the cost of repairing and restoring the Premises
to good tenantable condition, Tenant will deposit with Landlord or the mortgagee
of any first mortgage on the Premises the amount by which such proceeds are
insufficient and Landlord thereupon will proceed with such repairs and
restoration; if Tenant fails to make such a deposit, Landlord will be under no
obligation to make such repairs or undertake such restoration, or to use any
portion of the insurance proceeds for such restoration and repair, but Tenant
will not thereby be relieved of its obligations to repair and restore the
Premises to good tenantable condition.
9.03 Tenant will have the option, exercisable by written notice to
Landlord upon restoration of the Premises, to extend the original Term of this
Lease (or the extension of the Term during which the damage or destruction
occurred, as the case may be) for a period equal to the period, if any, during
which Tenant was deprived of the use of all or a significant portion of the
Premises by reason of such damage or destruction. Tenant's option must be
exercised within twenty (20) days following completion of the work of
restoration and repair.
SECTION 10
REPAIRS
10.1 Tenant agrees at its own expense to keep the Improvements,
including all structural, electrical, mechanical and plumbing systems at all
times in good appearance and repair except for reasonable
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and normal wear and tear. Tenant will also pay all other expenses in connection
with the maintenance of the Premises including repair and upkeep of grounds,
sidewalks, driveways and parking areas in a first-class condition.
10.02 Notwithstanding any other provision of this Lease, from and after
the date Tenant takes occupancy of the Premises any repairs, additions or
alterations to the Improvements or any of its systems (e.g., plumbing,
electrical, mechanical) structural or non-structural, which are required by any
law, statute, ordinance, rule, regulation or governmental authority or insurance
carrier, including, without limitation, OSHA, will be the obligation of Tenant.
10.03 Landlord represents that the Premises, including the Building and
Improvements, are in good operating condition and repair, and Landlord has
received no written notice that the Building and Premises are not in compliance
with all applicable laws and regulations. Tenant acknowledges that he has
examined the Premises prior to the making of this Lease, that he knows the
condition thereof, that no representations as to the condition or the state of
repairs thereof have been made by Landlord or Landlord's agent which are not
expressly set forth herein, and that Tenant hereby accepts the Premises in their
present condition at the date of execution of this Lease.
SECTION 1l
PAYMENT FOR SERVICES RENDERED BY LANDLORD
11.01 If Landlord at any time: (i) does any work or performs any
service in connection with the Premises, or (ii) supplies any materials to the
Premises, and the cost of the services, work or materials is Tenant's
responsibility under the provisions of this Lease, Landlord will invoice Tenant
for the cost, payable within five (5) days after delivery of the invoice. This
Section will apply to any such work, services or materials, whether furnished at
Tenant's request or on its behalf and whether furnished or caused to be
furnished by Landlord or its agents, employees or contractors. All amounts
payable under this Section will be additional rental, and failure by Tenant to
pay them when due will be a default under this Lease and further will result in
the assessment of late charges and interest under Section 5.
SECTION 12
ALTERATIONS
l2.01 The parties agree that Tenant will not make any alterations,
additions, or improvements to the Premises without the written consent of
Landlord and, if required by the terms of any mortgage on the Premises, the
written consent of the mortgagee. All alterations, additions or improvements
made by either of the parties hereto on the Premises will be the property of
Landlord and will remain on and be surrendered with the Premises at the
termination of this Lease, except that alterations, additions or improvements
made by Tenant must be removed and the Premises restored by Tenant if so
requested by Landlord. Landlord represents that there are currently 115 parking
spaces which may be expanded to provide parking for 190 automobiles on the
Premises.
SECTION 13
LIENS
13.0l After the Commencement Date, Tenant will keep the Premises free
of liens of any sort and will hold Landlord harmless from any liens which may be
placed on the Premises except those attributable to the acts of Landlord.
SECTION 14
EMINENT DOMAIN
14.01 If seventy-five (75%) percent or more of the building's net
rentable area is condemned or taken in any manner (including without limitation
any conveyance in lieu thereof) for any public or quasi-public use, the Term of
this Lease shall cease and terminate as of the date title is vested in the
condemning authority. If less than seventy-five (75%) percent of the building's
net rentable area is so condemned or taken, with the result that Tenant's
business is significantly and adversely affected thereby, or if the points of
ingress and egress to the public roadways as in existence on the date hereof are
materially impaired to the point where the building is untenantable for Tenant's
use as defined under Section 7.01, or if such a portion of the parking area is
so condemned or taken that the number of parking spaces remaining are less than
the number required by applicable zoning or other code for the building, then
Tenant may terminate this Lease as of the date title is vested in the condemning
authority by written notice to Landlord.
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14.02 If this Lease is not terminated following such a condemnation or
taking, Landlord, as soon as reasonably practicable after such condemnation or
taking and the determination and payment of Landlord's award on account thereof,
shall expend as much as may be necessary of the net amount which is awarded to
Landlord and released by Landlord's mortgagee, if any, in restoring, to the
extent originally constructed by Landlord (consistent, however, with zoning laws
and building codes then in existence), so much of the building as was originally
constructed by Landlord to an architectural unit as nearly like its condition
prior to such taking as shall be practicable. Should the net amount so awarded
to Landlord be insufficient to cover the cost of restoring the building, in the
reasonable estimate of Landlord, Landlord may, but shall have no obligation to,
supply the amount of such insufficiency and restore the building to such an
architectural unit, with all reasonable diligence, or Landlord may terminate
this Lease by giving notice to Tenant not later than a reasonable time after
Landlord has determined the estimated net amount which may be awarded to
Landlord and the estimated cost of such restoration.
14.03 If this Lease is not terminated pursuant to Section 14.01, the
minimum net rental payable by Tenant shall be reduced in proportion to the
reduction in net rentable area of the building by reason of the condemnation or
taking. If this Lease is terminated pursuant to Section 14.01, the minimum net
rental and other charges which are the obligation of Tenant hereunder shall be
apportioned and prorated accordingly as of the date of termination.
14.04 The whole of any award or compensation for any portion of the
Premises taken, condemned or conveyed in lieu of taking or condemnation shall be
solely the property of and payable to Landlord. Nothing herein contained shall
be deemed to preclude Tenant from seeking, at its own cost and expenses, an
award from the condemning authority for loss of its business, the value of any
trade fixtures or other personal property of Tenant in the Premises or moving
expenses, provided that the award for such claim or claims shall not be in
diminution of the award made to Landlord.
SECTION 15
ASSIGNMENT OR SUBLETTING
15.0l Tenant agrees not to assign or in any manner transfer this Lease
or any interest in this Lease without the previous written consent of Landlord,
and not to sublet the Premises or any part of the Premises or allow anyone to
use or to come in with, through or under it without like consent, which consent
will not be withheld unreasonably. In no event may Tenant assign or otherwise
transfer this Lease or any interest in this Lease at any time while in default
thereunder. One such consent will not be deemed a consent to any subsequent
assignment, subletting, occupation, or use by any other person. Tenant may,
however, assign this Lease to a corporation with which it may merge or
consolidate, to any parent or subsidiary of Tenant or subsidiary of Tenant's
parent, or to a purchaser of substantially all of Tenant's assets if the
assignee has assets and creditworthiness substantially equal to or greater than
Tenant and if the assignee executes an agreement required by landlord assuming
Tenant's obligations. The acceptance of rent from an assignee, subtenant or
occupant will not constitute a release of Tenant from the further performance of
the obligations of Tenant contained in this Lease. In the event of any
assignment or sublease of all or any portion of the Premises where the rental or
other consideration reserved in the sublease or by the assignment exceeds the
rental or prorata portion of the rental, as the case may be, for such space
reserved in this Lease. Tenant agrees to pay Landlord monthly, as additional
rent, on the Rent Day, the excess of the rental or other consideration reserved
in the sublease or assignment over the rental reserved in this Lease applicable
to the subleased/assigned space. Tenant acknowledges that Landlord selected
Tenant in part on the basis of Tenant's proposed use and occupation of the
Premises, and agrees that Landlord may withhold consent to any proposed sublease
or assignment if the subtenant's or assignee's business or proposed use of the
Premises would be physically injurious to the Building or would detract from the
reputation of the industrial park, if any, within which the premises are
located.
SECTION 16
INSPECTION OF PREMISES
16.01 Tenant agrees to permit Landlord and the authorized
representatives of Landlord to enter the Premises at all reasonable times during
business hours for the purpose of inspecting the same.
SECTION 17
FIXTURES AND EQUIPMENT
17.01 All fixtures and equipment paid for by Landlord and all fixtures
and equipment which may be paid for and placed on the Premises by Tenant from
time to time but which are so incorporated and affixed to Improvements that
their removal would involve damage or structural change to Improvements, will be
and remain the property of Landlord.
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17.02 All furnishings, equipment and fixtures other than those
specified in Section l7.0l, which are paid for and placed on the Premises by
Tenant from time to time (other than those which are replacements for fixtures
originally paid for by Landlord) will remain the property of Tenant.
SECTION 19
NOTICE OR DEMANDS
19.01 All bills, notices, statements, communications to or demands
(collectively, "notices or demands") upon Landlord or Tenant desired or
required to be given under any of the provisions hereof must be in writing. Any
such notices or demands from Landlord to Tenant will be deemed to have been duly
and sufficiently given if a copy thereof has been mailed by United States mail
in an envelope properly stamped and addressed to Tenant at the address of the
Premises or Tenant's registered office in the State in which the Premises are
located at such time, or at such other address as Tenant may have last furnished
in writing to the Landlord for such purpose, and any such notices or demands
from Tenant to Landlord will be deemed to have been duly and sufficiently given
if personally delivered to Landlord or mailed by United States mail in an
envelope properly stamped and addressed to Landlord at the address last
furnished by written notice from Landlord to Tenant. The effective date of such
notice or demand will be deemed to be the time when personally delivered or
mailed as herein provided.
SECTION 20
BREACH; INSOLVENCY; RE-ENTRY
20.01 If any rental payable by Tenant to Landlord remains unpaid for
more than seven (7) days after written notice to Tenant of non-payment, or if
Tenant violates or defaults in the performance of any of its obligations in this
Lease and the violation or default continues for a period of thirty (30) days
after written notice, or, for a non-monetary default, such longer period as
needed if Tenant has in good faith initiated a cure within such thirty (30) day
period and proceeds diligently to complete such cure, then Landlord may (but
will not be required to) declare this Lease forfeited and the Term ended, or re-
enter the Premises, or may exercise all other remedies available under Michigan
law. Landlord will not be liable for damages to person or property by reason of
any legitimate re-entry or forfeiture, and Landlord will be aided and assisted
by Tenant, its agents, representatives and employees. Tenant, by the execution
of this Lease, waives notice of re-entry by Landlord. In the event of re-entry
by Landlord without declaration of forfeiture, the liability of Tenant for the
rent provided herein will not be relinquished or extinguished for the balance of
the Term, and any rentals prepaid may be retained by Landlord and applied
against the costs of re-entry, or as liquidated damages, or both. Tenant will
pay, in addition to the rentals and other sums agreed to be paid hereunder,
reasonable attorneys' fees, costs and expenses in any suit or action instituted
by or involving Landlord to enforce the provisions of, or the collection of the
rentals due Landlord under this Lease, including any proceeding under the
Federal Bankruptcy Code.
If Tenant is adjudged bankrupt or insolvent, files or consents to the
filing of a petition in bankruptcy under Federal or State law, applies for or
consents to the appointment of a receiver for all or substantially all of its
assets, makes a general assignment for the benefit of its creditors, fails
generally to pay its debts as they become due, or does anything which, under the
applicable provisions of the Federal Bankruptcy Code would
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permit a petition to be filed by or against Tenant, and such petition shall not
have been dismissed or set aside within sixty (60) days after the filing
thereof, then Tenant shall be in default under this Lease and, to the extent
from time to time permitted by applicable law, including but not limited to the
Federal Bankruptcy Code, Landlord shall be entitled to exercise all remedies set
forth in the preceding paragraph of the Section 20. In a reorganization under
Chapter 11 of the Federal Bankruptcy Code, the debtor or trustee must assume
this Lease or assign it within sixty (60) days from the filing of the
proceeding, or he shall be deemed to have rejected and terminated this Lease.
Tenant acknowledges that its selection to be the tenant hereunder was premised
in material part on Landlord's determination of Tenant's creditworthiness and
ability to perform the economic terms of this Lease, and Landlord's further
determination that Tenant and the character of its occupancy and use of the
Premises would be compatible with the nature of the Premises and other adjacent
properties of Landlord. Therefore, if Tenant, as debtor, or its trustee elects
to assume or assign this Lease, in addition to complying with all other
requirements for assumption or assignment under the Federal Bankruptcy Code,
then Tenant, as debtor, or its trustee or assignee, as the case may be, must
also provide adequate assurance of future performance, including but not limited
to a deposit, the amount of which shall be rasonably determined based on the
duration of time remaining in the Term, the physical condition of the Premises
at the time the proceeding was filed, and such damages as may be reasonably
anticipated after reinstatement of the Lease, taking into account rental market
conditions at the time of the reinstatement. In the event of an assignment, the
Landlord must be reasonably assured that the financial condition of the assignee
is sound, and that its use of the Premises will be compatible with the nature of
the Premises and other adjacent properties of Landlord.
In the event of declaration of forfeiture at or after the time of
re-entry, Landlord shall use its reasonable efforts to relet the Premises or
any portion(s) of the Premises for a term or terms and at a rent which may be
less than or exceed the balance of the Term of and the rent reserved under this
Lease. In such event Tenant will pay to Landlord as liquidated damages for
Tenant's default any deficiency between the total rent reserved and the net
amount, if any, of the rents collected on account of the lease or leases of the
Premises which otherwise would have constituted the balance of the term of this
Lease. In computing such liquidated damages, there will be added to the
deficiency any expenses which Landlord may incur in connection with re-leasing,
such as legal expenses, attorneys' fees, brokerage fees and expenses,
advertising and for keeping the Premises in good order or for preparing the
Premises for re-leasing. Any such liquidated damages will be paid in monthly
installments by Tenant on the Rent Day and any suit brought to collect the
deficiency for any month will not prejudice Landlord's right to collect the
deficiency for any subsequent month by a similar proceeding. In lieu of the
foregoing computation of liquidated damages, Landlord may elect, at its sole
option, to receive liquidated damages in one payment equal to any deficiency
between the total rent reserved hereunder and the fair and reasonable rental of
the Premises, both discounted at ten (10%) percent per annum to present value at
the time of declaration of forfeiture.
Whether or not forfeiture has been declared, Landlord will not be
obliged or be responsible in any way for failure to re-lease the Premises or,
in the event that the Premises are re-leased, for failure to collect the rent
under such re-leasing. The failure of Landlord to re-lease all or any part of
the Premises will not release or affect Tenant's liability for rent or damages.
SECTION 21
SURRENDER OF PREMISES ON TERMINATION
21.01 At the expiration (or earlier termination) of the Term, Tenant
will surrender the Premises broom clean and in as good condition and repair as
they were at the time Tenant took possession, reasonable wear and tear excepted,
and promptly upon surrender will deliver all keys and building security cards
for the Premises to Landlord at the place then fixed for payment of rent. All
costs and expenses incurred by Landlord in connection with repairing or
restoring the Premises to the condition called for herein, together with the
costs, if any, of removing from the Premises any property of Tenant left
therein, together with liquidated damages in an amount equal to the amount of
minimum net rental plus all other charges which would have been payable by
Tenant under this Lease if the term of this Lease had been extended for the
period of time reasonably required for Landlord to repair or restore the
Premises to the condition called for herein, shall be invoiced to Tenant and
shall be payable as additional rental within five (5) days after receipt of
invoice.
SECTION 22
PERFORMANCE BY LANDLORD OF THE COVENANTS OF TENANT
22.01 If Tenant fails to pay any sum of money, other than rental,
required to be paid hereunder or fails to perform any act on its part to be
performed hereunder, including without limitation the performance of all
covenants pertaining to the condition and repair of the Premises pursuant to
Section 10, above, and such failure shall continue for a period of thirty (30)
days (or a reasonable period of less than thirty (30) days when life, person or
property is in jeopardy), or such longer period as needed if Tenant has in good
faith initiated a cure within such thirty (30) day period, and is proceeding
diligently to complete such cure, after notice thereof by Landlord, Landlord may
(but shall not be required to), and without waiving or releasing Tenant from any
of Tenant's obligations, make any such payment or perform any such other act.
All sums so paid by Landlord and all necessary incidental costs, including
without limitation the cost of repair, maintenance or restoration of the
Premises if so performed by Landlord hereunder, shall be deemed additional
rental and, together with interest thereon at the rate set
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forth in Section 5.02, from the date of payment by Landlord until the date of
repayment by Tenant to Landlord, shall be payable to Landlord within five (5)
days after receipt of invoice by Tenant. On default in such payment, Landlord
shall have the same remedies as on default in payment of rent. The rights and
remedies granted to Landlord under this Section 22 shall be in addition to, and
not in lieu of all other remedies, if any, available to Landlord under this
Lease or otherwise, and nothing herein contained shall be construed to limit
such other remedies of Landlord with respect to any matters covered herein.
SECTION 24
QUIET ENJOYMENT
24.01 Landlord agrees that at all times when Tenant is not in default
under the provisions and during the Term of this Lease, Tenant's quiet and
peaceable enjoyment of the Premises will not be disturbed or interfered with by
Landlord or any person claiming by, through, or under Landlord. Landlord
represents it shall at all times provide its reasonable efforts to maintain
adequate ingress and egress from the Premises to adjoining public roadways.
SECTION 25
HOLDING OVER
25.01 If Tenant remains in possession of the Premises after the
expiration of this Lease without executing a new lease, it will be deemed to be
occupying the Premises as a tenant from month to month, subject to all the
provisions of this Lease to the extent that they can be applicable to a month-
to-month tenancy, except that the minimum net rental for each month will be one
hundred fifty (150%) percent of the regular monthly installments of minimum net
rental set forth in Section 4.01, above.
SECTION 26
REMEDIES NOT EXCLUSIVE; WAIVER
26.01 Each and every of the rights, remedies and benefits provided by
this Lease are cumulative, and are not exclusive of any other of said rights,
remedies and benefits, or of any other rights, remedies and benefits allowed by
law.
26.02 One or more waivers of any covenant or condition by Landlord will
not be construed as a waiver of a further or subsequent breach of the same
covenant or condition, and the consent or approval by Landlord to or of any act
by Tenant requiring Landlord's consent or approval will not be deemed to waive
or render unnecessary Landlord's consent or approval to or of any subsequent
similar act by Tenant.
SECTION 27
WAIVER OF SUBROGATION
27.01 Landlord and Tenant hereby waive any and all right of recovery
against each other for any loss or damage caused by fire or any of the risks
covered by standard fire and extended coverage, vandalism and malicious mischief
insurance policies.
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SECTION 28
RIGHT TO SHOW PREMISES
28.01 For a period commencing one-eighty (180) days prior to the
termination of this Lease or any extension thereof, Landlord may show the
Premises and may display about the Premises signs advertising the availability
of the Premises.
SECTION 30
INDEMNIFICATION
30.01 Tenant at its expense will defend, indemnify and save Landlord,
its licensees, servants, agents, employees and contractors, harmless from any
loss, damage, claim of damage, liability or expense to or for any person or
property, whether based on contract, tort, negligence or otherwise, arising
directly or indirectly out of or in connection with the condition of the
Premises, the use or misuse thereof by Tenant or any other person, the acts or
omissions of Tenant, its licensees, servants, agents, employees or contractors,
the failure of Tenant to comply with any provision of this Lease, or any event
on the Premises, whatever the cause; provided, however, that nothing herein
shall be construed to require Tenant to indemnify Landlord against Landlord's
own acts, omissions or neglect. Subject to the provisions of Section 32 hereof,
Landlord will indemnify Tenant, its business, servants, agents, employees and
contractors for any loss, damage, claim of damage, liability or expense arising
out of its representations, covenants or agreements contained in this Lease.
SECTION 31
PREVENTING REMOTE VESTING
31.01 Notwithstanding any other provisions of this Lease, if the Term
of this Lease does not commence within three (3) years from the date hereof,
this Lease will be deemed terminated three (3) years from the date hereof
without necessity of any notice or act by Landlord or Tenant. It is the
intention of this Section to prevent this Lease from becoming unenforceable by
reason of any claim that it might violate the rule against perpetuities.
SECTION 32
DEFINITION OF LANDLORD; LANDLORD'S LIABILITY
32.01 The term "Landlord" as used in this Lease so far as covenants,
agreements, stipulations or obligations on the part of the Landlord are
concerned is limited to mean and include only the owner or owners of fee title
(or of a ground leasehold interest) to the Premises at the time in question, and
in the event of any transfer or transfers of the title to such fee the Landlord
herein named (and in case of any subsequent transfers or conveyances the then
grantor) will automatically be freed and relieved from and after the date of
such transfer or conveyance of all personal liability for the performance of any
covenants or obligations on the part of the Landlord contained in this Lease
thereafter to be performed.
If Landlord fails to perform any provision of this Lease upon Landlord's
part to be performed, and if as a consequence of such default Tenant recovers a
money judgment against Landlord, such judgment may be satisfied only out of the
proceeds of sale received upon execution of such judgment and levied thereon
against the right, title and interest of Landlord in the Premises and out of
rents or other income from such property receivable by Landlord and Landlord
shall not be personally liable for any deficiency.
SECTION 33
ENTIRE AGREEMENT
33.01 This Lease and the Exhibits attached hereto and forming a part
hereof, set forth all of the covenants, agreements, stipulations, promises,
conditions and understandings between Landlord and Tenant concerning the
Premises and there are no covenants, agreements, stipulations, promises,
conditions or understanding, either oral or written, between them other than
herein set forth.
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SECTION 34
GENERAL
34.01 Many references in this Lease to persons, entities and items have
been generalized for ease of reading. Therefore, references to a single person,
entity or item will also mean more than one person, entity or thing whenever
such usage is appropriate (for example "Tenant" may include, if appropriate, a
group of persons acting as a single entity, or as tenants-in-common). Similarly,
pronouns of any gender should be considered interchangeable with pronouns of
other genders.
34.02 All agreements and obligations of Tenant under this Lease are
joint and several in nature. Any waiver or waivers by Landlord of any of the
provisions of this Lease will not constitute a waiver of any later breach of
that provision, and any consent or approval given by Landlord with respect to
any act, neglect or default by Tenant will not waive or make unnecessary
Landlord's consent or approval with respect to any later similar act, neglect or
default by Tenant.
34.03 Topical headings appearing in this Lease are for convenience
only. They do not define, limit or construe the contents of any paragraphs or
clauses.
34.04 This Lease can be modified or amended only by a written agreement
signed by Landlord and Tenant.
34.05 All provisions of this Lease are and will be binding on the
heirs, executors, administrators, personal representatives, successors and
assigns of Landlord and Tenant.
34.06 The laws of the State of Michigan will control in the
construction and enforcement of this Lease.
34.07 See Addendum attached hereto and made a part hereof for
additional conditions.
34.08 The parties agree to execute a Memorandum of Lease simultaneously
with the execution hereof which Tenant, at its option and sole expense, may
cause to be recorded.
IN WITNESS WHEREOF the Landlord and Tenant have executed this Lease
as of the date set forth at the outset hereof.
W1TNESSES: LANDLORD:
FIRST INDUSTRIAL FINANCING PARTNERSHIP, L.P., a
Delaware Limited Partnership
By: First Industrial Finance Corporation, its General
Partner
By: /s/
--------------------------------------------------
Its: Senior Regional Director
-------------------------------------------------
TENANT:
DURA AUTOMOTIVE SYSTEMS, INC., a Delaware corporation
By: /s/ David Bovee
--------------------------------------------------
Its: Vice President
------------------------------------------------
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ADDENDUM to that certain Lease dated March 16, 1995, by and between FIRST
INDUSTRIAL FINANCING PARTNERSHIP, L.P., a Delaware Limited Partnership
("Landlord"), and DURA AUTOMOTIVE SYSTEM, INC., a Delaware corporation
("Tenant") covering the Premises of 2791 Research Drive, Rochester Hills,
Michigan 48309.
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SECTION 35
SUBORDINATION AND NONDISTURBANCE; NOTICES TO SUPERIOR
LESSORS AND MORTGAGEES; ATTORNMENT
35.01 Subordination of Lease. This Lease, and all rights of Tenant
hereunder are and shall be subject to subordinate to all ground leases of the
premises now or hereafter existing and to all mortgages and trust deeds in the
nature of a mortgage (both of which are hereafter referred to as "mortgages"),
which may now or hereafter affect or encumber all or any portion of the Premises
provided the mortgagee, lessor or trustee named in any such mortgages, trust
deeds or leases agrees to recognize the lease of Tenant in the event of
foreclosure if Tenant is not in default. This subordination and nondisturbance
shall likewise apply to each and every advance made, or hereafter to be made
under such mortgages; to all renewals, modifications, replacements and
extensions of such ground leases and mortgages; and to "spreaders" and
consolidations of such mortgages. This Section 35.01 shall be self-operative and
no further instrument of subordination shall be required; however, in
confirmation of such subordination and nondisturbance, Tenant shall promptly
execute, acknowledge and deliver any instrument that Landlord, the lessor under
any such ground lease or the holder of any such mortgage (or their respective
successors-in-interest), may reasonably request in order to evidence such
subordination and nondisturbance. Tenant acknowledges that this Lease has been
(and, in the future, may be) assigned by Landlord to a Superior Mortgagee as
additional collateral security for the loans secured by the Superior Mortgage
held by such Superior Mortgagee. Any ground lease to which this Lease is subject
and subordinate is hereinafter referred to as a "Superior Lease" and the lessor
of a Superior Lease is hereinafter referred to as a "Superior Lessor", and the
holder of a Superior Mortgage is hereinafter referred to as a "Superior Lessor".
Notwithstanding the foregoing, at Landlord's election, this Lease may be made
senior to the lien of any Superior Mortgage, if the Superior Mortgagee
thereunder so requests.
35.02 Notice in the Event of Default. If any act or omission of
Landlord or Agent would give Tenant the right to cancel or terminate this Lease,
or to claim a partial or total eviction, tenant shall not exercise such right
(a) until it has given, by registered or certified mail, return receipt
requested, written notice of such act or omission to Landlord and to each
Superior Mortgagee and Superior Lessor whose name and address shall previously
have been furnished to Tenant, and (b) until a thirty (30) day period for
remedying such act or omission shall have elapsed following the giving of such
notice; provided, however, that said thirty (30) day cure period may be extended
in the event that the act or omission cannot, by its nature, be cured within
thirty (30) days and one or more of Landlord, the Superior Mortgagee or the
Superior Lessor is diligently proceeding to cure said default.
35.03 Successor Landlord. If any Superior Lessor or Superior Mortgagee
shall succeed to the rights of Landlord hereunder, whether through possession or
foreclosure action or delivery of a new ground lease or deed, or otherwise,
then, at the request of such party (hereinafter referred to as "Successor
Landlord"), Tenant shall attorn to, and recognize, each Successor Landlord as
Tenant's landlord under this Lease, and shall promptly execute and deliver any
instrument such Successor Landlord may reasonably request to further evidence
such attornment. Tenant hereby acknowledges that in the event that any Successor
Landlord succeeds to Landlord's rights and interest under this Lease, then from
and after the date on which the Successor Landlord acquires the Landlord's
rights and interest under this Lease (the "Succession Date"), the rights and
remedies available to Tenant under this Lease with respect to any obligations of
any Successor Landlord shall be limited, at all times, to the equity interest of
the Successor Landlord in the Premises; and the Successor Landlord shall not (a)
be liable for any act, omission or default of any prior landlord under this
Lease; (b) be required to make or complete any tenant improvements or capital
improvements, or to repair, restore, rebuild or replace the Premises or any part
thereof in the event of damage, casualty or condemnation provided that insurance
or condemnation proceeds shall be used for restoration if restoration to the
Premises is required hereunder; or (c) be required to pay any amounts to Tenant
that are due and payable, under the express terms of this Lease, prior to the
Succession Date. Additionally, from and after the Succession Date, Tenant's
obligation to pay Rent (as provided in Section 4 hereof) shall not be subject to
any abatement, deduction, set-off or counterclaim against the Successor Landlord
that arises as a result of, or due to, a landlord default that occurs prior to
the Succession Date. Moreover, nor Successor Landlord shall be bound by any
advance payments of Rent made prior to the calendar month in which the
Succession Date occurs, not by any security deposit that is nor actually
delivered to, and received by, the Successor Landlord.
<PAGE>
Addendum - Dura Automotive System, Inc.
March 16, 1995
Page Two
SECTION 36
ESTOPPEL CERTIFICATES
36.01 Tenant shall, at any time and from time to time, as requested by
Landlord, execute and deliver to Landlord (and to any existing or prospective
mortgage lender, ground lessor, or purchaser designated by Landlord), within
thirty (30) days after the request therefor, a statement: (i) certifying that
this Lease is unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as modified and stating
the modifications); (ii) certifying the dates to which the Base Rent has been
paid; (iii) stating whether or not Landlord is in default in performance of any
of its obligations under this Lease, and, if so, specifying each such default;
and (iv) stating whether or not any event has occurred which, with the giving of
notice or passage of time, or both, would constitute such a default, and, if so,
specifying each such event. Tenant also shall include in any such statements
such other information concerning this Lease as Landlord or Agent may reasonably
request including, but not limited to, the amount of Base Rent under this Lease,
and whether Landlord has completed all (if any) improvements to the Premises
required under this Lease. If Tenant fails to execute, acknowledge or deliver
any such statement within thirty (30) days after request therefor, such failure
shall constitute a default under this Lease.
SECTION 37
TOXIC WASTE
37.01 Tenant shall not spill, introduce, discharge or bury any hazardous
substance (*) in, on or under the Premises or any portion thereof, or permit the
discharge thereof into the sanitary or storm sewer or water systems serving the
Premises and/or the industrial park in which the Premises is located, or into
any municipal or other governmental water system or storm and/or sanitary sewer
system without first obtaining the written consent of Landlord (which may not be
unreasonably withheld), and in any event without first obtaining the license,
permit or other approval of all governmental agencies having jurisdiction
thereover. In any event, Tenant shall employ all safeguards and procedures
necessary or appropriate to protect such systems from contamination. Tenant
shall be solely responsible, at its expense, for the control and proper handling
of any hazardous substances used or stored on the Premises in connection with
Tenant's business conducted therein. Tenant shall undertake, at its expense, any
necessary and/or appropriate clean-up process in connection with any breach of
the foregoing covenant and without limiting Tenant's other indemnity or
insurance obligations under this Lease, except for Landlord's (its licensees,
servants, agents, employees and contractors) own acts, omissions, or neglect.
Tenant shall indemnify and hold harmless Landlord from and against all liability
arising from any incident or occurrence on or about the Premises or the
industrial park in which the Premises are located attributable to Tenant and
pertaining to hazardous substances. The obligation of Tenant under this Section
37 including expressly but without limitation the foregoing indemnity, shall
survive the expiration or earlier termination of this Lease, for two years,
anything to the contrary contained herein notwithstanding. Landlord represents
to the best of its knowledge that there are no hazardous substances in, on or
under the Premises, or any portion thereof. Except for Tenant's (its licensees,
servants, agents, employees, and contractors) own acts, omissions, or neglect,
Landlord shall indemnify and hold harmless Tenant from and against all liability
arising from any incident or occurrence on or about the Premises or the
industrial park in which the Premises are located pertaining to hazardous
substances.
Prior to commencement of the Lease, Landlord will obtain at its expense
an inspection by an approved testing agency, and a copy of the written result
provided to Tenant. Upon the expiration of the Lease, Tenant shall obtain at
its expense a visual inspection of the demised premises by an approved testing
agency which shall consist of a visual inspection of a Level I Environmental
Survey and shall result in a written certification by said agency that said
Premises of free of any visual evidence of contamination by hazardous materials
and recommending that no further and/or more in depth investigation be
conducted.
(*) For purposes of this Section, "hazardous substances" shall mean as
defined in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended from time to time, and regulations promulgated
thereunder, as well as other federal and state environmental laws.
37.02 Exhibit "D" attached hereto and made a part hereof has been
completed by Tenant.
<PAGE>
Addendum - Dura Automotive System, Inc.
March 16, 1995
Page Three
SECTION 38
OPTION TO EXTEND TERM
38.01 Grant of Options. Tenant shall have the right and option to extend
the Term of this Lease for two (2) additional periods of five (5) years each
(hereinafter and from time to time referred to as the "Extension Period") at the
rental rate and upon the other terms and conditions set forth herein. Tenant
shall not be entitled to so extend the Term of this Lease if during the year
immediately proceeding the date for exercise of the option in question, Tenant
shall have been in default under the Lease beyond any cure period for any prior
consecutive period of two (2) months or any prior non-consecutive period
totaling four (4) months.
38.02 Exercise of Options. The options to extend the Term granted herein
shall be exercised by a written notice to Landlord given not more than two
hundred forty (240) days and not less than one hundred eighty (180) days prior
to the expiration of the original Term of this Lease or the first extension
period, as the case may be. In the event that Tenant does not notify Landlord of
its intent to do so during this period, this Option to Extend shall immediately
expire and be of no further force and effect.
38.03 Adjusted Minimal Net Rental. Tenant's possession of the Premises
during the Extension Periods shall be under and subject to all the terms,
covenants and conditions set forth in this Lease, with the exception that the
minimal Base Net Rental under Section 4 for each Extension Period shall be at
the Fair Market Value. In the event Landlord and Tenant are unable to agree upon
the Fair Market Value, they shall mutually pick an independent third party who
must have at least five (5) years experience as an MAI appraiser of sizeable
commercial properties. But in no event will rent be less than $5.75 NNN per
square foot.
38.04 Option to Terminate Lease Agreement. Landlord grants to Tenant the
right and option to terminate this Lease Agreement at the end of the 84th month
by providing to Landlord notice no later than the 78th month of this Lease
Agreement while simultaneously paying to Landlord the cost of all unamortized
Tenant Improvements and commissions pursuant to Section 4.03 which amounts
shall be annexed to the Lease in a subsequent Lease Addendum. In the event
Tenant fails to exercise its Option to Terminate Lease Agreement under this
paragraph, its rights to terminate shall immediately expire and be of no further
force and effect.
38.05 Limited to Tenant. This Option to Extend is personal to Dura and
affiliates and may not be exercised by any assignee or sublessee of Dura and its
affiliates.
LANDLORD:
FIRST INDUSTRIAL FINANCING
PARTNERSHIP, L.P., a Delaware Limited
Partnership
By: First Industrial Finance Corporation, its
General Partner
By: /S/
----------------------------------------
Its: Senior Regional Director
----------------------------------------
TENANT:
DURA AUTOMOTIVE SYSTEM, INC., a
Delaware corporation
By: /S/ David Bovee
----------------------------------------
Its: Vice President
----------------------------------------
<PAGE>
EXHIBIT "A" to that certain Lease dated March 6, 1995, by and between FIRST
INDUSTRIAL FINANCING PARTNERSHIP, L.P., a Delaware Limited Partnership
("Landlord"), and DURA AUTOMOTIVE SYSTEM, INC., a Delaware corporation
("Tenant") covering the Premises of 2791 Research Drive, Rochester Hills,
Michigan 48309.
- --------------------------------------------------------------------------------
Legal Description:
- ------------------
Land in the City of Rochester Hills, Oakland County, Michigan more particularly
described as follows:
Sidwell #15-29-302-004
A parcel of land containing the south 35.00 feet of Lot 23, and all of Lots 24,
25 and 26, Rochester Hills Executive Park, part of the southwest 1/4 of Section
29 and the Southeast 1/4 of Section 30, T.3N., R.llE., City of Rochester Hills,
Oakland County, Michigan, according to the Plat thereof recorded in Liber 199 of
Plats, pages 26, 27, 28, 29, and 30 Oakland County Records.
<PAGE>
EXHIBIT "B"
EXHIBIT "B" to that certain Lease dated March 8, 1995, by and between FIRST
INDUSTRIAL FINANCING PARTNERSHIP, L.P., a Delaware Limited Partnership
("Landlord"), and DURA AUTOMOTIVE SYSTEM, INC., a Delaware corporation
("Tenant") covering the Premises of 2791 Research Drive, Rochester Hills,
Michigan 48309.
- -------------------------------------------------------------------------------
Construction plans and specifications shall be mutually agreed to by the
parties.
Tenant agrees to accept the Leased Premises in an "as-is" condition on the
Commencement Date.
The cost of all reasonable Tenant Improvements for the Leased Premises shall be
added to the minimum Base Rent as defined in Section 4 of the Lease Agreement
and amortized over the Term of the Lease with interest at the rate of twelve
(12%) percent per annum.
Landlord and Tenant agree that as soon as possible after the Commencement Date
to execute an Addendum to this Lease setting forth the revised minimum Base
Rent.
<PAGE>
ROCHESTER HILLS EXECUTIVE PARK
DECLARATION OF COVENANTS AND RESTRICTIONS
This Declaration of Covenants and Restrictions is made this 23 day of
December, 1992 by Rochester Hills Executive Park, a Michigan joint venture
having an office at 850 Stephenson Highway, Suite 600, Troy, Michigan 48083.
WHEREAS, Rochester Hills Executive Park, a Michigan joint venture, is
the owner of the real property described in attached Exhibit A (the "Land") and,
WHEREAS, it is the intention of Rochester Hills Executive Park to
develop the Land as an industrial park known as Rochester Hills Executive Park
(the "Park"), containing industrial facilities of harmonious structural and
architectural design and suitable landscaping, and to adopt a general plan of
improvement for the benefit of all of the Land and the future owners thereof as
hereinafter set forth.
NOW, TREREFORE, it is hereby declared (subject to the provisions of
Section F below) that the Land is held and shall be held, conveyed, encumbered,
leased, rented, used, occupied and improved subject to the following conditions,
restrictions and covenants in furtherance of a plan for the division,
improvement and sale of the Land, which are established for the purpose of
enhancing the value, desirability and attractiveness of the Land. The
conditions, restrictions and covenants herein contained are hereby expressly
made an essential part of this instrument and shall be and remain in full force
and effect in respect to the said premises and the parties herein designated,
their and each of their successors, heirs and assigns until the expiration
thereof as hereinafter stated.
All of the conditions, covenants and restrictions shall run with the
Land and shall be binding on all parties having or acquiring any right, title or
interest in the Land, or any part hereof. They shall be for the benefit of each
owner of any portion of the Land or any interest therein and shall inure to the
benefit of and be binding upon each successor in interest of the owners thereof.
A. Definitions.
1. The "Developer" shall mean:
(a) Rochester Hills Executive Park, a Michigan joint venture, its
successors and assigns;
<PAGE>
(b) Any partnership, joint venture, corporation, association or trust
controlled by Rochester Hills Executive Park, a Michigan joint
venture, or by which Rochester Hills Executive Park has been
acquired, provided it has been granted of record by Rochester
Hills Exeoutive Park the exclusive right to act hereunder;
(c) Any association, organized by a majority of owners of record of
the Land for the purpose of maintaining and enforcing the
restrictions as set forth in Section B herein and provided
Rochester Hills Executive Park or its successor has granted to
said association the exclusive right to act hereunder;
2. "Site" means an area of the Land in the same ownership or subject to
the same leasehold interest;
3. "Site Area" shall be the square footage of the Land in the same
ownership which shall include easements, rights of way and property
thereafter taken for streets or railroads whether by condemnation or
dedication.
B. Restrictions.
1. All structures and improvements constructed or erected on a Site
shall comply with applicable ordinances, rules, regulations and
codes. Moreover, no structure or any portion thereof shall be
constructed on any Site within fifty (50) feet of any street in
existence at the time of construction, or within fifteen (15) feet of
its side lot lines and twenty (20) feet of its rear lot lines, nor
shall more than fifty percent (50%) of any Site be covered by
structures. No parking surfaces shall be constructed within the front
set back area.
2. Exterior walls of buildings shall be constructed of durable permanent
materials, tastefully handled (face brick, treated concrete or other
architectural exterior surfaces or approved equal material). All
exposed masonry surfaces except brick and stone must be painted.
3. No building having barrel-type or arch-type roof construction shall
be built on any Site.
4. All set back areas from streets other than paved driveways and paved
walks, must be in lawns and
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<PAGE>
landscaping and be irrigated via underground sprinkler systems. All
landscaped areas must be maintained in a park-like manner. All
landscaping and irrigation plans must be approved by the Developer
and implemented within one (1) year after approval.
5. Overhead electric power lines are located on rear property lines.
Overhead electric service entrances shall be located at the rear of
the structure. If electric service entrances are forward of the rear
building wall, electric service entrances shall be underground. All
other overhead utility services shall comply with the electric
service entrance standards.
6. All vertical roof projections over eighteen (18) inches in height
must be set back a minimum of twenty (20) feet from the face of the
exterior walls; in no event may such projections, for equipment or
otherwise, exceed five (5) feet in height on any office roof.
7. All parking and truck maneuvering areas shall be surfaced with
bituminous concrete, asphalt or approved comparable all-weather
dustless material.
8. Outside storage shall comply with applicable ordinances, rules,
regulations and codes and, in any event, shall be permitted on the
rear lot areas only, and all such storage shall be properly fenced
and screened with approved material to a minimum height of six (6)
feet and a maximum height of ten (10) feet. Under no circumstance
may materials or equipment in excess of ten (10) feet in height be
stored outdoors.
9. Signs must be for identification only, must be located on the
exterior building walls and cannot project above the roofline. They
may not exceed a height of four (4) feet and a total area of forty
(40) square feet. All lettering is to be open and of metallic
material. Only individual (i.e., unconnected) letters may be used on
signs. Flashing signs and ground signs are not permitted. All
exterior signs must be approved by the Developer.
10. The exterior of all structures and all walks, driveways, lawns and
landscaping on each Site shall be maintained in good order, repair
and condition and all exterior painted surfaces shall be maintained
in first-class condition and shall be repainted at least once in
every four (4) years.
3
<PAGE>
ll. All provisions of the zoning codes and ordinances in effect at the
time of conveyance shall be maintained and owners of Sites shall not
petition for variation or other relief with respect to such zoning
codes and ordinances without prior written approval of the
Developer.
12. No open loading dock or truck loading doors shall be erected on the
sides of buildings fronting on any street.
13. Uses for Sites shall be restricted to manufacturing, assembly,
processing, storage, wholesale, office, laboratory, professional
research and development activities; there shall be no junk or
salvage yard or rendering plant, or such other use which will be
offensive to the neighborhood by reason of odor, fumes, dust, smoke,
noise, or pollution, or such use as would be hazardous by reason of
danger of fire, explosion or contamination. Uses for retail purposes
shall be limited to sales of goods and services reasonably required
for the convenience of occupants of the Land, such as restaurants,
drug stores, barber and beauty shops, shoe repair shops, cleaners,
post offices, banks, department and hardware stores; no retail or
wholesale use shall be undertaken unless and until same shall have
been approved in the manner hereinafter provided (See Section C
below).
14. No buildings, structures or exterior signs shall be erected,
altered, or added to or improved in any fashion on any Site on the
Land until the building plans and specifications, landscaping plan,
and site plan showing the location of such building or addition or
improvement or alteration have been approved by the Developer in
writing as to architectural design and to conformity and harmony of
external design to existing structures, and as to location of the
building with respect to topography and finished ground elevation,
and in conformance with all other restrictions of record, as
aforesaid. All blueprints, specifications, and plans submitted under
this provision shall be retained by the Developer.
15. There exists within the Land a certain storm drainage retention
basin (the "Basin"), which Basin is more particularly described in
attached Exhibit B. The Basin shall be used for the sole purpose of
the retention of surface water until such time as
4
<PAGE>
the City of Rochester Hills (the "City") may determine and signify
by written notice to the Developer and its successors and assigns,
if any, that it is no longer necessary to utilize the Basin for the
retention of surface water. In no event shall the Basin be utilized
for any purpose other than the retention of surface water without
the prior written agreement of the Developer and the City.
Notwithstanding the foregoing, the Developer may use water from the
Basin for purposes of irrigation. The discharge of sewage or
industrial waste of any kind into the Basin is prohibited.
16. Accumulations of snow and ice on parking lots and drives must be
removed by shovel, plow or salt. Only the minimum amount of salt
necessary for the removal of snow and ice may be used.
17. Trees bordering the Basin shall not be removed so long as such trees
do not materially interfere with the intended use of a Site.
18. No owner(s) of a Site shall spill, leak, introduce, discharge or
release any hazardous substance as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. 9601 et seq. ("CERCLA"), or any pollutant or contaminant of
any kind in, on or under the Land or any portion thereof, or to the
air or permit the discharge thereof into the sanitary or storm sewer
or water systems serving the Land and/or a Site or into any
municipal or other governmental water system or storm and/or
sanitary sewer system without complying with all applicable federal,
state and local laws and regulations, and without first obtaining
any necessary license, permit or other approval of all governmental
agencies having jurisdiction thereover. No owner(s) of a Site shall
store or treat any hazardous waste, oil or polluting materials on or
under the Land or a Site without complying with all federal, state
and local laws and ordinances, and without first obtaining all
necessary licenses and permits.
All safeguards and procedures necessary or appropriate to protect
such systems from contamination shall be employed by the owner(s) of
each Site. A copy of any violation, permit, approval or license
issued by any federal, state or local government pursuant to any
storage, discharge or treatment of any such pollutant or contaminant
or violation of any such law or regulation shall be
5
<PAGE>
ll9C?19441 375
provided by the owner(s) of each Site to the Developer promptly upon
receipt thereof. Notwithstanding anything contained herein to the
contrary, it shall be the sole responsibility of the owner(s) of any
particular Site to obtain (and thereafter achieve and maintain
compliance therewith) all necessary permits, licenses and authorizations
as may be required by applicable laws, regulations, rules and
ordinances; nothing contained herein shall be deemed to impose such
obligations upon the Developer. The owner(s) of any particular Site
shall be solely responsible, at its/their cost and expense, for the
control and proper handling of any toxic chemicals or other substances
used or stored on such Site and each such owner shall undertake, at its
sole cost and expense, any necessary and/or appropriate clean-up process
in connection with the foregoing covenant, and shall indemnify and hold
the Developer harmless from and against all liability, whether direct,
indirect, consequential or otherwise, arising from any incident or
occurrence on or about the Site or the Land, attributable in whole or in
part to such owner, whether such owner has obtained any approval,
license or permit issued by any governmental authority having
jurisdiction thereof and pertaining to any hazardous substance as
defined in CERCLA or any relevant state or local rule, regulation or
ordinance. The obligation of a Site owner under this Paragraph 18,
including without limitation, the foregoing indemnity, shall survive the
expiration or earlier termination of this Declaration of Covenants and
Restrictions, anything to the contrary contained herein notwithstanding.
C. Approvals, Variances and Waivers.
1. The Developer shall have the exclusive right to grant approvals required
by these restrictions and to waive or vary restrictions in particular
respects whenever in its opinion and sole discretion such waiver or
variance will not be detrimental to the Land.
2. All persons having an interest in any Site may rely upon the approval
signed by the Developer purporting to grant an approval or to waive or
vary restrictions in particular respects.
3. If building plans, specifications and plot plan have been submitted to
the Developer for approval, and no written notice of disapproval has
been given by the
6
<PAGE>
Developer within sixty (60) days thereafter, all construction other than
exterior signs, driveways, parking areas, grading, landscaping, fences
and screens completed for more than three (3) months shall be deemed
approved unless prior to the expiration of such period a suit for
enforcement of the restrictions contained herein has been commenced and
notice thereof duly recorded.
D. Owner's Association.
1. In accordance with the terms of a certain Agreement for Maintenance of
Retention Basin dated August 10, 1984 and recorded in Liber 8845, Page
460 in the Office of the Oakland County Register of Deeds, the Developer
intends (and hereby reserves the right) to (i) establish a Drainage
District which shall utilize the Basin (the size and location of such
Drainage District being subject to the approval of the City) and (ii)
incorporate a Michigan nonprofit membership corporation to serve as the
Owner's Association (the "Association") for the purpose of (i)
maintaining the Basin in accordance with the terms of the Agreement and
this Declaration of Covenants and Restrictions and (ii) maintaining,
repairing and replacing the landscaping within the Park (the
"Landscaping") and the entranceways to the Park (the "Entranceways").
2. The members of the Association shall consist of the owners of Sites
within the Park. The Association shall be subject to such provisions as
may be established by the Bylaws or Articles of Incorporation of the
Association, which the Developer reserves the right to prepare and to
amend or modify.
3. The Association shall have the right to make reasonable rules and
regulations relating to the maintenance of the Basin and the
maintenance, repair and replacement of the Landscaping and the
Entranceways. All persons and/or entities having an ownership or
leasehold interest in a Site shall abide by and observe such rules and
regulations.
E. Enforcement
1. All of the provisions herein contained shall run with the Land and
shall be specifically enforceable.
2. So long as there is a Developer, as defined above, it shall have the
exclusive right to enforce the
7
<PAGE>
provisions hereof without liability for failure to do so, except that
each owner of record of any portion of the Land shall have the right to
enforce the provisions hereof then applicable to any Site if the
Developer shall fail to do so within thirty (30) days after written
request from any such owner and providing said the Developer has not
waived such provisions complained of prior thereto.
3. If there ceases to be a Developer, or if there is for any reason no
"Developer" as defined herein, each owner of record of any portion of
the Land shall have the right to enforce the restrictions then
applicable to any site without liability providing said restrictions
have not been waived prior thereto.
4. A person having an interest in any Site who violates the restrictions
set forth in Section B above shall indemnify and hold harmless the
Developer, other persons having an interest in a Site and their
respective successors and assigns from any claims, costs, causes of
action, damages, judgments, obligations or expenses, including
reasonable attorneys' fees, arising out of any damage to property or
harm to any person incurred in connection with or as a result of such
person's negligence or any act or omission arising from the exercise of
the restrictions set forth above. The terms and provisions of this
paragraph shall survive the termination of this Declaration of Covenants
and Restrictions.
F. Limitations
The provisions of this Declaration of Covenants and Restrictions shall run
with the and bind the Land until December 31, 2020, whereupon they shall be
extended automatically for successive periods of ten (10) years.
IN WITNESS WHEREOF, the undersigned have executed this Declaration of
Covenants and Restrictions as of the date first written above.
8
<PAGE>
WITNESSES: ROCHESTER HILLS EXECUTIVE PARK,
a Michigan joint venture
BY: RHEP LIMITED PARTNERSHIP, a
Michigan limited partnership
Its: Joint Venturer
By: Damone/Andrew
Investment Co., Inc.
Its: General Partner
/s/ James E. White By: /s/ Michael G. Damone
- --------------------- ----------------------
James E. White Michael G. Damone
Its: President
/s/ Sherri L. Szep
- ---------------------
Sherri L. Szep
And
/s/ James E. White By: /s/ Daniel R. Andrew
- --------------------- ----------------------
James E. White Daniel R. Andrew
Its: General Partner
/s/ Sherri L. Szep
- ---------------------
Sherri L. Szep
And
/s/ James E. White By: /s/ Michael G. Damone
- --------------------- ----------------------
James E. White Michael G. Damone
Its: General Partner
/s/ Sherri L. Szep
- ---------------------
Sherri L. Szep
STATE OF MICHIGAN)
) ss.
COUNTY OF OAKLAND)
The foregoing instrument was acknowledged before me this 22nd day of
December, 1992 by Michael G. Damone, the President of Damone/Andrew Investment
Co., Inc., a general partner of RHEP Limited Partnership, a Michigan limited
partnership, one of the joint venturers of Rochester Hills Executive Park, a
Michigan joint venture, on behalf of such joint venture.
/s/ Ruth M. Manz
------------------------------------
Notary Public, Macomb County,
Michigan
My Commission Expires: July 16, 1994
Acting in Oakland County, MI
9
<PAGE>
LIBER 13241 379
STATE OF MICHIGAN )
) ss.
COUNTY OF OAKLAND )
The foregoing instrument was acknowledged before me this 22nd day of
December, 1992 by Daniel R. Andrew, a general partner of RHEP Limited
Partnership, a Michigan limited partnership, one of the joint venturers of
Rochester Hills Executive Park, a Michigan joint venture, on behalf of such
joint venture.
/s/ Ruth M. Manz
------------------------------
[SEAL] Notary Public, Macomb County,
Michigan
My Commission Expires: July 16, 1994
Acting in Oakland County, MI
STATE OF MICHIGAN )
) ss.
COUNTY OF OAKLAND )
The foregoing instrument was acknowledged before me this 22nd day of
December, 1992 by Michael G. Damone, a general partner of RHEP Limited
Partnership, a Michigan limited partnership, one of the joint venturers of
Rochester Hills Executive Park, a Michigan joint venture, on behalf of such
joint venture.
/s/ Ruth M. Manz
------------------------------
[SEAL] Notary Public, Macomb County,
Michigan
My Commission Expires: July 16, 1994
Acting in Oakland County, MI
10
<PAGE>
LIBER 13241 380
DRAFTED BY AND WHEN
RECORDED, RETURN TO:
Michael A. Lesha, Esq.
Dykema Gossett
35th Floor - 400 Renaissance Center
Detroit, Michigan 48243
11
<PAGE>
EXHIBIT A - LEGAL FOR LAND
Lots 1 through 37, inclusive, and one private park of Rochester Hills
Executive Park, a part of the S.W. 1/4 of Section 29, and a part of the
S.E. 1/4 of Section 30, T.3N., R.11E., City of Rochester Hills, Oakland
County, Michigan, as recorded in Liber 199, Pages 26 through 30, inclusive,
Oakland County Records.
Lot 1 15-30-476-017
Lot 2\
Lot 3 15-30-476-016
Lot 4/
Lot 5 15-30-476-015
Lot 6 15-30-476-015 & 014
Lot 7 15-30-476-014 & 020
Lot 8 15-30-476-020
Lot 9 15-30-476-020 & 019
Lot 10 15-30-476-019
Lot 11 15-30-476-019 & 018
Lot 12 15-30-476-018 & 008
Lot l3 15-30-476-008
Lot 14 15-30-402-001
Lot 15 15-30-402-001
Lot 16 15-30-402-001 & 002
Lot 17 15-30-402-003 & 002
Lot 18 15-30-402-003 & 15-29-302-001
Lot 19 15-30-402-003 & 15-29-302-001
Lot 20 15-29-302-001 & 15-29-302-002
Lot 21 l5-29-302-002
Lot 22 15-29-302-002 & 003
Lot 23 15-29-302-003 & 004
Lot 24 15-29-302-004
Lot 25 15-29-302-004
Lot 26 15-29-302-004
Lot 27 15-29-352-005
Lot 28 lS-29-352-005 & 004
Lot 29 15-29-352-003
Lot 30 15-29-352-002
Lot 31 15-29-352-001
Lot 32 15-30-477-001
Lot 33 15-30-477-002
Lot 34 15-30-477-003
Lot 35 15-30-477-004
Lot 36 15-30-477-005
Lot 37 15-30-477-007
<PAGE>
EXHIBIT B - LEGAL FOR BASIN
One private park within Rochester Hills Executive Park, a part of the S.W. 1/4
of Section 29, and a part of the S.E. 1/4 of Section 30, T.3N., R11E., City of
Rochester Hills, Oakland County, Michigan, as recorded in Liber 199, Pages 26
through 30, inclusive, Oakland County Records.
15-30-477-006 Executive Watershed Park
<PAGE>
EXHIBIT "D"
-----------
HAZARDOUS WASTES
----------------
Building Size: 64199 Sq. Ft. Address: 2791 Research Drive Rochester Hills, MI
Tenant: Dura Automotive Systems Contact: Pete Garzoni/Tony Galat
Phone: 810-362-8300 Fax: 810-362-8377
- --------------------------------------------------------------------------------
Please answer the following key questions so the landlord can evaluate the
potential toxic hazard presented by the proposed tenant's occupancy:
1. What will the tenant do in the building? "Research" and/or "assembly" are
not adequate responses as both may involve processes and/or material usage
which are potentially hazardous even in small quantities.
Engineering Design Development & Testing of components.
----------------------------------------------------------------------------
Low volume of prototype product assembly (Mechanical Controls) Low volume
----------------------------------------------------------------------------
machining ferrous and non-ferrous, materials, grinding and welding
----------------------------------------------------------------------------
2. Assuming the tenant has a process of some type, is it wet or dry?
Dry/Wet - very low volume
----------------------------------------------------------------------------
----------------------------------------------------------------------------
3. What are the materials used in the process?
Steel, paper and plastic/rubber, cardboard & wood
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
What waste product is generated?
Steel and paper/plastic rubber, cardboard & wood
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
4. How will the materials/waste be stored, for how long, and what is the
method of disposal?
Steel is scrapped through local dealer. Paper goes to sanitation service.
----------------------------------------------------------------------------
Cardboard, wood, plastic/rubber Disposal method is through the Oakland
----------------------------------------------------------------------------
County Recycling Center.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
5. Does the tenant intend to install any tanks, clarifiers, sumps, etc?
Yes, install venting for welding and grinding operations -
----------------------------------------------------------------------------
low volume
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
6. Does the tenant require that drains be installed in the floor of the
building? If so, what materials will be discharged into the sanitary and/or
storm sewer?
None Req'd
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
<PAGE>
Exhibit 10.24
FIRST ADDENDUM to that certain Lease between FIRST INDUSTRIAL FINANCING
PARTNERSHIP, L.P., as Landlord, and DURA AUTOMOTIVE SYSTEMS, INC., as Tenant,
dated March 16, 1995 for Premises at 2791 Research Drive, Rochester Hills,
Michigan, 48309.
- --------------------------------------------------------------------------------
Tenant Improvements
- -------------------
It is understood and agreed to between the parties that Landlord shall provide a
tenant improvement allowance not to exceed $350,000.00. Landlord to notify
Tenant in writing of the final tenant improvement cost for the leased premises.
Tenant has seven (7) days to notify Landlord in writing of the amount Tenant, in
its sole discretion, elects to finance under the terms of the Lease Agreement.
In the event there exists a monetary difference between the financed amount and
the final tenant improvement cost, Tenant shall pay the remaining portion as
required under the terms and conditions of this Lease.
Pursuant to Section 4.01 and Exhibit "B", Base Rental for the Leased Premises
shall be amended at the time the Tenant Improvement Allowance has been fixed.
LANDLORD:
FIRST INDUSTRIAL FINANCING
PARTNERSHIP, L.P., a Delaware Limited
Partnership
By: First Industrial Financing Corporation,
its General Partner
By: /s/ James E. White
--------------------
James E. White
Its: Senior Regional Director
TENANT:
DURA AUTOMOTIVE SYSTEMS, INC.,
Delaware corporation
By: /s/ David Bovee
--------------------
Its: Vice President
Date: April 24, 1995
<PAGE>
[LOGO BCED] Exhibit 10.25
LEASE OF OFFICE SPACE
DATE: June 14, 1991
BETWEEN: 80 SOUTH EIGHTH STREET LIMITED PARTNERSHIP
(address) A Delaware limited partnership
By BCED Minnesota Inc., Its Managing Agent
4340 Multifoods Tower, 33 South Sixth Street
Minneapolis, Minnesota 55402 ("Landlord")
AND: HIDDEN CREEK INDUSTRIES
(address) a New York partnership
4806 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402 ("Tenant")
FOR PREMISES IN: IDS Center
LANDLORD AND TENANT, in consideration of the covenants herein contained, hereby
agree as follows:
ARTICLE 1.00 DEFINITIONS
1.01 Definitions In this Lease:
(a) "Annual Rent" means the amount payable by Tenant to Landlord in
respect of each year of the Term under Article 4.01.
(b) "Article" means an article of this Lease.
(c) "Commencement Date" means the first day of the Term.
(d) "Exhibit A" means the plan(s) attached hereto as Exhibit A.
(e) "Exhibit B" means the provisions relating to Occupancy Costs and
other matters attached hereto as Exhibit B.
(f) "Exhibit C" means the Rules and Regulations attached hereto as
Exhibit C.
(g) "Fiscal Year" means a twelve month period (an or part of which
falls within the Term) from time to time determined by Landlord
with concurrence of the appropriate taxation authorities, at the
end of which Landlord's books are balanced for auditing and/or
taxation purposes.
(h) "Lease" means this lease, Exhibits A, B, C and (if attached) D to
this lease, and every properly executed instrument which by its
terms amends, modifies or supplements this lease.
(i) "Occupancy Costs" means amounts payable by Tenant to Landlord
under Article 4.02.
(j) "Other Charges" means amounts payable to Landlord under Article
4.03.
(k) "Premises" means 3,343 square feet, more or less*, on the 45th
floor of the Building as generally indicated on Exhibit A.
(l) "Rent" means the aggregate of all amounts payable by Tenant to
Landlord under Articles 4.01, 4.02 and 4.03.
(m) "Term" means the period of time set out in Article 3.01.
*plus for the calculation of Rent only, an additional 468 square feet of
unallocated space in the Building.
ONE
<PAGE>
ARTICLE 2.00 GRANT OF LEASE
2.01 Grant Landlord hereby demises and leases the Premises to Tenant,
and Tenant hereby leases and accepts the Premises from Landlord, to
have and to hold during the Term, subject to the terms and conditions
of this Lease.
2.02 Quiet Enjoyment Landlord shall warrant and defend Tenant in the
quiet enjoyment and possession of the Premises during the Term,
subject to the terms and conditions of this Lease.
2.03 Covenants of Landlord and Tenant Landlord covenants to observe and
perform all of the terms and conditions to be observed and performed
by Landlord under this Lease. Tenant covenants to pay the Rent when
due under this Lease, and to observe and perform all of the terms and
conditions to be observed and performed by Tenant under this Lease.
ARTICLE 3.00 TERM AND POSSESSION
3.01 Term Notwithstanding Articles 3.02 and 3.03, the term of this Lease
shall be five (5) years, beginning on the first day of the month of
August, 1991 and ending on the last day of the month of July, 1996,
unless terminated earlier as provided in this Lease.
3.02 Early Occupancy If Tenant begins to conduct business in all or any
portion of the Premises before the Commencement Date, Tenant shall pay
to Landlord on the Commencement Date a rental in respect thereof for
the period from the date Tenant begins to conduct business therein to
the Commencement Date, which rental shall be that proportion of Rent
for one calendar year which the number of days in such period bears to
365. Except where clearly inappropriate, the provisions of this Lease
shall be applicable during such period.
3.03 Delayed Possession If Landlord is delayed in delivering possession of
all or any portion of the Premises to Tenant on or before the
Commencement Date, then Tenant shall take possession of the Premises
on the date (not later than one year after the Commencement Date) when
Landlord delivers possession of all of the Premises, which date shall
be conclusively established by notice to Tenant, accompanied and
confirmed by an Architect's Certificate, at least 5 days before such
date. This Lease shall not be void or voidable nor shall Landlord be
liable to Tenant for any loss or damage resulting from any delay in
delivering possession of the Premises to Tenant, but unless such delay
is principally caused by or attributable to Tenant, its servants,
agents or independent contractors, no Rent shall be payable by Tenant
for the period prior to the date on which Landlord can so deliver
possession of all of the Premises, unless Tenant elects to take
possession of a portion of the Premises whereupon Rent shall be
payable in respect thereof from the date such possession is so taken.
ARTICLE 4.00 RENT AND OCCUPANCY COSTS
4.01 Annual Rent Tenant shall pay to Landlord as Annual Rent for the
Premises the sum of $34,299.00 in respect of each year of the Term,
payable in advance and without notice in monthly installments of
$2,858.25 each on the Commencement Date and on the first day of each
calendar month thereafter during the Term.
4.02 Occupancy Costs Tenant shall pay to Landlord, at the times and in the
manner provided in Article 4.06, the Occupancy Costs (if any)
determined under Exhibit B.
4.03 Other Charges Tenant shall pay to Landlord, at the times and in the
manner provided in this Lease or, if not so provided, as reasonably
required by Landlord, all amounts (other than that payable under
Articles 4.01 and 4.02) which are payable by Tenant to Landlord under
this Lease.
TWO
<PAGE>
4.04 Payment of Rent - General All amounts payable by Tenant to Landlord
under this Lease shall deemed to be Rent and shall be payable and
recoverable as Rent in the manner herein provided, and Landlord shall
have all rights against Tenant for default in any such payment as in
the case of arrears of rent. Rent shall be paid to Landlord, without
deduction or set-off, in legal tender of the jurisdiction in which the
Building is located, at the address of Landlord as set forth in the
beginning of this Lease, or to such other person or at such other
address as Landlord may from time to time designate in writing.
Tenant's obligation to pay Rent shall survive the expiration or
earlier termination of this Lease.
4.05 Annual Rent - Early Termination If the Term ends on a day other than
the last day of a calendar month, the installment of Annual Rent
payable on the first day of the last calendar month of the Term shall
be that proportion of the Annual Rent which the number of days from
the first day of such last calendar month to the last day of the Term
bears to 365.
4.06 Payment - Occupancy Costs
(a) Prior to the Commencement Date and the beginning of each Fiscal
Year thereafter, Landlord shall compute and deliver to Tenant a
bona fide estimate of Occupancy Costs for the appropriate Fiscal
Year and without further notice Tenant shall pay to Landlord in
monthly installments one-twelfth of such estimate simultaneously
with Tenant's payments of Annual Rent during such Fiscal Year.
(b) Unless delayed by causes beyond Landlord's reasonable control,
Landlord shall deliver to Tenant within 120 days after the end of
each Fiscal Year a written statement (the "Statement") setting
out in reasonable detail the amount of Occupancy Costs for such
Fiscal Year and certified to be correct by an officer of
Landlord. If the aggregate of monthly installments of Occupancy
Costs actually paid by Tenant to Landlord during such Fiscal Year
differs from the amount of Occupancy Costs payable for such
Fiscal Year under Article 4.02, Tenant shall pay or Landlord
shall refund the difference (as the case may be) without interest
within 30 days after the date of delivery of the Statement.
(c) If Landlord and Tenant disagree on the accuracy of Occupancy
Costs as set forth in the Statement, Tenant shall nevertheless
make payment in accordance with any notice given by Landlord, but
the disagreement shall immediately be referred by Landlord for
prompt decision by a mutually acceptable public accountant,
architect, insurance broker or other professional consultant who
shall be deemed to be acting as expert(s) and not arbitrator(s),
and a determination signed by the selected expert(s) shall be
final and binding on both Landlord and Tenant. Any adjustment
required to any previous payment made by Tenant or Landlord by
reason of any such decision shall be made within 14 days thereof,
and the party required to make payment under such adjustment
shall bear all costs of the expert(s) making such decision,
except where that payment represents 3% or less of the Occupancy
Costs that were the subject of the disagreement in which case
Tenant shall bear all such costs.
(d) Neither party may claim a re-adjustment in respect of Occupancy
Costs for a Fiscal Year if based upon any error of computation or
allocation except by notice delivered to the other party within
six months after the date of delivery of the Statement.
ARTICLE 5.00 USE OF PREMISES
5.01 Use The Premises shall be used and occupied only as genera1 business
offices for the business of Tenant, or for such other purpose as
Landlord may specifically authorize in writing.
5.02 Compliance with Laws The Premises shall be used and occupied in a
safe, careful and proper manner so as not to contravene any present or
future governmental or quasi-governmental laws in force or regulations
or orders. If due solely to Tenant's use of the Premises, improvements
are necessary to comply with any of the foregoing or with the
requirements of insurance carriers, Tenant shall pay the entire cost
thereof.
5.03 Abandonment Tenant shall abandon the Premises at any time during the
Term without Landlord's written consent.
5.04 Nuisance Tenant shall not cause or maintain any nuisance in or about
the Premises, and shall keep the Premises free of debris, rodents,
vermin and anything of a dangerous, noxious or offensive nature or
which could create a fire hazard (through undue load on electrical
circuits or otherwise) or undue vibration, heat or noise.
THREE
<PAGE>
ARTICLE 6.00 SERVICES, MAINTENANCE, REPAIR AND ALTERATIONS BY LANDLORD
6.01 Operation of Building During the Term Landlord shall operate and
maintain the Building in accordance with all applicable laws and
regulations and with standards from time to time prevailing for first-
class office buildings in the area in which the Building is located
and, subject to participation by Tenant by payment of Occupancy Costs
under Article 4.02, shall provide the services set out in Article 6.02
and 6.03.
6.02 Services to Premises Landlord shall provide in the Premises:
(a) heat, ventilation and cooling as required for the comfortable
use and occupancy of the Premises during normal business hours,
(b) janitor services, including window washing, as reasonably
required to keep the Premises in a clean and wholesome condition,
provided that Tenant shall leave the Premises in a reasonably
tidy condition at the end of each business day,
(c) electric power for normal lighting and small business office
equipment (but not equipment using amounts of power
disproportionate to that used by other tenants in the Building),
(d) replacement of Building Standard fluorescent tubes, light bulbs
and ballasts as required from time to time as a result of normal
usage, and
(e) maintenance, repair, and replacement as set out in Article 6.04.
6.03 Building Services Landlord shall provide in the Building:
(a) domestic running water and necessary supplies in washrooms
sufficient for the normal use thereof by occupants in the
Building,
(b) access to and egress from the Premises, including elevator or
escalator service if included in the Building,
(c) heat, ventilation, cooling, lighting, electric power, domestic
running water, and janitor service in those areas of the Building
from time to time designated by Landlord for use during normal
business hours by Tenant in common with all tenants and other
persons in the Building but under the exclusive control of
Landlord,
(d) a general directory board on which Tenant shall be entitled to
have its name shown, provided that Landlord shall have exclusive
control thereof and of the space thereon to be allocated to each
tenant, and
(e) maintenance, repair, and replacement as set out in Article 6.04.
6.04 Maintenance, Repair and Replacement Landlord shall operate, maintain,
repair and replace the systems, facilities and equipment necessary for
the proper operation of the Building and for provision of Landlord's
services under Article 6.02 and 6.03 (except as such may be installed
by or be the property of Tenant), and shall be responsible for and
shall expeditiously maintain and repair the foundations, structure and
roof of the Building and repair damage to the Building which Landlord
is obligated to insure against under Article 9.00, provided that
(a) if all or part of such systems, facilities and equipment are
destroyed, damaged or impaired, Landlord shall have a reasonable
time in which to complete the necessary repair or replacement,
and during that time shall be required only to maintain such
services as are reasonably possible in the circumstances,
(b) Landlord may temporarily discontinue such services or any of them
at such times as may be necessary due to causes (except lack of
funds) beyond the reasonable control of Landlord,
(c) Landlord shall use reasonable diligence in carrying out its
obligations under this Article 6.04, but shall not be liable
under any circumstances for any consequential damage to any
person or property for any failure to do so,
(d) no reduction or discontinuance of such services under this
Article 6.04 (a) or (b) shall be construed as an eviction of
Tenant or (except as specifically provided in this Lease) release
Tenant from any obligation of Tenant under this Lease, and
(e) nothing contained herein shall derogate from the provisions of
Article 16.00.
FOUR
<PAGE>
6.05 Additional Services
(a) If from time to time requested in writing by Tenant and to the
extent that it is reasonably able to do so, Landlord shall
provide in the Premises services in addition to those set out in
Article 6.02, provided that Tenant shall within ten days of
receipt of any invoice for any such additional service pay
Landlord therefor at such reasonable rates as Landlord may from
time to time establish.
(b) Tenant shall not without Landlord's written consent install in
the Premises equipment (including telephone equipment) which
generates sufficient heat to affect the temperature otherwise
maintained in the Premises by the air conditioning system as
normally operated. Landlord may install supplementary air
conditioning units, facilities or services in the Premises, or
modify its air conditioning system, as may in Landlord's
reasonable opinion be required to maintain proper temperature
levels, and Tenant shall pay Landlord within ten days of receipt
of any invoice for the cost thereof, including installation,
operation and maintenance expense.
(c) If Landlord shall from time to time reasonably determine that the
use of electricity or any other utility or service in the
Premises is disproportionate to the use of other tenants,
Landlord may separately charge Tenant for the excess costs
attributable to such disproportionate use. At Landlord's request,
Tenant shall install and maintain at Tenant's expense, metering
devices for checking the use of any such utility or service in
the Premises.
6.06 Alterations by Landlord Landlord may from time to time
(a) make repairs, replacements, changes or additions to the
structure, systems, facilities and equipment in the Premises
where necessary to serve the Premises or other parts of the
Building,
(b) make changes in or additions to any part of the Building not in
or forming part of the Premises, and
(c) change or alter the location of those areas of the Building from
time to time designated by Landlord for use during normal
business hours by Tenant in common with all tenants and other
persons in the Building but under the exclusive control of
Landlord,
provided that in doing so Landlord shall not disturb or interfere with
Tenant's use of the Premises and operation of its business any more
than is reasonably necessary in the circumstances and shall repair any
damage to the Premises caused thereby.
6.07 Access by Landlord Tenant shall permit Landlord to enter the
Premises outside normal business hours, and during normal business
hours where such will not unreasonably disturb or interfere with
Tenant's use of the Premises and operation of its business, to
examine, inspect, and show the Premises to persons wishing to lease
them, to provide services or make repairs, replacements, changes or
alterations as set out in this Lease, and to take such steps as
Landlord may deem necessary for the safety, improvement or
preservation of the Premises or the Building. Landlord shall whenever
possible (except in an emergency) consult with or give reasonable
notice to Tenant prior to such entry, but no such entry shall
constitute an eviction or entitle Tenant to any abatement of Rent.
6.08 Energy, Conservation and Security Policies Landlord shall be deemed to
have observed and performed the terms and conditions to be performed
by Landlord under this Lease, including those relating to the
provision of utilities and services, if in so doing it acts in
accordance with a mandatory directive of a governmental or quasi-
governmental authority serving the public interest in the fields of
energy, conservation or security.
ARTICLE 7.00 MAINTENANCE, REPAIR, ALTERATIONS AND IMPROVEMENTS BY TENANT
7.01 Condition of Premises Except to the extent that Landlord is
specifically responsible therefor under this Lease, Tenant shall
maintain the Premises and all improvements therein in good
order and condition in accordance with the requirements set forth in
Article 7.04, including
(a) repainting and redecorating the Premises and cleaning drapes and
carpets at reasonable intervals as needed, and
(b) making repairs, replacements and alterations as needed,
including those necessary to comply with the requirements of any
governmental or quasi-governmental authority having jurisdiction.
FIVE
<PAGE>
7.02 Failure to Maintain Premises If Tenant fails to perform any
obligation under Article 7.01, then on not less than ten days' notice
to Tenant, Landlord may enter the Premises and perform such obligation
without liability to Tenant for any loss or damage to Tenant thereby
incurred, and Tenant shall pay Landlord for the cost thereof, plus 20%
of such cost for overhead and supervision, within ten days of receipt
of Landlord's invoice therefore.
7.03 Alterations by Tenant Tenant may from time to time at its own
expense make changes, additions and improvements in the Premises to
better adapt the same to its business, provided that any such change,
addition or improvement shall
(a) comply with the requirements of any governmental or quasi-
governmental authority having jurisdiction,
(b) be made only with the prior written consent of Landlord,
(c) equal or exceed the then current standard for Building, and
(d) be carried out only by persons selected by Tenant and approved in
writing by Landlord, who shall if required by Landlord deliver to
Landlord before commencement of the work performance and payment
bonds as well as proof of worker's compensation and public
liability and property damage insurance coverage, with Landlord
named as an additional insured, in amounts, with companies, and
in form reasonably satisfactory to Landlord, which shall remain
in effect during the entire period in which the work will be
carried out.
Any increase in property taxes on or fire or casualty insurance
premiums for the Building attributable to such change, addition or
improvement shall be borne by Tenant.
7.04 Trade Fixtures and Personal Property Tenant may install in the
premises its usual trade fixtures and personal property in a proper
manner, provided that no such installation shall interfere with or
damage the mechanical or electrical systems or the structure of the
Building. If Tenant is not then in default hereunder, trade fixtures
and personal property installed in the Premises by Tenant may be
removed from the Premises
(a) from time to time in the ordinary course of Tenant's business or
in the course of reconstruction, renovation, or alteration of the
Premises by Tenant, and
(b) during a reasonable period prior to the expiration of the Term,
provided that Tenant promptly repairs at its own expense any
damage to the Building resulting from such installation and
removal.
7.05 Mechanic Liens Tenant shall pay before delinquency all costs for work
done or caused to be done by Tenant in the Premises which could result
in any lien or encumbrance on Landlord's interest in the Land or
Building or any part thereof, shall keep the title to the Land or
Building and every part thereof free and clear of any lien or
encumbrance in respect of such work, and shall idemnify and hold
harmless Landlord against any claim, loss, cost, demand and legal or
other expense, whether in respect of any lien or otherwise, arising
out of the supply of material, services or labor for such work.
Tenant shall immediately notify Landlord of any such lien, claim of
lien or other action of which it has or reasonably should have
knowledge and which affects the title to the Land or Building or any
part thereof, and shall cause the same to be removed within five days
(or such additional time as Landlord may consent to in writing),
failing which Landlord may take such action as Landlord deems
necessary to remove the same and the entire cost thereof shall be
immediately due and payable by Tenant to Landlord.
7.06 Signs Any sign, lettering or design of Tenant which is visible
from the exterior of the Premises shall be at Tenant's expense
and subject to approval by Landlord, and shall conform to the
uniform pattern of identification signs for tenants in the Building as
prescribed by Landlord. Tenant shall not inscribe or affix any sign,
lettering or design in the Premises or Building which is visible from
the exterior of the Building.
See Exhibit D
ARTICLE 8.00 TAXES
8.01 Landlord's Taxes Landlord shall pay before delinquency (subject to
participation by Tenant by payment of Occupancy Costs under Article
4.02) every real estate tax, assessment, license fee and other charge,
excepting Tenant's Taxes under Article 8.02, which is imposed, levied,
assessed or charged by any governmental or quasi-governmental
authority having jurisdiction and which is payable in respect of the
Term upon or on account of the Land or Building.
SIX
<PAGE>
8.02 Tenant's Taxes Tenant shall pay before delinquency every tax,
assessment, license fee, excise and other charge, however described,
which is imposed, levied, assessed or charged by any governmental or
quasi-governmental authority having jurisdiction and which is payable
in respect of the Term upon or on account of
(a) operations at, occupancy of, or conduct of business in or from
the Premises by or with the permission of Tenant,
(b) fixtures or personal property in the Premises which do not belong
to the Landlord, and
(c) the Rent paid or payable by Tenant to Landlord for the Premises
or for the use and occupancy of all or any part thereof;
provided that if Landlord so elects by notice to Tenant, Tenant shall
add any amounts payable under this Article 8.02 to the monthly
installments of Annual Rent payable under Article 4.01 and Landlord
shall remit such amounts to the appropriate authorities.
8.03 Right to Contest Landlord and Tenant shall each have the right to
contest in good faith the validity or amount of any tax, assessment,
license fee, excise fee and other charge which it is responsible to
pay under this Article 8.00, provided that no contest by Tenant may
involve the possibility of forfeiture, sale or disturbance of
Landlord's interest in the Premises, that Tenant provides to Landlord
security for the taxes contested by Tenant adequate in the opinion of
Landlord, and that upon the final determination of any contest by
Tenant, Tenant shall immediately pay and satisfy the amount found to
be due, together with any costs, penalties and interest.
ARTICLE 9.00 INSURANCE
9.01 Landlord's Insurance During the Term, Landlord shall maintain at
its own expense (subject to participation by Tenant by payment of
Occupancy Costs under Article 4.02) liability insurance, fire
insurance with extended coverage, boiler and pressure vessel
insurance, and other insurance on the Building and all property and
interest of Landlord in the Building with coverage and in amounts less
than those which are from time to time acceptable to a prudent owner
in the area in which the Building is located. Policies for such
insurance shall waive, to the extent available from Landlord's
carrier(s), any right of subrogation against Tenant.
9.02 Tenant's Insurance During the Term, Tenant shall maintain at its own
expense
(a) fire insurance with extended coverage and water damage
insurance in amounts sufficient to fully cover Tenant's
improvements and all property in the Premises which is not owned
by Landlord, and
(b) liability insurance, with Landlord named as an additional
insured, against claims for death, personal injury and property
damage in or about the Premises, in amounts which are from time
to time acceptable to a prudent tenant in the community in which
the Building is located, but not less than $1,000,000 for death,
illness or injury to one or more persons, and $500,000 for
property damage, in respect of each occurrence.
Policies for such insurance shall be in a form and with an insurer
reasonably acceptable to Landlord, shall require at least fifteen
days' written notice to Landlord of termination or material alteration
during the Term, and shall waive, if possible, any right of
subrogation against Landlord. If requested by Landlord, Tenant shall
from time to time promptly deliver to Landlord certified copies or
other evidence of such policies, and evidence satisfactory to Landlord
that all premiums thereon have been paid and the policies are in full
force and effect.
10.01 Indemnity by Tenant Tenant shall indemnify and hold harmless
Landlord from and against every demand, claim, cause of action,
judgment and expense, and all loss and damage arising from
(a) any injury or damage to the person or property of Tenant, any
other tenant in the Building or to any other person rightfully in
the Building, where the injury or damage is caused by negligence
or misconduct of Tenant, its agents, servants or employees, or of
any other person entering upon the Premises under express or
implied invitation of Tenant, or results from the violation of
laws or ordinances, governmental orders of any kind or of the
provisions of this Lease by any of the foregoing,
(b) any loss or damage, however caused, to books, records, files,
money, securities, negotiable instruments or papers in or about
the Premises,
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(c) any loss or damage resulting from interference with or
obstruction of deliveries to or from the Premises, and
(d) any injury or damage not specified above to the person or
property of Tenant, its agents, servants or employees, or any
other person entering upon the Premises under express or implied
invitation of Tenant, where the injury or damage is caused by any
reason other than the negligence or misconduct of Landlord, its
agents, servants, or employees.
10.02 Subrogation The provisions of this Article 10.00 are subject to the
waiver of any right of subrogation against Tenant in Landlord's
Insurance under Article 9.01 and to the waiver of any right of
subrogation against Landlord in Tenant's Insurance under Article 9.02.
ARTICLE 11.00 ASSIGNMENT AND SUBLETTING
(See Exhibit D)
11.02 Subleasing Tenant, with Landlord's prior written consent and subject
to Article 11.03, may sublet all or any part of the Premises to a
sublessee who, in Landlord's sole opinion, will not be inconsistent
with the character of the Building and its other tenants.
11.03 First Offer to Landlord If Tenant wishes to assign this Lease
(except as set out in Article 11.01 (a)) or sublet all or any part of
the Premises to a named third party, Tenant shall first offer in
writing to assign or sublet (as the case may be) to Landlord on the
same terms and conditions and for the same Rent as provided in this
Lease. Any such first offer shall be deemed to have been rejected
unless within ten days of receipt thereof Landlord delivers written
notice of acceptance to Tenant.
11.04 Limitation Except as specifically provided in this Article 11.00,
Tenant shall not assign or transfer this Lease or any interest therein
or in any way part with possession of all or any part of the Premises,
or permit all or any part of the Premises to be used or occupied by
any other person. Any assignment, transfer or subletting or purported
assignment, transfer or subletting except as specifically provided
herein shall be null and void and of no force and effect. Landlord
shall not be required to consent to an assignment of this Lease or a
sublease of all or part of the Premises by Tenant to any tenant in a
building in the same city in which the Building is located and which
is owned or managed by Landlord or any affiliate of Landlord. The
rights and interests of Tenant under this Lease shall not be
assignable by operation of law without Landlord's written consent,
which consent may be withheld in Landlord's absolute discretion.
ll.05 Tenant's Obligations Continue No assignment, transfer or subletting
(or use or occupation of the Premises by any other person) which is
permitted under this Article 11.00 shall in any way release or relieve
Tenant of its obligations under this Lease unless such release or
relief is specifically granted by Landlord to Tenant in writing.
11.06 Subsequent Assignments Landlord's consent to an assignment, transfer
or subletting (or use or occupation of the Premises by any other
person) shall not be deemed to be a consent to any subsequent
assignment, transfer, subletting, use or occupation.
See Exhibit D
ARTICLE 12.00 SURRENDER
12.01 Possession Upon the expiration or other termination of the Term,
Tenant shall immediately quit and surrender possession of the Premises
in substantially the condition in which Tenant is required to maintain
the Premises excepting only reasonable wear and tear and damage
covered by Landlord's insurance under Article 9.01. Upon such
surrender, all right, title and interest of Tenant in the Premises
shall cease.
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12.02 Trade Fixtures, Personal Property and Improvements Subject to
Tenant's rights under Article 7.04, after the expiration or other
termination of the Term all of Tenant's trade fixtures, personal
property and improvements remaining in the Premises shall be deemed
conclusively to have been abandoned by Tenant and may be appropriated,
sold, destroyed or otherwise disposed of by Landlord without notice or
obligation to compensate Tenant or to account therefor, and Tenant
shall pay to Landlord on written demand all costs incurred by Landlord
in connection therewith.
12.03 Merger The voluntary or other surrender of this Lease by Tenant or
the cancellation of this Lease by mutual agreement of Tenant and
Landlord shall not work a merger, and shall at Landlord's option
terminate all or any subleases and subtenancies or operate as an
assignment to Landlord of all or any subleases or subtenancies.
Landlord's option hereunder shall be exercised by notice to Tenant and
all known sublessees or subtenants in the Premises or any part
thereof.
12.04 Payments After Termination No payments of money by Tenant to
Landlord after the expiration or other termination of the Term or
after the giving of any notice (other than a demand for payment of
money) by Landlord to Tenant, shall reinstate, continue or extend the
Term or make ineffective any notice given to Tenant prior to the
payment of such money. After the service of notice or the commencement
of a suit, or after final judgment granting Landlord possession of the
Premises, Landlord may receive and collect any sums of Rent due under
the Lease, and the payment thereof shall not make ineffective any
notice, or in any manner affect any pending suit or any judgment
theretofore obtained.
ARTICLE 13.00 HOLDING OVER
13.01 Month-to-Month Tenancy If with Landlord's written consent Tenant
remains in possession of the Premises after the expiration or other
termination of the Term, Tenant shall be deemed to be occupying the
Premises on a month-to-month tenancy only, at a monthly rental equal
to the Rent as determined in accordance with Article 4.00 or such
other rental as is stated in such written consent, and such month-to-
month tenancy may be terminated by Landlord or Tenant on the last day
of any calendar month by delivery of at least 30 days' advance notice
of termination to the other.
13.02 Tenancy at Sufferance If without Landlord's written consent Tenant
remains in possession of the Premises after the expiration or other
termination of the Term, Tenant shall be deemed to be occupying the
Premises upon a tenancy at sufferance only, at a monthly rental equal
to two times the Rent determined in accordance with Article 4.00. Such
tenancy at sufferance may be terminated by Landlord at any time by
notice of termination to Tenant, and by Tenant on the last day of any
calendar month by at least 30 days' advance notice of termination to
Landlord.
13.03 General Any month-to-month tenancy or tenancy at sufferance
hereunder shall be subject to all other terms and conditions of this
Lease except any right of renewal and nothing contained in this
Article 13.00 shall be construed to limit or impair any of Landlord's
rights of re-entry or eviction or constitute a waiver thereof.
ARTICLE 14.00 RULES AND REGULATION
14.01 Purpose The Rules and Regulations in Exhibit C have been adopted by
Landlord for the safety, benefit and convenience of all tenants and
other persons in the Building.
14.02 Observance Tenant shall at all times comply with, and shall cause
its employees, agents, licensees and invitees to comply with, the
Rules and regulations from time to time in effect.
14.03 Modification Landlord may from time to time, for the purposes set
out in Article 14.01, amend, delete from, or add to the Rules and
Regulations, provided that any such modification
(a) shall not be repugnant to any other provision of this Lease,
(b) shall be reasonable and have general application to all tenants
in the Building, and
(c) shall be effective only upon delivery of a copy thereof to Tenant
at the Premises.
14.04 Non-Compliance Landlord shall use its best efforts to secure
compliance by all tenants and other persons with the Rules and
Regulations from time to time in effect, but shall not be responsible
to Tenant for failure of any person to comply with such Rules and
Regulations.
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ARTICLE 15.00 EMINENT DOMAIN
15.01 Taking of Premises If during the Term all of the Premises shall be
taken for any public or quasi-public use under any statute or by right
of eminent domain, or purchased under threat of such taking, this
Lease shall automatically terminate on the date on which the
condemning authority takes possession of the Premises (hereinafter
called the "date of such taking").
15.02 Partial Taking of Building If during the Term only part of the
Building is taken or purchased as set out in Article 15.01, then
(a) if in the reasonable opinion of Landlord substantial alteration
or reconstruction of the Building is necessary or desirable as a
result thereof, whether or not the Premises are or may be
affected, Landlord shall have the right to terminate this Lease
by giving the Tenant at least 30 days' written notice of such
termination, and
(b) if more than one-third of the number of square feet in the
Premises is included in such taking or purchase, Landlord and
Tenant shall each have the right to terminate this Lease by
giving the other at least 30 days' written notice thereof.
If either party exercises its right of termination hereunder, this
Lease shall terminate on the date stated in the notice, provided,
however, that no termination pursuant to notice hereunder may occur
later than 60 days after the date of such taking.
15.03 Surrender On any such date of termination under Article 15.01 or
15.02, Tenant shall immediately surrender to Landlord the Premises
and all interests therein under this Lease. Landlord may re-enter and
take possession of the Premises and remove Tenant therefrom, and the
Rent shall no longer accrue from the date of termination, except that
if the date of such taking differs from the date of termination, Rent
shall abate on the former date in respect of the portion taken. After
such termination, and on notice from Landlord stating the Rent then
owing, Tenant shall forthwith pay Landlord such Rent.
15.04 Partial Taking of Premises If any portion of the Premises (but less
than the whole thereof) is so taken, and no rights of termination
herein conferred are timely exercised, the Term of this Lease shall
expire with respect to the portion so taken on the date of such
taking. In such event the Rent payable hereunder with respect to such
portion so taken shall no longer accrue from such date, and the Rent
thereafter payable with respect to the remainder not so taken shall be
adjusted pro rata by Landlord in order to account for the resulting
reduction in the number of square feet in the Premises.
15.05 Awards Upon any such taking or purchase, Landlord shall be entitled
to receive and retain the entire award or consideration for the
affected lands and improvements, and Tenant shall not have nor advance
any claim against Landlord for the value of its property or its
leasehold estate or the unexpired Term of the Lease, or for costs of
removal or relocation, or business interruption expense or any other
damages arising out of such taking or purchase. Nothing herein shall
give Landlord any interest in or preclude Tenant from seeking and
recovering on its own account from the condemning authority any award
or compensation attributable to the taking or purchase of Tenant's
improvements, chattels or trade fixtures. If any such award made or
compensation paid to either party specifically includes an award or
amount for the other, the party first receiving the same shall
promptly account therefor to the other.
ARTICLE 16.00 DAMAGE BY FIRE OR OTHER CASUALTY
16.01 Limited Damage to Premises If all or part of the Premises are
rendered untenantable by damage from fire or other casualty which, in
the reasonable opinion of an architect acceptable to Landlord and
Tenant, can be substantially repaired under applicable laws and
governmental regulations within 180 days from the date of such
casualty (employing normal construction methods without overtime or
other premium), Landlord shall forthwith at its own expense repair
such damage other than damage to improvements, furniture, chattels or
trade fixtures which do not belong to Landlord, which shall be
repaired forthwith by Tenant at its own expense.
16.02 Major Damage to Premises If all or part of the Premises are rendered
untenantable by damage from fire or other casualty which, in the
reasonable opinion of an architect acceptable to Landlord and Tenant,
cannot be substantially repaired under applicable laws and
governmental regulations within 180 days from the date of such
casualty (employing normal construction methods without overtime or
other premium), then either Landlord or Tenant may elect to terminate
this Lease as of the date of such casualty by written notice delivered
to the other not more than 10 days after receipt of such architect's
opinion, failing which Landlord shall forthwith at its own expense
repair such damage other than damage to improvements, furniture,
chattels or trade fixtures which do not belong to Landlord, which
shall be repaired forthwith by Tenant at its own expense.
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16.03 Abatement if Landlord is required to repair damage to all or part of
the Premises under Article 16.01 or 16.02 the Rent payable by Tenant
hereunder shall be proportionately reduced to the extent that the
Premises are thereby rendered untenantable from the date of such
casualty until five days after completion by landlord of the repairs
to the Premises (or the part thereof rendered untenantable) or until
Tenant again uses the Premises (or the part thereof rendered
untenantable) in its business, whichever first occurs.
16.04 Major Damage to Building If all or a substantial part (whether or
not including the Premises) of the Building is rendered untenantable
by damage from fire or other casualty to such a material extent that
in the reasonable opinion of Landlord the Building must be totally or
partially demolished, whether or not to be reconstructed in whole or
in part, Landlord may elect to terminate this Lease as of the date of
such casualty (or on the date of notice if the Premises are unaffected
by such casualty) by written notice delivered to Tenant not more than
60 days after the date of such casualty.
16.05 Limitation on Landlord's Liability Except as specifically provided
in this Article 16.00, there shall be no reduction of Rent and
Landlord shall have no liability to Tenant by reason of any injury to
or interference with Tenant's business or property arising from fire
or other casualty, howsoever caused, or from the making of any
repairs resulting therefrom in or to any portion of the Building or
the Premises. Notwithstanding anything contained herein, Rent payable
by Tenant hereunder shall not be abated, if the damage is caused by
any act or omission of Tenant, its agents, servants, employees or any
other person entering upon the Premises under express or implied
invitation of Tenant.
See Exhibit D
ARTICLE 17.00 TRANSFERS BY LANDLORD
17.01 Sales, Conveyance and Assignment Nothing in this Lease shall restrict
the right of Landlord to sell, convey, assign or otherwise deal with
the Building, subject only to the rights of Tenant under this Lease.
17.02 Effect of Sale, Conveyance or Assignment A sale, conveyance or
assignment of the Building shall operate to release Landlord from
liability from and after the effective date thereof upon all of the
covenants, terms and conditions of this Lease, express or implied,
except as such may relate to the period prior to such effective date,
and Tenant shall thereafter look solely to Landlord's successor in
interest in and to this Lease. This Lease shall not be affected by any
such sale, conveyance or assignment, and Tenant shall attorn to
Landlord's successor in interest thereunder.
17.03 Subordination This Lease is and shall be subject and subordinate in
all respects to any first mortgage or first deed of trust now or
hereafter encumbering the Building or Land and to all renewals,
modifications, supplements, consolidations and replacements thereof
(herein called the "First Mortgage"). However, a holder of the First
Mortgage may elect to subordinate, in whole or in part, by an
instrument in form and substance satisfactory to the holder, the First
Mortgage to this Lease. In such case, Tenant agrees upon request by
and without cost to Landlord or any successor in interest to execute
promptly and to deliver to Landlord or the holder such subordination
instrument(s) requested by the holder.
17.04 Attornment Subject to Article 17.05, if the interest of Landlord is
transferred to any person (herein called "Purchaser") by reason of
foreclosure or other proceedings for enforcement of the First
Mortgage, or by delivery of a deed in lieu of such foreclosure or
other proceedings, Tenant shall immediately and automatically attorn
to Purchaser.
17.05 Nondisturbance No attornment under Article 17.04 shall be effective
unless:
(a) the holder of the First Mortgage has subordinated, in whole or in
part, the First Mortgage to this Lease, or
(b) Purchaser delivers to Tenant a written undertaking, in a form
satisfactory to Purchaser, binding upon Purchaser and enforceable
by and for the benefit of Tenant under applicable law, that this
Lease and Tenant's rights hereunder shall continue undisturbed
while Tenant is not in default despite such enforcement
proceedings and transfer.
17.06 Effect of Attornment Upon attornment under Article 17.04 this Lease
shall continue in full force and effect as a direct lease between
Purchaser and Tenant, upon all of the same terms, conditions and
covenants as are set forth in this Lease except that, after such
attornment, Purchaser shall not be
(a) subject to any offsets or defenses which Tenant might have against
Landlord, or
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(b) bound by any prepayment by Tenant of more than one month's
installment of Rent, or by any previous modification of this
Lease, unless such prepayment or modification shall have been
approved in writing by Purchaser or any predecessor in interest
except Landlord, or
(c) subject to the obligations of Landlord hereunder except during
the period of Purchaser's ownership of the Building or Land.
17.07 Execution of Instruments The subordination and attornment provisions
of this Article 17.00 shall be self-operating and (except as
specifically required in Articles 17.03 and 17.05) no further
instrument shall be necessary. Nevertheless Tenant, on request by and
without cost to landlord or any successor in interest, shall execute
and deliver any and all instruments further evidencing such
subordination and (where applicable hereunder) attornment.
ARTICLE 18.00 NOTICES, ACKNOWLEDGEMENTS, AUTHORITIES FOR ACTION
18.01 Notices Any notice from one party to the other hereunder shall be in
writing and shall be deemed duly served if delivered personally to a
responsible employee of the party being served, or if mailed by
registered or certified mail addressed to Tenant at the Premises
(whether or not Tenant has departed from, vacated or abandoned the
same) or to Landlord at the place from time to time established for
the payment of Rent. Any notice shall be deemed to have been given at
the time of personal delivery or, if mailed, seven days after the date
of mailing thereof. Either party shall have the right to designate by
notice, in the manner above set forth, a different address to which
notices are to be mailed.
18.02 Acknowledgements Each of the parties hereto shall at any time and
from time to time upon not less than 20 days prior notice from the
other execute, acknowledge and deliver a written statement certifying
(a) that this Lease is in full force and effect, subject only to such
modifications (if any) as may be set out therein,
(b) that Tenant is in possession of the Premises and paying Rent as
provided in this Lease,
(c) the dates (if any) to which Rent is paid in advance,
(d) that there are not, to such party's knowledge, any uncured
defaults on the part of the other party hereunder, or specifying
such defaults if any are claimed, and
(e) as true and accurate such other information concerning this Lease
or tenancy as may be reasonably required by any First Mortgage
lender.
Any such statement may be relied upon by any prospective transferee or
encumbrancer of all or any portion of the Building, or any assignee of
any such persons. If Tenant fails to timely deliver such statement,
Tenant shall be deemed to have acknowledged that this Lease is in full
force and effect, without modification except as may be represented by
Landlord, and that there are no uncured defaults in Landlord's
performance.
18.03 Authorities for Action Landlord may act in any matter provided for
herein by its Property Manager and any other person who shall from
time to time be designated by Landlord by notice to Tenant. Tenant
shall designate in writing one or more persons to act on its behalf in
any matter provided for herein and may from time to time change, by
notice to Landlord, such designation. In the absence of any such
designation, the person or persons executing this Lease for Tenant
shall be deemed to be authorized to act on behalf of Tenant in any
matter provided for herein.
ARTICLE 19.00 DEFAULT
19.01 Interest and Costs Tenant shall pay to Landlord interest at a rate
equal to the lesser of 1-1/2% per month, or the maximum rate
permitted by applicable law, upon all Rent required to be paid
hereunder from the due date for payment thereof until the same is
fully paid and satisfied. Tenant shall indemnify Landlord against all
costs and charges (including legal fees) lawfully and reasonably
incurred in enforcing payment thereof, and in obtaining possession of
the Premises after default of Tenant or upon expiration or earlier
termination of the Term of this Lease, or in enforcing any covenant,
proviso or agreement of Tenant herein contained.
19.02 Right of Landlord to Perform Covenants All covenants and agreements
to be performed by Tenant under any of the terms of this Lease shall
be performed by Tenant, at Tenant's sole cost and expense, and without
any abatement of Rent. If Tenant shall fail to perform any act on its
part to be performed hereunder, and such failure shall continue for 10
days after notice thereof from Landlord, Landlord may (but shall not
be obligated so to do) perform such act without waiving or releasing
Tenant from any of its obligations relative thereto. All sums paid or
costs
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incurred by Landlord in so performing such acts under this Article
19.02, together with interest thereon at the rate set out in Article
19.01 from the date each such payment was made or each such cost
incurred by landlord, shall be payable by Tenant to Landlord on
demand.
19.03 Events of Default If and whenever:
(a) part or all of the Rent hereby reserved is not paid when due, and
such default continues for ten days after the due date
thereof, or
(b) the Term or any goods, chattels or equipment of Tenant is taken
or exigible in execution or in attachment or if a writ of
execution is issued against Tenant, or
(c) Tenant becomes insolvent or commits an act of bankruptcy or
becomes bankrupt or takes the benefit of any statute that may be
in force for bankrupt or insolvent debtors or becomes involved in
voluntary or involuntary winding-up proceedings or if a receiver
shall be appointed for the business, property, affairs or
revenues of Tenant, or
(d) Tenant makes a bulk sale of its goods, or
(e) Tenant fails to observe, perform and keep each and every of the
covenants, agreements, provisions, stipulations and conditions
herein contained to be observed, performed and kept by Tenant
(other than payment of Rent) and persists in such failure after
30 days notice by Landlord requiring that Tenant remedy, correct,
desist or comply (or if any such breach would reasonably require
more than 30 days to rectify, unless Tenant commences
rectification within the 30 day notice period and thereafter
promptly and effectively and continuously proceeds with the
rectification of the breach),
then and in any of such cases, at the option of Landlord, the full
amount of the current month's and the next ensuing three month's
installments of Annual Rent shall immediately become due and payable
and Landlord may immediately distrain for the same, together with any
arrears then unpaid; and Landlord may without notice or any form of
legal process forthwith re-enter upon and take possession of the
Premises or any part thereof in the name of the whole and remove and
sell Tenant's goods, chattels and trade fixtures therefrom, any rule
of law or equity to the contrary notwithstanding; and Landlord may
seize and sell such goods, chattels and equipment of Tenant as are in
the Premises and may apply the proceeds thereof to all Rent and other
payments to which Landlord is then entitled under this Lease. Any such
sale may be effected in the discretion of Landlord by public auction
or otherwise, and either in bulk or by individual item, or partly by
one means and partly by another, all as Landlord in its entire
discretion may decide. If any of Tenant's property is disposed of as
provided in this Article 19.03, 10 days prior notice to Tenant of
disposition shall be deemed to be commercially reasonable.
19.04 Waiver of Exemption and Redemption Notwithstanding anything contained
in any statute now or hereafter in force limiting or abrogating the
right of distress, none of Tenant's goods, chattels or trade fixtures
on the Premises at any time during the continuance of the Term shall
be exempt from levy by distress for Rent in arrears, and upon any
claim being made for such exemption by Tenant or on distress being
made by Landlord this agreement may be pleaded as an estoppel against
Tenant in any action brought to test the right to the levying upon any
such goods as are named as exempted in any such statute, Tenant hereby
waiving all and every benefit that could or might have accrued to
Tenant under and by virtue of any such statute but for this Lease.
Tenant hereby expressly waives any and all rights of redemption
granted by or under any present or future laws in the event of Tenant
being evicted or dispossessed for any cause, or in the event of
Landlord obtaining possession of the Premises, by reason of the
violation by Tenant of any of the terms or conditions of this Lease or
otherwise.
19.05 Surrender If and whenever Landlord is entitled to or does re-enter,
Landlord may terminate this Lease by giving notice thereof, and in
such event Tenant shall forthwith vacate and surrender the Premises.
19.06 Payments If Landlord shall re-enter or if this Lease shall be
terminated hereunder, Tenant shall pay to Landlord on demand:
(a) Rent up to the time of re-entry or termination, whichever shall
be the later, plus accelerated rent as herein provided, and
(b) all expenses incurred by Landlord in performing any of Tenant's
obligations under this Lease, re-entering or terminating and
re-letting, collecting sums due or payable by Tenant, realizing
upon assets seized (including brokerage, legal fees and
disbursements), and the expense of keeping the Premises in good
order, repairing the same and preparing them for reletting, and
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(c) as damages for the loss of income of Landlord expected to be
derived from the Premises, the amounts (if any) by which the Rent
which would have been payable under this Lease exceeds the
payments (if any) received by Landlord from other tenants in the
Premises, payable on the first day of each month during the
period which would have constituted the unexpired portion of the
Term had it not been terminated, or if elected by Landlord by
notice to Tenant at or after re-entry or termination, a lump sum
amount equal to the Rent which would have been payable under this
Lease from the date of such election during the period which
would have constituted the unexpired portion of the Term had it
not been terminated, reduced by the rental value of the Premises
for the same period, established by reference to the terms and
conditions upon which Landlord re-lets them if such re-letting is
accomplished within a reasonable period after termination, and
otherwise established by reference to all market and other
relevant circumstances; Rent and rental value being reduced to
present worth at an assumed interest rate of 10% on the basis of
Landlord's estimates and assumptions of fact which shall govern
unless shown to be erroneous.
19.07 Remedies Cumulative No reference to nor exercise of any specific
right or remedy by Landlord shall prejudice or preclude Landlord from
exercising or invoking any other remedy in respect thereof, whether
allowed at law or in equity or expressly provided for herein. No such
remedy shall be exclusive or dependent upon any other such remedy, but
Landlord may from time to time exercise any one or more of such
remedies independently or in combination.
ARTICLE 20.00 MISCELLANEOUS
20.01 Relationship of Parties Nothing contained in this Lease shall
create any relationship between the parties hereto other than that of
landlord and tenant, and it is acknowledged and agreed that Landlord
does not in any way or for any purpose become a partner of Tenant in
the conduct of its business, or a joint venturer or a member of a
joint or common enterprise with Tenant.
20.02 Consent Not Unreasonably Withheld Except as otherwise specifically
provided, whenever consent or approval of Landlord or Tenant is
required under the terms of this Lease, such consent or approval shall
not be unreasonably withheld or delayed. Tenant's sole remedy if
Landlord unreasonably withholds or delays consent or approval shall
be an action for specific performance, and Landlord shall not be
liable for damages. If either party withholds any consent or approval,
such party shall on written request deliver to the other party a
written statement giving the reasons therefor.
20.03 Name of Building Landlord shall have the right, after 30 days
notice to Tenant, to change the name, number or designation of the
Building, during the Term without liability to Tenant.
20.04 Applicable Law and Construction This Lease shall be governed by and
construed under the laws of the jurisdiction in which the Building is
located, and its provisions shall be construed as a whole according to
their common meaning and not strictly for or against Landlord or
Tenant. The words Landlord and Tenant shall include the plural as well
as the singular. If this Lease is executed by more than one tenant,
Tenants' obligations hereunder shall be joint and several obligations
of such executing tenants. Time is of the essence of this Lease and
each of its provisions. The captions of the Articles are included for
convenience only, and shall have no effect upon the construction or
interpretation of this Lease.
20.05 Entire Agreement If there are any terms and conditions which at the
date of execution of this Lease are additional or supplemental to
those set out on the first 15 pages and in Exhibits A, B and C, such
terms and conditions are contained in Exhibit D (if any) attached
hereto as part of this Lease. This Lease contains the entire agreement
between the parties hereto with respect to the subject matter of this
Lease. Tenant acknowledges and agrees that it has not relied upon any
statement, representation, agreement or warranty except such as are
set out in this Lease. If this Lease is made pursuant to an Offer to
Lease, then the term "Lease" in this Article 20.05 shall be deemed to
include such Offer to Lease.
20.06 Amendment or Modification Unless otherwise specifically provided in
this Lease, no amendment, modification, or supplement to this Lease
shall be valid or binding unless set out in writing and executed by
the parties hereto in the same manner as the execution of this Lease.
FOURTEEN
<PAGE>
20.07 Construed Covenants and Severability All of the provisions of this
Lease are to be construed as covenants and agreements as though the
words importing such covenants and agreements were used in each
separate Article hereof. Should any provision of this Lease be or
become invalid, void, illegal or not enforceable, it shall be
considered separate and severable from the Lease and the remaining
provisions shall remain in force and be binding upon the parties
hereto as though such provision had not been included.
20.08 No implied Surrender or Waiver No provisions of this Lease shall be
deemed to have been waived by Landlord unless such waiver is in
writing signed by Landlord. Landlord's waiver of a breach of any term
or condition of this Lease shall not prevent a subsequent act, which
would have originally constituted a breach, from having all the force
and effect of any original breach. Landlord's receipt of Rent with
knowledge of a breach by Tenant of any term or condition of this Lease
shall not be deemed a waiver of such breach. Landlord's failure to
enforce against Tenant or any other tenant in the Building any of the
Rules and Regulations made under Article 14.00 shall not be deemed a
waiver of such Rules and Regulations. No act or thing done by
Landlord, its agents or employees during the Term shall be deemed an
acceptance of a surrender of the Premises, and no agreement to accept
a surrender of the Premises shall be valid, unless in writing signed
by Landlord. The delivery of keys to any of Landlord's agents or
employees shall not operate as a termination of this Lease or a
surrender of the Premises. No payment by Tenant, or receipt by
Landlord, of a lesser amount than the Rent due hereunder shall be
deemed to be other than on account of the earliest stipulated Rent,
nor shall any endorsement or statement on any check or any letter
accompanying any check, or payment as Rent, be deemed an accord and
satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such Rent or
pursue any other remedy available to Landlord.
20.09 Successors Bound Except as otherwise specifically provided, the
covenants, terms, and conditions contained in this Lease shall apply
to and bind the heirs, successors, executors, administrators and
assigns of the parties hereto.
20.10 Personal Liability The obligations of Landlord under this Lease do
not constitute personal obligations of the Landlord or the individual
partners, members, directors, officers, agents or shareholders of
Landlord, disclosed or undisclosed. Tenant shall look solely to
Landlord's estate in the Land and Building for satisfaction of any
liability under or in respect of this Lease or for the satisfaction of
Tenant's remedies for the collection of a judgment (or other legal
process) requiring the payment of money by Landlord and no other
property and assets of such Landlord or any partner, member, officer,
director, agent or shareholder, disclosed or undisclosed, shall be
subject to levy, execution or other enforcement procedure for the
satisfaction of Tenant's remedies under or in respect of this Lease,
the relationship of Landlord and Tenant under this Lease or Tenant's
use of the Land or Building or the use or occupancy of the Premises.
See Exhibit D.
IN WITNESS OF THIS LEASE Landlord and Tenant have properly executed it as of
the date set out on page one.
80 SOUTH EIGHTH STREET LIMITED PARTNERSHIP
By BCED Minnesota Inc.,
Its Managing Agent
LANDLORD TENANT HIDDEN CREEK INDUSTRIES
By: DANIEL P. PROFFITT By: MARY L. JOHNSON
------------------------------ ------------------------------
DANIEL P. PROFFIIT
VICE PRESIDENT
By: CYNTHIA M. WHITEFORD By: SCOTT RUED
------------------------------ ------------------------------
CYNTHIA M. WHITEFORD
ASSISTANT SECRETARY
----------------------------------
Witness to the signature of Tenant
if not incorporated.
FIFTEEN
<PAGE>
EXHIBIT A
[FLOOR PLAN 45TH FLOOR]
<PAGE>
EXHIBIT B
[LOGO OF BCED]
IDS TOWER
IDS CENTER
80 SOUTH EIGHTH STREET
MINNEAPOLIS, MINNESOTA 55402
SECTION 1.00 WORDS AND PHRASES
1.01 Definitions In the Lease, including this Exhibit:
(a) "Architect" means such firm of professional architects or
engineers as Landlord may from time to time engage for
preparation of construction drawings for the Building or for
general supervision of architectural and engineering aspects and
operations of the Building and includes any consultant(s) from
time to time appointed by Landlord or the Architect whenever such
consultant(s) is acting within the scope of his or her
appointment and specialty.
(b) "Land" means those portions from time to time owned or leased by
Landlord of those lands located in Hennepin County, Minnesota,
described as:
Lots 1 and 2, except that part of said Lots 1 and 2 embraced
within Lots 1, 2 and 3, Auditor's Subdivision Number Eighty-
one (81), Hennepin County, Minnesota; Lots 3 to 10
inclusive, all in Block 224, Brown & Jackins Addition to
Minneapolis; Lots 1, 2 and 3, Auditor's Subdivision Number
Eighty-one (81), Hennepin County, Minnesota; and a tract in
Wells, Sampson & Bells Addition to Minneapolis adjacent to
Lot 1, Block 224, Brown & Jackins Addition to Minneapolis,
lying Southeasterly of the Southwesterly extension of the
Northwesterly line of said Lot 1 and lying Northeasterly of
the Northwesterly extension of the Southwesterly line of
said Lot 1, according to the recorded plats thereof on file
or of record in the office of the County Recorder in and for
the County of Hennepin, State of Minnesota.
(c) "Project" means those developments and improvements from time to
time constructed on the Land.
(d) "Building" means the building in which the Premises are
located, being the high-rise office tower forming part of the
Project and the adjoining office building located east of the
high-rise office tower, excluding (i) those portions of those
buildings (except elevator cores and stairwells, vertical duct
work and mechanical systems, and structural supports) below the
third level above street level, and (ii) those portions of those
buildings on the third level above street level used or
designated for use as restaurants and hotel conference rooms.
(e) "Hotel Building" means the hotel and office building located
northeast of the Building, excluding (i) those portions of that
building (except elevator cores and stairwells, vertical duct
work and mechanical systems, and structural supports),
designated for use as Major Retail and Retail Court.
(f) "Marquette Office Building" means those portions of the Hotel
Building from time to time leased or designated for lease to
tenants for office space.
(g) "Major Retail" means those portions of the Project below the
third level above street level leased to First Minnesota Savings
Bank of Minneapolis, F. W. Woolworth Company, Marquette National
Bank, and their respective assignees, subtenants, or successors,
except those parts assigned, subleased, or otherwise transferred
to Landlord.
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<PAGE>
(h) "Retail Court" means those portions of the Project (excluding the
Building, Hotel Building, Major Retail, and Parking Facilities)
used or designed for use as retail and service stores located
below the third level above street level.
(i) "Rentable Components" means the Building, Marquette Office
Building, Major Retail, Retail Court, and those other portions of
the Project (excluding Hotel and Parking Facilities) from time to
time leased or designated for lease to tenants.
(j) "Hotel" means the Hotel Building (excluding the Marquette Office
Building and areas designated for use as retail and service
stores) and those portions of the Office Tower designated for
hotel use.
(k) "Parking Facilities" means those portions of the Project from
time to time designated by Landlord for vehicular parking.
(l) "Delivery Facilities" means those portions of the Project on and
below the street level from time to time designated by Landlord
as facilities to be used in common by Landlord, tenants in the
Project, and others for purposes of loading, unloading, delivery,
dispatch and holding of merchandise, goods and materials
entering or leaving the Project and giving vehicular access to
those portions of the Project.
(m) "Common Areas" means those portions of the Land and Project
(excluding the Rentable Components, Hotel, Delivery Facilities,
and Parking Facilities) not leased or designated for lease to
tenants that Landlord provides for use in common by Landlord,
Tenant, and other tenants of the Project (or by their respective
sublessees, agents, employees, customers, or licensees), whether
or not those areas are open to the general public, and includes
any fixtures, chattels, systems, decor, signs, facilities, or
landscaping contained, maintained, or used in connection with
those areas, and is deemed to include the city sidewalks adjacent
to the Land and any pedestrian walkway system (either above or
below ground) or other facility open to the general public in
respect of which Landlord is from time to time subject to
obligations arising from the Land and Project.
(n) "Section" means a section of this Exhibit B.
1.02 Normal Business Hours Except as otherwise specifically provided in
the Lease, normal business hours for the Building shall be from 8:00
a.m. to 6:00 p.m. Monday through Friday, and 8:00 a.m. to 1:00 p.m.
Saturday, excluding days which are legal or statutory holidays in the
jurisdiction in which the Building is located.
SECTION 2.00 DETERMINATION OF OCCUPANCY COSTS
2.01 Definitions In this Section 2.00:
(a) "Tax Cost" means that portion of Taxes accruing in respect of the
calendar year in which the Fiscal Year begins, less that part of
those Taxes which is attributable to the Hotel and Parking
Facilities, multiplied by a fraction the numerator of which is
the gross area of the Building and the denominator of which is
the aggregate gross area of the Rentable Components.
(b) "Taxes" means the aggregate of all taxes, rates, charges, levies,
and assessments payable by Landlord and imposed by any competent
authority upon or in respect of the Land and all improvements on
the Land, including any tax imposed on the capital invested in
the Land or improvements on the Land. In determining Taxes, any
corporate income, profits, excess profits, and business tax
imposed upon the income of Landlord and any other impost of a
personal nature charged or levied against the Landlord shall be
excluded, except to the extent that it is levied in lieu of
taxes, rates, charges, or assessments in respect of the Land or
any improvements on the land.
(c) "HVAC Cost" means a percentage of the costs in the Fiscal Year
for the operation, repair, and maintenance of the system for
heating, ventilating, and cooling the Project as established by
Landlord from time to time on a fair and equitable basis which
reflects load and hours of operation.
(d) "Delivery Facilities Costs" means all net costs, charges and
expenses in respect of a Fiscal Year which are directly
attributable to the operation, repair and maintenance of the
Delivery Facilities including without limitation HVAC Cost.
TWO
<PAGE>
(e) "Common Areas Costs" means all net costs, charges, and expenses
in respect of a Fiscal Year which are directly attributable to
the operation, repair and maintenance of the Common Areas,
including without limitation HVAC Cost.
(f) "Project Costs" means all net costs, charges and expenses in
respect of a Fiscal Year which are directly attributable to the
operation, repair and maintenance of the Project, but which are
not attributable solely to the operation, repair or maintenance
of the Common Areas, Delivery Facilities, Parking Facilities,
Hotel, or any Rentable Component.
(g) "Square Feet in the Premises" means the number of square feet set
out in Article 1.01(k) of the Lease, which includes the number
of square feet of unallocated space in the Building set out in
Article 1.01(k) of the Lease.
(h) "Square Feet in the Building" means 1,180,711 square feet being
the aggregate of the rentable areas of office space in the
Building calculated on a single-tenancy floor basis. If from time
to time there is a material change in the rentable areas of
office space in the Building, Square Feet in the Building shall
(until any further change) mean the number of square feet in the
Building determined on completion of that change on the basis set
out in Section 3.01
2.02 Occupancy Costs Occupancy Costs for any Fiscal Year shall be an
amount equal to Operating Cost in respect of that Fiscal Year
multiplied by the Square Feet in the Premises.
2.03 Determination of Operating Cost "Operating Cost" means an amount per
square foot (calculated to the nearest tenth of a cent) established in
accordance with generally accepted accounting principles and confirmed
in a certificate of Landlord, and equal to the sum of the following
costs in respect of a Fiscal Year, divided by the number of square
feet of office space in the Building (determined on the basis set out
in Section 3.01):
(a) all net costs, charges and expenses directly attributable to the
operation, repair and maintenance of the Building, including
without limitation Tax Cost and HVAC Cost, and
(b) a portion of Delivery Facilities Costs as established by Landlord
on a fair and equitable basis which reflects usage, and
(c) fifty percent (50%) of Common Areas Costs, less that part of
those Common Areas Costs payable by the Marquette Office
Building, and
(d) that proportion of Project Costs which the gross area of the
Building is of the aggregate gross area of the Rentable
Components.
Operating Cost under this Section 2.03 includes all net expenses
properly allocable to the Fiscal Year for any capital improvement or
structural repair incurred to reduce or limit increases in Operating
Cost, or required by Landlord's insurance carrier or by any change in
the laws, rules, regulations or orders of any governmental or quasi-
governmental authority having jurisdiction, which expenses shall be
amortized at applicable interest rates over the useful capital life of
the capital improvement or structural repair. If Landlord manages the
Building or other applicable portion of the Project, Operating Cost
under this Section 2.03 also includes an imputed management fee
commensurate with the then-current Minneapolis-St. Paul metropolitan
market for management services.
2.04 Limitation on Operating Cost In determining Operating Cost, the cost
(if any) of the following shall be excluded except as specifically
provided in Section 2.03:
(a) major structural repairs to the Project,
(b) improvements, additions, or alterations to the Project,
(c) repair and replacement resulting from inferior or deficient
workmanship, materials, or equipment in the initial construction
of the Project or for which Landlord is reimbursed by insurers,
(d) ground rent (if any), depreciation, amortization, and interest on
and capital retirement of debt,
THREE
<PAGE>
(e) operation, repair, and maintenance which is attributable solely
to the Parking Facilities, the Hotel, or any Rentable Component
other than the Building, and
(f) tenant improvements and leasing commissions.
2.05 When Services Are Not Provided Notwithstanding Section 2.03, when and
if any service which is normally provided by Landlord to some tenants
of the Building in their premises
(a) is not provided by Landlord in the Premises under the specific
terms of the Lease, in determining Occupancy Costs for Tenant,
the cost of such service (except as it relates to Common Areas
and Delivery Facilities) shall be excluded, and
(b) is not provided by Landlord in a significant portion of the
Building, in determining Occupancy Costs for Tenant, the cost of
that service shall be divided by the difference between the
Square Feet in the Building and the number of square feet in the
Building in which Landlord does not provide that service,
determined on the basis set out in Section 3.01.
2.06 Shared Facilities, Services and Utilities If any facilities, services
or utilities
(a) for the operation, repair and maintenance of the Project are
provided from another building or other buildings owned or
operated by Landlord or an affiliate of Landlord, or
(b) for the operation, repair and maintenance of another building or
other buildings owned or operated by Landlord or an affiliate of
Landlord are provided from the Project,
the net costs, charges and expenses for those facilities, services and
utilities shall, for the purpose of Section 2.03, be allocated by
Landlord between the Project and the other building or among the
Project and the other buildings on a fair and equitable basis.
2.07 Credit to Common Area and Delivery Facilities Landlord shall use its
best efforts to recover where circumstances so permit an equitable
share of the cost of operating and maintaining Common Areas and
Delivery Facilities from owners or occupants of neighboring properties
and others who benefit from the use of the Common Areas and Delivery
Facilities, and shall credit any recovery to the gross cost before
determination of Common Areas Costs and Delivery Facilities Costs.
2.08 Occupancy Adjustment If the Project is not fully leased and occupied
in any Fiscal Year, appropriate adjustments shall be made in
determining Occupancy Costs under this Section 2.00 so that Occupancy
Costs shall be as though the Project had been fully leased and
occupied during that Fiscal Year.
2.09 Reallocation If from time to time there is a material change in the
Rentable Components within the Project, Taxes, Common Areas Costs, and
Delivery Facilities Costs shall be reallocated among the Rentable
Components on a fair and equitable basis.
2.10 Partial Fiscal Year If the Term commences after the beginning of or
terminates before the end of a Fiscal Year, any amount payable by
Tenant under Section 2.02 shall be adjusted accordingly.
SECTION 3.00 DETERMINATION OF SQUARE FEET IN THE PREMISES
3.01 Office Space -- Single-Tenancy Floors For the purposes of the Lease,
the number of square feet of office space in the Premises on a single-
tenancy floor in the Building (if any) shall be calculated from
dimensioned Architect's drawings to the inside face of the glass in
the permanent exterior building walls (whether or not the glass
extends to the floor) or to the inside finish of those walls if they
contain no glass. It shall include all space within exterior building
walls except for stairs (other than stairs exclusively serving a
tenant occupying offices on more than one floor), elevator shafts,
flues, pipe shafts, vertical ducts, and other vertical risers which
penetrate the floor and their enclosing walls. No deduction shall be
made for washrooms, janitor closets, air conditioning rooms, fan
closets, or for electrical or telephone cupboards within and servicing
only that floor or servicing a single tenant on more than one floor,
or for any other rooms, corridors, or areas available to the tenant on
that floor for its use, furnishings, or personnel, or for any columns
located wholly or partially within the space, or for any enclosures
around the periphery of the Building used for the purpose of heating,
ventilating or cooling.
FOUR
<PAGE>
3.02 Office Space - Multiple-Tenancy Floors For the purposes of the Lease,
the number of square feet of office space in the Premises on a
multiple-tenancy floor in the Building (if any) shall be calculated
from dimensioned Architect's drawings to the inside finish of
permanent exterior building walls or to the inside face of the glass
as described in Section 3.01, to the face of permanent interior walls
and to the center line of demising partitions. No deductions shall be
made for any columns located wholly or partially within the space, or
for any enclosures around the periphery of the Building used for the
purpose of heating, ventilating or cooling.
SECTION 4.00 LOADING AND DELIVERY
4.01 The delivery and shipping of merchandise, supplies, fixtures, and
other materials or goods of any kind to or from the Premises and all
loading, unloading, and handling of them shall be done only at such
times, in such areas, by such means, and through such elevators,
entrances, malls, and corridors as are designated from time to time by
Landlord.
4.02 Landlord accepts no liability and is hereby relieved and released by
Tenant in respect of the operation and adequacy of the Delivery
Facilities, the acts or omissions of any person or persons engaged in
the operation of the Delivery Facilities, or in the acceptance,
holding, handling, delivery or dispatch of any goods for or on behalf
of Tenant, and any claim of Tenant by reason of damage, loss, theft,
or any acceptance, holding, handling, delivery or dispatch, or failure
of any acceptance, holding, handling, or dispatch, or any error,
negligence or delay in acceptance, holding, handling, or dispatch.
4.03 Landlord may from time to time make and amend regulations for the
orderly and efficient operation of the Delivery Facilities, and may
require the payment of reasonable and equitable charges for delivery
services and demurrage provided by Landlord.
SECTION 5.00 FISCAL YEAR
5.01 Notwithstanding Article 1.0l(g) of the Lease, "Fiscal Year" means the
calendar year unless Landlord elects, by thirty (30) days' notice to
Tenant, that Fiscal Year shall mean a twelve-month period from time to
time determined by Landlord with the concurrence of the appropriate
taxation authorities at the end of which Landlord's books are balanced
for auditing or taxation purposes.
FIVE
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EXHIBIT C
[LOGO OF BCED]
RULES AND REGULATIONS
1 Security Landlord may from time to time adopt appropriate systems and
procedures for the security or safety of the Building, any persons
occupying, using or entering the same, or any equipment, finishings or
contents thereof, and Tenant shall comply with Landlord's reasonable
requirements relative thereto.
2. Locks Landlord may from time to time install and change locking mechanisms
on entrances to the Building, common areas thereof, and the Premises, and
(unless 24 hour security is provided by the Building) shall provide to
Tenant a reasonable number of keys and replacements therefor to meet the
bona fide requirements of Tenant. In these rules "keys" include any device
serving the same purpose. Tenant shall not add to or change existing
locking mechanisms on any door in or to the Premises without Landlord's
prior written consent. If with Landlord's consent, Tenant installs lock(s)
incompatible with the Building master locking system:
(a) Landlord, without abatement of Rent, shall be relieved of any
obligation under the Lease to provide any service to the affected
areas which require access thereto,
(b) Tenant shall indemnify Landlord against any expense as a result of
forced entry thereto which may be required in an emergency, and
(c) Tenant shall at the end of the Term and at Landlord's request remove
such lock(s) at Tenant's expense.
3. Return of Keys At the end of the Term, Tenant shall promptly return to
Landlord all keys for the Building and Premises which are in possession of
Tenant.
4 Windows Tenant shall observe Landlord's rules with respect to maintaining
window coverings at all windows in the Premises so that the Building
presents a uniform exterior appearance, and shall not install any window
shades, screens, drapes, covers or other materials on or at any window in
the Premises without Landlord's prior written consent. Tenant shall ensure
that window coverings are closed on all windows in the Premises while they
are exposed to the direct rays of the sun.
5. Repair, Maintenance, Alterations and Improvements Tenant shall carry out
Tenant's repair, maintenance, alterations and improvements in the Premises
only during times agreed to in advance by Landlord and in a manner which
will not interfere with the rights of other tenants in the Building.
6. Water Fixtures Tenant shall not use water fixtures for any purpose for
which they are not intended nor shall water be wasted by tampering with
such fixtures. Any cost or damage resulting from such misuse by Tenant
shall be paid for by Tenant.
7. Personal Use of Premises The Premises shall not be used or permitted to be
used for residential, lodging or sleeping purposes or for the storage of
personal effects or property not required for business purposes.
8. Heavy Articles Tenant shall not place in or move about the Premises
without Landlord's prior written consent any safe or other heavy article
which in Landlord's reasonable opinion may damage the Building, and
Landlord may designate the location of any heavy articles in the Premises.
9. Carpet Pads
10. Bicycles, Animals Tenant shall not bring any animals or birds into the
Building, and shall not permit bicycles or other vehicles inside or on the
sidewalks outside the Building except in areas designated from time to time
by Landlord for such purposes.
ONE
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11. Deliveries Tenant shall ensure that deliveries of materials and supplies
to the Premises are made through such entrances, elevators and corridors
and at such times as may from time to time be designated by Landlord, and
shall promptly pay or cause to be paid to Landlord the cost of repairing
any damage in the Building caused by any person making such deliveries.
12 Furniture and Equipment Tenant shall ensure that furniture and equipment
being moved into or out of the Premises is moved through such entrances,
elevators and corridors and at such times as may from time to time be
designated by Landlord, and by movers or a moving company approved by
Landlord, and shall promptly pay or cause to be paid to Landlord the cost
of repairing any damage in the Building caused thereby.
13. Solicitations Landlord reserves the right to restrict or prohibit
canvassing, soliciting or peddling in the Building.
14. Food and Beverages Only persons approved from time to time by Landlord
may prepare, solicit orders for, sell, serve or distribute foods or
beverages in the Building, or use the elevators, corridors or common areas
for any such purpose. Except with Landlord's prior written consent and in
accordance with arrangements approved by Landlord, Tenant shall not permit
on the Premises the use of equipment for dispensing food or beverages or
for the preparation, solicitation of orders for, sale, serving or
distribution of food or beverages.
15. Refuse Tenant shall place all refuse in proper receptacles provided by
Tenant at its expense in the Premises or in receptacles (if any) provided
by Landlord for the Building and shall keep sidewalks and driveways outside
the Building and lobbies, corridors, stairwells, ducts and shafts of the
Building, free of all refuse.
16. Obstructions Tenant shall not obstruct or place anything in or on the
sidewalks or driveways outside the Building or in the lobbies, corridors,
stairwells or other common areas of the Building, or use such locations for
any purpose except access to and exit from the Premises without Landlord's
prior written consent. Landlord may remove at Tenant's expense any such
obstruction or thing (unauthorized by Landlord) without notice or
obligation to Tenant.
17. Dangerous or Immoral Activities Tenant shall not make any use of the
Premises which involves the danger of injury to any person, nor shall the
same be used for any immoral purpose.
18. Proper Conduct Tenant shall not conduct itself in any manner which is
inconsistent with the character of the Building or which will impair the
comfort and convenience of other tenants in the Building.
19. Employees, Agents and Invitees In these Rules and Regulations, Tenant
includes the employees, agents, invitees and licensees of Tenant and others
permitted by Tenant to use or occupy the Premises.
20. Housekeeping Tenant shall prevent paper, books, magazines, and other
obstructions from being placed on heat, ventilating and air conditioning
convectors and any other interference with the heat; ventilating and/or air
conditioning system within the Premises.
21. Energy Conservation Tenant shall make every effort to practise energy
conservation within the Premises and will cooperate with Landlord in
establishing and implementing such conservation programs as Landlord may
from time to time develop.
TWO
<PAGE>
EXHIBIT D
SUPPLEMENTAL TERMS
AND CONDITIONS
1. The following is added to Article 7.00:
7.07 During initial construction and during any subsequent remodeling of the
Premises pursuant to Minnesota Statutes Section 514.06, Landlord shall
have the right to post a notice (or notices) in conspicuous location(s)
on the Premises disclaiming any liability for payment of mechanic's
liens for construction or improvements to the Premises. Tenant hereby
covenants not to disturb such notice(s) and holds Landlord harmless
against any claim, loss, cost, demand and legal or other expense arising
from such posting.
2. The following is substituted for Article 11.01:
11.01 Assignment. Tenant, with Landlord's prior written consent, may
assign this Lease
(a) To an assignee who is a purchaser of all or substantially all of
the business of the Tenant that is conducted in the Premises, a
parent or wholly-owned subsidiary company of Tenant, a company
which results from the reconstruction, consolidation, amalgamation
or merger of Tenant, or a partnership in which Tenant (or not less
than one-half of the principals thereof) has a substantial
interest, or
(b) Subject to Article 11.03, to any other assignee who, in the
Landlord's sole opinion, meets the Landlord's requirements as set
forth in Paragraph (c) below, and who will not be inconsistent with
the character of the Building and its other tenants.
(c) Landlord's prior written consent to an assignment under any
provision of this Article may be withheld by Landlord if:
(i) Tenant is in default under this Lease on the date of the
proposed assignment;
(ii) The proposed assignee has not agreed in writing with
Landlord to observe and perform all of the obligations of
this Lease on the part of Tenant from and after the date of
any such assignment;
<PAGE>
(iii) The net worth of the proposed assignee immediately following
the proposed assignment would be less than the:
(A) net worth of the Tenant at the time of execution of this
Lease or
(B) the net worth of Tenant at the time of the proposed
assignment, whichever is greater;
(iv) The business experience, qualifications or expertise of the
assignee is deemed inadequate by Landlord under the criteria
Landlord used for evaluating the suitability and
qualifications of Tenant; or
(v) The Premises are expected or intended by the proposed
assignee to be used by the proposed assignee for some use
other than the use specified in this Lease.
3. The following is added as Article 11.07:
11.07 Additional Limitation. Notwithstanding anything contained in this
Article 11.00 to the contrary, Tenant shall not, under any
circumstances, be permitted to assign or sublet the Premises during
the first (lst) year of the Term.
4. The following is added to Article 16.00:
16.06 Demolition or Substantial Renovation. Notwithstanding anything
contained in the Lease, Landlord may terminate this Lease at any
time after twelve months prior written notice to Tenant if, at the
time of the notice, it is Landlord's intention to demolish.
5. The following is added as Article 21.00:
ARTICLE 21.00 BANKRUPTCY
(a) In the event a petition is filed by or against Tenant under the
Bankruptcy Code, Tenant, as debtor and debtor in possession, and
any trustee who may be appointed, agree to adequately protect
Landlord as follows:
(i) to pay monthly in advance on the first day of each month as
reasonable compensation for use and occupancy of the
Premises an amount equal to all Rent due pursuant to this
Lease; and
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<PAGE>
(ii) to perform each and every obligation of Tenant under this
Lease until such time as this Lease is either rejected or
assumed by order of a court of competent jurisdiction; and
(iii) to determine within sixty (60) days after the filing of such
petition whether to assume or reject this Lease; and
(iv) to give Landlord at least thirty (30) days prior written
notice, unless a shorter notice period is agreed to in
writing by the parties, or any proceeding relating to any
assumption of this Lease; and
(v) to give Landlord at least thirty (30) days prior written
notice of any vacation or abandonment (including any
vacation or abandonment specifically described in Article
19.03 (e)) of the Premises, any such vacation or abandonment
to be deemed a rejection of this Lease; and
(vi) to do all things of benefit to Landlord otherwise required
under the Bankruptcy Code. Tenant shall be deemed to have
reject this Lease in the event of the failure to comply with
any of the above.
(b) If Tenant or a trustee elects to assume this Lease subsequent to
the filing or a petition under the Bankruptcy Code, Tenant, as
debtor and as debtor in possession, and any trustee who may be
appointed agree as follows:
(i) to cure each and every existing breach by Tenant within not
more than ninety (90) days of assumption of this Lease; and
(ii) to compensate Landlord for any actual pecuniary loss
resulting from any existing breach, including without
limitation, Landlord's reasonable costs, expenses and
attorneys' fees incurred as a result of the breach, as
determined by a court of competent jurisdiction, within (90)
days of assumption of this Lease; and
(iii) in the event of an existing breach, to provide adequate
assurance of Tenant's future performance, including without
limitation
(A) the deposit of an additional sum equal to three months'
Rent to be held (without any
-3-
<PAGE>
allowance for interest thereon) to secure Tenant's
obligations under the Lease; and
(B) the production to Landlord of written documentation
establishing that Tenant has sufficient present and
anticipated financial ability to perform each and every
obligation of Tenant under this Lease; and
(C) assurances, in form acceptable to Landlord, as may be
required under any applicable provision of the
Bankruptcy Code; and
(iv) the assumption will not breach any provision of this Lease;
and
(v) the assumption will be subject to all of the provisions of
this Lease unless the prior written consent of Landlord is
obtained; and
(vi) the prior written consent to the assumption of any Mortgagee
or ground lessor to which this Lease has been assigned as
collateral security is obtained.
(c) If Tenant assumes this lease and proposes to assign the same
pursuant to the provisions of the Bankruptcy Code to any person or
entity who shall have made a bona fide offer to accept and
assignment of this lease on terms acceptable to Tenant, then notice
of such proposed assignment, setting forth
(i) the name and address of such person,
(ii) all the terms and conditions of such offer, and
(iii) the adequate assurance to be provided to Landlord to assure
such person's future performance under the lease, including,
without limitation, the assurances referred to in any
applicable provision of the Bankruptcy Code, shall be given
to Landlord by Tenant no later than twenty (20) days after
receipt by Tenant, but in any event no later than ten (10)
days prior to the date that Tenant shall make application to
a court of competent jurisdiction for authority and approval
to enter into such assignment and assumption, and Landlord
shall thereupon have the prior right and option, to be
exercised by notice to Tenant given at any time prior to the
effective date of such proposed assignment, to accept an
assignment of this Lease upon the same terms and conditions
and for the
-4-
<PAGE>
same consideration, if any, as the bona fide offer made by
such person, less any brokerage commissions which may be
payable out of the consideration to be paid by such person
for the assignment of this Lease. The adequate assurance to
be provided Landlord to assure the assignee's future
performance under the Lease shall include without
limitation:
(A) the deposit of a sum equal to three months' Rent to be
held (without any allowance for interest thereon) as
security for performance hereunder; and
(B) a written demonstration that the assignee meets all
reasonable financial and other criteria of Landlord as
did Tenant and its business at the time of execution of
this Lease, including the production of the most recent
audited financial statement of the assignee prepared by
a certified public accountant; and
(C) the assignee's use of the Premises will be in compliance
with the terms of Article 5.00 of this Lease; and
(D) assurances, in form acceptable to Landlord, as to all
matters identified in any applicable provision of the
Bankruptcy Code.
(d) Neither Tenant nor any trustee who may be appointed in the event of
the filing of a petition under the Bankruptcy Code shall conduct or
permit the conduct of any "fire", "bankruptcy", "going out of
business" or auction sale in or from the Premises.
6. The following is added as Article 22.00:
Moving Allowance. Landlord shall reimburse Tenant for the cost of moving
Tenant's furniture to the 45th floor. Landlord shall also provide an
allowance to Tenant in the amount of $3,811.00 (Moving Allowance) which
shall be applied as a credit to Annual Rent first coming due hereunder.
7. The following is added as Article 23.00:
Leasehold Improvements. Landlord shall complete the Premises in
substantial accordance with the plans approved by Landlord and Tenant
dated June 20, 1991 and attached as
-5-
<PAGE>
Exhibit D-1. Tenant shall be responsible for all costs for any changes
to the plan and for all work not described in the plan desired by Tenant
if necessary to complete the Premises for occupancy.
8. The following is added as Article 24.00:
Death or Incapacitation. Tenant (or his or her representative) may
terminate this Lease, if
(a) Sankey A. Johnson dies or becomes permanently incapable of
performing his business responsibilities, and
(b) Tenant (or his or her representative) gives not less than six (6)
months prior notice of termination, and
(c) Tenant (or his or her representative) has paid to all amounts owing
under this Lease as of the date of termination, and
(d) Tenant (or his or her representative) pays to Landlord on or before
the date of termination an amount equal to the unamortized
leasehold improvements and moving costs.
For purposes of this Lease, "Incapacitation" shall be defined to mean:
(i) Sankey A. Johnson is medically unable to conduct the business for a
continuous one-hundred-eighty day period, and
(ii) Sankey A. Johnson has not physically entered the Premises to
conduct business for a continuous one-hundred-eighty-day period.
Notwithstanding the foregoing, Tenant shall be responsible for all
matters accruing prior to the termination date described in
subparagraphs (a) through (d) of this Article 24.00.
The rights set forth in this Article 24.00 apply to Sankey A. Johnson
only and may not be severed from this Lease or separately sold,
assigned, or otherwise transferred, and shall expire on the expiration
or earlier termination of this Lease.
9. The following is added as Article 25.00:
Right of First Offer Landlord shall give Tenant written notice (the
"Notice") of the availability of space ("Offer
-6-
<PAGE>
Space") as outlined on Exhibit A on the 45th floor of the Building
before Landlord leases the Offer Space to a third party unless the third
party lease is on a month-to-month basis. The Notice shall set out the
Annual Rent for that Offer Space and Tenant shall have the right to
lease the Offer Space under the terms and conditions set out in this
Article 25.00, if
(a) Tenant is not in default under this Lease, and
(b) Tenant delivers to Landlord written notice exercising its right to
lease the Offer Space within five (5) days of receipt of Landlord's
notice.
25.02 Terms A lease of space under this Article 25.00 shall contain the
following:
(a) Annual Rent shall be equal to the amount set out in Landlord's
notice of availability of that Offer Space:
(i) If Tenant leases the Offer Space for a term commencing prior
to May 1, 1992, the Annual Rent shall be equal to the same
rate per square foot as outlined in Article 4.01 of this
Lease.
(b) Occupancy Costs shall be determined in the manner set out in
Landlord's then-current standard form of lease for the Building,
(c) Commencement Date for the lease of Offer Space shall be the earlier
of:
(i) the date improvements, if any, are completed in the Offer
Space or
(ii) the date Tenant occupies the Offer Space or
(iii) 30 days after Tenant has exercised its right to lease the
Offer Space.
(d) Term shall end on the expiration or earlier termination of this
Lease;
(e) The other terms and conditions shall be as set out in this Lease.
25.03 Limitation Notwithstanding anything contained in this Article
25.00 to the contrary, Landlord shall have the right to lease the
Offer Space on the 45th floor of the Building to a third party
provided the term shall only be on a month-to-month basis for any
period prior to
-7-
<PAGE>
April 30, 1992. Commencing May 1, 1992 and continuing thereafter
during the Term of this Lease, Landlord shall have the right to
lease the Offer Space to third parties provided however any future
leases to a third party is on a month-to-month basis or shall
contain language giving Landlord the right, upon reasonable notice,
to relocate said third party to different premises in the Building.
25.04 Additional Offer Space If at any time during the Term of this
Lease, James Binger vacates suite 4522 ("Additional Offer Space"),
the Additional Offer Space shall become part of Offer Space and
subject to the terms and conditions of this Article 25.00.
25.05 Documentation Within 15 days of receipt from Landlord, Tenant
shall execute and deliver appropriate documentation to evidence any
lease of space under this Article 25.00.
25.06 Non-Severability The rights of Tenant under this Article 25.00
shall not be severed from this Lease or separately sold, assigned,
or otherwise transferred, and shall expire on the expiration or
earlier termination of this Lease.
10. The following is added as Article 26.00:
Tenant's Termination Right Provided Tenant is not in default under
the Lease, Tenant shall have the right to terminate this Lease
effective July 31, 1994 ("Termination Date") if:
a) Tenant gives written notice to Landlord that it is exercising
that right no later than December 31, 1993; and b) Tenant or
its partners do not lease other office space in downtown
Minneapolis; during the remainder of the Term; and
c) Tenant pays to Landlord on or before the Termination Date, an
amount equal to the unamortized leasehold improvement and
moving costs.
If Tenant so terminates this Lease, Tenant shall surrender the
Lease and deliver vacant possession of the Premises to Landlord on
the Termination Date and all amounts due and payable from Tenant to
Landlord, if not payable earlier shall become due and payable from
-8-
<PAGE>
Tenant to Landlord on the Termination Date. Tenant shall execute
and deliver to Landlord those instruments which Landlord may
reasonably require to evidence surrender of this Lease within
fifteen (15) days after receipt of those documents by Tenant.
11. The following is added as Article 27.00:
ARTICLE 27.00 EXTENSION OF TERM
27.01 Grant. Landlord hereby grants to Tenant the option to extend the
Term of the Lease upon the terms and conditions set forth in this
Article 27.00 if:
a) Tenant is not in default under this Lease at the time such
option is exercised or at the commencement of the extended
Term;
b) Tenant delivers to Landlord, not later than July 31, 1995
written notice exercising its option to extend the Term. If
Tenant fails to give such notice, Tenant shall have waived its
right to extend the Term and the option to extend the Term
shall thereupon terminate. Landlord shall not have any
obligation to inform Tenant of the date on which such option
expires;
27.02 Terms. With respect to the extended Term:
a) Annual Rent shall be equal to Market Rent as of the
Commencement of the Extended Term but in no event less than the
amount per square foot as outlined in Article 4.01 of this
Lease.
b) The extended Term shall be five (5) years with no further right
of renewal.
c) The other terms and conditions of the renewal lease shall be as
set out in Landlord's then current standard form of lease for
the Building.
27.03 Documentation. Landlord and Tenant shall execute and deliver
appropriate documentation to evidence extension of the Term and the
terms and conditions of the renewal lease.
27.04 Non-Severability. The rights of Tenant under this Article 27.00
shall not be severed from this Lease or separately sold, assigned,
or otherwise transferred and shall expire on the expiration or
earlier termination of this Lease.
-9-
<PAGE>
11. The following is added as Article 28.00:
ARTICLE 28.00 MARKET RENT
28.01 Definition. "Market Rent" means the amount of cash (exclusive of
Occupancy Costs) which landlord would receive annually by then
renting the space in question assuming the landlord to be a prudent
person willing to lease but being under no compulsion to do so,
assuming a lease term equal to the term in questions, and assuming
a lease containing the same terms and provisions as those contained
in this Lease.
28.02 Determination of Market Rent. Whenever Annual Rent under this Lease
is based on the Market Rent, Landlord shall initially determine the
Market Rent and shall thereupon give Tenant notice of determination
of that amount. Upon receipt of that notice, Tenant shall pay the
Annual Rent stated in that notice in the manner set out in Article
4.01.
28.03 Disagreement on Market Rent.
(a) If Tenant does not agree with the Landlord's determination of
Market Rent, Tenant shall nevertheless pay to Landlord the
amount set out in the notice Landlord gives under Article
28.02 and Tenant shall give notice to Landlord of that
disagreement and Tenant's determination of Market Rent within
10 days of receipt of that notice from Landlord.
(b) If Tenant gives Landlord notice of disagreement, Landlord
shall immediately refer the matter to an individual (the
"Expert") approved by Tenant, who shall be deemed to be acting
as an expert and not as an arbitrator. The Expert shall make a
determination of Market Rent as expeditiously as possible.
(c) If the Market Rent as determined by the Expert is greater than
the Tenant has paid in accordance with the notice given under
Article 28.02, Tenant shall immediately pay to Landlord the
difference and shall after that make the payments of Annual
Rent as determined by the Expert. If the Market Rate as
determined by the Expert is less than Tenant has paid in
accordance with the notice given under Article 28.02, Landlord
shall immediately pay to Tenant the difference and
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<PAGE>
Tenant shall after that make the payments of Annual Rent as
determined by the Expert.
(d) If the Market Rent as determined by the Expert is less than
95% of the amount set out in the notice under Article 28.02,
Landlord shall bear the costs and reasonable expenses of the
Expert. If the Market Rent as determined by the Expert is 95%
or more of the amount set out in the notice under Article
28.02, Tenant shall bear the costs and reasonable expenses of
the Expert.
12. The following is added as Article 29.00:
Commission: Landlord agrees to pay Jensen, Durfee & Associates upon
execution of this Lease by Landlord and Tenant, an amount equal to
$11,433.00 as and for the commission associated with this Lease.
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<PAGE>
EXHIBIT D1
[FLOOR PLAN]
HIDDEN CREEK
[LOGO IDS CENTER]
<PAGE>
[FLOOR PLAN]
HIDDEN CREEK
<PAGE>
Exhibit 10.26
AMENDMENT AND RENEWAL OF LEASE
THIS AMENDMENT AND RENEWAL OF LEASE is made as of the 30th day of April, 1993,
by and between Eighth Street Tower Corporation, a Minnesota nonprofit
corporation, successor in interest to 80 South Eighth Street Limited Partnership
("Landlord") and Hidden Creek Industries, a New York partnership ("Tenant").
R E C I T A L S:
- - - - - - - -
A. Landlord and Tenant entered into a certain Lease of Office Space
dated June 14, 1991 as amended by this Amendment and Renewal of Lease
(collectively, the "Lease") covering certain Premises on the 45th floor of the
IDS Center located at 80 South Eighth Street, Minneapolis, Minnesota.
B. Landlord and Tenant desire to amend the Lease as of November 1,
1993 upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein and in the Lease contained, it is hereby agreed as follows:
1. DEFINED TERMS. Each capitalized term used as a defined term in this
Amendment and Renewal of Lease but not otherwise defined in this Amendment and
Renewal of Lease shall have the same meaning ascribed to such term in the Lease.
2. Article 1.01(k) of the Lease is amended to read as follows:
"Premises" means 4,475 rentable square feet, more or less on the
45th floor of the Building as generally indicated on Exhibit A, attached hereto
and made a part hereof. It is understood that the Premises shall be comprised of
3,811 rentable square feet of space as defined in Article 1.01(k) of the Lease
dated June 14, 1991 plus 664 rentable square feet of additional space for a
total of 4,475 rentable square feet.
3. Article 3.01 of the Lease is amended to read as follows:
Notwithstanding anything to the contrary contained in the Lease,
the Term of this Lease shall commence on August 1, 1991 and shall end on July
31, 1999, unless terminated earlier as provided in this Lease.
4. The following is added to the end of Article 4.01:
From and after November 1, 1993, Tenant shall pay the following
amounts of Annual Rent to Landlord in Lieu of the amounts set forth in the
preceding sentence of this Article 4.01 of the Lease.
(i) For the period from November 1, 1993 through July 31, 1996,
the sum of $40,275.00 in monthly installments of $3,356.25;
and
(ii) For the period from August 1, 1996 through July 31, 1999, the
sum of $23,991.72 in monthly installments of $1,999.31;
1
<PAGE>
Payable monthly at the times and in the manner as set forth in the
preceding sentence of this Article 4.01.
5. CONDITION OF THE ADDITIONAL PREMISES; IMPROVEMENT ALLOWANCE. On
November 1, 1993, Landlord shall deliver the Premises to Tenant in substantial
conformance with the Work Letter Agreement attached hereto as Exhibit 2.
6. BROKER. Tenant represents that except for Heitman Minnesota
Management, Inc. ("Heitman"), Tenant has not retained, contracted or otherwise
dealt with any real estate broker, salesperson or finder in connection with this
Amendment and Renewal of Lease, and no such person initiated or participated in
the negotiation of this Amendment and Renewal of Lease. Tenant shall indemnify
and hold Landlord and Heitman harmless from and against any and all liabilities
and claims for commissions and fees arising out of a breach of the foregoing
representation.
7. CONFLICT. If any conflict exists between the terms or provisions of
the Lease and the terms or provisions of this Amendment and Renewal of Lease,
the terms and provisions of this Amendment and Renewal of Lease shall govern and
control.
8. EFFECT OF AMENDMENT. As amended by the Amendment and Renewal of
Lease, the Lease shall remain in full force and effect and is ratified by
Landlord and Tenant. This Amendment and Renewal of Lease contains the entire
agreement of the parties with respect to the Additional Premises, and all
preliminary negotiations with respect thereto are merged into and superseded by
this Amendment and Renewal of Lease.
9. SUBMISSION OF INSTRUMENT. The submission of this Amendment and
Renewal of Lease by Landlord to Tenant or its broker or other agent does not
constitute an offer to Tenant to lease the Premises. This Amendment and Renewal
of Lease shall have no force and effect until it is executed and delivered by
Tenant to Landlord and executed by Landlord; provided, however, that upon
execution of this Amendment and Renewal of Lease by Tenant and delivery to
Landlord, such execution and delivery by Tenant shall, in consideration of the
time and expense incurred by Landlord in reviewing the Amendment and Renewal of
Lease, Tenant's credit and proposed use of the Premises, constitute an offer by
Tenant to lease the Premises upon the terms and conditions set forth herein
(which offer to lease shall be irrevocable for twenty (20) business days
following the date of delivery).
10. LANDLORD'S LEASE UNDERTAKING-EXCULPATION FROM PERSONAL
LIABILITY; TRANSFER OF LANDLORD'S INTEREST.
(a) Landlord's Lease Undertakings. Notwithstanding anything to the
contrary contained in this Amendment and Renewal of Lease or in any exhibits,
Riders or addenda thereto attached (collectively the "Lease Documents"), it is
expressly understood and agreed by and between the parties hereto that: (a) the
recourse of Tenant or its successors or assigns against Landlord with respect to
the alleged breach by or on the part of Landlord of any representation,
warranty, covenant, undertaking or agreement contained in any of the Lease
Documents (collectively, "Landlord's Lease Undertakings") shall extend only to
Landlord's interest in the real estate of which the Premises demised under the
Lease Documents are a part ("Landlord's Real Estate") and not to any other
assets of Landlord or its officers, directors or shareholders; and (b) except to
the extent of Landlord's interest in Landlord's Real Estate, no personal
liability or personal responsibility of any sort with respect to any of
Landlord's Lease Undertakings or any alleged breach thereof is assumed by, or
shall at
2
<PAGE>
any time be asserted or enforceable against, Landlord, Heitman Advisory
Corporation, Heitman Properties Ltd. or Heitman Minnesota Management Inc., or
against any of their respective directors, officers, shareholders, employees,
agents, constituent partners, trustees, beneficiaries or representatives.
(b) Transfer of Landlord's Interest. Landlord and each successor to
Landlord shall be fully released from the performance of Landlord's obligations
subsequent to their transfer of Landlord's interest in the Building. Landlord
shall not be liable for any obligation hereunder after a transfer of its
interest in the Building.
11. Article 26.00 of the Lease is deleted in its entirety.
12. The date of July 31, 1995 contained in Article 27.01(a) of the
Lease is changed to July 1, 1998
13. ASBESTOS. Tenant acknowledges that it has been expressly disclosed
to Tenant by Landlord's Managing Agent that the Building and the Premises
contain asbesto-containing materials ("ACM"). The acknowledgement by Tenant of
the ACM does not in any manner impose any liability or responsibility on Tenant
for removal, treatment or abatement of such ACM or any responsibility whatsoever
regarding such ACM; provided, however, that Tenant shall comply with all
applicable laws and regulations in connection with any work in the Premises
which requires entry into the ceiling.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Renewal of Lease to be duly executed and delivered as of the day and year first
written above.
TENANT: LANDLORD:
HIDDEN CREEK INDUSTRIES, EIGHTH STREET TOWER CORPORATION,
a New York partnership a Minnesota nonprofit Corporation
By: /s/ Mary L. Johnson By: /s/ Dwight P. Fawcett
----------------------------- -----------------------------
Its: Mgr, Admin. Its: Vice President
---------------------------- -----------------------------
3
<PAGE>
EXHIBIT A
---------
[FLOOR PLAN 45TH FLOOR]
<PAGE>
EXHIBIT 2
WORK LETTER AGREEMENT
---------------------
[Landlord Performs Work)
[Turn Key]
This Work Letter Agreement ("Work Letter") is executed simultaneously with
that certain Amendment and Renewal of Lease (as used herein, "Lease" is defined
in and inclusive of Paragraph A of said Amendment and Renewal of Lease) between
HIDDEN CREEK INDUSTRIES, a New York partnership, as "Tenant", and EIGHTH STREET
TOWER CORPORATION, a Minnesota nonprofit corporation, as "Landlord", relating to
demised premises ("Premises") at the building commonly known as IDS TOWER,
Minneapolis, Minnesota (the "Building"), which Premises are more fully
identified in the Lease. Capitalized terms used herein, unless otherwise defined
in this Work Letter, shall have the respective meanings ascribed to them in the
Lease.
For and in consideration of the agreement to lease the Premises and
the mutual covenants contained herein and in the Lease, Landlord and Tenant
hereby agree as follows:
1. Tenant's Initial Plans; the Work. Tenant desires Landlord to
perform certain leasehold improvement work in the Premises in substantial
accordance with the plan or plans (collectively, the "Initial Plan") prepared by
RSP Architects dated April 30, 1993, a copy or copies of which is/are attached
hereto as Schedule 1. Such work, as shown in the Initial Plan and as more fully
detailed in the Working Drawings (as defined and described in Paragraph 2
below), shall be hereinafter referred to as the "Work". All plans, drawings,
specifications and other details describing the Work which have been or are
hereafter furnished by or on behalf of Tenant shall be subject to Landlord's
approval, which Landlord agrees shall not be unreasonably withheld. Landlord
shall not be deemed to have acted unreasonably if it withholds its approval of
any plans, specifications, drawings or other details or of any Additional Work
(as defined in Paragraph 7 below) because, in Landlord's reasonable opinion, the
work, as described in any such item, or the Additional Work, as the case may be:
(a) is likely to adversely affect Building systems, the structure of the
Building or the safety of the Building and/or its occupants; (b) might impair
Landlord's ability to furnish services to Tenant or other tenants in the
Building; (c) would increase the cost of operating the Building; (d) would
violate any governmental laws, rules or ordinances (or interpretations thereof);
(e) contains or uses hazardous or toxic materials or substances; (f) would
adversely affect the appearance of the Building; (g) might adversely affect
another tenant's premises; (h) is prohibited by any ground lease affecting the
Building or any mortgage, trust deed or other instrument encumbering the
Building; or (i) is likely to be substantially delayed because of unavailability
or shortage of labor or materials necessary to perform such work or the
difficulties or unusual nature of such work. The foregoing reasons, however,
shall not be the only reasons for which Landlord may withhold its approval,
whether or not such other reasons are similar or dissimilar to the foregoing.
Neither the approval by Landlord of the Work or the Initial Plan or any other
plans, drawings, specifications or other items associated with the Work nor
Landlord's performance, supervision or monitoring of the Work shall constitute
any warranty by Landlord to Tenant of the adequacy of the design for Tenant's
intended use of the Premises.
2. Working Drawings. If necessary for the performance of the Work and
not included as part of the Initial Plan attached hereto, Landlord shall prepare
or cause to be prepared final working drawings and specifications for the Work
(the "Working Drawings") based on and consistent with the Initial Plan and the
other plans, drawings, specifications, finish details and other information
furnished by Tenant to Landlord and approved by Landlord pursuant to Paragraph 1
above. So long as the Working Drawings are consistent with the Initial Plan,
Tenant shall approve the Working Drawings within three (3) days after receipt of
same from Landlord by initialing and returning to Landlord each sheet of the
Working Drawings or by executing Landlord's approval form then in use, whichever
method of approval Landlord may designate.
EXHIBIT 2
---------
-1- 05/18/92
<PAGE>
3. Performance of the Work. Landlord, at its expense, shall cause the
Work to be performed using building standard materials, quantities and
procedures then in use by Landlord ("Building Standards"), except as may be
stated or shown otherwise in the Working Drawings.
4. Authorization to Proceed. Landlord may proceed with the Work at any
time after the execution of this Work Letter and the completion of the Working
Drawings, if applicable; provided, however, that Landlord, at its option, may
request Tenant to execute and deliver to Landlord a separate written
authorization (in the form then in use by Landlord) to proceed with the Work, in
which event Tenant shall execute and deliver such written authorization within
three (3) days after Landlord's request therefor, and, at Landlord's option, no
Work shall be commenced until Tenant has executed and delivered to Landlord such
authorization.
5. Substantial Completion. Landlord shall cause the Work to be
"substantially completed" on or before the scheduled date of commencement of the
term of the Lease as specified in Section 1.05 of the Lease, subject to delays
caused by strikes, lockouts, boycotts or other labor problems, casualties,
discontinuance of any utility or other service required for performance of the
Work, unavailability or shortages of materials or other problems in obtaining
materials necessary for performance of the Work or any other matter beyond the
control of Landlord (or beyond the control of Landlord's contractors or
subcontractors performing the Work) and also subject to "Tenant Delays" (as
defined and described in Paragraph 6 of this Work Letter). The Work shall be
deemed to be "substantially completed" for all purposes under this Work Letter
and the Lease if and when Landlord's architect issues a written certificate to
Landlord and Tenant, certifying that the Work has been substantially completed
(i.e., completed except for "punchlist" items listed in such architect's
certificate) in substantial compliance with the Working Drawings, or when Tenant
first takes occupancy of the Premises, whichever first occurs. If the Work is
not deemed to be substantially completed on or before the scheduled date of the
commencement of the term of the Lease as specified in Section 1.05 of the Lease,
(a) Landlord agrees to use reasonable efforts to complete the Work as soon as
practicable thereafter, (b) the Lease shall remain in full force and effect, (c)
Landlord shall not be deemed to be in breach or default of the Lease or this
Work Letter as a result thereof and Landlord shall have no liability to Tenant
as a result of any delay in occupancy (whether for damages, abatement of Rent or
otherwise), and (d) except in the event of Tenant Delays, and notwithstanding
anything contained in the Lease to the contrary, the Commencement Date of the
Lease Term as specified in Section 1.05 of the Lease shall be extended to the
date on which the Work is deemed to be substantially completed and the
Expiration Date of the Lease Term as specified in Section 1.06 of the Lease
shall be extended by an equal number of days. At the request of either Landlord
or Tenant in the event of such extensions in the commencement and expiration
dates of the term of the Lease, Tenant and Landlord shall execute and deliver an
amendment to the Lease reflecting such extensions. Landlord agrees to use
reasonable diligence to complete all punchlist work listed in the aforesaid
architect's certificate promptly after substantial completion.
6. Tenant Delays. There shall be no extension of the scheduled
commencement or expiration date of the term of the Lease (as otherwise
permissibly extended under Paragraph 5 above) if the Work has not been
substantially completed on said scheduled commencement date by reason of any
delay attributable to Tenant ("Tenant Delays"), including without limitation:
(i) the failure of Tenant to furnish all or any plans, drawings,
specifications, finish details or the other information required under Paragraph
1 above on or before the date stated in Paragraph l;
(ii) the failure of Tenant to grant approval of the Working
Drawings within the time required under Paragraph 2 above;
(iii) the failure of Tenant to comply with the requirements of
Paragraph 4 above;
EXHIBIT 2
---------
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<PAGE>
(iv) Tenant's requirements for special work or materials,
finishes, or installations other than the Building Standards or Tenant's
requirement for special construction staging or phasing;
(v) the performance of any Additional Work (as defined in
Paragraph 7 below) requested by Tenant or the performance of any work in the
Premises by any person, firm or corporation employed by or on behalf of Tenant,
or any failure to complete or delay in completion of such work; or
(vi) any other act or omission of Tenant.
7. Additional Work. Upon Tenant's request and submission by Tenant (at
Tenant's sole cost and expense) of the necessary information and/or plans and
specifications for work other than the Work described in the Working Drawings
("Additional Work") and the approval by Landlord of such Additional Work, which
approval Landlord agrees shall not be unreasonably withheld, Landlord shall
perform such Additional Work, at Tenant's sole cost and expense, subject,
however, to the following provisions of this Paragraph 7. Prior to commencing
any Additional Work requested by Tenant, Landlord shall submit to Tenant a
written statement of the cost of such Additional Work, which cost shall include
a fee payable to Landlord in the amount of 15% of the total cost of such
Additional Work as compensation to Landlord for monitoring the Additional Work
and for administration, overhead and field supervision associated with the
Additional Work and an additional charge payable to Landlord in the amount of 5%
of the total Cost of the Work as compensation for Landlord's general conditions
(such fee and additional charge being hereinafter referred to collectively as
"Landlord's Additional Compensation"), and, concurrently with such statement of
cost, Landlord shall also submit to Tenant a proposed tenant extra order (the
"TEO") for the Additional Work in the standard form then in use by Landlord.
Tenant shall execute and deliver to Landlord such TEO and shall pay to Landlord
the entire cost of the Additional Work, including Landlord's Additional
Compensation (as reflected in Landlord's statement of such cost), within five
(5) days after Landlord's submission of such statement and TEO to Tenant. If
Tenant fails to execute or deliver such TEO or pay the entire cost of such
Additional Work within such 5-day period, then Landlord shall not be obligated
to do any of the Additional Work and may proceed to do only the Work, as
specified in the Working Drawings.
8. Tenant Access. Landlord, in Landlord's reasonable discretion and
upon request by Tenant, may grant to Tenant a license to have access to the
Premises prior to the date designated in the Lease for the commencement of the
term of the Lease to allow Tenant to do other work required by Tenant to make
the Premises ready for Tenant's use and occupancy (the "Tenant's Pre-Occupancy
Work"). It shall be a condition to the grant by Landlord and continued
effectiveness of such license that:
(a) Tenant shall give to Landlord a written request to have such
access to the Premises not less than five (5) days prior to the date on which
such access will commence, which written request shall contain or shall be
accompanied by each of the following items, all in form and substance reasonably
acceptable to Landlord: (i) a detailed description of and schedule for Tenant's
Pre-Occupancy Work; (ii) the names and addresses of all contractors,
subcontractors and material suppliers and all other representatives of Tenant
who or which will be entering the Premises on behalf of Tenant to perform
Tenant's Pre-Occupancy Work or will be supplying materials for such work, and
the approximate number of individuals, itemized by trade, who will be present in
the Premises; (iii) copies of all contracts, subcontracts and material purchase
orders pertaining to Tenant's Pre-Occupancy Work; (iv) copies of all plans and
specifications pertaining to Tenant's Pre-Occupancy Work; (v) copies of all
licenses and permits required in connection with the performance of Tenant's
Pre-Occupancy Work; (vi) certificates of insurance (in amounts satisfactory to
Landlord and with the parties identified in, or required by, the Lease named as
additional insureds) and instruments of indemnification against all claims,
costs, expenses, damages and liabilities which may arise in connection with
Tenant's Pre-Occupancy Work; and (vii) assurances of the ability of Tenant to
pay for all of Tenant's Pre-Occupancy Work and/or a letter of credit or other
security deemed appropriate by Landlord securing Tenant's lien-free completion
of Tenant's Pre-Occupancy Work.
EXHIBIT 2
---------
-3- 5/18/92
<PAGE>
(b) Such pre-term access by Tenant and its representatives shall
be subject to scheduling by Landlord.
(c) Tenant's employees, agents, contractors, workmen, mechanics,
suppliers and invitees shall work in harmony and not interfere with Landlord or
Landlord's agents in performing the Work and any Additional Work in the
Premises, Landlord's work in other premises and in common areas of the Building,
or the general operation of the Building. If at any time any such person
representing Tenant shall cause or threaten to cause such disharmony or
interference, including labor disharmony, and Tenant fails to immediately
institute and maintain such corrective actions as directed by Landlord, then
Landlord may withdraw such license upon twenty-four (24) hours' prior written
notice to Tenant.
(d) Any such entry into and occupancy of the Premises by Tenant or
any person or entity working for or on behalf of Tenant shall be deemed to be
subject to all of the terms, covenants, conditions and provisions of the Lease,
specifically including the provisions of Section X thereof (regarding Tenant's
improvements and alterations to the Premises), and excluding only the covenant
to pay Rent. Landlord shall not be liable for any injury, loss or damage which
may occur to any of Tenant's Pre-Occupancy Work made in or about the Premises or
to property placed therein prior to the commencement of the term of the Lease,
the same being at Tenant's sole risk and liability. Tenant shall be liable to
Landlord for any damage to the Premises or to any portion of the Work or
Additional Work caused by Tenant or any of Tenant's employees, agents,
contractors, workmen or suppliers. In the event that the performance of Tenant's
Pre-Occupancy Work causes extra costs to Landlord or requires the use of
elevators during hours other than 6:00 a.m. to 6:00 p.m. on Monday through
Friday (excluding holidays) or of other Building services, Tenant shall
reimburse Landlord for such extra cost and/or shall pay Landlord for such
elevator service or other Building services at Landlord's standard rates then in
effect.
9. LEASE PROVISIONS. The terms and provisions of the Lease, insofar
as they are applicable to this Work Letter, are hereby incorporated herein by
reference. All amounts payable by Tenant to Landlord hereunder shall be deemed
to be additional Rent under the Lease and, upon any default in the payment of
same, Landlord shall have all of the rights and remedies provided for in the
Lease.
10. MISCELLANEOUS.
(a) This Work Letter shall be governed by the laws of the state in
which the Premises are located.
(b) This Work Letter may not be amended except by a written instrument
signed by the party or parties to be bound thereby.
(c) Any person signing this Work Letter on behalf of Tenant warrants
and represents he/she has authority to sign and deliver this Work Letter and
bind Tenant.
(d) Notices under this Work Letter shall be given in the same manner
as under the Lease.
(e) The headings set forth herein are for convenience only.
(f) This Work Letter sets forth the entire agreement of Tenant and
Landlord regarding the Work.
(g) In the event that the final working drawings and specifications
are included as part of the Initial Plan attached hereto, or in the event
Landlord performs the Work without the necessity of preparing working drawings
and specifications, then whenever the term "Working Drawings" is used in this
Agreement, such term shall be deemed to refer to the Initial Plan and all
supplemental plans and specifications approved by Landlord.
11. Exculpation of Landlord and Heitman. Notwithstanding anything to
the contrary contained in this Work Letter, it is expressly understood and
agreed by and between the parties hereto that:
EXHIBIT 2
---------
-4- 05/18/92
<PAGE>
(a) The recourse of Tenant or its successors or assigns against
Landlord with respect to the alleged breach by or on the part of Landlord of any
representation, warranty, covenant, undertaking or agreement contained in this
Work Letter or the Lease (collectively, "Landlord's Work Letter Undertakings")
shall extend only to Landlord's interest in the real estate, of which the
Premises demised under the Lease Documents are a part (hereinafter, "Landlord's
Real Estate") and not to any other assets of Landlord or its officers, directors
or shareholders; and
(b) Except to the extent of Landlord's interest in Landlord's Real
Estate, no personal liability or personal responsibility of any sort with
respect to any of Landlord's Work Letter Undertakings or any alleged breach
thereof is assumed by, or shall at any time be asserted or enforceable against,
Landlord, Heitman Advisory Corporation, Heitman Properties Ltd., or Heitman
Minnesota Management Inc., or against any of their respective directors,
officers, shareholders, employees, agents, constituent partners, beneficiaries,
trustees or representatives.
IN WITNESS WHEREOF, this Work Letter Agreement is executed as of the
21st day of September, 1993.
TENANT: LANDLORD:
- ------ --------
HIDDEN CREEK INDUSTRIES, EIGHTH STREET TOWER
- --------------------------------- CORPORATION, a Minnesota nonprofit
a New York partnership corporation
- ---------------------------------
By: /s/ Mary L. Johnson By: /s/ Dwight P. Fawcett
------------------------------ ------------------------------------
Title: Mgr., Admin. Title: VICE PRESIDENT
--------------------------- ---------------------------------
EXHIBIT 2
---------
-5- 05/18/92
<PAGE>
[Floor Plan]
[LOGO RSP]
==============================================================================
PROJECT: HIDDEN CREEK INDUSTRIES - EXPANSION SHEET NO.
IDS CENTER - 45TH FLOOR A1
DATE 24 JUNE 1993
PROJECT NO. 6187.981.14.1
==============================================================================
<PAGE>
[Floor Plan]
[LOGO RSP]
==============================================================================
PROJECT: HIDDEN CREEK INDUSTRIES - EXPANSION SHEET NO.
IDS CENTER - 45TH FLOOR A2
DATE 24 JUNE 1993
PROJECT NO. 6187.981.14.1 MD
==============================================================================
<PAGE>
[Floor Plan]
[LOGO RSP]
==============================================================================
PROJECT: HIDDEN CREEK INDUSTRIES - EXPANSION SHEET NO.
IDS CENTER - 45TH FLOOR A3
DATE 24 JUNE 1993
PROJECT NO. 6187.981.01 MD
==============================================================================
<PAGE>
[Floor Plan]
[LOGO RSP]
==============================================================================
PROJECT: HIDDEN CREEK INDUSTRIES - EXPANSION SHEET NO.
IDS CENTER - 45TH FLOOR A4
DATE 24 JUNE 1993
PROJECT NO. 6187.981.01 MD
==============================================================================
<PAGE>
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
------------------------------
Subsidiary Jurisdiction of Incorporation
- ---------- -----------------------------
Dura Operating Corp. Delaware
Dura de Mexico S.A. de C.V. Mexico
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
and to all references to our Firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
June 21, 1996
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
and to all references to our Firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Kansas City, Missouri,
June 21, 1996
