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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 29, 1997
DURA AUTOMOTIVE SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
333-06601 38-2961431
(Commission File Number) (I.R.S. Employer Identification No.)
4508 IDS CENTER, MINNEAPOLIS, MINNESOTA 55402
(Address of principal executive offices) (Zip Code)
(612) 342-2311
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective August 29, 1997 (the "CLOSING DATE"), the Registrant,
through Dura Shifter Holding Corp. ("HOLDING"), a wholly owned subsidiary of
the Registrant's wholly owned subsidiary Dura Operating Corp. ("DURA"),
acquired from eight individuals, one living trust, and one limited
partnership (collectively, the "SELLERS") all of the issued and outstanding
stock (the "ACQUISITION") of GT Automotive Systems, Inc., a Michigan
Corporation ("GT"). In connection with this Acquisition, the Registrant
delivered a guaranty to the Sellers agreeing to guarantee Holding's
performance of its obligations in connection with the Acquisition.
The aggregate purchase price paid to the Sellers by Holding in
exchange for the stock of GT consisted of (i) $14,888,397.40 paid in cash on
the Closing Date (which number represented a base purchase price of
$45,000,000, MINUS an agreed-upon reduction of $315,000 for GT's accumulated
post-retirement benefit obligations with respect to its current retirees and
dependents, and MINUS the aggregate amount of GT's outstanding debt
obligations as of the Closing Date), (ii) an "earn-out" under which Holding
may be obligated in 1998 to pay the Sellers up to $5,000,000 in additional
cash purchase price based on GT's earnings during 1997, and (iii) an
"earn-out" under which Holding may be obligated in 1999 to pay the Sellers up
to $10,000,000 in additional cash purchase price based on GT's earnings
during 1998 (except that up to $2,500,000 of such $10,000,000 may, based on
GT's 1997 earnings, be accelerated and become payable in 1998).
Funding of the purchase price was obtained through an outstanding
credit facility (the "MULTICURRENCY FACILITY") between Dura and five
financial institutions, comprising Bank of America NT & SA, The Bank of Nova
Scotia, Comerica Bank, Chase Manhattan Bank, N.A., and First Bank National
Association, which Multicurrency Facility was amended in connection with the
Acquisition. Also in connection with the Acquisition, $28,571,585.87 of GT's
and its subsidiaries' existing debt obligations were refinanced with funds
obtained under the Multicurrency Facility and under a Master Note delivered
by GT Automotive Systems (Windsor) Ltd., an Ontario corporation and a wholly
owned subsidiary of GT, to Bank of America Canada.
The terms of the Acquisition and the establishment of the purchase
price were arrived at as a result of arm's length negotiations between the
Sellers and the management of the Registrant. There are no material
relationships between the Sellers and Registrant, any affiliate, director, or
officer of the Registrant, or any associate of any such officer or director.
GT, itself and through its two wholly owned subsidiaries, GT Shift
Systems, Inc., a Delaware corporation, and GT Automotive Systems (Windsor)
Ltd., an Ontario corporation, presently designs and manufactures gearshift
lever systems, turn signal and tilt lever assemblies for the North American
automotive industry. The Registrant intends that GT will continue to conduct
its operations as a separate and discrete wholly owned subsidiary of Holding.
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Item. 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
At the time of this report, it is not practicable to provide the
required financial statements for GT and its subsidiaries. Such statements
will be filed as an amendment to this Form 8-K Report as soon as
practicable and not later than November 11, 1997.
(b) PRO FORMA FINANCIAL INFORMATION
At the time of this report, it is not practicable to provide the
required pro forma financial information relating to the Acquisition. Such
information will be filed as an amendment to this Form 8-K Report as soon
as practicable and not later than November 11, 1997.
(c) EXHIBITS
2.1 Stock Purchase Agreement, dated August 1, 1997, by and among Dura
Shifter Holding Corp. and the various selling shareholders listed
on the signature pages thereto.*
4.1 Amended and Restated Multicurrency Credit Agreement, dated
December 5, 1996, by and among Dura Operating Corp., Kimanus
Vermogensverwaltung GmbH, the various commercial lending
institutions parties thereto, as lenders, Bank of America NT&SA,
as agent, and BA Securities, Inc., as the arranger (NOTE: this
document is not physically attached to this Report, but is
incorporated herein by reference to the Form 8-K, dated December
5, 1996, filed by the Registrant with the Securities and Exchange
Commission on December 20, 1996).*
4.2 Consolidated Amendment No. 1 to Amended and Restated
Multicurrency Credit Agreement, dated August 29, 1997, by and
among Dura Operating Corp., Kimanus Vermogensverwaltung GmbH, the
various commercial lending institutions parties thereto, as
lenders, and Bank of America NT&SA, as agent.*
4.3 Master Note, dated August 29, 1997, issued by GT Automotive
Systems (Windsor) Ltd. to Bank of America Canada.
*The Registrant agrees to furnish supplementally to the Commission a copy of any
omitted schedule or exhibit to such agreement upon request by the Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
DURA AUTOMOTIVE SYSTEMS, INC.
DATE: SEPTEMBER 12, 1997 BY: /S/ STEPHEN E. K. GRAHAM
----------------------------------------------
NAME: STEPHEN E. K. GRAHAM
TITLE: VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER (PRINCIPAL ACCOUNTING AND
FINANCIAL OFFICER)
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of
August 1, 1997, by and among Dura Shifter Holding Corp., a Delaware
corporation ("BUYER"), GT Automotive Systems, Inc., a Michigan corporation
(the "COMPANY"), and each of the other Persons listed on the signature pages
hereto (collectively, the "SELLERS"). Capitalized terms used but not
otherwise defined herein are defined in Article VII hereof.
The Sellers collectively own beneficially and of record all of the
outstanding shares of the Company's capital stock (the "COMPANY STOCK").
This Agreement contemplates a transaction in which, pursuant to the terms and
subject to the conditions set forth herein, Buyer will purchase from the
Sellers, and the Sellers will sell to Buyer, all of the outstanding shares of
Company Stock in exchange for cash, as set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF COMPANY STOCK
1.1 PURCHASE AND SALE. Pursuant to the terms and subject to the
conditions set forth herein, at the Closing (as defined below), the Sellers
shall sell and transfer to Buyer and Buyer shall purchase from the Sellers
all of the outstanding shares of Company Stock free and clear of all liens,
claims, charges, security interests and other encumbrances, for an aggregate
purchase price as determined pursuant to Section 1.3 below.
1.2 THE CLOSING.
(a) THE CLOSING DATE. The closing of the purchase and sale of the
Company Stock (the "CLOSING") shall take place at the offices of Dean &
Fulkerson in Troy, Michigan, at 10:00 a.m. local time on the second business
day following the expiration or other termination of the applicable waiting
period (and any extensions thereof) under the HSR Act (as defined below), or
if later, on the second business day following the satisfaction or waiver of
all other conditions set forth in Article II hereof, or at such other place
or on such other date as is mutually acceptable to Buyer and the
Representative. The date of the Closing hereunder is referred to herein as
the "CLOSING DATE."
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(b) THE CLOSING TRANSFERS. Subject to the conditions set forth in
this Agreement, at the Closing:
(i) the Sellers shall deliver to Buyer certificates representing
all of the shares of the Company Stock outstanding as of the Closing Date,
duly endorsed for transfer to the Buyer and accompanied by duly executed
stock powers;
(ii) Buyer shall deliver to the Representative, on behalf of the
Sellers, a cashier's or certified check, or wire transfer of immediately
available funds to an account designated by the Representative at least 2
days prior to the Closing Date, in an aggregate amount equal to the
Purchase Price (as defined in Section 1.3 below); and
(iii) Buyer shall repay all amounts owing with respect to the
indebtedness for borrowed money (including accrued interest through the
Closing Date) described on Schedule 1.2 (the "PAID-OFF INDEBTEDNESS").
1.3 THE CLOSING PURCHASE PRICE.
(a) THE BASE PURCHASE PRICE. For purposes of this Agreement, the
"BASE PURCHASE PRICE" shall be equal to $45,000,000.
(b) DETERMINATION OF CLOSING FUNDED INDEBTEDNESS. Not more than 5
nor less than 1 business day(s) prior to the Closing Date, Buyer and the
Representative shall, in good faith, jointly determine the amount of Funded
Indebtedness as of the Closing Date immediately prior to giving effect to the
transactions contemplated hereby (but including any fees, expenses, prepayment
penalties or other charges which would be incurred as a result of the repayment
or prepayment of any such Funded Indebtedness contemporaneously with the
Closing) (the "CLOSING FUNDED INDEBTEDNESS"). For purposes of this Agreement,
"FUNDED INDEBTEDNESS" means the principal amount of the obligations identified
on the FUNDED DEBT SCHEDULE, all accrued interest thereon, and all fees,
expenses, prepayment penalties and other charges with respect thereto. For
purposes of calculating the Closing Funded Indebtedness, all obligations payable
in Canadian dollars shall be converted into U.S. Dollar amounts based on the
prevailing exchange rate between Canadian and U.S. currencies set forth in the
WALL STREET JOURNAL on the Closing Date (or on such earlier date as shall be
mutually agreeable to the Buyer and the Representative). Notwithstanding the
foregoing, in the event that the principal amount outstanding as of the Closing
Date under the Company's revolving credit facility with NBD Bank and First
Chicago NBD Bank, Canada (the "REVOLVER"), is less than $6,900,000 (the "MINIMUM
REVOLVER AMOUNT"), then for purposes of this Agreement the Closing Funded
Indebtedness shall be calculated as if the Minimum Revolver Amount were in fact
the principal amount outstanding as of the Closing Date under the Revolver.
(c) ACCUMULATED POST-RETIREMENT OBLIGATIONS. The parties hereto have
agreed that the aggregate amount of the Company's and its Subsidiaries'
accumulated post-retirement benefit obligations for all current retirees and
dependents as of the Closing Date (the "CLOSING APBO") shall be equal to
$315,000.
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(d) THE PURCHASE PRICE. The "PURCHASE PRICE" hereunder shall be
equal to (i) the Base Purchase Price, MINUS (ii) the amount of Closing Funded
Indebtedness, MINUS (iii) the amount of Closing APBO.
1.4 ADDITIONAL EARNED PURCHASE PRICE.
(a) THE 1997 EARN-OUT.
(i) As promptly as practicable, but in any event not later than
90 days after the last day of the 1997 Measuring Period (as defined below),
Buyer shall cause to be prepared and delivered to the Representative a
draft statement of income prepared in accordance with generally accepted
accounting principles applied on a basis consistent with the accounting
practices and procedures used in the preparation of the 1996 Financial
Statements (the "1997 STATEMENT"), and which sets forth the Company's EBIT
(as defined below) for the 1997 Measuring Period ("1997 EBIT"). The 1997
Statement shall be accompanied by a certificate, signed by an officer of
Parent, stating that such statement is the "1997 Statement" required to be
delivered pursuant to this Section 1.4 and that, to the best of such
officer's knowledge and belief, such statement has been prepared in
accordance with the provisions of this Section 1.4. If the 1997 Statement
reflects 1997 EBIT in excess of $6,000,000, Buyer shall deliver to the
Representative (on behalf of the Sellers) a cashier's or certified check,
or wire transfer of immediately available funds to an account designated by
the Representative, in an aggregate amount (which amount shall be deemed an
adjustment to the Purchase Price hereunder) equal to the payment calculated
in accordance with subparagraph (vi) below based on the 1997 EBIT as
reflected in the 1997 Statement (the "INITIAL PAYMENT"). If the Sellers
disagree in any respect with Buyer's calculation of 1997 EBIT as set forth
in the 1997 Statement, the Sellers may, within 90 days after delivery of
such 1997 Statement deliver a statement to Buyer disagreeing with such
calculation and setting forth the Sellers' calculation of such amount. Any
such statement of disagreement shall specifically state and shall only
state those items or amounts as to which the Sellers disagree and the basis
of such disagreement, and each Seller shall be deemed to have agreed with
all other items and amounts contained in the calculation of 1997 EBIT set
forth on the 1997 Statement. If the Sellers do not deliver such a
statement of disagreement within such 90-day period, the 1997 Statement
shall be conclusive and binding on all parties hereto.
(ii) If a statement of disagreement is delivered pursuant to
subparagraph (i), Buyer and the Representative shall, during the 20 days
following such delivery, use their best efforts to reach agreement on the
disputed items or amounts in order to determine, as may be required, the
amount of 1997 EBIT, which amount shall not be less than the amount thereof
set forth in the 1997 Statement nor greater than the amount set forth in
the Sellers' statement of disagreement. Any such agreement reached shall
be conclusive and binding on all parties hereto.
(iii) If, during such 20-day period, Buyer and the
Representative are unable to reach such agreement, they shall promptly
thereafter cause Deloitte & Touche (the "ACCOUNTING FIRM") to review this
Agreement, the 1997 Statement, and the Sellers' statement
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of disagreement, and to make its own calculation of 1997 EBIT. In making
such review and calculation, the Accounting Firm shall consider only those
items or amounts in the 1997 Statement as to which the Sellers have
disagreed. The Accounting Firm shall deliver to Buyer and the
Representative, as promptly as practicable after its retention, a report
setting forth its calculation of 1997 EBIT. Such report shall be final and
binding upon all parties hereto; PROVIDED that in no event shall the amount
of 1997 EBIT be less than the amount thereof set forth in the 1997 Statement
nor greater than the amount set forth in the Sellers' notice of
disagreement. The cost of such review and report shall be borne by Buyer,
on the one hand, and by the Sellers (jointly and severally), on the other
hand, based upon the percentage which the portion of the contested amount
not awarded to each party bears to the amount actually contested by
such party.
(iv) Buyer and each of the Sellers agree that they will, and
agree to cause their respective independent accountants and the Company to,
cooperate and assist in the preparation of the 1997 Statement, any
statement of disagreement, and in the conduct of the audits and reviews
referred to in this Section, including without limitation, the making
available to the extent necessary of books, records, work papers
(including, without limitation, all memoranda, summaries, conclusions, file
notes, and analyses supporting, explaining, or forming the basis thereof
which are retained by such accountants) and personnel. Buyer and the
Sellers and their respective independent accountants desire to act in a
spirit of cooperation in assisting each other in the review, audit, and
determination of the 1997 Statement. Therefore, as the preferred method of
conducting such a review, audit, and preparation of such a statement
referred to in this Section, Buyer and the Sellers agree that Buyer's
independent accountants will complete their audit and reviews referred to
in this Section, providing Sellers' independent accountants status updates
with respect thereto, and upon completion of the Buyer's independent
accountants' work, provide full access to the information referred to above
to Sellers' independent accountants. Buyer and its independent accountants
shall provide the Sellers and their independent accountants a schedule of
the timing of fieldwork and permit Sellers and their independent
accountants, at their discretion, to be present during fieldwork and
observe any tests, measurements, interviews, or other investigatory events,
as determined necessary by the Sellers or their independent accountants,
conducted in the course of preparing the 1997 Statement. The Sellers and
their independent accountants understand that timing of such tests,
measurements, interviews or other investigatory events is subject to change
on short notice for numerous reasons (both within and outside the control
of the parties), that time is of the essence in the completion of the audit
by the Buyer, and that notification to Sellers and their independent public
accountants of such changes, other than changes in the timing of fieldwork
generally, is not required. Sellers' and their accountants' cooperation
and assistance, if any, in any activities relating to the preparation of
the 1997 Statement shall be without prejudice to Sellers' right to disagree
with the 1997 Statement. All costs related to the Sellers' independent
accountants' performance under this Section will be paid by the Sellers.
(v) For purposes of this Agreement, the "1997 MEASURING PERIOD"
shall mean the 12-month period commencing on January 1, 1997, and ending on
December 31, 1997; PROVIDED that any calendar month commencing after the
Closing Date in which there
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exists a 1997 Unforeseen Event Loss shall be excluded from the
1997 Measuring Period, and for each month so excluded the 1997 Measuring
Period shall continue for one additional consecutive calendar month (it
being understood that the 1997 Measuring Period shall in no event extend
beyond March 31, 1998), such that the 1997 Measuring Period shall
comprise the first 12 months (or if less, the total number of months
between January 1, 1997, and March 31, 1998) in which no 1997 Unforeseen
Event Loss has occurred. For purposes of this Agreement, "1997 UNFORESEEN
EVENT LOSS" means, during any calendar month, a loss in revenue of (A) more
than $750,000 from a single customer directly resulting from strikes or
walkouts by such customer's workers, or (B) more than $750,000 in the
aggregate for such month directly resulting from a strike or walkout by the
Company's or its Subsidiaries' workers, Act of God, boycott, and/or
postponement (in whole or in part) of a major start-up program of a
customer identified on the MAJOR START-UP SCHEDULE and scheduled to
commence during the 1997 Measuring Period.
(vi) Within 3 business days after the final determination of 1997
EBIT as set forth in this paragraph (a), if 1997 EBIT as so determined
exceeds $6,000,000, Buyer shall deliver to the Representative (on behalf of
the Sellers) a cashier's or certified check, or wire transfer of
immediately available funds to an account designated by the Representative,
in an aggregate amount (which amount shall be deemed an adjustment to the
Purchase Price hereunder) equal to the sum of:
(x) the product of (A) $5,000,000 MULTIPLIED BY (B) a
fraction, the numerator of which is equal to 1997 EBIT (or $7,000,000
if EBIT is greater than $7,000,000) MINUS $6,000,000, and the
denominator of which is equal to $1,000,000, PLUS
(y) if 1997 EBIT exceeds $7,000,000, an amount (the
"ACCELERATED 1998 AMOUNT") equal to the product of (A) $2,500,000
MULTIPLIED BY (B) a fraction, the numerator of which is equal to 1997
EBIT (or $8,000,000 if 1997 EBIT is greater than $8,000,000) MINUS
$7,000,000, and the denominator of which is equal to $1,000,000, MINUS
(z) the amount of the Initial Payment, if any.
(vii) In addition to any other payments under this Section
1.4(a), in the event any portion of any payment made under this Section
1.4(a) is deemed the payment of interest income under the Code and the
regulations promulgated thereunder (such portion deemed to constitute
interest, the "INTEREST COMPONENT"), Buyer shall in connection with such
payment pay to the Representative (on behalf of the Sellers) an additional
amount (which payment shall be deemed an adjustment to the Purchase Price
hereunder) (the "ADDITIONAL PURCHASE PRICE AMOUNT") equal to the quotient
of (x) the product obtained by multiplying (1) the difference of 39.6%
MINUS the rate of U.S. federal tax on long-term capital gains in effect on
the Closing Date, TIMES (2) the Interest Component of such payment, DIVIDED
BY (y) the difference of 100% MINUS the rate of U.S. federal tax on
long-term capital gains in effect on the Closing Date.
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(b) THE 1998 EARN-OUT.
(i) In the event that, at any time on or prior to the last day
of the 1998 Measuring Period (as defined below), the Company achieves EBIT
for such period of at least $5,000,000, the Sellers shall be entitled to
receive, in accordance with this paragraph (b), additional consideration
for the Company Stock in an aggregate amount equal to $10,000,000 MINUS the
Accelerated 1998 Amount, if any (the "1998 EARN-OUT AMOUNT"). For purposes
of this Agreement, the "1998 MEASURING PERIOD" shall mean the 12-month
period commencing on January 1, 1998; PROVIDED that each calendar month in
which there exists a 1998 Unforeseen Event Loss shall be excluded from the
1998 Measuring Period, and for each month so excluded the 1998 Measuring
Period shall continue for one additional consecutive calendar month (it
being understood that the 1998 Measuring Period shall in no event extend
beyond December 31, 1999), such that the 1998 Measuring Period shall
comprise the first 12 months (or if less, the total number of months
between January 1, 1998, and December 31, 1999) in which no 1998 Unforeseen
Event Loss is in existence. For purposes of this Agreement, "1998
UNFORESEEN EVENT LOSS" means, during any calendar month, a loss of revenue
of (A) more than $500,000 from a single customer directly resulting from
strikes or walkouts by such customer's workers, or (B) more than $500,000
in the aggregate for such month directly resulting from a strike or walkout
by the Company's or its Subsidiaries' workers, Act of God, boycott, and/or
postponement (in whole or in part) of a major start-up program of a
customer identified on the MAJOR START-UP SCHEDULE and scheduled to
commence during the 1998 Measuring Period. The 1998 Earn-Out Amount shall
be due and payable on the date on which Buyer delivers a month-end report
pursuant to paragraph 1.4(d) which reflects 1998 EBIT of at least
$5,000,000, but in no event more than 60 days after the last day of the
month during which the Company achieves 1998 EBIT of at least $5,000,000
(the "1998 DUE DATE").
(ii) If at any time and from time to time on or after September
30, 1998, the Representative in good faith determines that the Sellers are
entitled to additional consideration pursuant to this paragraph (b), but
that the Buyer's month-end reports have failed to reflect the Company's
achievement of 1998 EBIT of $5,000,000, the Representative shall deliver to
the Buyer written notice to that effect (a "1998 NOTICE"). Promptly, but
in no event more than 45 days, after receipt of such 1998 Notice, Buyer
shall cause to be prepared and delivered to the Representative a draft
statement of income prepared in accordance with generally accepted
accounting principles applied on a basis consistent with the accounting
practices and procedures used in the preparation of the 1996 Financial
Statements (the "1998 STATEMENT"), and which sets forth the Company's EBIT
(as defined below) for the elapsed portion of the 1998 Measuring Period
("1998 EBIT"). The 1998 Statement shall be accompanied by a certificate,
signed by an officer of Parent, stating that such statement is the "1998
Statement" required to be delivered pursuant to this Section 1.4 and that,
to the best of such officer's knowledge and belief, such statement has been
prepared in accordance with the provisions of this Section 1.4. If the
Sellers disagree in any respect with Buyer's calculation of 1998 EBIT as
set forth in the 1998 Statement, the Sellers may, within 90 days after
delivery of such 1998 Statement deliver a statement to Buyer disagreeing
with such calculation and setting forth the Sellers' calculation of such
amount.
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Any such statement of disagreement shall specifically state and
shall only state those items or amounts as to which the Sellers disagree
and the basis of such disagreement, and each Seller shall be deemed to have
agreed with all other items and amounts contained in the calculation of
1998 EBIT set forth on the 1998 Statement. If the Sellers do not deliver
such a statement of disagreement within such 90-day period, the 1998
Statement shall be conclusive and binding on all parties hereto (but, if
such 1998 Statement includes a calculation of 1998 EBIT in respect of less
than the entire 1998 Measuring Period, such 1998 Statement shall be without
prejudice to any subsequent 1998 Statement, disagreements therewith, or the
resolution of any such disagreements as provided herein);
(iii) If a statement of disagreement is delivered pursuant to
subparagraph (ii), Buyer and the Representative shall, during the 20 days
following such delivery, use their best efforts to reach agreement on the
disputed items or amounts in order to determine, as may be required, the
amount of 1998 EBIT, which amount shall not be less than the amount thereof
set forth in the 1998 Statement nor greater than the amount set forth in
the Sellers' notice of disagreement. Any such agreement reached shall be
conclusive and binding on all parties hereto.
(iv) If, during such 20-day period, Buyer and the Representative
are unable to reach such agreement, they shall promptly thereafter cause
the Accounting Firm to review this Agreement, the 1998 Statement, and the
Sellers' statement of disagreement, and to make its own calculation of the
1998 EBIT. In making such review and calculation, the Accounting Firm
shall consider only those items or amounts in the 1998 Statement as to
which the Sellers have disagreed. The Accounting Firm shall deliver to
Buyer and the Representative, as promptly as practicable after its
retention, a report setting forth its calculation of 1998 EBIT. Such report
shall be final and binding upon all parties hereto; PROVIDED that in no
event shall the amount of 1998 EBIT be less than the amount thereof set
forth in the 1998 Statement nor greater than the amount set forth in the
Sellers' notice of disagreement. The cost of such review and report shall
be borne by Buyer if the Accounting Firm finally determines that the 1998
EBIT equals or exceeds $5,000,000, and by the Sellers (jointly and
severally) if the Accounting Firm finally determines that the 1998 EBIT is
less than $5,000,000.
(v) Buyer and each of the Sellers agree that they will, and
agree to cause their respective independent accountants and the Company to,
cooperate and assist in the preparation of the 1998 Statement, any
statement of disagreement, and in the conduct of the audits and reviews
referred to in this Section, including without limitation, the making
available to the extent necessary of books, records, work papers
(including, without limitation, all memoranda, summaries, conclusions, file
notes, and analyses supporting, explaining, or forming the basis thereof
which are retained by such accountants) and personnel. Buyer and the
Sellers and their respective independent accountants desire to act in a
spirit of cooperation in assisting each other in the review, audit, and
determination of the 1998 Statement. Therefore, as the preferred method of
conducting such a review, audit, and preparation of such a statement
referred to in this Section, Buyer and the Sellers agree that Buyer's
independent accountants will complete their audit and reviews referred to
in this
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Section, providing Sellers' independent accountants status updates
with respect thereto, and upon completion of the Buyer's independent
accountants' work, provide full access to the information referred to above
to Sellers' independent accountants. Buyer and its independent accountants
shall provide the Sellers and their independent accountants a schedule of
the timing of fieldwork and permit Sellers and their independent
accountants, at their discretion, to be present during fieldwork and
observe any tests, measurements, interviews, or other investigatory events,
as determined necessary by the Sellers or their independent accountants,
conducted in the course of preparing the 1998 Statement. The Sellers and
their independent accountants understand that timing of such tests,
measurements, interviews or other investigatory events is subject to change
on short notice for numerous reasons (both within and outside the control
of the parties), that time is of the essence in the completion of the audit
by the Buyer, and that notification to Sellers and their independent
accountants of such changes, other than changes in the timing of fieldwork
generally, is not required. Sellers' and their accountants' cooperation
and assistance, if any, in any activities relating to the preparation of
the 1998 Statement shall be without prejudice to Sellers' right to disagree
with the 1998 Statement. All costs related to the Sellers' independent
accountants' performance under this Section will be paid by the Sellers.
(c) CALCULATION OF EBIT. As used in this Agreement, "EBIT" means,
with respect to any period, the sum of (x) consolidated net income of the
Company and its Subsidiaries for such period, PLUS (y) the amount of the
provisions for United States and Canadian federal, provincial, state and
local Income Taxes (including, without limitation, the Michigan Single
Business Tax and the Canadian federal and provincial capital tax) reflected
in the consolidated net income of the Company and its Subsidiaries for such
period, PLUS (z) the amount of interest expense for indebtedness for borrowed
money (including capitalized leases) reflected in the consolidated net income
of the Company and its Subsidiaries for such period, in each case determined
on a consolidated basis in accordance with generally accepted accounting
principles applied on a basis consistent with the accounting practices and
procedures used in the preparation of the 1996 Financial Statements.
Notwithstanding the foregoing, and whether or not permitted by generally
accepted accounting principles:
(i) EBIT shall not be affected by any "purchase accounting"
adjustments made as a result of the transactions contemplated hereby;
(ii) EBIT shall not include any intercompany general overhead,
general administrative, general headquarters, or general home office
expenses (other than expenses specifically relating to the Company or any
of its Subsidiaries, but only to the extent such expenses are incurred to
replace services provided to or by the Company and its Subsidiaries prior
to the Closing Date (including, without limitation, expenses relating to
legal or accounting (including general, audit, and tax accounting)
services, insurance coverage, or employee benefit plans) and in amounts not
greater than the historical costs of such services to the Company and its
Subsidiaries and the respective predecessors thereof) allocated to the
Company or any of its Subsidiaries by Buyer or Parent or their Affiliates;
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(iii) EBIT shall not include expenses for any services
provided to the Company or any of its Subsidiaries by Buyer, Parent or
their Affiliates except to the extent permitted under paragraph (ii);
(iv) in the event that the Company or any of its Subsidiaries
enters into a transaction for the sale of goods to Buyer, Parent, or any of
their Affiliates, or for the purchase of goods from Buyer, Parent, or any
of their Affiliates, EBIT shall include expenses and revenues from the
manufacture and sale of such goods, or the purchase and use or resale of
such goods, respectively, only to the extent such transaction is entered
into on terms and conditions commensurate with arm's length transactions;
(v) EBIT shall not include any amounts paid to TRW Corporation
in settlement of the dispute identified in Schedule 4.19 attached hereto;
(vi) EBIT shall not include any amounts paid after the Closing
Date pursuant to the terms of the February 1997 claim settlement under the
Ontario Pay Equity Act referenced in Schedule 4.9 attached hereto;
(vii) EBIT shall not include any extraordinary gains or
losses (including any gains or losses on the sale or other disposition of
capital equipment);
(viii) EBIT shall not include any costs or expenses directly
relating to any restructuring, reorganization, or plant closing by the
Company, or to any action taken by the Company other than in the ordinary
course of business in accordance with past practices, where EBIT is reduced
by at least $125,000 as a direct result of such action;
(ix) EBIT shall include only the actual cash cost in respect of
any post-retirement health benefits paid during the relevant period; and
(x) if the Company (A) purchases, exchanges or otherwise
acquires any material assets or liabilities other than in the ordinary
course of business, or (B) purchases or otherwise acquires any new line of
business, product, or technology that is materially different from the
businesses, products, and technology engaged in, distributed, or used in
the Company's businesses as conducted as of the Closing Date (each of (A)
and (B), a "MATERIAL ACQUISITION"), EBIT shall not include any costs,
expenses, losses, revenues or gains resulting from such Material
Acquisition or the assets, liabilities or business so acquired.
(d) COVENANTS OF BUYER.
(i) Notwithstanding anything herein to the contrary, until
December 31, 1997, Buyer shall operate and conduct the business of the
Company and its Subsidiaries in the ordinary course of business in
accordance with past practices, and the Buyer shall not make any material
changes (including, without limitation, unplanned (but not including
planned) expenditures, expense increases, or revenue reductions) in the
operation of the
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Company's business as conducted as of the Closing Date, PROVIDED that
this subparagraph (i) shall not forbid Buyer from (A) making
announcements concerning material changes in the operation of the Company's
business, so long as such changes are to occur after December 31, 1997, and
so long as 1997 EBIT does not include any accrued expenses relating to such
changes, or (B) terminating employees of the Company or any of its
Subsidiaries and replacing such terminated employees, so long as 1997 EBIT
does not include any amount by which the aggregate compensation paid to
such employees replacing such terminated employees during the 1997
Measuring Period exceeds the amount that would have been paid to such
terminated employees during the 1997 Measuring Period had they not been so
terminated;
(ii) If the corporate form of the Company and its Subsidiaries
changes, Buyer shall cause the Company to maintain separate books and
records consistent with the Company's past practice for the purposes of
calculating EBIT as if the Company and its Subsidiaries had remained in the
corporate form in existence immediately following the Closing Date;
(iii) Buyer agrees that the Company and its Subsidiaries will
not at any time prior to the end of the 1998 Measuring Period (or, if
earlier, the date of any payment to the Sellers under subparagraph (b)
hereof), sell any material portion of its consolidated assets outside the
ordinary course of business, without the prior consent of the
Representative;
(iv) Buyer agrees that it will deliver to the Sellers such
financial reports, statements and other information concerning the Company
and its Subsidiaries as Parent delivers generally to its stockholders or
files with the Securities and Exchange Commission;
(v) Buyer agrees to cause the Company and its Subsidiaries to
maintain an accurate logbook of all actions taken with respect to the
Company or any of its Subsidiaries of the kinds described in clauses
(c)(viii) and (x) above, which shall include the financial impact (if
known) or the estimated financial impact (if the actual financial impact is
unknown) of such actions, and to permit Representative to inspect and copy
such logbook; and
(vi) Buyer shall cause the Company to deliver to Representative
within 60 days after the end of each calendar month (A) a report, signed by
an officer of the Company, Buyer, or Parent, containing an interim
year-to-date income statement with appropriate adjustments to reflect the
Company's EBIT (it being understood that (x) such statement shall indicate
the months in which there has occurred a 1997 Unforeseen Event Loss or 1998
Unforeseen Event Loss, as applicable, and shall indicate the nature of such
loss, and (y) the amounts shown on such statement shall be estimates and
will not be audited), and (B) a forecast for monthly earnings for the
remainder of the fiscal year in accordance with the Company's current
forecasting practices as of immediately prior to the Closing Date.
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(e) NONCOMPLIANCE. In the event of a default by Buyer of any of
Buyer's covenants set forth in Section 1.4(d) hereof, Buyer shall have a period
of 30 days to cure such default after written notice thereof by Representative;
PROVIDED that if under the circumstances then prevailing Buyer cannot reasonably
satisfy its obligations under such covenant before the end of such 30-day
period, Buyer shall have up to an additional 90 days to cure such default so
long as Buyer continues to proceed diligently in good faith to satisfy such
obligations; AND PROVIDED FURTHER that if under the circumstances then
prevailing Buyer cannot reasonably satisfy its obligations under such covenant
before the end of such additional 90-day period, Buyer shall prior to the end of
such 90-day period deliver written notice to the Representative setting forth
the reasons for Buyer's failure to satisfy its obligations within such period,
and after reasonable discussions with the Representative Buyer shall have such
additional time to cure such default as is approved by the Representative (which
approval shall not be unreasonably withheld). If Buyer fails to cure the
default within such 30-day period (or such longer period, if applicable),
Representative may seek any remedies it may have at equity, or may request
arbitration pursuant to Section 8.5(h) hereof for a determination of such
default and an award of appropriate damages.
1.5 ALLOCATION OF PURCHASE PRICE. All payments of the Purchase Price
made by Buyer to Representative pursuant to the provisions of this Article I
shall be allocated and distributed by the Representative among the Sellers in
accordance with Schedule 1.5 attached hereto (the "DISBURSEMENT OF PURCHASE
PRICE BY REPRESENTATIVE SCHEDULE").
ARTICLE II
CONDITIONS TO CLOSING
2.1 CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article IV hereof
will be true and correct in all material respects at and as of the Closing Date
as though then made and as though the Closing Date were substituted for the date
of this Agreement throughout such representations and warranties (without taking
into account any disclosures made pursuant to Sections 3.1(c) or 4.32 hereof);
(b) The Sellers will have performed and complied with all of the
covenants and agreements required to be performed or complied with by them under
this Agreement through the Closing;
(c) There will have been no material adverse change in the
businesses, financial condition, operating results, assets, customer, supplier,
employee or sales representative relations, or business prospects of the Company
or any of its Subsidiaries;
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(d) All third party consents that are required (i) for the
consummation of the transactions contemplated hereby, (ii) in order to prevent a
breach of or default under or a right of termination or modification of any
agreement or lease to which the Company is a party or to which any portion of
the property of the Company is subject, or (iii) in order to enable Buyer to
prepay on the Closing Date the Company's and its Subsidiaries' outstanding
indebtedness for borrowed money without any premium or penalty, will have been
obtained on terms reasonably satisfactory to Buyer;
(e) All payoff letters relating to any indebtedness for borrowed
money for which Buyer has notified the Sellers of its intention to repay or
prepay on the Closing Date and releases of any and all security interests
relating to property of the Company and its Subsidiaries will have been
obtained, all on terms reasonably satisfactory to Buyer;
(f) All applicable waiting periods (and any extensions thereof) under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended and
including the rules and regulations promulgated thereunder, the "HSR ACT") shall
have expired or otherwise been terminated, and all governmental filings,
authorizations and approvals that are required for the consummation of the
transactions contemplated hereby and the continuation of the operation of the
Company's and its Subsidiaries' businesses will have been duly made and obtained
on terms reasonably satisfactory to Buyer;
(g) No action or proceeding before any court or government body will
be pending or threatened wherein an unfavorable judgment, decree, injunction or
order would prevent the carrying out of this Agreement or any of the
transactions contemplated hereby, declare unlawful the transactions contemplated
by this Agreement or cause such transactions to be rescinded, or might adversely
affect the right of Buyer to own, operate or control the Company, and no notice
will have been received regarding any investigation, or other conditions or
events, that could result in any such action or proceeding being pending or
threatened;
(h) Parent will have amended and restated its existing bank agreement
with its senior lenders, on terms and conditions satisfactory to Buyer, in order
to provide Buyer with sufficient proceeds to consummate the transactions
contemplated hereby and to finance as necessary the continuing operations of the
Company after the Closing Date;
(i) Buyer will have received an estoppel letter in form and content
reasonably acceptable to Buyer with respect to each parcel of Leased Real
Property;
(j) If required by Buyer's or Parent's lenders, Buyer will have
received a non-disturbance agreement in form and content acceptable to such
lenders from each Person encumbering each parcel of Leased Real Property;
(k) Buyer shall have received resignations and releases, effective as
of the Closing Date, of each director and each officer who is not (and after the
Closing Date will not be) an employee of the Company or its Subsidiaries, other
than those whom the Buyer shall have specified in writing at least 5 business
days prior to the Closing Date;
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(l) Buyer will have received a certification issued by the Company
pursuant to Treasury Regulation Section 1.897-2 to the effect that neither the
Company nor any of its Subsidiaries is a "United Sates real property holding
corporation" as defined in Section 897 of the Code;
(m) Buyer will have received from Dean & Fulkerson, P.C., counsel for
the Sellers, an opinion with respect to the matters set forth in EXHIBIT A
attached hereto, which opinion shall be addressed to Buyer, dated the Closing
Date, and in form and substance reasonably satisfactory to Buyer and its
counsel;
(n) Proctor & Redfern shall have, in accordance with its scope of
work plan delivered to the Buyer prior to the date hereof and pursuant to and in
compliance with the terms of the Tamco Agreement (as defined below), completed
its environmental testing and investigation concerning the real property now or
previously owned or leased by the Company's Subsidiaries and their respective
predecessors; Proctor & Redfern shall have delivered to the Company a clean-up
report, addressed to the Company, detailing its proposals for corrective or
remediating action to be taken with respect to such properties; and the Sellers
shall have delivered or caused the Company to deliver a true and correct copy of
such clean-up report to Buyer;
(o) Buyer, Sellers, and their respective environmental
representatives shall have met to determine in good faith whether additional
testing and investigation is required with respect to the drywells located on
the Company's real property located in Brantford; and if the parties determine
in good faith that such additional testing and investigation is required, such
additional testing and investigation shall (at Seller's sole cost) have been
been completed, and arrangements or agreements satisfactory to Buyer shall have
been made such that Buyer Parties (as defined below) shall be held harmless
against any liabilities arising out of or relating to such drywells;
(p) Sellers shall have delivered Schedule 4.30-3 (the "MAJOR START-UP
SCHEDULE") to Buyer, setting forth the major start-up programs of the Company's
customers which are expected to commence within the 24-month period following
the Closing Date and which are incorporated into the Company's current earnings
projections, the month in which each such program is scheduled to commence, and
projected monthly revenues from each such project during the 24-month period
following the Closing Date, and such schedule shall be reasonably satisfactory
to Buyer;
(q) On or prior to the Closing Date, the Representative will have
delivered to Buyer all of the following:
A. A certificate from the Sellers, dated the Closing Date,
stating that the preconditions specified in Sections 2.1(a) through (e),
and (g), inclusive, have been satisfied;
B. Copies of all third party and governmental consents,
approvals, and filings required in connection with the consummation of the
transactions hereunder;
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C. Certified copies of the resolutions duly adopted by each
corporate Seller's respective board of directors and shareholders
authorizing such Seller's execution, delivery and performance of this
Agreement and the transactions contemplated hereby;
D. Certified copies of the resolutions duly adopted by the
Company's board of directors and shareholders authorizing the Company's
execution, delivery and performance of this Agreement and the transactions
contemplated hereby; and
E. Such other documents or instruments as Buyer or its title
company reasonably requests or as may be required by any lender to Buyer or
Parent in connection with this Agreement to effect the transactions
contemplated hereby; and
(r) All proceedings to be taken by any of the Sellers and the Company
in connection with the consummation of the transactions contemplated hereby and
all certificates, opinions, instruments and other documents required to be
delivered by any of the Sellers to effect the transactions contemplated hereby
reasonably requested by Buyer will be reasonably satisfactory in form and
substance to Buyer.
Any condition specified in this Section 2.1 may be waived by Buyer, provided
that no such waiver will be effective unless it is set forth in a writing
executed by Buyer.
2.2 CONDITIONS TO THE SELLERS' OBLIGATIONS. The obligation of the
Sellers to consummate the transactions contemplated by this Agreement is subject
to the satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article V hereof
will be true and correct in all material respects at and as of the Closing Date
as though then made and as though the Closing Date were substituted for the date
of this Agreement throughout such representations and warranties (without taking
into account any disclosures made pursuant to Section 3.3(a) or 5.6 hereof);
(b) Buyer will have performed or complied with all of the covenants
and agreements required to be performed or complied with by it under this
Agreement through the Closing;
(c) All applicable waiting periods (and any extensions thereof) under
the HSR Act shall have expired or otherwise been terminated, and all
governmental filings, authorizations and approvals that are required for the
consummation of the transactions contemplated hereby will have been duly made
and obtained on terms reasonably satisfactory to the Sellers;
(d) No action or proceeding before any court or government body will
be pending or threatened wherein an unfavorable judgment, decree, injunction or
order would prevent the carrying out of this Agreement or any of the
transactions contemplated hereby, declare unlawful the transactions contemplated
by this Agreement or cause such transactions to be rescinded and no
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notice will have been received regarding any investigation, or other
conditions or events, that could result in any such action or proceeding
being pending or threatened;
(e) Parent shall have delivered to the Sellers its irrevocable
corporate guarantee, in form and substance as set forth in EXHIBIT C attached
hereto (the "PARENT GUARANTEE"), guaranteeing the performance of Buyer's
obligations under this Agreement;
(f) Sellers shall have received from Kirkland & Ellis, counsel for
the Buyer, an opinion with respect to the matters set forth in EXHIBIT B
attached hereto, which opinion shall be addressed to the Sellers, dated the
Closing Date, and in form and substance reasonably satisfactory to the Sellers
and their counsel;
(g) On or prior to the Closing Date, Buyer will have delivered to
Representative all of the following:
A. a certificate from Buyer, dated the Closing Date, stating
that the preconditions specified in Sections 2.2(a) through (d) above,
inclusive, have been satisfied;
B. certified copies of the resolutions duly adopted by Buyer's
board of directors and shareholders authorizing Buyer's execution,
delivery, and performance of this Agreement and the transactions
contemplated hereby;
C. certified copies of the resolutions duly adopted by Parent's
board of directors authorizing Parent's execution, delivery and performance
of the Parent Guarantee; and
D. such other documents or instruments as the Representative
reasonably requests to effect the transactions contemplated hereby; and
(h) All proceedings to be taken by Buyer in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to be delivered by Buyer to
effect the transactions contemplated hereby reasonably requested by the
Representative will be reasonably satisfactory in form and substance to the
Representative.
Any condition specified in this Section 2.2 may be waived by the
Representative, provided that no such waiver will be effective unless it is set
forth in a writing executed by Representative (which written waiver shall be
effective against each of the Sellers).
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ARTICLE III
COVENANTS PRIOR TO THE CLOSING DATE
3.1 AFFIRMATIVE COVENANTS OF THE SELLERS AND THE COMPANY. Prior to the
Closing Date, unless Buyer otherwise agrees in writing, each of the Sellers and
the Company covenant and agree as follows:
(a) The Sellers will cause the Company and its Subsidiaries to, and
the Company will, conduct its business in the ordinary course of business
consistent with past custom and practice. Without limiting the generality of
the foregoing, the Sellers will cause the Company and its Subsidiaries to, and
the Company will, pay expenses and payables, purchase inventory, perform all
maintenance and repairs, collect receivables and continue to fund capital
expenditures in amounts adequate to support the business with due regard to
changes in the business, in each case, in the ordinary course of business in
accordance with past custom and practice;
(b) The Sellers will, and will cause the Company, its Subsidiaries
and their respective officers, directors, employees and agents (including
attorneys and accountants) to, subject to the terms of those certain
Confidentiality Agreements entered into by and between Parent and the Company
(the "CONFIDENTIALITY AGREEMENTS"), permit Parent, Buyer and its and their
employees, agents, accounting and legal representatives and lenders and its and
their representatives to have reasonable access at reasonable times to the
Company's and its Subsidiaries' books, records, invoices, contracts, leases,
personnel, facilities, equipment and other things reasonably related to the
business and assets of the Company and its Subsidiaries, wherever located;
(c) The Company and each Seller will promptly (once it has knowledge
thereof) inform Buyer in writing of any variances from the representations and
warranties contained in Article IV hereof or any breach of any covenant
hereunder by any Seller or the Company;
(d) The Sellers will, and will cause the Company and its Subsidiaries
to, and the Company will, cooperate with Buyer and use their reasonable best
efforts to make all registrations, filings and applications, to give all notices
and to obtain all governmental, third party or other consents, transfers,
approvals, orders, qualifications and waivers necessary for the consummation of
the transactions contemplated hereby and to cause the other conditions to
Buyer's obligation to close to be satisfied (including, without limitation, the
execution and delivery of all agreements contemplated hereunder to be so
executed and delivered); PROVIDED, that, notwithstanding the foregoing, the
Sellers will provide copies of all documentation (other than the Notification
and Report Form required by the HSR Act) necessary to comply with this Section
3.1(d) to Buyer for its review and approval prior to submitting such
documentation to the appropriate Persons; and
(e) The Sellers will cause the Company and its Subsidiaries to, and
the Company will, terminate all of the agreements, contracts, commitments and
transactions described on the AFFILIATE TRANSACTIONS SCHEDULE, except for those
agreements, contracts, commitments and transactions set forth on Schedule 3.1(e)
(the "CONTINUING INSIDER ARRANGEMENTS").
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(f) The Sellers will use reasonable best efforts to take all actions
necessary, and to cause the Company and its Subsidiaries to, subject to the
proviso contained in Section 3.1(d), take all actions necessary, to consummate
the transactions contemplated by this Agreement.
3.2 NEGATIVE COVENANTS OF THE SELLERS AND THE COMPANY. Prior to the
Closing, without Buyer's prior written consent, the Sellers will not, and will
cause the Company and its Subsidiaries not to, and the Company will not, take
any action that would require disclosure under Section 4.9 of this Agreement if
such action had occurred immediately prior to the signing of this Agreement.
3.3 COVENANTS OF BUYER. Prior to the Closing, Buyer will:
(a) promptly (once it has knowledge thereof) inform the
Representative in writing of any variances from the representations and
warranties contained in Article V hereof or any breach of any covenant hereunder
by Buyer; and
(b) cooperate with the Sellers and use its reasonable best efforts to
make all registrations, filings and applications, to give all notices and to
obtain all governmental, third party or other consents, transfers, approvals,
orders, qualifications and waivers necessary for the consummation of the
transactions contemplated hereby and to cause the other conditions to the
Sellers' obligation to close to be satisfied (including, without limitation, the
execution and delivery of all agreements contemplated hereunder to be so
executed and delivered).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
CONCERNING THE SELLERS
As a material inducement to Buyer to enter into this Agreement, the
Sellers jointly and severally hereby represent and warrant to Buyer:
4.1 ORGANIZATION AND CORPORATE POWER. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Michigan and is qualified to do business in every jurisdiction in which the
nature of its business or its ownership of property requires it to be qualified.
Each of the Company's Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is qualified to do business in every jurisdiction in which the
nature of its business or its ownership of property requires it to be qualified.
All such jurisdictions in which the Company and its Subsidiaries are qualified
are set forth on Schedule 4.1 attached hereto (the "QUALIFICATIONS SCHEDULE").
The Company and its Subsidiaries have full corporate power and authority to own
and operate their properties, to carry on their businesses as now conducted and
presently proposed to be conducted. The copies of each of the Company's and its
Subsidiaries' certificate of incorporation and by-laws which have been furnished
to Buyer reflect all amendments made thereto at any time prior to the date of
this Agreement and are correct and complete. The minute books containing the
records of meetings of the shareholders and board of directors, the stock
certificate books and the stock record
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books of each of the Company and its Subsidiaries are correct and complete.
Neither the Company nor any of its Subsidiaries is in default under or in
violation of any provision of its respective certificates of incorporations
or by-laws.
4.2 AUTHORIZATION OF TRANSACTIONS. The Company has full corporate power
and authority to execute and deliver this Agreement, the other agreements
contemplated hereby and to consummate the transactions contemplated hereby and
thereby. Each of the Sellers and the board of directors of the Company has duly
approved this Agreement, the other agreements contemplated hereby and the
consummation of the transactions contemplated hereby and thereby. No other
corporate proceedings on the part of the Company or any corporate Seller are
necessary to approve and authorize the execution and delivery of this Agreement,
the other agreements contemplated hereby and the consummation of the
transactions contemplated hereby and thereby. This Agreement and the other
agreements contemplated hereby to which the Company or any Seller is a party
have been duly executed and delivered by each such Person party thereto, and
each such agreement is a valid and binding obligation of each such Person party
thereto, enforceable in accordance with its terms, except as enforceability
hereof may be limited by bankruptcy or other laws affecting creditor's rights
generally and limitations on the availability of equitable remedies.
4.3 CAPITALIZATION. The authorized and issued capital stock of the
Company and each of its Subsidiaries is accurately described in Schedule 4.3
(the "CAPITALIZATION SCHEDULE") attached hereto. All of the issued shares
described in Schedule 4.3 are issued and outstanding and are owned of record and
beneficially by the Sellers, the Company or its Subsidiaries as set forth
opposite their names on Schedule 4.3, which on the Closing Date will be free and
clear of any security interests, claims, liens, pledges, options, encumbrances,
charges, agreements, voting trusts, proxies or other arrangements or
restrictions (including transfer restrictions) whatsoever, except as described
on Schedule 4.3. All of the outstanding capital stock of the Company and its
Subsidiaries has been duly authorized by all necessary corporate action on the
part of the Company and its Subsidiaries and is validly issued, fully paid and
nonassessable. There are no rights, outstanding commitments, subscriptions,
warrants, options, conversion rights or agreements of any kind outstanding to
purchase or otherwise acquire any shares of capital stock of the Company or its
Subsidiaries or securities or obligations of any kind convertible into or
exchangeable or exercisable for any shares of capital stock of the Company or
its Subsidiaries, except pursuant to this Agreement. As of the close of
business on the Closing Date, Buyer shall own 100% of the issued and outstanding
capital stock of the Company free and clear of any security interests, claims,
liens, pledges, options, encumbrances, charges, agreements, voting trusts,
proxies or other arrangements or restrictions (including transfer restrictions)
whatsoever. Except as set forth on Schedule 4.3, no shares of the capital stock
of the Company or its Subsidiaries are reserved for any purpose; there are no
preemptive or similar rights with respect to the issuance, sale or other
transfer (whether present, past or future) of the capital stock of the Company
or its Subsidiaries and there are no agreements or other obligations (contingent
or otherwise) which may require the Company or its Subsidiaries to issue,
repurchase or otherwise acquire any shares of its capital stock or any of its
other securities of any kind.
4.4 SUBSIDIARIES; INVESTMENTS. Schedule 4.4 attached hereto (the
"SUBSIDIARY SCHEDULE") correctly sets forth the name of each Subsidiary of the
Company, the jurisdiction of its incorporation
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and the Persons owning the outstanding capital stock of such Subsidiary.
Except as set forth on Schedule 4.4, neither the Company nor any of its
Subsidiaries owns or holds the right to acquire any stock, partnership
interest, joint venture interest or other security or interest in any other
Person, except for cash and cash equivalents. "PERSON" means an individual, a
partnership, a corporation, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or
any department, agency or political subdivision thereof.
4.5 ABSENCE OF CONFLICTS. Except as set forth on the attached Schedule
4.5 (the "CONFLICTS SCHEDULE"), the execution, delivery and performance by the
Company and the Sellers of this Agreement and the other agreements contemplated
hereby to which it is a party and the consummation of the transactions
contemplated hereby and thereby do not and shall not (i) conflict with or result
in any breach of any of the provisions of, (ii) constitute a default under,
(iii) result in a violation of, (iv) give any third party the right to terminate
or to accelerate any obligation under, (v) result in the creation of any lien
upon any of the assets of the Company or any of its Subsidiaries or (vi) require
any authorization, consent, approval, license, permit, exemption or other action
by or notice to or filing with any court or other governmental entity, under the
provisions of the Company's or any of its Subsidiaries' constituent documents or
any agreement, contract, instrument, lease, commitment, license, guaranty, or
other business arrangement or understanding, or any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of an arbitrator or governmental entity.
4.6 FINANCIAL STATEMENTS; PROJECTIONS AND PROFORMA FINANCIAL STATEMENTS.
(a) The Company has furnished Buyer with copies of (i) a draft of
(and on or prior to the Closing Date will have furnished to Buyer a final
copy of) the Company's audited consolidated balance sheet as of December
31, 1996 (the "LATEST BALANCE SHEET") and the related other consolidated
financial statements for the period from inception (June 30, 1996) to
December 31, 1996 (collectively with the Latest Balance Sheet, the "1996
FINANCIAL STATEMENTS"), the draft of which is attached hereto as SCHEDULE
4.6(a)-1, (ii) audited consolidated financial statements of Tamco Limited
for the fiscal year ended December 31, 1995, and (iii) audited consolidated
financial statements (and supplemental schedules) for GEL, Inc., for the
fiscal years ended December 31, 1995 and 1994. The 1996 Financial
Statements (including the notes thereto) are correct and complete, are
consistent with the Company's books and records (which, in turn, are
correct and complete), present fairly in all material respects the
consolidated financial condition and results of operations of the Company
and its Subsidiaries as of the time and for the period referred to therein,
and except as set forth on SCHEDULE 4.6(a)-2 attached hereto (the
"EXCEPTIONS TO GAAP SCHEDULE") have been prepared in accordance with
generally accepted accounting principles.
(b) Attached hereto as Schedule 4.6(b) (the "PROJECTIONS SCHEDULE")
is a true and complete copy of the latest projections of the consolidated
income of the Company and its Subsidiaries for the fiscal years ending
December 31, 1997, 1998, and 1999.
4.7 ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Company nor any of
its Subsidiaries has any obligation or liability (whether accrued or unaccrued,
whether absolute or contingent,
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whether liquidated or unliquidated, whether known or unknown, whether due or
to become due) arising out of or related to events, transactions,
occurrences, facts, circumstances, actions or inactions on or prior to the
Closing Date, except (a) obligations under contracts or commitments
described in Schedule 4.17 or under contracts and commitments which are not
required to be disclosed thereon due solely to the specific dollar thresholds
and other requirements contained in Schedule 4.17 (but excluding any
obligation arising out of or in connection with any breach or default
thereof), (b) liabilities reflected on the Latest Balance Sheet, (c)
liabilities which have arisen after the date of the Latest Balance Sheet in
the ordinary course of business or otherwise in accordance with the terms and
conditions of this Agreement (none of which is a liability for breach of
contract, breach of warranty, tort or infringement, or violation of law or
any action, suit or proceeding (including, without limitation, any clean-up
obligation or liability for personal injury or property damage under any
Environmental Requirements (as defined in Section 4.13))), and (d)
liabilities otherwise expressly disclosed in this Agreement or the Schedules
attached hereto.
4.8 ABSENCE OF MATERIAL ADVERSE CHANGE. Except as set forth in Schedule
4.8 attached hereto (the "MATERIAL ADVERSE CHANGE SCHEDULE"), since December 31,
1996, there has been no material adverse change in the businesses, financial
condition, operating results, assets, or customer, supplier, employee or sales
representative relations, or business prospects of the Company or any of its
Subsidiaries.
4.9 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth in Schedule 4.9
attached hereto (the "DEVELOPMENTS SCHEDULE") and except as expressly
contemplated by this Agreement, since December 31, 1996, neither the Company nor
any of its Subsidiaries has:
(a) redeemed or repurchased, directly or indirectly, any shares of
capital stock or declared, set aside or paid any dividends or made any other
distributions with respect to any shares of its capital stock;
(b) issued, sold or transferred any notes, bonds or other debt
securities or any equity securities, securities convertible, exchangeable or
exercisable into equity securities, or warrants, options or other rights to
acquire equity securities, of the Company or its Subsidiaries;
(c) borrowed any amount or incurred or become subject to any
liabilities, except trade payables and accrued liabilities incurred in the
ordinary course of business;
(d) mortgaged, pledged or subjected to any lien, charge or any other
encumbrance, any portion of its properties or assets;
(e) sold, leased, licensed (as licensor), assigned, disposed of or
transferred (including without limitation transfers to the Sellers or any
employees or affiliates of the Company) any of its assets (whether tangible or
intangible), except for (x) transfers of cash and sales of inventory in the
ordinary course of business, and (y) sales of assets in the ordinary course of
business and not in excess of $100,000 in the aggregate;
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(f) disclosed any proprietary confidential information to any
competitor under circumstances which would have a material adverse effect on the
Company or any of its Subsidiaries;
(g) suffered any extraordinary losses or waived any rights of value,
whether or not in the ordinary course of business or consistent with past custom
and practice (other than waivers of rights of value in the ordinary course of
business, where such rights involve less than $100,000);
(h) suffered any theft, damage, destruction or casualty loss in
excess of $100,000, to its assets, whether or not covered by insurance;
(i) entered into, amended, accelerated or terminated any lease,
license, contract, agreement or commitment, taken any other action or entered
into any other transaction involving more than $100,000, or entered into any
transaction with any insider (as defined in Section 4.26);
(j) made or granted any bonus or any wage, salary or compensation
increase in excess of $25,000 per year to any director, officer, employee or
sales representative, or consultant or amended, modified or terminated any Plan
(as defined in Section 4.23) or any Canadian Employee Plan (as defined in
Section 4.32), other than in the usual and ordinary course of business and in
accordance with past custom and practice;
(k) incurred intercompany charges or conducted its collection of
receivables or inventory purchases, in each case other than in the usual and
ordinary course of business and in accordance with past custom and practice;
(l) made any capital expenditures or commitments therefor that
aggregate in excess of $500,000;
(m) delayed or postponed the repair and maintenance of its properties
or the payment of accounts payable, accrued liabilities and other obligations
and liabilities, in each case other than in the usual and ordinary course of
business consistent with past custom and practice;
(n) made loans or advances (other than for business travel) to,
guarantees for the benefit of, or any investments in, any Persons in excess of
$10,000 in the aggregate;
(o) made any loan or other payment to any insider, other than in the
ordinary course of business pursuant to pre-existing contractual arrangements
set forth on Schedule 4.26;
(p) instituted or settled any claim or lawsuit involving equitable or
injunctive relief or more than $25,000 in the aggregate; or
(q) committed to do any of the foregoing.
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4.10 REAL PROPERTY.
(a) The real estate leases and subleases (the "LEASED REAL PROPERTY")
described on Schedule 4.10(a) attached hereto (the "LEASES SCHEDULE") are in
full force and effect, and either the Company or one of its Subsidiaries holds a
valid and existing leasehold interest under each of such leases or subleases for
the term set forth in Schedule 4.10(a). The leases and subleases described in
Schedule 4.10(a) constitute all of the leases and subleases under which the
Company and its Subsidiaries hold leasehold or subleasehold interests in real
estate. The Company has delivered to Buyer complete and accurate copies of each
of the leases or subleases described in Schedule 4.10(a). With respect to each
lease and sublease listed on Schedule 4.10(a), except as set forth on the Leases
Schedule: (i) the lease or sublease is legal, valid, binding, enforceable in
accordance with its terms and in full force and effect; (ii) neither the
Company, any of its Subsidiaries nor any other party to the lease or sublease is
in breach or default, and no event has occurred which, with notice or lapse of
time, would constitute such a breach or default or permit termination,
modification or acceleration under the lease or sublease; and (iii) neither the
Company nor any of its Subsidiaries has assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold or
subleasehold.
(b) Schedule 4.10(b) attached hereto (the "OWNED PROPERTY SCHEDULE")
lists and describes briefly all real property owned by any of the Company and
its Subsidiaries (the "OWNED REAL PROPERTY"). With respect to each parcel of
real property listed on the Owned Property Schedule: (i) either the Company or
its Subsidiaries has good and marketable title to the parcel of real property,
free and clear of all mortgages, pledges, security interests, encumbrances,
charges or other liens, easements and other restrictions, other than
(A) installments of special assessments not yet delinquent and (B) recorded
easements, covenants and restrictions which do not impair the current use,
occupancy or the marketability of title, of the property subject thereto;
(ii) there are no (A) pending or, to the knowledge of any Seller or any of the
Company and its Subsidiaries, threatened condemnation proceedings relating to
the property or (B) other matters affecting adversely the current use or
occupancy thereof; (iii) there are no leases, subleases, licenses, concessions
or other agreements, written or oral, granting to any party or parties the right
of use or occupancy of any portion of the parcel of real property; (iv) there
are no outstanding options or rights of first refusal to purchase the parcel of
real property, or any portion thereof or interest therein; (v) there are no
parties (other than the Company and its Subsidiaries) in possession of the
parcel of real property, other than tenants under any leases disclosed in
Schedule 4.10(b) who are in possession of space to which they are entitled;
(vi) and all facilities located on the parcel of real property are supplied with
utilities and other services necessary for the operation of such facilities,
including gas, electricity, water, telephone, sanitary sewer, and storm sewer,
all of which services are adequate in accordance with all applicable laws,
ordinances, rules and regulations and are provided via public roads or via
permanent, irrevocable, appurtenant easements benefitting the parcel of real
property.
(c) There are no pending or, to the knowledge of any officer or
director of the Company or its Subsidiaries, threatened condemnation
proceedings, litigation or administrative actions relating to the Company's or
its Subsidiaries' Leased Real Property.
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4.11 TANGIBLE ASSETS. The assets owned or leased by the Company or its
Subsidiaries include all buildings, machinery, equipment, and other tangible
assets that are necessary for the conduct of the business of the Company and its
Subsidiaries as presently conducted, and all assets employed in the conduct of
the business of the Company and its Subsidiaries (which are all the tangible
assets necessary to conduct such business as presently conducted) are, subject
to normal wear and tear, in adequate operating condition.
4.12 TITLE TO PERSONAL PROPERTY. Either the Company or one of its
Subsidiaries has good title to, or a valid leasehold interest in, all personal
property used in connection with the operation of the business of the Company or
its Subsidiaries, free and clear of all mortgages, pledges, security interests,
encumbrances, charges or other liens, except (a) as set forth in Schedule 4.12
attached hereto (the "ENCUMBRANCES SCHEDULE") and (b) liens for Taxes not yet
due and payable or being contested in good faith by appropriate proceedings and
in respect of which adequate reserves under GAAP have been established.
4.13 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 4.13 (the
"ENVIRONMENTAL SCHEDULE") attached hereto and the environmental reports
identified on such schedule:
(a) Each of the Company, its Subsidiaries and their respective
predecessors and Affiliates has complied and is in compliance with all
Environmental Requirements.
(b) Without limiting the generality of the foregoing, each of the
Company, its Subsidiaries and their respective predecessors and Affiliates has
obtained and complied with, and is in compliance with, all permits, licenses,
consents, approvals, registrations and other authorizations that are required
pursuant to Environmental Requirements for the occupation of its facilities and
the operation of its business.
(c) None of the Sellers, the Company, its Subsidiaries or their
respective predecessors or Affiliates has received any notice, report or
information regarding any actual or alleged violation of Environmental
Requirements or any liabilities or potential liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise), including any investigatory,
remedial or corrective obligations, relating to any of them or their facilities
arising under Environmental Requirements.
(d) None of the following exists at any property owned or occupied by
the Company or its Subsidiaries:
(i) Underground storage tanks;
(ii) Asbestos-containing material in any form or condition;
(iii) Materials or equipment containing polychlorinated
biphenyls; or
(iv) Landfills, surface impoundments, incinerators, or
disposal areas.
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(e) None of the Company, its Subsidiaries, or (to the knowledge of
the Sellers) their respective predecessors or Affiliates has treated,
stored, disposed of, arranged for or permitted the disposal of, transported,
handled, had management, charge, or control over, owned, caused or permitted
the discharge of or released any substance, including without limitation any
hazardous substance, or owned, operated, occupied or had management, charge,
or control over any property or facility (and no such property or facility is
contaminated by any such substance) in a manner that has given or would give
rise to liabilities, including any liability for response costs, corrective
action costs, personal injury, property damage, natural resources damages or
attorney fees, pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), the Solid
Waste Disposal Act, as amended ("SWDA"), the Environmental Protection Act
(Ontario), the Ontario Water Resources Act, the Fisheries Act (Canada), the
Canadian Environmental Protection Act, or any other Environmental
Requirements.
(f) No facts, events or conditions relating to the past or present
facilities, properties or operations of the Company or its Subsidiaries will
prevent, hinder or limit continued compliance with Environmental Requirements,
give rise to any investigatory, remedial or corrective obligations pursuant to
Environmental Requirements, or give rise to any other liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise) pursuant to
Environmental Requirements, including without limitation any relating to onsite
or offsite releases or threatened releases of hazardous or otherwise regulated
materials, substances or wastes, personal injury, property damage or natural
resources damage.
(g) Neither this Agreement nor the transaction that is the subject of
this Agreement imposes 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.
(h) Neither the Company, its Subsidiaries nor any of their respective
predecessors or Affiliates has either expressly or by operation of law, assumed
or undertaken any liability or corrective or remedial obligation of any other
person relating to Environmental Requirements.
(i) No Environmental Lien has attached to any property owned, leased
or operated by the Company or any of its Subsidiaries.
(j) No environmental audit, assessment, study, report or other
information relating to the environmental matters relevant to the Company, its
Subsidiaries or their respective predecessors or Affiliates is in the possession
of or under the control of the Sellers or the Company or any of its
Subsidiaries.
(k) As used in this Agreement, the following terms shall have the
following respective meanings:
(i) "ENVIRONMENTAL REQUIREMENTS" shall mean all international,
federal, provincial, state, municipal, local and foreign statutes,
regulations, ordinances and similar provisions having the force or effect
of law, all judicial and administrative orders and
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determinations, and all common law concerning environmental public health
and safety and pollution or protection of the environment, including
without limitation all those relating to the presence, use, production,
generation, handling, transport, treatment, storage, disposal, distribution,
labeling, testing, processing, discharge, release, threatened release,
control, or cleanup of any hazardous or otherwise regulated materials,
substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, urea formaldehyde foam insulation, ozone depleting substances,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.
(ii) "ENVIRONMENTAL LIEN" shall mean a lien, either recorded or
unrecorded, in favor of any governmental entity, relating to any liability
of the Company or any of its Subsidiaries or Sellers, arising under
Environmental Requirements.
4.14 ACCOUNTS RECEIVABLE. All of the notes and accounts receivable of the
Company and its Subsidiaries on the Closing Date will be valid receivables.
Except as disclosed on Schedule 4.14 attached hereto, as of the Closing Date, no
Person will have any lien on such receivables or any part thereof, and no
agreement for deduction, free goods, discount or other deferred price or
quantity adjustment will have been made with respect to any such receivables
other than in the ordinary course of business.
4.15 INVENTORY. The inventories of the Company and its Subsidiaries are,
and the inventories of the Company and its Subsidiaries on the Closing Date will
be, reflected at the lower of original cost or market value in accordance with
GAAP, applied consistently with the 1996 Financial Statements. The inventories
of the Company and its Subsidiaries on the Closing Date will, net of reserves
applicable thereto, consist of a quantity and quality sufficient to continue the
conduct of the Company's and its Subsidiaries' business in the ordinary course.
4.16 TAXES.
(a) The Company and each of its Subsidiaries has timely filed all Tax
Returns required to be filed by it, each such Tax Return has been prepared in
compliance with all applicable laws and regulations, and all such Tax Returns
are true and accurate in all respects. All Taxes due and payable by the Company
and each of its Subsidiaries have been paid. The Company and each of its
Subsidiaries has properly withheld and paid all Taxes which such person was
required to withhold from amounts paid to employees, foreign persons or other
persons. No Taxes have been incurred since the date of the Latest Balance Sheet
other than in the ordinary course of business. All Taxes accrued but not yet
due are accrued on the Company's financial statements.
(b) Except as set forth in Schedule 4.16 attached hereto (the "TAXES
SCHEDULE"):
(i) neither the Company nor any of its Subsidiaries has
requested or been granted an extension of the time for filing any Tax
Return which has not yet been filed;
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(ii) there is no action, suit, taxing authority proceeding or
audit now in progress, pending or, to any Seller's or any of the Company's
or its Subsidiaries' knowledge, threatened against or with respect to the
Company or any of its Subsidiaries;
(iii) no claim has ever been made by a taxing authority in a
jurisdiction where the Company or any of its Subsidiaries does not file Tax
Returns that the Company or any of its Subsidiaries is or may be subject to
Taxes assessed by such jurisdiction;
(iv) neither the Company nor any of its Subsidiaries has made any
election under Section 341(f) of the Code (or any corresponding provision
of state, local or foreign income Tax law);
(v) neither the Company nor any of its Subsidiaries will be
required to include any amount in taxable income or exclude any item of
deduction or loss from taxable income for any taxable period (or portion
thereof) ending after the Closing Date (A) as a result of a change in
method of accounting for a taxable period ending on or prior to the Closing
Date, (B) as a result of any "closing agreement," as described in Code
Section 7121 (or any corresponding provision of state, local or foreign
income Tax law) entered into on or prior to the Closing Date, (C) as a
result of any deferred intercompany gain described in Treasury Regulation
Sections 1.1502-13 or former Treasury Regulations Section 1.1502-14 or any
excess loss account described in Treasury Regulation Sections 1.1502-19 (or
any corresponding or similar provision or administrative rule of federal,
state, local or foreign income tax law), (D) as a result of any sale
reported on the installment method where such sale occurred on or prior to
the Closing Date, and (E) as a result of any prepaid amount received on or
prior to the Closing Date;
(vi) neither the Company nor any of its Subsidiaries has any
obligation or liability for the payment of Taxes of any other Person,
including but not limited to the following, a liability of the Company for
the payment of any Tax arising (A) as a result of being (or ceasing to be) a
member of any Affiliated Group (or being included (or required to be
included) in any Tax Return relating thereto), (B) as a result from any
expressed or implied obligation to indemnify another person, and (C) as
a result from the Company assuming or succeeding to the Tax liability of any
other person as a successor, transferee or otherwise;
(vii) neither the Company nor any of its Subsidiaries has
made any payment, or is or will become obligated (under any contract
entered into on or before the Closing Date) to make any payment, that will
be non-deductible under Section 280G of the Code (or any corresponding
provision of state, local or foreign income Tax law);
(viii) none of the property owned or used by the Company or
its Subsidiaries is subject to a lease, other than a "true" lease for
federal income tax purposes; and
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(ix) Buyer will not be required to deduct and withhold any amount
with respect to Taxes pursuant to Section 1445(a) of the Code or otherwise
upon or giving effect to the consummation of the transactions contemplated
hereby.
(c) Schedule 4.16 contains a list of states, territories and
jurisdictions (whether foreign or domestic) in which, to the knowledge of the
Sellers, the Company or any of its Subsidiaries is required to file Tax Returns
relating to income Taxes of the Company or any of its Subsidiaries.
(d) As used in this Agreement, the following terms shall have the
following respective meanings.
(i) "AFFILIATED GROUP" means an affiliated group as defined in
Section 1504 of the Code (or any analogous combined, consolidated or
unitary group defined under state, local or foreign income Tax law) of
which the Company or any of its Subsidiaries is or has been a member.
(ii) "TAX" means any (A) federal, state, provincial, local or
foreign income, capital gains, gross receipts, franchise, estimated,
alternative minimum, add-on minimum, sales, use, transfer, goods and
services, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, withholding, environmental,
customs, duties, real property, personal property, capital stock, large
corporations, social security, unemployment, disability, payroll, license,
employee or other withholding or source deduction, or other tax, of any
kind whatsoever, including any interest, penalties or additions to tax or
additional amounts in respect of the foregoing; (B) liability of the
Company or its Subsidiaries for the payment of any amounts of the type
described in clause (A) arising as a result of being (or ceasing to be) a
member of any Affiliated Group (or being included (or required to be
included) in any Tax Return relating thereto); and (C) liability of the
Company or any Subsidiary for the payment of any amounts of the type
described in clause (A) as a result of any express or implied obligation to
indemnify or otherwise assume or succeed to the liability of any other
person;
(iii) "TAX RETURNS" means returns, declarations, reports,
notices, claims for refund, information returns or other documents
(including any related or supporting schedules, statements or information)
filed or required to be filed in connection with the determination,
assessment or collection of Taxes of any party or the administration of any
laws, regulations or administrative requirements relating to any Taxes.
4.17 CONTRACTS AND COMMITMENTS.
(a) Except as specifically contemplated by this Agreement and except
as set forth in Schedule 4.17 attached hereto (the "CONTRACTS SCHEDULE") neither
the Company nor any of its Subsidiaries is a party to or bound by, whether
written or oral, any: (i) collective bargaining agreement or contract with any
labor union; (ii) management agreement or other contract for the employment of
any officer, partner, individual employee or other person on a full time,
part-time
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or consulting basis or providing for the payment of any cash or other
compensation or benefits upon the sale of all or a material portion of the
assets of the Company or any Subsidiary thereof or a change of control (other
than at-will employment agreements with its employees which do not commit the
Company or any of its Subsidiaries to severance, termination or other similar
payments); (iii) agreement or indenture under which the Company or its
Subsidiaries has created, incurred, assumed or guaranteed any indebtedness for
borrowed money or any capitalized lease obligation, or created or suffered to
exist a security interest, pledge or other lien on any of its assets;
(iv) contract, including, but not limited to, purchase orders, for the purchase
or sale of raw materials, commodities, supplies, products or other personal
property or for the furnishing or receipt of services which either calls for
performance over a period of more than one year (except if such contracts do not
involve a sum in excess of $500,000 annually) or involves a sum in excess of
$1,000,000; (v) contract not terminable by it upon 30 days or less notice
without premiums or penalties (except if such contracts do not involve a sum in
excess of $250,000 per year), (vi) contract which prohibits it from freely
engaging in business anywhere in the world; (vii) contract relating to the
distribution, marketing or sales of its products; (viii) franchise or license
agreements; (ix) power of attorney; (x) agreement or contract relating to the
acquisition or sale of the business (or any material portion thereof); or
(xi) other agreement material to it whether or not entered into in the ordinary
course of business.
(b) With respect to each of the Company's and its Subsidiaries'
agreements and contracts required to be disclosed on Schedule 4.17 or any other
Schedule hereto: (i) such agreement or contract is legal, valid, binding, and
enforceable in accordance with its terms (except as enforceability thereof may
be limited by bankruptcy or other laws affecting creditor's rights generally and
limitations on the availability of equitable remedies), and is in full force and
effect; (ii) neither the Company nor its Subsidiaries is in breach or default,
and no event has occurred which with notice or lapse of time would constitute a
breach or default by the Company or its Subsidiaries or permit any third party
to terminate, modify, or accelerate, such agreement or contract; (iii) neither
the Company nor its Subsidiaries has repudiated any provision of such agreement,
contract or arrangement; (iv) to the best of the Company's and its Subsidiaries'
knowledge, no third party is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default by such
third party or permit the Company or its Subsidiaries to terminate, modify, or
accelerate, such agreement, contract or arrangement; (v) neither the Company nor
its Subsidiaries has any present expectation or intention of not fully
performing any obligation on its part to be performed pursuant to any such
agreement or contract; (vi) neither the Company nor its Subsidiaries has any
knowledge of any breach or anticipated breach by any other party to any such
agreement or contract; (vii) to the knowledge of Sellers, no unfilled customer
order or commitment obligating the Company or any of its Subsidiaries to
process, manufacture or deliver products or perform services will result in a
material loss to the Company or any of its Subsidiaries upon completion of
performance, and (viii) to the knowledge of Sellers, with respect to verbal or
written contracts for which the Company's or its Subsidiaries' payments or
receipts are presently anticipated to exceed $250,000 neither the Company nor
any of its Subsidiaries is obligated to purchase any property or services at a
price greater than prevailing market price, sell any property or services at a
price less than prevailing market price, pay rentals or royalties at a rate
greater than the prevailing market price, or act as lessor or licensor at a
rate less than the prevailing market price.
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(c) The Company has provided Buyer with a true and correct copy of
all written contracts which are referred to on Schedule 4.17, together with all
amendments, waivers or other changes thereto. Schedule 4.17 contains an
accurate and complete description of all material terms of all oral contracts
referred to therein.
4.18 INTELLECTUAL PROPERTY RIGHTS.
(a) "INTELLECTUAL PROPERTY RIGHTS" shall mean all of the following
owned by, issued to or licensed to, the Company or its Subsidiaries: patents,
patent applications, patent disclosures and inventions (whether or not
patentable or reduced to practice) and any reissue, continuation,
continuation-in-part, division, revision, extension or reexamination thereof;
trademarks, service marks, trade dress, logos, trade names and corporate names
and all goodwill associated therewith; registered or unregistered copyrights,
and copyrightable works; and all registrations, applications and renewals for
any of the foregoing; other intellectual property rights; licenses or other
agreements to or from third parties regarding the foregoing; in each case
including, without limitation, the items set forth on Schedule 4.18 attached
hereto (the "INTELLECTUAL PROPERTY RIGHTS SCHEDULE").
(b) The Intellectual Property Rights set forth on the INTELLECTUAL
PROPERTY RIGHTS SCHEDULE comprise all of the intellectual property rights
necessary for the operation of the Company's and its Subsidiaries' businesses as
currently conducted. The INTELLECTUAL PROPERTY RIGHTS SCHEDULE sets forth a
complete and correct list of all: (i) patented or registered Intellectual
Property Rights and all pending patent applications or other applications for
registration of Intellectual Property Rights; (ii) trade names and service marks
used by the Company or any of its Subsidiaries; and (iii) all licenses or
similar agreements or arrangements to which the Company or any of its
Subsidiaries is a party either as licensee or licensor for the Intellectual
Property Rights.
(c) Except as set forth on the INTELLECTUAL PROPERTY RIGHTS SCHEDULE,
(i) the Company or one of its Subsidiaries owns and possesses all right, title
and interest in and to, or has a valid, enforceable and effective license to
use, the Intellectual Property Rights free and clear of all liens, licenses and
other encumbrances, and to the knowledge of any of the Sellers, the Company, or
its Subsidiaries, no claim by any third party contesting the validity,
enforceability, use or ownership of any of the Intellectual Property Rights has
been made, is currently outstanding or is threatened; (ii) to the knowledge of
any of the Sellers, the Company, or its Subsidiaries, all of the Intellectual
Property Rights are valid and enforceable and none of the Intellectual Property
Rights have been misused; (iii) to the knowledge of any of the Sellers, the
Company, or its Subsidiaries, no loss (other than as a result of statutory
expiration) of any of the Intellectual Property Rights is threatened, pending or
reasonably foreseeable; (iv) to the knowledge of the any of the Sellers, the
Company, or its Subsidiaries, no third party has infringed, misappropriated or
otherwise conflicted with any of the Intellectual Property Rights and none of
the Sellers, the Company nor its Subsidiaries are aware of any facts that
indicate a likelihood of any of the foregoing; and (v) neither the Company nor
any of its Subsidiaries has infringed, misappropriated or otherwise conflicted
with any intellectual property rights or other rights of any third parties, none
of the Sellers or the Company or any of its Subsidiaries is aware of any
infringement, misappropriation or conflict which will occur as a result of the
continued operation of the Company's and the Subsidiaries' businesses
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as currently conducted or as currently proposed to be conducted, and none of
the Sellers or the Company or any of its Subsidiaries have received any
notices regarding any of the foregoing (including, without limitation, any
demands or offers to license any intellectual property rights from any third
party).
(d) All of the Intellectual Property Rights identified on the
INTELLECTUAL PROPERTY RIGHTS SCHEDULE are or will be owned by, or properly
assigned or licensed from a third party to, the Company or one of its
Subsidiaries at the time of the Closing. The transactions contemplated by this
Agreement will have no material adverse effect on the Company's or its
Subsidiaries' right, title and interest in and to the Intellectual Property
Rights set forth on the INTELLECTUAL PROPERTY RIGHTS SCHEDULE. The Company and
each of its Subsidiaries will use best efforts to maintain the Intellectual
Property Rights set forth on the INTELLECTUAL PROPERTY RIGHTS SCHEDULE prior to
the Closing so as to not materially adversely affect the validity or enforcement
of such Intellectual Property Rights.
4.19 LITIGATION; PROCEEDINGS. Except as set forth in Schedule 4.19
attached hereto (the "LITIGATION SCHEDULE"), there are no actions, suits,
proceedings, orders or investigations pending or, to the Sellers' and the
Company's and its Subsidiaries' knowledge, threatened against or affecting the
Company or its Subsidiaries at law or in equity, or before or by any federal,
provincial, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, and there is no
basis known to the Sellers for any of the foregoing. Except as set forth on
Schedule 4.19, neither the Company nor any of its Subsidiaries has received any
opinion or legal advice in writing to the effect that the Company or any of its
Subsidiaries is exposed from a legal standpoint to any liability or disadvantage
which may be material to the Company's or any of its Subsidiaries' business as
previously or presently conducted or business prospects.
4.20 BROKERAGE. Except as set forth in Schedule 4.20 attached hereto (the
"BROKERAGE SCHEDULE"), which compensation is the sole responsibility of the
Sellers, there are no claims for brokerage commissions, finders fees' or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of the Sellers, the
Company or any of its Subsidiaries.
4.21 GOVERNMENTAL LICENSES AND PERMITS. Schedule 4.21 attached hereto (the
"LICENSES SCHEDULE") sets forth permits, licenses, franchises, certificates,
approvals and other authorizations of foreign, federal, state and local
governments or other similar rights (collectively, the "GOVERNMENT LICENSES")
owned or possessed by the Company or its Subsidiaries or used by the Company or
its Subsidiaries in the conduct of their business. Except as indicated on the
LICENSES SCHEDULE and the ENVIRONMENTAL SCHEDULE, (i) the Company and its
Subsidiaries own or possess all right, title and interest in and to all of the
Government Licenses which are necessary to conduct its businesses as presently
constituted and prior to the Closing will use its best efforts to maintain all
such Government Licenses, and (ii) the consummation of the transactions
contemplated hereby will not require any filings, authorizations or approvals in
respect of the Government Licenses. No loss or expiration of any Government
License is pending or to the knowledge of any Seller, the Company or any
Subsidiary thereof, threatened, other than expiration in accordance with the
terms thereof.
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4.22 EMPLOYEES. Except as set forth on Schedule 4.22 attached hereto, to
the knowledge of the Sellers and the Company and its Subsidiaries, no key
executive employee and no group of employees of the Company or its Subsidiaries
has any plans to terminate his, her or its employment with the Company or any of
its Subsidiaries. The Company and its Subsidiaries have complied in all
material respects with all applicable laws relating to the employment of
personnel and labor, including provisions thereof relating to wages, hours,
equal opportunity, pay equity, collective bargaining and the payment of social
security and other taxes and (with respect to the Company and each Subsidiary
subject to such Act) the Immigration Reform and Control Act of 1986. Neither
the Company nor any of its Subsidiaries has experienced any strikes, material
grievances, unfair labor practices claims or other material employee disputes
and their labor relations are satisfactory.
4.23 EMPLOYEE BENEFIT PLANS MAINTAINED IN THE UNITED STATES PRIMARILY FOR
THE BENEFIT OF UNITED STATES CITIZENS.
(a) Schedule 4.23 attached hereto (the "U.S. EMPLOYEE BENEFIT PLANS
SCHEDULE") contains an accurate and complete list of each Plan, as defined
below, which the Company or any of its U.S. Subsidiaries have sponsored,
maintained or contributed to at any time during the 6-year period preceding the
Closing Date. For purposes of this Section 4.23 and Schedule 4.23, the term
"PLAN" shall mean: (i) each employee benefit plan as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not terminated, but subject to the 6-year-period limitation specified
above and (ii) fringe benefit plans, policies, programs and arrangements,
whether or not subject to ERISA and whether or not funded, including without
limitation, stock bonus, deferred compensation, severance, bonus, vacation, and
incentive compensation, whether or not terminated, but subject to the
6-year-period limitation specified above.
(b) Except as provided in Schedule 4.23, neither the Company nor any
of its Subsidiaries have sponsored, maintained or contributed to any Plan at any
time during the 6-year period preceding the Closing Date which provides health
or life insurance benefits to current or future retirees, their spouses or
dependents, other than in accordance with Section 4980B of the Code or
applicable state continuation coverage law.
(c) Except as provided in Schedule 4.23, no Plan obligates the
Company or its Subsidiaries to pay separation, severance, termination or
similar-type benefits solely as a result of the sale of stock contemplated by
this Agreement or solely as a result of a "change in ownership of effective
control," as such term is defined in Section 280G of the Code and the
regulations thereunder.
(d) No Plan as defined in Section 4.23(a) above is a "multiemployer
plan" as defined in Section 3(37) of ERISA or a Plan maintained by more than one
employer within the meaning of Section 413(c) of the Code. No Plan as defined
in Section 4.23 above is a pension plan subject to Title IV of ERISA or Section
412 of the Code. With respect to each Plan, all required payments, premiums,
contributions, or reimbursements for all periods ending prior to or as of the
Closing Date shall have been made. Except with respect to those Plans which by
their terms are self-funded or unfunded and are appropriately accounted for on
the Latest Balance Sheet in
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accordance with GAAP, with respect to Plans (as defined in this Section)
only, no Plan has any material unfunded liabilities as of the Closing Date.
(e) Except as disclosed on Schedule 4.23, each Plan and any related
trusts, insurance contracts and funds have been maintained, funded and
administered in compliance in all material respects with all applicable laws and
regulations, including but not limited to ERISA and the Code. None of the
Sellers nor the Company nor any of its Subsidiaries, nor any trustee or Plan
administrator of any Plan, nor other Person has engaged in any transaction with
respect to the Plans which could subject the Company or its Subsidiaries, or any
trustee or administrator of the Plans, or any party dealing with any Plan, to
any tax or penalty imposed by ERISA or the Code. Except as disclosed on
Schedule 4.23(e), no actions, suits or claims with respect to the Plans (other
than routine claims for benefits) are pending or threatened and none of the
Sellers nor the Company nor any of its Subsidiaries has any knowledge of any
facts which could give rise to or be expected to give rise to any such actions,
suits or claims.
(f) Each Plan that is intended to be qualified under Section 401(a)
of the Code, and each trust (if any) forming a part thereof, has received a
favorable determination letter from the Internal Revenue Service ("IRS") as to
the qualification under the Code of such Plan and the tax-exempt status of such
related trust, and, except as disclosed on Schedule 4.23, nothing has occurred
since the date of such determination letter that could adversely affect the
qualification of such Plan or the tax-exempt status of such related trust.
(g) True, complete and correct copies have been made available to
Buyer, to the extent applicable of (i) each Plan, (ii) the two most recent
annual reports (Form 5500 series) filed with the IRS (with attachments) for each
Plan, if applicable, (iii) the two most recent financial statements of each
Plan, if applicable, (iv) all governmental rulings, determinations and opinions
(and pending requests for governmental rulings, determinations and opinions),
and (vi) the most recent valuation, if any, of the present and future benefit
obligations under each Plan that provides post-retirement or post-employment,
health or life insurance benefits.
4.24 INSURANCE. Schedule 4.24 attached hereto (the "INSURANCE SCHEDULE")
sets forth the following information with respect to each insurance policy
insuring the properties, business or assets of the Company or its Subsidiaries
to which the Company or its Subsidiaries is a party, a named insured, or
otherwise the beneficiary of coverage:
(a) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(b) the scope, period and amount of coverage; and
(c) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is a legal, valid,
binding and enforceable in accordance with its terms and is in full force and
effect; (B) neither the Company nor any of its
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Subsidiaries is in breach or default (including with respect to the payment
of premiums or the giving of notices), and no event has occurred which with
notice or lapse of time would constitute a breach or default by the Company
or its Subsidiaries or permit the insurer to terminate, modify, or
accelerate, such policy; (C) neither the Company nor any of its Subsidiaries
has repudiated any provision of such policy; and (D) to the best of the
Sellers' and the Company's and its Subsidiaries' knowledge, the insurer is
not in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default by the insurer or permit
the Company or any of its Subsidiaries to terminate, modify, or accelerate,
such policy. The INSURANCE SCHEDULE describes any self-insurance
arrangements affecting the Company or any of its Subsidiaries.
4.25 OFFICERS AND DIRECTORS; BANK ACCOUNTS. Schedule 4.25 attached hereto
(the "OFFICERS AND DIRECTORS SCHEDULE") lists all officers and directors of the
Company and its Subsidiaries and all of the Company's and its Subsidiaries' bank
accounts (designating each authorized signatory).
4.26 AFFILIATE TRANSACTIONS. Except as disclosed on Schedule 4.26 attached
hereto (the "AFFILIATE TRANSACTIONS SCHEDULE") no executive officer, director or
shareholder of the Company or its Subsidiaries or any Affiliate thereof or any
person related by blood or marriage to any such Person in which any such Person
owns any beneficial interest (collectively, the "INSIDERS"), is a party to any
agreement, contract, commitment or transaction with the Company or any of its
Subsidiaries or which is pertaining to the business of the Company or has any
interest in any property, real or personal or mixed, tangible or intangible,
used in or pertaining to the business of the Company or its Subsidiaries.
"AFFILIATE" means, in the case of a natural Person, one or more members of a
group comprising such Person and such Person's parents or grandparents, his
children or grandchildren, his siblings and any spouse of any of the foregoing.
In the case of a corporation or other Person which is not a natural Person, the
term "AFFILIATE" means a Subsidiary or other Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such Person. For purposes hereof, "CONTROL" means the
power to vote or direct the voting of sufficient securities or other interests
to elect a majority of the directors or to control the management of a Person.
4.27 COMPLIANCE WITH LAWS. The Company and its Subsidiaries and their
officers, directors, agents and employees have complied with all applicable
laws, regulations (including, without limitation, applicable occupational health
and safety laws and regulations) and zoning ordinances of foreign, federal,
provincial, state and local governments and all agencies thereof which affect
the business, business practices (including, but not limited to, the Company's
and its Subsidiaries' marketing, sales and distribution of its products and
services) or any owned or leased properties of the Company or its Subsidiaries
and to which the Company or its Subsidiaries may be subject, and no claims have
been filed against the Company alleging a violation of any such laws or
regulations. Neither the Company nor any of its Subsidiaries has given or
agreed to give any money, gift or similar benefit (other than incidental gifts
of articles of nominal value) to any actual or potential customer, supplier,
governmental employee, insider or any other person in a position to assist or
hinder the Company or its Subsidiaries in connection with any actual or proposed
transaction.
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4.28 DISCLOSURE. Neither this Agreement, nor any of the schedules,
attachments or exhibits hereto, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they were made, not misleading.
There is no fact which has not been disclosed to Buyer of which any of the
Sellers or the Company or any Subsidiary is aware and which affects adversely or
could reasonably be anticipated to affect adversely the business, financial
condition, operating results, assets, customer, supplier, employee or sales
representative relations or business prospects of the Company and its
Subsidiaries.
4.29 PRODUCT AND SERVICE WARRANTY; PRODUCT RECALL. Schedule 4.29-1
attached hereto (the "WARRANTY SCHEDULE") contains copies of the standard terms
and conditions of sale for products delivered and services rendered to the
extent relating to the business of the Company and its Subsidiaries (containing
applicable guaranty, warranty, and indemnity provisions). Except as set forth
on the attached Schedule 4.29-2 (the "PRODUCT RECALLS SCHEDULE") during the past
three years there have been no product recalls, withdrawals, discontinuances or
seizures with respect to any products manufactured or sold by the Company or any
of its Subsidiaries.
4.30 CUSTOMERS AND SUPPLIERS.
(a) The attached Schedule 4.30-1 (the "CUSTOMER LIST") lists the
customers of the Company and its Subsidiaries which represent at least 80% of
the sales of the Company and its Subsidiaries for the last fiscal year (on a
consolidated basis).
(b) Since January 1, 1997, no material supplier of the Company or any
of its Subsidiaries has indicated that it shall stop, or materially decrease the
rate of, supplying materials, products or services to the Company or any of its
Subsidiaries, and no customer listed on the attached Customer List has indicated
that it shall stop, or materially decrease the rate of, buying materials,
products or services from the Company or its Subsidiaries.
(c) Schedule 4.30-3 (the "MAJOR START-UP SCHEDULE") sets forth all
major start-up programs (and the amounts and timing of expected revenues
relating thereto) of a customer of the Company or its Subsidiaries which the
Sellers expect to commence during the 24-month period immediately following the
Closing Date and which expected commencement is reflected in the projections set
forth on the PROJECTIONS SCHEDULE.
4.31 FUNDED DEBT AMOUNT. Schedule 4.31 attached hereto (the "FUNDED DEBT
SCHEDULE") describes the Funded Debt Amount as of the date of this Agreement.
The FUNDED DEBT SCHEDULE also sets forth the principal amounts, scheduled
amortizations, and interest accruals necessary to calculate the Funded Debt
Amount as of the Closing Date. There shall be no fees, expenses, prepayment
penalties or other charges due as of the Closing Date with respect to
indebtedness for borrowed money described on the FUNDED DEBT SCHEDULE assuming
that all amounts owing with respect to such indebtedness are repaid on the
Closing Date. From the date hereof through the Closing Date, (i) there shall be
no increase in the Company's and its Subsidiaries liabilities with respect to
the principal amount of debt for borrowed money (other than in accordance with
the terms of existing debt agreements, as in effect on the date hereof), (ii)
there shall be no decrease in the
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principal amount of any of the obligations (other than the Revolver) set
forth on the FUNDED DEBT SCHEDULE other than in accordance with the scheduled
amortization payments set forth on the FUNDED DEBT SCHEDULE, and (iii)
neither the Company nor any of its Subsidiaries shall enter into any capital
leases that are properly classified as a liability on a balance sheet
prepared in accordance with GAAP. "FUNDED DEBT AMOUNT" means, as of the date
of any determination, (x) all liabilities of the Company and its Subsidiaries
with respect to the outstanding principal amount of all indebtedness for
borrowed money plus accrued interest thereon and all fees, expenses,
prepayment penalties and other charges with respect thereto, PLUS (y) that
portion of the obligations of the Company and its Subsidiaries with respect
to capital leases that are properly classified as a liability on the balance
sheet prepared in accordance with GAAP, applied consistently with the 1996
Financial Statements.
4.32 CANADIAN EMPLOYEE PLANS.
(a) The Company has delivered true copies of the Canadian Employee Plans
to the Buyer and has delivered actuarial evaluations in its possession prepared
for each Canadian Employee Plan during the past five years. For purposes of
this Section 4.32 and Schedule 4.32, the term "CANADIAN EMPLOYEE PLAN" means the
retirement, pension, bonus, stock purchase, profit sharing, stock option,
deferred compensation, severance or termination pay, insurance, medical,
hospital, dental, vision care, drug, sick leave, disability, salary
continuation, legal benefits, unemployment benefits, vacation, incentive or
other compensation plan or arrangement or other employee benefit that is
maintained or otherwise contributed to or required to be contributed to by GT
Automotive Systems (Windsor) Limited (together with any predecessor or successor
thereto or Subsidiary thereof (other than GT Shift Systems, Inc.), the "CANADIAN
SUBSIDIARY") for the benefit of its employees or former employees of the
Canadian Subsidiary.
(b) The Canadian Subsidiary does not have, and is not subject to, any
present or future liability under any Canadian Employee Plan or other program,
policy or practice, formal or informal, with respect to any of its employees or
former employees, other than those Canadian Employee Plans set forth on Schedule
4.32 attached hereto.
(c) There are no pending claims or proceedings (other than the workers'
compensation claims disclosed on Schedule 4.19) by any employee covered under
the Canadian Employee Plans, nor has any notice been received by the Canadian
Subsidiary from any other Person, alleging any violation of any fiduciary duties
or violation of Canadian federal, provincial, or local laws, statutes,
ordinances, rules and regulations which may result in liability to the Canadian
Subsidiary with respect to the Canadian Employee Plans. There are no employees
or former employees of the Canadian Subsidiary who are receiving from the
Canadian Subsidiary any pension or retirement payments or who are entitled to
receive any such payments other than under the Canadian Employee Plans set forth
on Schedule 4.32.
(d) The Canadian Subsidiary is not responsible for any obligation or
liability under the Canada-Wide Industrial Pension Plan (including, but not
limited to, any portion of any underfunding existing under such plan), other
than for the monthly contributions which arise in the ordinary course of
business.
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(e) To the knowledge of the Sellers, after inquiries with senior
management of the Canadian Subsidiary and after review of all books and records
in their possession, each Canadian Employee Plan has been maintained, funded and
administered in compliance in all material respects with all applicable laws and
regulations.
(f) With respect to each Canadian Employee Plan, all required payments,
premiums, contributions, accruals, or reimbursements for all periods ending
prior to or as of the Closing Date shall have been made when due. No Canadian
Employee Plan has any unfunded liabilities as of the Closing Date that could
result in any liabilities to Buyer, the Company, the Canadian Subsidiary or any
of their Affiliates under or pursuant to (i) the terms of the Canadian Employee
Plans or any contracts entered into by the Canadian Subsidiary in connection
therewith, (ii) Canadian federal, provincial, state, or local laws, statutes,
ordinances, rules, regulations, or practices, or (iii) any action of any
federal, provincial, state, or local government authority, or any administrator,
trustee, or other Person responsible for managing or administering the Canadian
Employee Plan; PROVIDED that "unfunded liabilities" as used in this sentence
shall not include the amount of Closing APBO to the extent pertaining to the
Canadian Subsidiary.
4.33 CLOSING DATE. To the knowledge of Sellers, all of the representations
and warranties contained in this Article IV and elsewhere in this Agreement and
all information delivered in any schedule, attachment or exhibit hereto are true
and correct on the date of this Agreement and will be true and correct on the
Closing Date except to the extent that the Sellers have advised the Buyer
otherwise in writing prior to the Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to the Sellers to enter into this Agreement,
Buyer hereby represents and warrants to the Sellers that:
5.1 CORPORATE ORGANIZATION AND POWER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified to do business in every jurisdiction in which the
nature of its business or its ownership of property requires it to be qualified.
Buyer has full corporate power and authority and all licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and presently proposed to be conducted. Buyer has
full corporate power to execute and deliver this Agreement, the other agreements
contemplated hereby and to consummate the transactions contemplated hereby and
thereby.
5.2 AUTHORIZATION. Except as described on Schedule 5.2 attached hereto
(the "BUYER AUTHORIZATION SCHEDULE"), (i) the execution, delivery and
performance of this Agreement, the other Agreements contemplated hereby and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all requisite corporate action on the part of Buyer,
(ii) no other corporate proceedings on its part are necessary to authorize the
execution,
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delivery or performance of this Agreement, the other agreements contemplated
hereby or the transactions contemplated hereby or thereby and (iii) this
Agreement and the other agreements contemplated hereby to which it is a party
constitutes a valid and binding obligation of Buyer, enforceable in
accordance with its terms, except as enforceability hereof may be limited by
bankruptcy or other laws affecting creditor's rights generally and
limitations on the availability of equitable remedies.
5.3 ABSENCE OF CONFLICTS. Except as set forth on the attached Schedule
5.3 (the "BUYER CONFLICTS SCHEDULE"), the execution, delivery and performance by
Buyer of this Agreement and the other agreements contemplated hereby to which it
is a party and the consummation of the transactions contemplated hereby and
thereby do not and shall not (i) conflict with or result in any breach of any of
the provisions of, (ii) constitute a default under, (iii) result in a violation
of, (iv) give any third party the right to terminate or to accelerate any
obligation under, or (v) require any authorization, consent, approval, license,
permit, exemption or other action by or notice to or filing with any court or
other governmental entity, under the provisions of Buyer's constituent documents
or any agreement, contract, instrument, lease, commitment, license, guaranty, or
other business arrangement or understanding of Buyer, or any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of an arbitrator or governmental entity.
5.4 LITIGATION. There are no actions, suits, proceedings, orders or
investigations pending or, to the best of Buyer's knowledge, threatened against
or affecting Buyer at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would adversely affect Buyer's
performance under this Agreement or the consummation of the transactions
contemplated hereby.
5.5 SECURITIES LAW. Buyer understands that it may not sell or otherwise
dispose of the Company Stock in any manner or to any person or persons in
violation of the Securities Act of 1933 and applicable state securities laws or
as a statutory underwriter for the Sellers under such Act. The Buyer is
acquiring the Company Stock pursuant to this Agreement for its own account and
for investment and not with a view to a public distribution thereof and
acknowledges that the Company Stock being so acquired have not been registered
under the Securities Act of 1933 or any applicable state securities laws.
5.6 CLOSING DATE. To the knowledge of Buyer, all of the representations
and warranties contained in this Article V and elsewhere in this Agreement and
all information delivered in any schedule, attachment or exhibit hereto are true
and correct in all material respects on the date of this Agreement and will be
true and correct in all material respects on the Closing Date, except to the
extent that Buyer has advised the Sellers otherwise in writing prior to the
Closing.
ARTICLE VI
TERMINATION
6.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
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(a) by mutual written consent of Buyer and the Representative (on
behalf of the Sellers);
(b) by Buyer if there has been a breach in any material respect on
the part of the Company or any Seller, or by the Sellers if there has been a
breach in any material respect on the part of the Buyer, in the representations
and warranties or covenants set forth in this Agreement, or if events have
occurred which have made it impossible to satisfy a condition precedent to the
terminating party's obligations to consummate the transactions contemplated
hereby, unless such terminating party's (or in the case of the Sellers, the
Company's or any Seller's) willful breach of this Agreement has caused the
condition to be unsatisfied; or
(c) by either Buyer or the Sellers if the Closing has not occurred on
or prior to October 15, 1997, by reason of the failure of any condition
precedent under Article II hereof; provided that neither Buyer nor the Sellers
will be entitled to terminate this Agreement pursuant to this Section 6.1(c) if
such person's (or, in the case of the Sellers, the Company's or any Seller's)
willful breach of this Agreement has prevented satisfaction of the conditions or
the consummation of the transactions contemplated hereby at or prior to such
time.
6.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either Buyer or the Sellers as provided above, this Agreement will forthwith
become void and there will be no liability on the part of any party hereto to
any other party hereto or its shareholders or directors or officers in respect
thereof, except for the obligations of the parties hereto in Sections 9.2
(announcements), 9.4 (remedies), 8.7(b) (confidentiality) and 8.8 (payment of
expenses), and except that nothing herein will relieve any party from any breach
of this Agreement prior to such termination.
ARTICLE VII
CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
set forth below:
"DOLLARS" or "$", as expressly used herein, means U.S. dollars.
"PARENT" means Dura Automotive Systems, Inc., a Delaware corporation.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association, limited liability company, 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
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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, limited liability company 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
the managing director or general partners of such partnership, association or
other business entity.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1 SURVIVAL. All representations, warranties, covenants and agreements
set forth in this Agreement (including the schedules, attachments, and exhibits
hereto) will survive the Closing Date and the consummation of the transactions
contemplated hereby and will not be affected by any examination made for or on
behalf of Buyer, the knowledge of any of its officers, directors, shareholders,
employees or agents, or the acceptance of any certificate or opinion.
8.2 INDEMNIFICATION.
(a) Subject to the limitations set forth in (b) below, the Sellers
agree (both jointly and severally) to indemnify Buyer and its officers,
directors, shareholders and Affiliates (the "BUYER PARTIES") and to hold them
harmless against any loss, liability, deficiency, damage or expense (including,
but not limited to, reasonable legal expenses and costs and including any
interest and penalties) ("LOSSES") which any Buyer Party may suffer, sustain or
become subject to, as a result of any of the following:
(i) the breach (or third-party allegation of a breach) by any
Seller of any representation or warranty contained in Article IV of this
Agreement;
(ii) the breach (or third-party allegation of a breach) by any
Seller of any covenant or agreement made by the Company and/or the Sellers
contained in this Agreement;
(iii) any Income Taxes of the Company or any Subsidiary (or
any unpaid Income Taxes of any Person for which the Company or any
Subsidiary is liable) relating to or arising out of any period (or partial
period) ending on or prior to the Closing Date;
(iv) the claim by TRW Automotive Electronics Group Division
referenced on Schedule 4.19(2);
(v) any liabilities and any investigative, corrective, or
remedial obligations relating to violations of, or liabilities arising
under, Environmental Requirements, to the extent (A) such liabilities arise
out of, relate to, or are caused by events, circumstances, conditions, or
occurrences which took place prior to July 1, 1996, AND (B)
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such liabilities are expressly allocated to the Company or any of its
Subsidiaries or their respective predecessors pursuant to the provisions of
Section 6.9 of the Share Purchase Agreement dated as of June 21, 1996 among
Nealvest Investments Limited, as Vendor, 1156754 Ontario Ltd., as
Purchaser, Tamco Limited, and Tamco Manufacturing, Inc., as amended by an
Amending Agreement dated as of June 23, 1996; and
(vi) any liabilities and any investigative, corrective, or
remedial obligations relating to violations of, or liabilities arising
under, Environmental Requirements, to the extent such liabilities arise out
of, relate to, or are caused by events, circumstances, conditions, or
occurrences which took place (A) with respect to GT Automotive Systems
(Windsor) Limited (formerly known as Tamco Limited) and GT Shift Systems,
Inc. (formerly known as Tamco Manufacturing, Inc.) and any successor
thereto or Subsidiary thereof, on or after July 1, 1996, and prior to the
Closing Date, and (B) with respect to GT Automotive Systems, Inc. (formerly
known as GEL, Inc.) and any successor thereto, on or after November 1, 1996
and prior to the Closing Date.
(b) The indemnification provided for in Section 8.2(a)(i) (and,
solely with respect to the limitations in subparagraphs (b)(ii), (iii) and (iv)
below, Section 8.2(a)(vi)) above is subject to the following limitations:
(i) The Buyer acknowledges that the Company and its Subsidiaries
are composed of business units which have been acquired during the past
fourteen months. More specifically, GT Automotive Systems (Windsor)
Limited (formerly known as Tamco Limited) and its former wholly owned
subsidiary, GT Shift Systems, Inc. (formerly known as Tamco Manufacturing,
Inc.) were acquired on July 1, 1996, and GT Automotive Systems, Inc.
(formerly known as GEL, Inc.) was acquired on November 1, 1996.
Accordingly, Buyer has agreed (subject to the provisos set forth in the
following sentence) to rely solely upon the representations and warranties
contained in the transaction documents pursuant to which these companies
were acquired for breaches (or third-party allegations of breaches) of
representations and warranties occurring prior to the respective dates of
acquisition of these companies, and (to the extent provided herein) the
Sellers will be responsible for breaches (and third-party allegations of
breaches) of representations and warranties occurring after the respective
dates of acquisition of these companies. Therefore, notwithstanding
anything herein to the contrary, Buyer acknowledges and agrees that its
indemnification rights against Sellers are limited to, and Sellers shall
only be liable to indemnify Buyer Parties for Losses under Section
8.2(a)(i) solely to the extent such Losses arise out of, relate to, or are
caused by events, circumstances, conditions or occurrences which took place
(A) with respect to GT Automotive Systems (Windsor) Limited (formerly known
as Tamco Limited) and GT Shift Systems, Inc. (formerly known as Tamco
Manufacturing, Inc.) and any successor thereto or Subsidiary thereof, on or
after July 1, 1996, and prior to the Closing Date, and (B) with respect to
GT Automotive Systems, Inc. (formerly known as GEL, Inc.) and any successor
thereto, on or after November 1, 1996, and prior to the Closing Date;
PROVIDED that the limitations of this subparagraph (i) will not apply to
Losses under Section 8.2(a)(i) if such Losses arise out of, relate to, or
are caused by events, circumstances, conditions or occurrences of which any
of the Sellers or the Company or its Subsidiaries had knowledge
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or notice prior to the Closing Date; AND PROVIDED FURTHER that the
limitations of this subparagraph (i) shall not apply to Losses relating to
breaches of the representations and warranties set forth in
Sections 4.1 (Organization), 4.2 (Authorization), 4.3 (Capitalization),
4.4 (Subsidiaries), and 4.5 (Absence of Conflicts).
(ii) The Sellers will be liable to Buyer Parties only if such
Buyer Party gives the Representative written notice thereof within 2 years
after the Closing Date, except for (A) claims arising under Section
8.2(a)(vi) above, as to which written notice thereof must be made within 3
years after the Closing Date, and (B) claims arising from breaches of the
representations and warranties (x) set forth in Section 4.16 (Taxes) as to
which written notice thereof must be made prior to the expiration of the
applicable statute of limitation with respect thereto and (y) set forth in
Section 4.2 (Authorization) and 4.3 (Capitalization) as to which written
notice thereof may be made at any time;
(iii) the Sellers will not be liable to Buyer Parties for any
Losses under Section 8.2(a)(i) or (vi) unless and until the aggregate
amount of all such Losses relating to all such breaches or liabilities
exceeds $500,000, except for Losses arising from breaches of the
representations and warranties set forth in Sections 4.2 (Authorization),
4.3 (Capitalization), 4.16 (Taxes), 4.26 (Affiliated Transactions) and 4.31
(Funded Debt) (in which case the Sellers will be liable to Buyer for all
such Losses); and
(iv) the Sellers will not be liable to Buyer Parties for any
Losses under Section 8.2(a)(i) or (vi) to the extent that such Losses
exceed $5.0 million in the aggregate, except for Losses arising from
breaches of the representations and warranties set forth in Sections 4.2
(Authorization), 4.3 (Capitalization), 4.16 (Taxes), 4.26 (Affiliated
Transactions) and 4.31 (Funded Debt) (in which case the Sellers will be
liable to Buyer for all such Losses).
(c) Buyer agrees to indemnify the Sellers and to hold them harmless
against any Losses the Sellers may suffer, sustain or become subject to as the
result of a breach (or third-party allegation of a breach) of any
representation, warranty, covenant, or agreement by Buyer contained in this
Agreement; PROVIDED, however, that the Buyer will not be liable for any Losses
relating to breaches of Buyer's representations and warranties contained in
Article V hereof unless written notice of such breach is given by the Sellers to
Buyer within 2 years of the Closing Date, except for claims arising from
breaches or alleged breaches of representations and warranties set forth in
Section 5.2 (Authorization), as to which claims may be brought at any time.
(d) If a party hereto seeks indemnification under this Section 8.2,
such party (the "INDEMNIFIED PARTY") shall gave written notice to the other
party (the "INDEMNIFYING PARTY") specifying in reasonable detail the basis for
the claim. In that regard, if any suit, action, claim, liability of obligation
shall be brought or asserted by any third party which, if adversely determined,
would entitle the Indemnified Party to indemnity pursuant to this Section 8.2,
the Indemnified Party shall promptly notify the Indemnifying Party of the same
in writing, specifying in detail the basis of such claim and the facts
pertaining thereto; PROVIDED that if the Sellers are the Indemnifying Party,
then notice need only be given to the Representative, rather than to each
Indemnifying Party (and,
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in each such case, all references in this subparagraph (d) to the
Indemnifying Party or Parties shall mean the Representative). Once the
Indemnified Party has given notice of the matter to all of the Indemnifying
Parties, the Indemnified Party may defend against the matter in any manner it
reasonably may deem appropriate and the Indemnifying Party shall be entitled
to participate in the defense of such matter at its expense. Subject to
clauses (i) and (ii) of the proviso set forth below, if the Indemnifying
Party affirms its obligation to indemnify the Indemnified Party with respect
to such claim, the Indemnifying Party may assume the defense of such claim
with counsel reasonably acceptable to the Indemnified Party; PROVIDED,
however, that (i) the Indemnified Party may participate, at its expense, in
the defense of such claim with co-counsel of its choice and (ii) the
Indemnified Party shall be entitled, to the extent it so elects, to assume
and control the defense of (x) any claim involving any equitable claim,
including, but not limited to, injunctive relief, (y) any claim in which the
Indemnified Party might reasonably be obligated to bear a larger portion of
the Losses in respect of such claim than the Indemnifying Party or (z) any
claim in which the Indemnified Party believes in its sole discretion that
such claim may adversely affect its ongoing business (including, without
limitation, claims relating to items specified in Sections 4.13 or 8.2(a)(v)
or (vi)). Neither the Indemnified Party nor the Indemnifying Party may
consent to the entry of any judgment or enter into any settlement with a
third party with respect to the claim which does not release the other party
from all liability to the third party with respect thereto without the
consent of the other party, which consent shall not be unreasonably withheld
(it being understood that the extent to which any party will be obligated to
pay for Losses resulting from such matter as compared to the other party
shall be considered in determining whether it is reasonable for such party to
withhold its consent from the entry of any judgment or settlement with
respect to such matter), except that any party may consent to any judgment or
settlement without the consent of the other party to the extent that the
judgment or settlement is related to an equitable claim or claim which may
adversely affect ongoing business of such consenting party.
(e) The Losses which the Buyer Parties suffer, sustain or become
subject to, including any Income Taxes determined pursuant to Section 8.3 may,
at their option, be satisfied by recouping or setting off all or any portion of
the Losses which the Buyer Parties suffer, sustain or become subject to against
any payments to be made by the Buyer to the Sellers pursuant to Section 1.4
hereof.
(f) Any payment due and payable under this Agreement (including,
without limitation, earn-out payments under Section 1.4 hereof, Losses subject
to indemnification under Section 8.2, and payments of Income Taxes under Section
8.3) shall bear simple interest from (a) the date such payment becomes due and
payable (or, with respect to Losses indemnifiable under Section 8.2, the later
of (x) the Indemnified Party's receiving notice of such Loss and (y) the date
such Loss is incurred), until (b) the date on which such payment is satisfied
pursuant to the provisions hereof, at a rate equal to the lesser of (A) 15% per
annum, and (B) the maximum rate permitted by applicable law. Such interest
shall be payable in immediately available funds upon demand.
8.3 TAX MATTERS. The following provisions shall govern the allocation of
responsibility as between the Buyer and the Sellers for certain tax matters
following the Closing Date:
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(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. Buyer shall
prepare or cause to be prepared and file or cause to be filed all Tax Returns
for Taxes (including, without limitation, the Michigan Single Business Tax and
the Canadian capital tax) based upon or relating to income (such Taxes
(including penalties and interest thereon), "INCOME TAXES") (such Tax Returns,
"INCOME TAX RETURNS") for the Company or any of its Subsidiaries for all periods
ending on or prior to the Closing Date which are filed after the Closing Date.
Buyer shall permit the Representative to review and comment on each such Income
Tax Return described in the preceding sentence prior to filing. The Sellers will
jointly and severally reimburse Buyer for the amount of all Income Taxes
relating to any taxable period (or partial period) ending on or prior to the
Closing Date, regardless of the time for filing the income tax returns for such
taxable period. Such payments shall be made within two business days of payment
by the Buyer, any of its Subsidiaries or Affiliates of such Income Taxes.
(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING DATE.
Buyer shall prepare or cause to be prepared and file or cause to be filed any
Income Tax Returns of any of the Company's Subsidiaries for Tax periods which
begin before the Closing Date and end after the Closing Date. The Sellers will
jointly and severally reimburse Buyer for that portion of the Income Taxes with
respect to any such period which relates to the portion of such taxable period
ending on the Closing Date. Such payment shall be made within two business days
of the date on which Income Taxes are paid. For purposes of this Section, in
the case of any Income Taxes that are imposed on a periodic basis and are
payable for a taxable period that incledes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such taxable
period ending on the Closing Date shall be deemed to be equal to the amount
which would be payable if the relevant taxable period ended on the Closing Date.
All determinations necessary to give effect to the foregoing allocations shall
be made in a manner consistent with prior practice of the Company and its
Subsidiaries.
(c) COOPERATION ON TAX MATTERS.
(i) Buyer, the Company and its Subsidiaries, the Sellers and the
Representative shall at their own cost cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this Section and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or
other proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder. Buyer and the Sellers agree (A) to retain all books
and records with respect to Tax matters pertinent to the Company or any of
its Subsidiaries relating to any taxable period beginning before the
Closing Date until the expiration of the statute of limitations (and, to
the extent notified by the Buyer or the Sellers, any extensions thereof) of
the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (B) to give the
other party reasonable written notice prior to transferring, destroying or
discarding any such books and records and, if the other party so requests,
the Buyer or the Sellers, as the case may be, shall allow the other party
to take possession of such books and records.
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(ii) Buyer and the Sellers further agree, upon request, to use
their best efforts to obtain any certificate or other document from any
government authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).
(d) TAX SHARING AGREEMENTS. All tax-sharing agreements or similar
agreements with respect to or involving the Company or any of its Subsidiaries
shall be terminated as of the Closing Date and, after the Closing Date, neither
the Company nor any of its Subsidiaries shall be bound thereby or have any
liability thereunder.
(e) CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (including any gains tax,
transfer tax and any similar tax imposed in any state or subdivisions), shall be
paid by the Sellers, and the Sellers will, at their own expense, file all
necessary Tax Returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other Taxes and fees, and, if
required by applicable law, the Buyer will, and will cause its Affiliates to,
join in the execution of any such Tax Returns and other documentation.
(f) TAX REFUNDS. Upon receipt of any refunds of Taxes for which the
Sellers are liable under the terms of this Agreement, Buyer shall, and shall
cause the Company to, promptly remit such refunds to the Representative (on
behalf of the Sellers). Upon the reasonable request of Sellers, Buyer shall,
and shall cause the Company to, prepare and file or cause to be prepared and
filed all claims for refunds relating to Taxes for which the Sellers are liable
under the terms of this Agreement. Notwithstanding any of the foregoing, the
Sellers shall not be entitled to any refunds relating to any carryback of an
item occurring in any period (or partial period) commencing on or after the
Closing Date.
8.4 NON-COMPETE; NON-SOLICITATION. In further consideration for the
payment of the Purchase Price hereunder, and in order to protect the value of
the Company Stock purchased by Buyer (including, without limitation, the
goodwill inherent in the Company as of the Closing Date), each of the Sellers
agrees as follows:
(a) During the period from the Closing Date to and including the
fifth anniversary of the Closing Date (the "NONCOMPETE PERIOD"), no Seller shall
(unless otherwise agreed in writing by Buyer) have any affiliation (as defined
below) with any Person, corporation, partnership or other business entity or
enterprise having any location within North America, South America or Europe
which derives more than 20% of its total annual revenues from the manufacture
and sale of shift levers, shift lever systems, parking brakes, pedals, hinges,
latches, and/or automotive cables related to any of the foregoing (such
products, the "PRODUCTS") (such a Person, a "COMPETITOR"); PROVIDED that nothing
contained herein shall be construed to prohibit a Seller from purchasing up to
an aggregate of 10% of any class of the outstanding voting securities of any
other Person whose securities are listed on a national securities exchange or
traded in the Nasdaq national market system (a "PUBLIC COMPANY"); AND PROVIDED
FURTHER that nothing contained herein shall be construed to prohibit any Seller
from engaging in the process of roll-forming and fabricating stamped and
roll-
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formed subassemblies of automobile components ("ROLL FORMING") for any
Competitor or other Person, or from entering into any joint venture or other
business arrangement or relationship with any Competitor or other Person
pursuant to which such Seller will engage in the process of Roll-Forming, in
either case so long as Seller's affiliation or other relationship with any
Competitor is solely related to, and does not extend beyond, the process of
Roll-Forming or other activities involving, relating to, or competitive with the
manufacture or sale of the Products. For purposes of this subparagraph (a), the
term "AFFILIATION" shall mean any direct or indirect interest in such entity or
enterprise, whether as an officer, director, employee, investor, partner,
shareholder, sole proprietor, trustee, consultant, agent, representative,
broker, finder, promoter, Affiliate or otherwise.
(b) During the Noncompete Period, the Sellers shall not, and shall
not permit any of its Affiliates to, (i) induce or attempt to induce any
employee of Parent or its Subsidiaries, Buyer, or of the Company or its
Subsidiaries, or in any way interfere with the relationship between Parent or
its Subsidiaries, Buyer the Company or its Subsidiaries and any employee
thereof, (ii) hire directly or through an Affiliate any person who, to such
party's knowledge, was an employee of Parent or its Subsidiaries, Buyer the
Company or its Subsidiaries within 180 days prior to the date hereof, or
(iii) induce or attempt to induce any customer, supplier, licensee or other
business relation of Parent or its Subsidiaries, Buyer the Company or its
Subsidiaries to cease doing business with any such Person or in any way
interfere with the relationship between any such customer, supplier, licensee or
business relation of Parent or its Subsidiaries, Buyer the Company or its
Subsidiaries.
Notwithstanding anything in this Section 8.4 to the contrary, if at any time, in
any judicial proceeding, any of the restrictions stated in this Section 8.4 are
found by a final order of a court of competent jurisdiction to be unreasonable
or otherwise unenforceable under circumstances then existing, the Sellers agree
that the period, scope or geographical area, as the case may be, shall be
reduced to the extent necessary to enable the court to enforce the restrictions
to the extent such provisions are allowable under law, giving effect to the
agreement and intent of the parties that the restrictions contained herein shall
be effective to the fullest extent permissible. In the event of an alleged
breach or violation by any of the Sellers of any of the provisions of this
Section 8.4, the Noncompete Period will be tolled for such party until such
alleged breach or violation is resolved; provided that if such party is found to
have not violated the provisions of this Section 8.4, then the Noncompete Period
will not be deemed to have been tolled. Each of the Sellers agrees that the
restrictions contained in this Section 8.4 are reasonable in all respects.
8.5 ARBITRATION PROCEDURE.
(a) The parties hereto agree that, except as otherwise set forth in
this Section 8.5, the arbitration procedure set forth below shall be the sole
and exclusive method for resolving and remedying disputes concerning claims for
money damages arising out of this Agreement (the "DISPUTES"). The parties
hereby agree and acknowledge that, except as otherwise provided in this Section
8.5 or in the Commercial Arbitration Rules of the American Arbitration
Association as in effect from time to time, the arbitration procedures and any
Final Determination hereunder shall be governed by, and shall be enforced
pursuant to, the Uniform Arbitration Act.
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(b) In the event that either Buyer or the Representative asserts that
there exists a Dispute, such party shall deliver a written notice to each other
party or parties involved therein specifying the nature of the asserted Dispute
and requesting a meeting to attempt to resolve the same. If no such resolution
is reached within ten (10) business days after such delivery of such notice, the
party delivering such notice of Dispute (the "DISPUTING PERSON") may, within
forty-five (45) business days after delivery of such notice, commence
arbitration hereunder by delivering to each other party involved therein a
notice of arbitration (a "NOTICE OF ARBITRATION"). Such Notice of Arbitration
shall specify the matters as to which arbitration is sought, the nature of any
Dispute, the claims of each party to the arbitration and shall specify the
amount and nature of any damages, if any, sought to be recovered as a result of
any alleged claim, and any other matters required to be included therein, if
any, by the Commercial Arbitration Rules of the American Arbitration Association
as in effect from time to time.
(c) The Buyer and Representative each shall select one independent
arbitrator expert in the subject matter of the Dispute (the arbitrators so
selected shall be referred to herein as the "BUYER'S ARBITRATOR" and the
"SELLERS' ARBITRATOR," respectively). In the event that either party fails to
select an independent arbitrator as set forth herein within twenty (20) days
from delivery of a notice of arbitration, then the matter shall be resolved by
the arbitrator selected by the other party. The Sellers' Arbitrator and Buyer's
Arbitrator shall select a third independent arbitrator expert in the subject
matter of the dispute, and the three arbitrators so selected shall resolve the
matter according to the procedures set forth in this Section 8.5. If the
Sellers' Arbitrator and Buyer's Arbitrator are unable to agree on a third
arbitrator within twenty (20) days after their selection, the Sellers'
Arbitrator and Buyer's Arbitrator shall each prepare a list of three independent
arbitrators. The Sellers' Arbitrator and Buyer's Arbitrator shall each have the
opportunity to designate as objectionable and eliminate one arbitrator from the
other arbitrator's list within seven (7) days after submission thereof, and the
third arbitrator shall then be selected by lot from the arbitrators remaining on
the lists submitted by the Sellers' Arbitrator and Buyer's Arbitrator.
(d) The arbitrator(s) selected pursuant to subparagraph (c) above
will determine the allocation of the costs and expenses of arbitration based
upon the percentage which the portion of the contested amount not awarded to
each party bears to the amount actually contested by such party. For example,
if Buyer submits a claim for $1,000, and if the representative contests only
$500 of any amount claimed by Buyer, and if the arbitrator(s) ultimately
resolves the dispute by awarding Buyer $300 of the $500 contested, then the
costs and expenses of arbitration will be allocated 60% (i.e. 300 DIVIDED BY
500) to the Sellers and 40% (i.e. 200 DIVIDED BY 500) to Buyer.
(e) The arbitration shall be conducted in Oakland County, Michigan,
and under the Commercial Arbitration Rules of the American Arbitration
Association as in effect from time to time, except as modified by the agreement
of Buyer and the Representative. The arbitrator(s) shall so conduct the
arbitration that a final result, determination, finding, judgment and/or award
(the "FINAL DETERMINATION") is made or rendered as soon as practicable, but in
no event later than ninety (90) business days after the delivery of the Notice
of Arbitration nor later than ten (10) days following completion of the
arbitration. The Final Determination must be agreed upon and signed by the sole
arbitrator or by at least two of the three arbitrators (as the case may be).
The Final Determination shall be final and binding on all parties and there
shall be no appeal from or
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reexamination of the final determination, except for fraud, perjury, evident
partiality or misconduct by an arbitrator prejudicing the rights of any
party, and to correct manifest clerical errors.
(f) Buyer and the Representative, may enforce any Final Determination
in the United States District Court for the Eastern District of Michigan. For
the purpose of any action or proceeding instituted with respect to any Final
Determination, each party hereby irrevocably submits to the jurisdiction of such
courts, irrevocably consents to the service of process by registered mail or
personal service and hereby irrevocably waives, to the fullest extent permitted
by law, any objection which it may have or hereafter have as to personal
jurisdiction, the laying of venue of any such action or proceeding brought in
any such court and any claim that any such action or proceeding brought in such
court has been brought in an inconvenient forum.
(g) The parties hereto accept, acknowledge, and agree that
application of the indemnification arrangements set forth in Sections 8.2(a)(v)
and (vi) and (with respect to Section 8.2(a)(i)) Section 8.2(b)(i) may require
allocation of liability for Losses incurred hereunder between the Sellers, on
the one hand, and the sellers under the transaction documents pursuant to which
the Company's predecessor companies were acquired, on the other hand, based on a
determination of when actions or events giving rise to such Losses occurred. In
order to facilitate the swift and accurate determination of such allocations,
notwithstanding any of the foregoing arbitration provisions, each of the parties
hereto agree: (i) at the election of the Buyer or Representative all parties
hereto shall consent to jurisdiction in any state or federal court in which an
action against any of the prior owners of GEL, Inc. (the "GEL SELLERS") or
Nealvest Investments Ltd., the prior owner of Tamco Limited (or any successor
thereto) ("NEALVEST"), is pending, shall consent to joinder of all parties
hereto to such action, and shall irrevocably agree to be bound by any judgment
rendered thereby with respect to the liability of the Sellers, on the one hand,
and of the GEL Sellers or Nealvest (as applicable), on the other hand, to
indemnify Buyer Parties for such Losses under the terms of this Agreement and
the GEL Agreement or the Tamco Agreement, as applicable; (ii) at the election of
Buyer or Representative all parties hereto shall consent to the jurisdiction of
and agree to be bound by any arbitration proceeding to which Nealvest is a party
in accordance with the mandatory arbitration provisions set forth in the Tamco
Agreement, shall consent to joinder of all parties hereto to such proceeding
(or, if joinder of the parties in such proceeding is not available for any
reason, shall consent to an arbitration in accordance with the provisions of
this Agreement, but with a panel of the same three arbitrators who presided over
the dispute to which joinder was not available), and shall agree that the
findings and conclusions of such arbitrators shall constitute a final, binding,
and enforceable determination of the respective liabilities of Sellers and
Nealvest to indemnify Buyer Parties for such Losses under the terms of this
Agreement and the Tamco Agreement; and (iii) at the election of Buyer or
Representative all parties hereto shall consent to the joinder of the GEL
Sellers or Nealvest to any action, suit, or proceeding in which the liability of
the Sellers, on the one hand, and of the GEL Sellers or Nealvest (as
applicable), on the other hand, to indemnify Buyer Parties for Losses under the
terms of this Agreement and the GEL Agreement or the Tamco Agreement, as
applicable, may be at issue or relevant. For purposes of this paragraph, "TAMCO
AGREEMENT" means the Share Purchase Agreement dated as of June 21, 1996, among
Nealvest as Vendor, 1156754 Ontario Ltd. as Purchaser, Tamco Limited, and Tamco
Manufacturing, Inc., as amended by an Amending Agreement dated as of June 23,
1996. For purposes of this
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paragraph, "GEL AGREEMENT" means the Stock Purchase Agreement dated as of
September 6, 1996, among WLP Acquisition, GEL Inc., and the GEL Sellers.
(h) Notwithstanding anything contained in Section 1.4 or in this
Section 8.5 (but after giving effect to Section 1.4(e)), in any arbitration
proceeding concerning an alleged breach of any of the covenants set forth in
Sections 1.4(d)(iv), (v) or (vi), if such breach is proven the arbitrator shall
assess as stipulated damages an amount equal to 3% per month (prorated as
necessary) on all amounts which, with respect to each such month, are then owed
or potentially will be owed (regardless of whether such amounts are ever
actually owed) by the Buyer to the Sellers under Sections 1.4(a) and (b) during
or after such month, from the time of such breach (but after giving effect to
Section 1.4(e)) until the earlier of (A) the remedy of such breach, or (B) the
date of payment of all amounts actually owed by the Buyer to the Sellers
pursuant to Sections 1.4(a) and (b). Notwithstanding anything contained in
Section 1.4 (but after giving effect to Section 1.4(e)) or in this Section 8.5,
in any arbitration proceeding concerning an alleged breach of any of the
covenants set forth in Sections 1.4(d)(i), (ii) or (iii), if Representative
satisfies its initial burden of demonstrating that the Buyer in fact breached
such covenant, the burden in such proceeding shall shift to the Buyer to rebut
the presumption that such breach actually and proximately resulted in Sellers'
failure to receive an amount equal to (x) the maximum earn-out amount that could
be payable to the Sellers under Section 1.4 in respect of the earn-out period in
which such breach allegedly occurred, MINUS (y) the aggregate actual payments to
the Sellers under Section 1.4 in respect of the earn-out period during which
such breach occurred (which, with respect to the 1998 Measuring Period, shall
include any Accelerated 1998 Amount paid).
8.6 APPOINTMENT OF REPRESENTATIVE.
(a) POWERS OF ATTORNEY. Each of the Sellers irrevocably constitutes
and appoints W III H Partners, L.P. (the "REPRESENTATIVE") as such person's true
and lawful attorney-in-fact and agent and authorizes him acting for such person
and in such person's name, place and stead, in any and all capacities to do and
perform every act and thing required or permitted to be done in connection with
the transactions contemplated by this Agreement and the other agreements
contemplated hereby, as fully to all intents and purposes as such person might
or could do in person, including, without limitation:
(i) execute any agreements on behalf of such person, including
any amendments, modifications or waivers of any such agreements;
(ii) determine the presence (or absence) of claims for
indemnification against the Buyer Parties pursuant to Section 8.2 above;
(iii) deliver all notices required to be delivered by such
person under this agreement, including, without limitation, any notice of a
claim for which indemnification is sought under Section 8.2 above, any
notice of a third party claim under Section 8.2 above, and any Notice of
Arbitration under Section 8.5 above;
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(iv) receive all notices required to be delivered to such person
under this agreement, including, without limitation, any notice of a claim
for which indemnification is sought under Section 8.2 above, any notice of
a third party claim under Section 8.2 above, and any notice of arbitration
under Section 8.5 above;
(v) take any and all action on behalf of such person from time
to time as the Representative may deem necessary or desirable to resolve
and/or settle claims under this Agreement and the other agreements
contemplated hereby, including, without limitation, Sections 8.2 and 8.3
above; and
(vi) take all action as the Representative may deem necessary or
advisable under this Agreement, and the other agreements contemplated
hereby.
Each of the Sellers grants unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing necessary or desirable
to be done in connection with the transactions contemplated by this Agreement
and the other agreements contemplated hereby, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that the Representative may lawfully do or cause to be done by
virtue hereof. Each of the Sellers acknowledges and agrees that upon execution
of this Agreement, any delivery by the representative of any waiver, amendment,
agreement, opinion, certificate or other documents executed by the
representative pursuant to this Section 8.6, such person shall be bound by such
documents as fully as if such person had executed and delivered such documents.
(b) REPLACEMENT OF THE REPRESENTATIVE. Upon the death, disability or
incapacity of the initial Representative appointed pursuant to Section 8.6(a)
above, each of the Sellers acknowledges and agrees that the representative's
executor, guardian or legal representative, as the case may be, shall appoint a
replacement reasonably believed by such person as capable of carrying out the
duties and performing the obligations of the Representative hereunder within
thirty (30) days.
(c) ACTIONS OF THE REPRESENTATIVE; LIABILITY OF THE REPRESENTATIVE.
Each shareholder agrees that Buyer shall be entitled to rely on any action taken
by the Representative, on behalf of the Sellers, pursuant to Section 8.6(a)
above (each, an "AUTHORIZED ACTION"), and that each Authorized Action shall be
binding on each Seller as fully as if such person had taken such Authorized
Action. Buyer agrees that the Representative (in its capacity as such) shall
have no liability to it for any Authorized Action, except to the extent that
such Authorized Action is found by a final order of a court of competent
jurisdiction to have constituted fraud or willful misconduct. The Sellers
jointly and severally agree to pay, and to indemnify and hold harmless Buyer
from and against any losses which they may suffer, sustain, or become subject
to, as the result of any claim by any person that an Authorized Action is not
binding on, or enforceable against, the Sellers.
8.7 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Closing Date, subject to the terms of the
Confidentiality Agreement, Buyer may make or cause to be made such investigation
of the business and properties
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of the Company and its Subsidiaries as it deems necessary or advisable to
familiarize itself therewith. The Sellers agree to, and agree to cause the
Company and its Subsidiaries to, permit Buyer, its authorized representatives
and agents to (i) have full access to the premises, books and records of the
Company and its Subsidiaries at reasonable hours, (ii) visit and inspect any
of the properties of the Company and its Subsidiaries, and (iii) discuss the
affairs, finances and accounts of the Company and its Subsidiaries with the
directors, officers, key employees, key customers, key sales representatives,
key suppliers and independent accountants of the Company and its
Subsidiaries.
(b) If the transactions contemplated by this Agreement are not
consummated, Buyer will not disclose or use at any time any information and
materials reasonably designated by the Sellers as confidential, and Buyer and
its representatives will return to the Sellers all memoranda, notes, plans,
records, documentation and other materials obtained from the Sellers in
connection with the transactions contemplated by this agreement. Whether or not
the transactions contemplated hereby are consummated, the Sellers will maintain
the confidentiality of all information and materials regarding Buyer and its
Affiliates reasonably designated by Buyer as confidential. If the transactions
contemplated by this Agreement are consummated, the Sellers will maintain the
confidentiality of all proprietary and other non-public information regarding
the Company or any of its Subsidiaries, except as necessary to file tax returns
and other reports to governmental agencies, and to turn over to Buyer at the
closing all such materials they have in their possession.
8.8 EXPENSES. Except as otherwise provided herein, the parties hereto
will pay all of their own expenses (including fees and expenses of legal
counsel, investment bankers, brokers or other representatives and consultants
and appraisal fees and expenses) incurred in connection with or related to the
sales process, the negotiation of this Agreement and the other agreements
contemplated hereby, the performance of its obligations hereunder and
thereunder, and the consummation of the transactions contemplated hereby and
thereby; it being understood that the Sellers will pay the fees and expenses of
the Company and its Subsidiaries, and that neither the Company nor any of its
Subsidiaries will pay any of the Sellers' costs and expenses (including legal
and accounting), arising in connection with the transactions contemplated hereby
if the transactions are consummated.
8.9 EXCLUSIVITY. The Sellers, the Company and its Subsidiaries shall, and
shall cause their officers, directors and affiliates to, not discuss a possible
sale or other disposition (whether by merger, reorganization, recapitalization
or otherwise) of all or any part of the capital stock or assets of the Company
or its Subsidiaries with any other party (an "ACQUISITION PROPOSAL") or provide
any information to any other party regarding other than information which is
traditionally provided in the regular course of their respective business
operations to third parties where the Company and its Subsidiaries and their
respective officers, directors and affiliates have no reason to believe that
such information may be utilized to evaluate any such possible sale or other
disposition of the capital stock or assets of the Company or its Subsidiaries.
The Sellers, the Company and its Subsidiaries will, and will cause their
respective officers, directors and affiliates to, promptly notify Buyer if any
acquisition proposal, or any inquiry or contact with any Person with respect
thereto, is made.
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8.10 RELEASE OF THE COMPANY. Effective upon the Closing, each Seller
hereby irrevocably waives, releases and discharges forever the Company and its
Subsidiaries from any and all liabilities and obligations to, and agreements
with such Seller of any kind or nature whatsoever, whether in its capacity as
Seller hereunder, as a stockholder of the Company or its Subsidiaries or
otherwise, including, without limitation, in respect of rights of contribution
or indemnification, in each case whether absolute or contingent, liquidated or
unliquidated, and whether arising hereunder or under any other agreement or
understanding or otherwise at law or equity, and each Seller hereby covenants
and agrees that it will not seek to recover any amounts in connection therewith
or thereunder from the Company or any of its Subsidiaries.
8.11 FINANCIAL INFORMATION. The Sellers and the Company understand that
Parent is a reporting company under the Securities Exchange Act of 1934, and
that the transactions contemplated hereby may require Parent to file with the
Securities and Exchange Commission financial statements of the Company and its
Subsidiaries prepared in accordance with Regulation S-X of the Securities Act of
1933, as amended (the "S-X FINANCIALS"). Accordingly, the Sellers shall (and
during the period prior to the Closing Date shall cause the Company to) furnish
to Buyer any existing information or documents in their possession requested by
Buyer for completion of the S-X Financials.
ARTICLE IX
MISCELLANEOUS
9.1 PRESS RELEASES AND ANNOUNCEMENTS. Prior to the date hereof, no press
releases related to this Agreement and the transactions contemplated herein, or
other announcements to the employees, customers or suppliers of the Company or
its Subsidiaries will be issued without the mutual approval of all parties
hereto, except any public disclosure which any party in good faith believes is
required by law or regulation or any stock exchange listing or trading
requirements, in which case the party making such press release or announcement
shall use reasonable efforts to advise and consult with the other party prior to
the issuance of such press release or announcement.
9.2 FURTHER TRANSFERS. The Sellers will execute and deliver such further
instruments of conveyance and transfer and take such additional action as Buyer
may reasonably request to effect, consummate, confirm or evidence the transfer
to Buyer of the Company Stock and any other transactions contemplated hereby.
9.3 REMEDIES. Except as provided in Section 8.5 above regarding the
requirement of using the arbitration procedures set forth therein for resolving
and remedying claims for money damages arising out of Section 8.2, the Sellers
acknowledge that the Company's and its Subsidiaries' businesses are unique and
recognize and affirm that in the event of a breach of this Agreement by the
Sellers, money damages may be inadequate and Buyer may have no adequate remedy
at law. Accordingly, the Sellers, agree that Buyer shall have the right, in
addition to any other rights and remedies existing in its favor, to enforce its
rights and the Sellers' obligations hereunder not only by an action or actions
for damages but also by an action or actions for specific performance,
injunctive
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and/or other equitable relief (without the requirement of posting any bonds
or additional security whatsoever).
9.4 AMENDMENT AND WAIVER. This Agreement may be amended and any provision
of this Agreement may be waived, provided that any such amendment or waiver will
be binding upon a party only if such amendment or waiver is set forth in a
writing executed by Buyer and the Representative. No course of dealing between
or among any persons having any interest in this Agreement will be deemed
effective to modify, amend or discharge any part of this Agreement or any rights
or obligations of any party under or by reason of this Agreement.
9.5 NOTICES. All notices, demands and other communications given or
delivered under this Agreement will be in writing and will be deemed to have
been given when personally delivered, sent by telecopy (with receipt confirmed)
or two days after sent by reputable overnight express courier (charges prepaid).
Notices, demands and communications to the Sellers, the Company and Buyer will,
unless another address is specified in writing, be sent to the address indicated
below:
NOTICES TO SELLERS: NOTICES TO THE COMPANY:
W III H Partners, L.P. GT Automotive Systems, Inc.
c/o TMW Enterprises, Inc. c/o TMW Enterprises, Inc.
801 Big Beaver Road 801 Big Beaver Road
Suite 201 Suite 201
Troy, Michigan 48084 Troy, Michigan 48084
Attention: President Attention: President
WITH A COPY TO: WITH A COPY TO:
Laurence M. Luke, Esq. Laurence M. Luke, Esq.
801 Big Beaver Road 801 Big Beaver Road
Suite 500 Suite 500
Troy, Michigan 48084 Troy, Michigan 48084
NOTICES TO BUYER:
c/o Dura Automotive Systems, Inc.
2791 Research Drive
Rochester Hills, Michigan 48309
Attention: President
WITH A COPY TO:
Hidden Creek Industries
4508 IDS Center
Minneapolis, Minnesota 55402
Attention: Robert R. Hibbs
WITH A COPY TO:
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Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: Jeffrey C. Hammes, P.C
9.6 BINDING AGREEMENT; ASSIGNMENT.
(a) 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, but neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by the Company or the
Sellers without the prior written consent of Buyer, or by Buyer (except as
otherwise provided in this Agreement) without the prior written consent the
Representative.
(b) Buyer may (at any time prior to the Closing), at its sole
discretion, assign, in whole or in part, its rights and obligations pursuant to
this Agreement to one or more of its Affiliates. Buyer's "Affiliates" include
Affiliates which may be organized subsequent to the date hereof.
(c) Buyer may assign all or any portion of this Agreement and the
other agreements contemplated hereby (including rights hereunder and
thereunder), including its rights to indemnification, to any of its or its
Affiliates' lenders as collateral security. After the Closing, or Buyer may
assign this Agreement and its rights and obligations hereunder in connection
with a (i) merger or consolidation involving Buyer or its Affiliates, (ii) a
sale of stock or assets of Buyer or its Affiliates or (iii) dispositions of the
business of the Company and its Subsidiaries or any part thereof.
9.7 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
such provisions or the remaining provisions of this Agreement.
9.8 NO STRICT CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any person.
Where specific language is used to clarify by example a general statement
contained herein, such specific language shall not be deemed to modify, limit or
restrict in any manner the construction of the general statement to which it
relates.
9.9 CAPTIONS. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and will not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement will be enforced and construed
as if no caption had been used in this Agreement.
9.10 ENTIRE AGREEMENT. This Agreement and the documents referred to herein
contain the entire agreement between the parties and supersede any prior
understandings, agreements or
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representations by or between the parties, written or oral, which may have
related to the subject matter hereof in any way.
9.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which taken
together will constitute one and the same instrument.
9.12 GOVERNING LAW; SUBMISSION TO JURISDICTION; REPRESENTATIVE AS AGENT FOR
SERVICE OF PROCESS. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Michigan without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Michigan or any other jurisdiction) that would cause the application to this
Agreement of the laws of any jurisdiction other than the State of Michigan. To
the extent legal proceedings are permitted under this Agreement, and subject to
the provisions of Sections 8.5 and 9.3 hereof, all legal proceedings arising out
of or relating to this Agreement or any other transactions contemplated hereby
shall be brought either in the United States District Court for the Eastern
District of Michigan or in any Michigan state court sitting in Oakland County
and in no other forum. The parties irrevocably waive, to the fullest extent
permitted by law, any objection which they may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum. Each of the Sellers hereby appoints the Representative as
its agent for service of process.
9.13 PARTIES IN INTEREST. Nothing in this Agreement, express or implied,
is intended to confer on any person other than the parties and their respective
successors and assigns (and with respect to Section 8.2, the Buyer Parties) any
rights or remedies under or by virtue of this Agreement.
9.14 DELIVERY BY FACSIMILE. This Agreement and any signed agreement or
instrument entered into in connection with thereto or contemplated thereby, and
any amendments hereto or thereto, to the extent signed and delivered by means of
a facsimile machine, shall be treated in all manner and respects as an original
agreement or instrument and shall be considered to have the same binding legal
effects as if it were the original signed version thereof delivered in person.
At the request of any party hereto or to any such agreement or instrument, each
other party hereto or thereto shall re-execute original forms thereof and
deliver them to all other parties. No party hereto or to any such agreement or
instrument shall raise the use of a facsimile machine to deliver a signature or
the fact that any signature or agreement or instrument was transmitted or
communicated through the use of facsimile machine as a defense to the formation
of a contract and each such party forever waives any such defense.
* * * * * * * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GT AUTOMOTIVE SYSTEMS, INC.
By:_______________________________
Its:_______________________________
DURA SHIFTER HOLDING CORP.
By:_______________________________
Its:_______________________________
W III H PARTNERS, L.P.
By:_______________________________
Its:_______________________________
___________________________________
DENNIS M. DRESSER
____________________________________
BRUCE F. WEBER
____________________________________
KENNETH M. WALKERDINE, individually and as trustee
of the Kenneth M. Walkerdine Living Trust u/d/a
December 19, 1994, as amended
_____________________________________
O.B. MARX III
____________________________________
DONALD R. BROOKS
<PAGE>
____________________________________
LAURENCE M. LUKE
_____________________________________
PAUL OSTER
____________________________________
THOMAS TALBOYS
____________________________________
DOUGLAS S. SOIFER
<PAGE>
LIST OF EXHIBITS
Exhibit A - Form of Dean & Fulkerson Opinion
Exhibit B - Form of Kirkland & Ellis Opinion
Exhibit C - Parent Guaranty
<PAGE>
EXHIBIT A
FORM OPINION OF DEAN & FULKERSON
1. W III H Partners, L.P., is a limited partnership existing and in good
standing under the laws of the State of Delaware.
2. W III H Partners, L.P., has the necessary power and authority to enter
into and perform its obligations under the Stock Purchase Agreement.
3. Kenneth M. Walkerdine has the necessary power and authority to enter
into the Stock Purchase Agreement on behalf of, and as trustee for, the Kenneth
M. Walkerdine Living Trust u/d/a December 19, 1994, as amended, and to perform
its obligations thereunder.
4. Each of Dennis M. Dresser, Bruce F. Weber, Kenneth M. Walkerdine, O.B.
Marx III, Donald R. Brooks, Laurence M. Luke, Paul Oster, Thomas Talboys, and
Douglas S. Soifer has the necessary power and capacity to enter into and perform
his obligations under the Stock Purchase Agreement.
5. The Stock Purchase Agreement has been duly authorized, executed, and
delivered by each of W III H Partners, L.P., Dennis M. Dresser, Bruce F. Weber,
Kenneth M. Walkerdine (both individually and as trustee for the Kenneth M.
Walkerdine Living Trust u/d/a December 19, 1994, as amended), O.B. Marx III,
Donald R. Brooks, Laurence M. Luke, Paul Oster, Thomas Talboys, and Douglas S.
Soifer, and such agreement is a valid and binding obligation of each such
seller, enforceable in accordance with its terms.
6. The execution, delivery and performance by W III H Partners, L.P., of
the Stock Purchase Agreement do not and will not violate or conflict with, or
require approval or consent under, any provision of the Agreement of Limited
Partnership of W III H Partners, L.P.
This opinion is furnished to you and intended solely for your
exclusive use and benefit and is intended to be relied upon by you and may not
be used, reproduced, circulated, filed, quoted, relied upon or otherwise
referred to in whole or in part, for any other purpose, or by any other person
or entity without our express prior written consent, except that this opinion
may be relied upon by Dura Automotive Systems, Inc. ("PARENT"), Bank of America
NT & SA ("BofA"), as Agent under the Amended and Restated Multicurrency Credit
Agreement, dated as of December 5, 1996, by and among Dura Operating Corp.,
Kimanus Vermogensverwaltung GmbH, BofA, BA Securities, Inc., and the other
Lenders (as defined therein) party thereto, and such Lenders, as if it were
addressed directly to such Persons.
<PAGE>
EXHIBIT B
FORM OPINION OF KIRKLAND & ELLIS
1. Each of Dura Shifter Holding Corp. (the "COMPANY") and Dura Automotive
Systems, Inc., is a corporation existing and in good standing under the General
Corporation Law of the State of Delaware.
2. The Company has the corporate power to enter into and perform its
obligations under the Stock Purchase Agreement, and Parent has the corporate
power to enter into and perform its obligations under the Parent Guaranty.
3. The Company's Board of Directors has adopted by requisite vote the
resolutions necessary to authorize the Company's execution, delivery and
performance of the Stock Purchase Agreement. No approval by the Company's
stockholders is required. Parent's Board of Directors has adopted by requisite
vote the resolutions necessary to authorize Parent's execution, delivery and
performance of the Parent Guaranty. No approval by Parent's stockholders is
required.
4. The Company has duly executed and delivered the Stock Purchase
Agreement, and Parent has duly executed and delivered the Parent Guaranty.
5. The Stock Purchase Agreement is a valid and binding obligation of the
Company and is enforceable in accordance with its terms. The Parent Guaranty is
a valid and binding obligation of Parent and is enforceable in accordance with
its terms.
<PAGE>
EXHIBIT C
IRREVOCABLE CORPORATE GUARANTY
Dura Automotive Systems, Inc. ("Guarantor"), unconditionally and
irrevocably, as primary obligor, guarantees to the Creditors (as hereinafter
defined), the full and prompt payment when due, whether at maturity, by
acceleration or otherwise, any and all Indebtedness (as hereinafter defined)
of the Principal Debtor (as hereinafter defined) to Creditors, and in
addition, Guarantor unconditionally and irrevocably guarantees to the
Creditors, the full and prompt performance and observance, when due, of any
and all Obligations (as herein defined) of the Principal Debtor to the
Creditors.
As used herein, "Creditors" shall mean and include each shareholder of
GT Automotive Systems, Inc., who is a signatory to the Stock Purchase
Agreement (as hereinafter defined), and their successors, assigns, personal
representatives, executors and heirs, and the promises made to the Creditors
shall be made to and acquired by them collectively, individually, jointly and
severally. All references to Creditors herein shall be construed to mean the
singular or plural, as the context may suggest, and the covenants of the
Creditors made herein, shall be joint and several.
As used herein, "Principal Debtor" shall mean and include Dura Shifter
Holding Corp., a Delaware corporation, its successors, transferees and
assigns.
As used herein, "Stock Purchase Agreement" shall mean and include that
certain Stock Purchase Agreement dated August 1, 1997 among and between
Principal Debtor, and the Creditors, and all amendments, modifications,
renewals or extensions thereof.
As used herein, "Indebtedness" shall mean and include all Indebtedness
and liabilities of Principal Debtor to the Creditors arising under the Stock
Purchase Agreement, howsoever evidenced, whether absolute or contingent,
direct or indirect, and whether now existing or hereafter arising. The
Indebtedness guaranteed includes, but is not limited to (a) all accrued
interest or other charges relating to the Indebtedness; (b) all Obligations;
and (c) to the extent permitted under the Stock Purchase Agreement, any and
all costs and expenses, including reasonable attorneys fees, incurred by any
of the Creditors, whether before or after the entry of a judgment or award,
in enforcing or recovering, or attempting to enforce or recover the payment or
enforcement of any of the Indebtedness of the Principal Debtor or of the
Guarantor to any of the Creditors.
As used herein, Obligations shall mean and include any and all
covenants, promises, guarantees, warranties and undertakings by the Principal
Debtor to the Creditors made under the Stock Purchase Agreement, whether
direct, indirect, absolute or contingent.
Guarantor hereby waives notice of acceptance of this Guaranty, and
presentment, demand, protest, notice of protest, notice of default and
diligence in collecting any Indebtedness, and agrees that the Creditors may
modify the terms of the Indebtedness or renew or forbear to enforce payment
of any part or all of any Indebtedness, or permit the Principal Debtor to
incur additional
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<PAGE>
Indebtedness, all without notice to Guarantor and without affecting in any
manner the unconditional or absolute obligation of Guarantor under this
Guaranty. Guarantor acknowledges and agrees that the liabilities created by
this Guaranty are direct and are not conditioned upon pursuit by the
Creditors of any remedy the Creditors may have against the Principal Debtor
or any other person.
This is a continuing guaranty as to any and all Indebtedness of the
Principal Debtor and Guarantor, without regard to other primary or secondary
obligors, if any. No invalidity, irregularity or unenforceability by reason
of any bankruptcy, insolvency or other similar law purporting to reduce,
amend or otherwise affect the Indebtedness shall impair, affect or be a
defense to the obligations of Guarantor under this Guaranty.
Until the Indebtedness is paid in full, Guarantor shall have no right of
reimbursement, indemnity, contribution or other right of recourse to or with
respect to the Principal Debtor with respect to amounts paid under this
Guaranty. The Creditors shall have no duty to enforce or protect any rights
which Guarantor may have against the Principal Debtor, and Guarantor assumes
full responsibility for enforcing and protecting any such rights.
If after receipt of any payment of all or any part of the Indebtedness,
any or all Creditors are for any reason compelled to surrender such payment
to any person or entity, because such payment is determined to be void or
voidable as a preference, impermissible setoff, diversion of trust funds or
for any other reason, then to the extent of that payment, the Indebtedness
shall be revived and the obligations under this Guaranty shall be continued
in effect without reduction or discharge for that payment, and this Guaranty
shall continue in full force notwithstanding any contrary action which may
have been taken by the Creditor in reliance upon such payment, and any such
contrary action so taken shall be without prejudice to Creditors' rights
under this Guaranty and shall be deemed to have been conditioned upon such
payment having become final and irrevocable.
This Guaranty shall be deemed to be made under and shall be governed by
the laws of the State of Michigan in all respects, including matters of
construction, validity, and performance, and the terms and provisions hereof
may not be waived, altered, modified, or amended except in writing duly
signed by Creditors and by Guarantor. No effect shall be given to any
conflict of law provision that would cause the application to this Guaranty
of any laws of any other state or jurisdiction.
Notwithstanding anything contained herein to the contrary, including,
without limitation, the use of the word "unconditional" in this Guaranty, (i)
Guarantor may assert and raise as a defense any and all defenses that
Principal Debtor may otherwise assert or raise to the payment and performance
of said Indebtedness and Obligations then due, except Guarantor may not raise
or assert any defenses directly or indirectly relating to the insolvency,
bankruptcy, or similar event, if applicable, of Principal Debtor; and (ii)
Guarantor may also raise and assert any claims against Creditors which may be
raised or asserted by Principal Debtor arising out of the provisions of the
Stock Purchase Agreement or the transaction consummated thereby.
2
<PAGE>
The parties hereto agree that if any claim is made hereunder against the
Guarantor that could be asserted against the Principal Debtor under Section
8.2 of the Stock Purchase Agreement, then the procedures set forth in Section
8.2(d) of the Stock Purchase Agreement shall be followed, for which purpose,
Section 8.2(d) of the Stock Purchase Agreement is hereby incorporated herein
by reference, it being understood in such case that references therein to
"Indemnifying Party" shall mean Guarantor; references therein to "Indemnified
Party" shall mean the Creditor making such claim; and references to section
numbers shall mean the referenced Section of the Stock Purchase Agreement.
The parties hereto agree that the sole and exclusive method for
resolving and remedying claims for money damages arising out of the
provisions of the Stock Purchase Agreement or this Guaranty shall be the
arbitration procedure set forth in Section 8.5 of the Stock Purchase
Agreement, which Section 8.5 of the Stock Purchase Agreement is incorporated
herein by reference in its entirety, it being understood in such case that
the references therein to parties hereto shall refer to the parties to this
Guaranty and references therein to Buyer shall mean the Guarantor.
This Guaranty shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, permitted assigns, heirs,
executors and personal representatives, but none of the parties hereto may
assign any of their rights or interest without the prior written consent of
all the other parties hereto.
To the extent legal proceedings are permitted under this Guaranty and
subject to the provisions of Section 8.5 of the Stock Purchase Agreement
incorporated herein by reference, all legal proceedings arising out of or
relating to this Guaranty shall be brought either in the United States
District Court for the Eastern District of Michigan or in any Michigan state
court sitting in Oakland County and in no other forum. The parties
irrevocably waive, to the fullest extent permitted by law, any objection
which they may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
This Guaranty and any amendments hereto or thereto, to the extent signed
and delivered by means of a facsimile machine, shall be treated in all manner
and respects as an original agreement or instrument and shall be considered
to have the same binding legal effects as if it were the original signed
version thereof delivered in person. At the request of any party hereto, each
other party shall re-execute original forms thereof and deliver them to all
other parties. No party hereto or to any such agreement or amendment shall
raise the use of a facsimile machine to deliver a signature or the fact that
any signature or agreement or amendment was transmitted or communicated
through the use of facsimile machine as a defense to the formation of a
contract, and each such party forever waives any such defense.
This Guaranty may be executed in one or more counterparts, each of which
shall be deemed an original but all of which taken together will constitute
one and the same instrument.
3
<PAGE>
Whenever possible, each provision of this Guaranty will be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Guaranty 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 such
provisions or the remaining provisions of this Agreement.
IN WITNESS WHEREOF, the undersigned have signed this Guaranty on the
29th day of August, 1997.
GUARANTOR
DURA AUTOMOTIVE SYSTEMS, INC.
By:____________________________________
Title:_________________________________
CREDITORS
Acknowledged and Accepted:
W III H PARTNERS, L.P.
By:____________________________________
Its:___________________________________
________________________________________
Dennis M. Dresser
________________________________________
Bruce F. Weber
________________________________________
Kenneth M. Walkerdine, individually and as
Trustee of the Kenneth M. Walkerdine Living
Trust u/d/a December 19, 1994, as amended
signatures continued
4
<PAGE>
________________________________________
O.B. Marx III
________________________________________
Donald R. Brooks
________________________________________
Laurence M. Luke
________________________________________
Paul Oster
________________________________________
Thomas Talboys
________________________________________
Douglas S. Soifer
5
<PAGE>
INDEX TO SCHEDULES
Schedule 1.2 Paid-Off Indebtedness
Schedule 1.5 Disbursement of Purchase Price by Sellers'
Representative
Schedule 3.1(e) Continuing Insider Arrangements
Schedule 4.1 Qualifications Schedule
Schedule 4.3 Capitalization Schedule
Schedule 4.4 Subsidiary Schedule
Schedule 4.5 Conflicts Schedule
Schedule 4.6(a)-1 1996 Financial Statements
Schedule 4.6(a)-2 Exceptions to GAAP Schedule
Schedule 4.6(b) Projections Schedule
Schedule 4.8 Material Adverse Changes
Schedule 4.9 Developments Schedule
Schedule 4.10(a) Leases Schedule
Schedule 4.10(b) Owned Property Schedule
Schedule 4.12 Encumbrances Schedule
Schedule 4.13 Environmental Schedule
Schedule 4.14 Liens on Accounts Receivable
Schedule 4.16 Taxes Schedule
Schedule 4.17 Contracts Schedule
Schedule 4.18 Intellectual Property Rights Schedule
Schedule 4.19 Litigation Schedule
Schedule 4.20 Brokerage Schedule
Schedule 4.21 Licenses Schedule
Schedule 4.22 Key Employees Termination Schedule
Schedule 4.23 Employee Benefit Plans Maintained in
the U.S. Primarily for the Benefit of
U.S. Citizens
Schedule 4.24 Insurance Schedule
Schedule 4.25 Officers and Directors Schedule
Schedule 4.26 Affiliate Transaction Schedule
Schedule 4.29-1 Warranty Schedule
Schedule 4.29-2 Product Recalls Schedule
Schedule 4.30-1 Customer List
Schedule 4.30-3 Major Start-Up Schedule
Schedule 4.31 Funded Debt Schedule
Schedule 4.32 Canadian Employee Plans
<PAGE>
CONSOLIDATED AMENDMENT NO. 1 TO
AMENDED AND RESTATED MULTICURRENCY CREDIT AGREEMENT
This Consolidated Amendment No. 1 (this "Amendment") to Amended and
Restated Multicurrency Credit Agreement is made as of August __, 1997, by and
among Dura Operating Corp. ("Dura"), Kimanus Vermogensverwaltung GmbH
("Kimanus"; Dura and Kimanus being referred to collectively as the "Borrowers"),
certain commercial lending institutions signatories hereto as lenders (the
"Lenders") and Bank of America NT&SA, as agent ("Agent") for the Lenders.
Reference is made to the Amended and Restated Multicurrency Credit
Agreement dated as of December 5, 1996 (as amended or otherwise modified from
time to time, the "Credit Agreement") by and among the Borrowers, the Lenders,
Agent and BA Securities, Inc., as arranger. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to such terms in
the Credit Agreement.
Dura has advised Agent and the Lenders that Dura has indirectly
acquired or will indirectly acquire one hundred percent (100%) of the
outstanding capital stock of GT Automotive Systems, Inc., a Michigan
corporation, which shall change its name on or shortly after the date hereof to
Dura Automotive Systems, Inc. Column Shifter Operations (the "Acquisition"). To
accommodate the Borrowers' working capital and other credit needs after giving
effect to the Acquisition, the Borrowers have requested that the Credit
Agreement be amended in certain respects. As a mutual accommodation, the
parties hereto further desire to restate in this Amendment certain amendments to
the Credit Agreement set forth in that certain Waiver and Amendment dated
January 7, 1997, among the Borrowers, the Lenders and Agent.
1. DEFINED TERMS. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings ascribed to such terms in the Credit
Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is hereby
amended as follows:
2.1. SECTION 1.1 of the Credit Agreement is hereby amended to add a
new definition of "Adjusted EBITDA" immediately preceding the definition of
"Affiliate", as follows:
"Adjusted EBITDA" shall mean, for any period, EBITDA for such
period PLUS, for each Investment by Dura or any Borrower in compliance
with SECTION 7.2.5(f) of the Credit Agreement, or otherwise consented
to in writing by Required Lenders, in each case consummated during the
period of measurement for which EBITDA is being calculated, EBITDA
attributable to such Investment for the portion of the applicable
period preceding consummation of such Investment based on the most
recent financial
<PAGE>
statements (audited if available) provided to Dura or any Borrower in
connection with the consummation of such Investment.
2.2. SECTION 1.1 of the Credit Agreement is hereby amended to add a
new definition of "EBITDA" immediately preceding the definition of "Effective
Date", as follows:
"EBITDA" shall mean, for any period, EBITA for such period PLUS
the amount of depreciation during such period.
2.3. SECTION 1.1 of the Credit Agreement is hereby amended to add new
definitions of "GT" and "GT Transaction" immediately preceding the definition of
"GAAP", as follows:
"GT" means GT Automotive Systems, Inc., a Michigan corporation,
which shall change its name on or shortly after August __, 1997 to
Dura Automotive Systems, Inc. Column Shifter Operations.
"GT Transaction" means the acquisition by Dura Shifter Holding
Corp., a Delaware corporation and a wholly-owned Subsidiary of the
U.S. Borrower, of the stock of GT."
2.4. The chart set forth below the first paragraph of the definition
of "Applicable Margin" in SECTION 1.1 of the Credit Agreement is hereby amended
and restated as follows:
Leverage Ratio Applicable Margin For
Offshore Rate Loans
Less than 0.40 : 1.0 0.25%
Equal to or greater than 0.40 : 1.0 but 0.30%
less than 0.50 : 1.0
Equal to or greater than 0.50 : 1.0 but 0.40%
less than 0.55 : 1.0
Equal to or greater than 0.55 : 1.0 0.50%
2.5. The clause "December 31, 2001" set forth in clause (iii) of the
definition of "Interest Period" set forth in SECTION 1.1 of the Credit Agreement
is hereby amended and restated to read "the Stated Maturity Date".
2.6. The definition of the term "Obligations" set forth in SECTION 1.1
of the Credit Agreement is hereby amended and restated in its entirety, as
follows:
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<PAGE>
"Obligations" means all obligations, liabilities and indebtedness
of every nature of a Borrower from time to time owed to the Agent or
any Lender under the Loan Documents including the principal amount of
all debts, claims and indebtedness, accrued and unpaid interest and
all Hedging Obligations, fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now
and/or from time to time hereafter owing, due or payable whether
before or after the filing of a proceeding under the Bankruptcy Code
by or against such Borrower, and all Indebtedness owing to any Lender
or any Affiliate of any Lender to the extent such Indebtedness is
permitted pursuant to SECTION 7.2.2(e) hereof, which Indebtedness
shall be pari passu with all other Obligations.
2.7. The definition of the term "Revolving Loan Commitment Amount" set
forth in SECTION 1.1 of the Credit Agreement is hereby amended and restated as
follows:
"REVOLVING LOAN COMMITMENT AMOUNT" means $200,000,000, as
adjusted in the event the same is permanently reduced from time to
time pursuant to SECTION 2.2. "
2.8. The clause "December 31, 2001" set forth in clause (a) of the
definition of "Revolving Loan Commitment Termination Date" set forth in
SECTION 1.1 of the Credit Agreement is hereby amended and restated to read
"the Stated Maturity Date".
2.9. The definition of the term "Stated Maturity Date" set forth in
SECTION 1.1 of the Credit Agreement is hereby amended by deleting the clause
"December 31, 2001" in such term, and by inserting in lieu thereof the clause
"August __, 2002".
2.10. The chart set forth below the first paragraph of
SECTION 3.3.1 of the Credit Agreement is hereby amended and restated as
follows:
Leverage Ratio Applicable Rate
Less than 0.40 : 1.0 0.15%
Equal to or greater than 0.40 : 1.0 but 0.20%
less than 0.50 : 1.0
Equal to or greater than 0.50 : 1.0 but 0.2250%
less than 0.55 : 1.0
Equal to or greater than 0.55 : 1.0 0.25%
2.11. SECTION 4.10 of the Credit Agreement is hereby amended and
restated as follows:
-3-
<PAGE>
"The Borrowers shall apply the proceeds of the Revolving Loans
(i) to finance the KPI Transaction and the German Acquisition, (ii) to
make intercompany loans and distributions, as permitted under this
Agreement, to finance the GT Transaction, (iii) to refinance certain
obligations of KPI Michigan and the VOFA Group, (iv) for capital
expenditures and (v) for working capital purposes and general
corporate purposes (including, without limitation, acquisitions
permitted hereunder) of the Borrowers and their subsidiaries."
2.12. The clause "each material company in the VOFA Group" set
forth in SECTION 5.2.6 of the Credit Agreement is hereby deleted and the clause
"each company in the VOFA Group having assets constituting 5% or more of the
total assets of Dura and its Subsidiaries on a consolidated basis at fair value,
or 5% or more of the total revenues of Dura and its Subsidiaries on a
consolidated basis" is inserted in lieu thereof.
2.13. SECTION 7.2.2(e) of the Credit Agreement is hereby amended
and restated as follows:
"(e) other unsecured Indebtedness of Dura, a Borrower or any of
its Subsidiaries, and secured Indebtedness of Dura, a Borrower or any
of its Subsidiaries owing to any Lender or any Affiliate of any Lender
other than in connection with the Loan Documents, not to exceed
$20,000,000 in the aggregate principal amount at any time
outstanding."
2.14. SECTION 7.2.4(a) of the Credit Agreement is hereby amended
and restated as follows:
(a) The Interest Coverage Ratio for the Four Quarter period ending on
the last day of each Fiscal Quarter set forth below shall not be less than the
ratio set forth opposite such period:
Period Ratio
Each Fiscal Quarter commencing with 2.50 : 1.00
the Third Fiscal Quarter, 1997 through
and including the Third Fiscal Quarter,
1998
Each Fiscal Quarter commencing with 2.75 to 1.00
the Fourth Fiscal Quarter, 1998 through
and including the Third Fiscal Quarter,
1999
Each Fiscal Quarter commencing with 3.00 to 1.00
-4-
<PAGE>
the Fourth Fiscal Quarter, 1999 and each
Fiscal Quarter thereafter
2.15. The chart set forth in SECTION 7.2.4(b) of the Credit
Agreement is hereby amended and restated as follows:
Period Ratio
Third Fiscal Quarter, 1997 through and 0.65 : 1.00
including the Third Fiscal Quarter,
1998
Fourth Fiscal Quarter, 1998 through and 0.60 . 1.00
including the Third Fiscal Quarter,
1999
Fourth Fiscal Quarter, 1999 and each 0.55 : 1.00
Fiscal Quarter thereafter
2.16. SECTION 7.2.4 of the Credit Agreement is hereby amended to
add a new SECTION 7.2.4(c), which Section shall read as follows:
"(c) The ratio of (i) the aggregate principal amount of Debt of Dura
and its Subsidiaries on a consolidated basis outstanding on the last day of
each Fiscal Quarter to (ii) Adjusted EBITDA for the four Fiscal Quarters
ending on each such day shall not be greater than 3.5 : 1.0."
2.17. SECTION 7.2.5(c) of the Credit Agreement is hereby amended
and restated as follows:
"(c) Investments by Dura and the U.S. Borrower (i) as of the
Effective Date, with respect to the U.S. Borrower in any of its then
existing Subsidiaries, or by any such Subsidiary in any of its
Subsidiaries; (ii) as of the date of the Counterpart Agreement, with
respect to the U.S. Borrower in the German Borrower and any of its
then existing Subsidiaries and (iii) as of August __, 1997, with
respect to the U.S. Borrower in Dura Shifter Holding Corp., a Delaware
corporation, and any of its then existing Subsidiaries."
2.18. SECTION 7.2.5(g) of the Credit Agreement is hereby amended
by deleting the clause "10%", and by inserting in lieu thereof the clause "15%".
2.19. SECTION 7.2.5(h) of the Credit Agreement is hereby amended
and restated as follows:
-5-
<PAGE>
"(h) the KPI Transaction, the German Acquisition and the GT
Transaction."
2.20. SECTION 10.14 of the Credit Agreement is hereby amended and
restated in its entirety as follows:
"In the event that the conditions set forth in SECTION 5.2 are not
satisfied on or before February 7, 1997, the German Revolving Loan
Commitment shall be null and void, all references and provisions
relating to the German Revolving Loan Commitment, including without
limitation the provisions of SECTION 2.1.2 of the Agreement, shall be
of no force or effect and this Agreement shall be read as if such
provisions were removed from the Agreement."
2.21. The Disclosure Schedule is hereby amended and restated as
set forth on EXHIBIT A hereto.
3. CERTAIN AGREEMENTS.
3.1. Notwithstanding anything to the contrary set forth in the
definition of "Applicable Margin" contained in the Credit Agreement, the
Borrowers hereby agree that the Applicable Margin for Offshore Rate Loans shall
be 0.50%, such percentage rate to remain in effect until the delivery of a
Compliance Certificate with respect to the Third Fiscal Quarter 1997.
3.2. Notwithstanding anything to the contrary set forth in the
definition of "Percentage" contained in the Credit Agreement, the Borrowers, the
Agent and the Lenders hereby agree that each Lender's Percentage shall be the
percentage set forth opposite its signature to this Amendment, as such
percentage may be adjusted from time to time pursuant to an Assignment and
Acceptance Agreement.
3.3. Notwithstanding anything to the contrary set forth in
SECTION 3.3.1 of the Credit Agreement, the Borrowers hereby agree that the
facility fee described in said Section shall be equal to 0.25% of the
Revolving Loan Commitment Amount until the delivery of a Compliance
Certificate with respect to the Third Fiscal Quarter 1997.
4. CONDITIONS PRECEDENT. The amendments to the Credit Agreement
set forth in this Amendment shall become effective as of the date of this
Amendment upon the satisfaction of the following conditions precedent:
4.1. NO DEFAULT. No Default and no Event of Default shall have
occurred and be continuing.
4.2. AMENDMENT FEES. Borrowers shall have paid Agent (i) for the pro
rata benefit of Lenders, based on the increased amount of each such Lender's
Revolving Loan Commitment pursuant to the terms of this Amendment, an amendment
fee of $50,000 and (ii)
-6-
<PAGE>
for the account of BancAmerica Securities, Inc. ("BASI"), the amount set
forth in that certain letter of even date herewith executed by the Borrowers
in favor of BASI.
4.2. DOCUMENTATION. The delivery of an executed copy of this
Agreement and each additional document, agreement and instrument set forth on
SCHEDULE 1 hereto.
5. MISCELLANEOUS.
5.1. EXPENSES. Borrowers jointly and severally agree to pay on
demand all costs and expenses of Agent (including the reasonable fees and
expenses of outside counsel for Agent) in connection with the preparation,
negotiation, execution, delivery and administration of this Amendment and all
other instruments or documents provided for herein or delivered or to be
delivered hereunder or in connection herewith. In addition, Borrowers agree
to pay, and save Agent and each Lender harmless from all liability for, any
stamp or other taxes which may be payable in connection with the execution or
delivery of this Amendment, the borrowings under the Credit Agreement, as
amended hereby, and the execution and delivery of any instruments or
documents provided for herein or delivered or to be delivered hereunder or in
connection herewith. All obligations provided in this SECTION 5.1 shall
survive any termination of this Amendment or the Credit Agreement as amended
hereby.
5.2. GOVERNING LAW. This Amendment shall be a contract made under and
governed by the internal laws of the State of Illinois.
5.3. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each such counterpart, when executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Amendment.
5.4. REFERENCE TO CREDIT AGREEMENT. Except as herein amended, the
Credit Agreement shall remain in full force and effect and is hereby ratified in
all respects. On and after the effectiveness of the amendments to the Credit
Agreement accomplished hereby, each reference in the Credit Agreement to "this
Agreement," "hereunder," "hereof," "herein" or words of like import, and each
reference to the Credit Agreement in any note and in any Loan Documents, or
other agreements, documents or other instruments executed and delivered pursuant
to the Credit Agreement, shall mean and be a reference to the Credit Agreement,
as amended by this Amendment.
5.5. SUCCESSORS. This Amendment shall be binding upon Borrowers,
Lenders and Agent and their respective successors and assigns, and shall inure
to the benefit of Borrowers, Lenders and Agent and the successors and assigns of
Borrowers, Lenders and Agent.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their respective officers thereunto duly authorized and
delivered at Chicago, Illinois as of the date first above written.
DURA OPERATING CORP.
By /s/
_________________________________
Its Vice President
________________________________
KIMANUS VERMOGENSVERWALTUNG GmbH
By /s/
_________________________________
Its General Manager
________________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By /s/
_________________________________
Its Managing Director
________________________________
-8-
<PAGE>
PERCENTAGE LENDERS
Revolving Loans: 22.0% BANK OF AMERICA NT&SA, successor-by-
merger to BANK OF AMERICA ILLINOIS,
as a Lender and the Issuer
By /s/
_________________________________
Its Managing Director
________________________________
-9-
<PAGE>
PERCENTAGE LENDERS
Revolving Loans: 19.5% THE BANK OF NOVA SCOTIA,
as a Lender
By /s/ J.R. TRIMBLE
_________________________________
Its Senior Relationship Manager
________________________________
-10-
<PAGE>
PERCENTAGE LENDERS
Revolving Loans: 19.5% COMERICA BANK,
as a Lender
By /s/ DARYL K. KRAUSE
_________________________________
Its Assistant Vice President
________________________________
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<PAGE>
PERCENTAGE LENDERS
Revolving Loans: 19.5% THE CHASE MANHATTAN BANK,
as a Lender
By /s/
_________________________________
Its Vice President
________________________________
-12-
<PAGE>
PERCENTAGE LENDERS
Revolving Loans: 19.5% FIRST BANK NATIONAL ASSOCIATION,
as a Lender
By /s/ MARK R. McDONALD
_________________________________
Its Vice President
________________________________
-13-
<PAGE>
EXHIBIT 4.3
MASTER NOTE
$10,000,000 August 29, 1997 Canada
1. FOR VALUE RECEIVED GT AUTOMOTIVE SYSTEMS (WINDSOR) LTD., a
Canadian corporation, hereafter referred to as "Borrower," promises to pay to
the order of BANK OF AMERICA CANADA ("Bank") on demand, or if no demand is
made, then on December 31, 1997 at Bank's offices at 200 Front Street West,
Suite 2700, Toronto, Ontario, CANADA, the total unpaid principal amount
advanced by Bank from time to time to or for the benefit of or at the request
of Borrower from and after the date of this Note through December 31, 1997,
together with interest thereon at the times and at the rates specified in
this Note. No. advance shall be made under this Note if, as a result of such
advance, the total principal amount outstanding under this Note would exceed
Ten Million Canadian Dollars (C$10,000,000).
2. All advances provided by the Bank, the maturities thereof and all
repayments of the principal thereof shall be recorded by the Bank in one or
more loan accounts. In the absence of manifest error, the loan account
records maintained by the Bank shall be conclusive evidence as to the amount
of any Advance, its interest rate, maturity and outstanding amount at all
times, PROVIDED THAT the failure of the Bank to make any such recordation or
endorsement shall not affect the obligation of the Borrower hereunder.
3. Each advance under this Note shall bear interest from the date of
such advance until payment in full at a rate per year equal to the rate of
interest publicly announced from time to time by Bank in Toronto, Ontario, as
its prime rate. (The prime rate is set by Bank based on various factors,
including Bank's costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans).
Loans may be priced at, above or below the prime rate. Interest shall accrue
daily and shall be computed on the basis of the actual number of days in the
applicable year for the actual number of days elapsed.
Any change in the interest rate of this Note shall take effect at the
opening of business on the day specified in the public announcement of a
change in said prime rate. Interest shall be payable quarterly, commencing
September 30, 1997, on the last day of each successive quarter thereafter,
and upon payment in full of principal of this Note.
4. Each advance under this Note shall be made in such manner as Bank and
Borrower may agree in writing.
5. The occurrence of any of the following events shall terminate any
obligation of Bank to make advances under this Note and, at the option of the
holder of this Note, shall make all sums of interest and principal of this
Note immediately due and payable without notice of default,
<PAGE>
presentment or demand for payment, protest or notice of nonpayment or
dishonor, or other notices or demands of any kind or character.
(a) Default in the payment when due of any installment of interest;
(b) Nonpayment by Borrower of any debt when due;
(c) Insolvency, failure in business, general assignment for the
benefit of creditors, filing of any petition in bankruptcy or for relief
under the provisions of the Bankruptcy and Insolvency Act, or any other
law or laws for the relief of or relating to debtors, of, by or against
Borrower or any Borrower, surety or guarantor of the indebtedness
evidenced by this Note, or any endorser of this Note;
(d) Appointment of a receiver or trustee to take possession of any
property of Borrower or any Borrower, surety or guarantor of the
indebtedness evidenced by this Note, or any endorser of this Note;
(e) Attachment of an involuntary lien or liens of any kind or
character, to the assets or property of Borrower or any Borrower, surety
or guarantor of the indebtedness evidenced by this Note, or any endorser
of this Note.
6. If suit is commenced to enforce payment of this Note, Borrower agrees
to pay such additional sums as attorney's fees as the court may adjudge
reasonable.
7. The obligations of the undersigned under this Note, if there is more
than one signing this Note as Borrower, are joint and several.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
by its officers thereunto duly authorized and directed by a resolution of its
sole shareholder, having been invested with all of the powers of the
directors of the Borrower pursuant to a written declaration made the ___ day
of August, 1997, duly passed and adopted by such shareholder.
GT AUTOMOTIVE SYSTEMS (WINDSOR) LTD.,
as Borrower
By: /s/
____________________________________
Title: Vice President
_________________________________
Mailing Address:
_______________________________________
_______________________________________
_______________________________________
_______________________________________
Telephone:_____________________________
