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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 EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) April 14, 1999
-----------------------
EAGLE-PICHER HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 333-49957 13-3989553
- ------------------------------ ---------------- ----------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
250 East Fifth Street, Suite 500, Cincinnati, Ohio 45202
- --------------------------------------------------------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code 513-721-7010
------------------------------
(Not Applicable)
- --------------------------------------------------------------------------------
(Former Name Or Former Address, If Changed Since Last Report)
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TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
Jurisdiction of IRS Employer
Incorporation or Commission File Identification
Name Organization Number Number
---- ------------ ------ ------
<S> <C> <C> <C>
Eagle-Picher Industries, Inc. Ohio 333-49957 31-0268670
Daisy Parts, Inc. Michigan 333-49957-02 38-1406772
Eagle-Picher Development Co., Inc. Delaware 333-49957-03 31-1215706
Eagle-Picher Far East, Inc. Delaware 333-49957-04 31-1235685
Eagle-Picher Fluid Systems, Inc. Michigan 333-49957-05 31-1452637
Eagle-Picher Minerals, Inc. Nevada 333-49957-06 31-1188662
Eagle-Picher Technologies, LLC Delaware 333-49957-09 31-1587660
Hillsdale Tool & Manufacturing Co. Michigan 333-49957-07 38-0946293
Michigan Automotive Research Corp. Michigan 333-49957-08 38-2185909
</TABLE>
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 14, 1999, Hillsdale Tool & Manufacturing Co. ("Hillsdale"), an
indirectly wholly-owned subsidiary of Eagle-Picher Holdings, Inc. (the
"Company"), acquired all of the outstanding capital stock of Charterhouse
Automotive Group, Inc., a Delaware corporation ("Charterhouse"), the indirect
parent corporation of Carpenter Enterprises Limited, a Michigan corporation
("Carpenter"). The acquisition was made pursuant to a Stock Purchase Agreement
dated April 8, 1999, which was held in escrow until April 14, 1999, and is
effective as of March 1, 1999 for accounting purposes. The total consideration
paid for Charterhouse was approximately $72.0 million, consisting of $37.9
million for the stock of Charterhouse, a $3.1 million payment to the former
president of Carpenter under a phantom stock plan which was triggered by the
transaction, and $31.0 million of existing indebtedness of Carpenter.
Carpenter is a supplier of precision machined components to the
automotive industry. Charterhouse is a holding company whose only asset is the
stock of Charterhouse-Carpenter Holdings, Inc., a Delaware corporation
("Carpenter Holdings"), another holding company whose only asset is the stock of
Carpenter. It is anticipated that Charterhouse and Holdings will be dissolved in
the near future.
A copy of the press release announcing the completion of this
transaction is attached hereto as Exhibit 99.1 and incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The Registrant believes that it would be impractical to provide the required
financial statements at the time this Report on Form 8-K is filed. The
Registrant intends to file such financial information as an amendment to
this Form 8-K within 60 days after April 29, 1999, the date by which this
Report must be filed.
(b) Pro Forma Financial Information
The Registrant believes that it would be impractical to provide the required
financial statements at the time this Report on Form 8-K is filed. The
Registrant intends to file such financial information as an amendment to
this Form 8-K within 60 days after April 29, 1999, the date by which this
Report must be filed.
(c) Exhibits:
2.1 - Stock Purchase Agreement dated April 8, 1999 between Hillsdale
Tool & Manufacturing Co., Charterhouse Automotive Group, Inc.
and the shareholders of Charterhouse Automotive Group, Inc.
99.1 - Press release dated April 14, 1999 announcing the completion of
the acquisition.
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has dully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EAGLE-PICHER HOLDINGS, INC.
/s/ Carroll D. Curless
-----------------------------------
Carroll D. Curless
Vice President and Controller
DATE April 16, 1999
--------------------
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has dully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EAGLE-PICHER INDUSTRIES, INC.
/s/ Carroll D. Curless
------------------------------------
Carroll D. Curless
Vice President and Controller
DATE April 16, 1999
-------------------------
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has dully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DAISY PARTS, INC.
/s/ Gary M. Freytag
----------------------------------
Gary M. Freytag
Vice President and Treasurer
DATE April 16, 1999
---------------------
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has dully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EAGLE-PICHER DEVELOPMENT COMPANY, INC.
/s/ Gary M. Freytag
--------------------------------
Gary M. Freytag
Vice President and Treasurer
DATE April 16, 1999
------------------------
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has dully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EAGLE-PICHER FAR EAST, INC.
/s/ Gary M. Freytag
--------------------------------
Gary M. Freytag
Vice President and Treasurer
DATE April 16, 1999
----------------------
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has dully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EAGLE-PICHER FLUID SYSTEMS, INC.
/s/ Gary M. Freytag
------------------------------
Gary M. Freytag
Treasurer
DATE April 16, 1999
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has dully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EAGLE-PICHER MINERALS, INC.
/s/ Gary M. Freytag
--------------------------------
Gary M. Freytag
Vice President and Treasurer
DATE April 16, 1999
----------------------
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has dully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EAGLE-PICHER TECHNOLOGIES, LLC
/s/ J. D. Seller
--------------------------------
J. D. Seller
Vice President, Controller
and Chief Financial Officer
DATE April 16, 1999
------------------------
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has dully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HILLSDALE TOOL & MANUFACTURING CO.
/s/ Gary M. Freytag
----------------------------
Gary M. Freytag
Treasurer
DATE April 16, 1999
-------------------------
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has dully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MICHIGAN AUTOMOTIVE RESEARCH CORPORATION
/s/ Gary M. Freytag
-----------------------------
Gary M. Freytag
Vice President
DATE April 16, 1999
--------------------------
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EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
2.1 Stock Purchase Agreement dated April 8, 1999 between Hillsdale
Tool & Manufacturing Co., Charterhouse Automotive Group, Inc.
and the shareholders of Charterhouse Automotive Group, Inc.
99.1 Press release dated April 14, 1999 announcing the completion
of the acquisition.
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
Dated
April 8, 1999
By and between
HILLSDALE TOOL & MANUFACTURING CO.
CHARTERHOUSE AUTOMOTIVE GROUP, INC.
and
THE SHAREHOLDERS OF
CHARTERHOUSE AUTOMOTIVE GROUP, INC.
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Table Of Contents
<TABLE>
<S> <C>
1. DEFINITIONS.....................................................................................1
2. SALE AND TRANSFER OF SHARES; CLOSING...........................................................10
2.1 SHARES.........................................................................................10
2.2 PURCHASE PRICE.................................................................................11
2.3 CLOSING........................................................................................11
2.4 CLOSING OBLIGATIONS............................................................................11
3. REPRESENTATIONS AND WARRANTIES OF SELLERS......................................................12
3.1 AUTHORITY; NO CONFLICT.........................................................................12
3.2 CAPITALIZATION.................................................................................13
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................14
4.1 ORGANIZATION AND GOOD STANDING.................................................................14
4.2 FINANCIAL STATEMENTS...........................................................................14
4.3 BOOKS AND RECORDS..............................................................................15
4.4 TITLE TO PROPERTIES; ENCUMBRANCES..............................................................15
4.5 CONDITION AND SUFFICIENCY OF ASSETS............................................................17
4.6 ACCOUNTS RECEIVABLE............................................................................17
4.7 INVENTORY......................................................................................17
4.8 NO UNDISCLOSED LIABILITIES.....................................................................18
4.9 TAXES..........................................................................................18
4.10 NO MATERIAL ADVERSE CHANGE.....................................................................22
4.11 EMPLOYEE BENEFITS..............................................................................22
4.12 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS................................26
4.13 LEGAL PROCEEDINGS; ORDERS......................................................................28
4.14 ABSENCE OF CERTAIN CHANGES AND EVENTS..........................................................29
4.15 CONTRACTS; NO DEFAULTS.........................................................................30
4.16 INSURANCE......................................................................................33
4.17 ENVIRONMENTAL MATTERS..........................................................................35
4.18 EMPLOYEES......................................................................................37
4.19 LABOR RELATIONS; COMPLIANCE....................................................................37
4.20 INTELLECTUAL PROPERTY..........................................................................38
4.21 CERTAIN PAYMENTS...............................................................................40
4.22 DISCLOSURE.....................................................................................40
4.23 RELATIONSHIPS WITH RELATED PERSONS.............................................................40
4.24 BROKERS OR FINDERS.............................................................................41
5. REPRESENTATIONS AND WARRANTIES OF BUYER........................................................41
5.1 ORGANIZATION AND GOOD STANDING.................................................................41
5.2 AUTHORITY; NO CONFLICT.........................................................................41
5.3 INVESTMENT INTENT..............................................................................42
5.4 CERTAIN PROCEEDINGS............................................................................42
5.5 BROKERS OR FINDERS.............................................................................42
5.6 PREPAYMENT PENALTIES...........................................................................43
5.7 ENVIRONMENTAL KNOWLEDGE........................................................................43
</TABLE>
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<TABLE>
<S> <C>
6. INDEMNIFICATION; REMEDIES......................................................................43
6.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE...................................43
6.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS..............................................43
6.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS-- ENVIRONMENTAL MATTERS...................45
6.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER................................................47
6.5 LIMITATIONS ON AMOUNT--SELLERS.................................................................47
6.6 ESCROW; LIMITATION TO ESCROW AMOUNT............................................................48
6.7 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS..............................................48
6.8 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS....................................................50
6.9 SELLERS' REPRESENTATIVE........................................................................50
7. GENERAL PROVISIONS.............................................................................50
7.1 EXPENSES.......................................................................................50
7.2 PUBLIC ANNOUNCEMENTS...........................................................................50
7.3 NOTICES........................................................................................51
7.4 JURISDICTION; SERVICE OF PROCESS...............................................................52
7.5 FURTHER ASSURANCES.............................................................................52
7.6 CERTAIN TAX RETURNS............................................................................53
7.7 WAIVER.........................................................................................53
7.8 ENTIRE AGREEMENT AND MODIFICATION..............................................................53
7.9 DISCLOSURE LETTER..............................................................................53
7.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.............................................54
7.11 SEVERABILITY...................................................................................54
7.12 SECTION HEADINGS, CONSTRUCTION.................................................................54
7.13 TIME OF ESSENCE................................................................................54
7.14 GOVERNING LAW..................................................................................55
7.15 COUNTERPARTS...................................................................................55
7.16 RELEASE........................................................................................55
7.17 STOCKHOLDERS' AGREEMENT........................................................................55
7.18 INSURANCE DIVIDENDS............................................................................55
</TABLE>
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made on April 8, 1999,
by Hillsdale Tool & Manufacturing Co., a Michigan corporation ("Buyer"),
Charterhouse Automotive Group, Inc., a Delaware Corporation and the shareholders
of Charterhouse Automotive Group, Inc. listed on Exhibit A hereto (individually
a "Seller" and collectively the "Sellers").
RECITAL
Sellers own and desire to sell, and Buyer desires to purchase, all of
the issued and outstanding shares (the "Shares") of capital stock of
Charterhouse Automotive Group, Inc., a Delaware corporation (the "Company"), for
the consideration and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"Accounts Receivable" -- as defined in Section 4.6.
"Acquired Companies" "Acquired Companies" -- the Company and its
Subsidiaries, collectively.
"Acquired Company" -- the Company or any of its Subsidiaries.
"Actual Knowledge" - a Person will be deemed to have "Actual Knowledge" of a
particular fact or other matter only:
(a) if such Person is a Seller and is a natural person, if such Seller
actually knew and was aware of such fact or other matter;
(b) if such Person is a Seller and not a natural person, if the chief
executive officer of such Person or the Person actually signing the Agreement on
such Seller's behalf actually knew and was aware of such fact or other matter;
or
(c) if such Person is an Acquired Company, if one or more of the
Persons listed on Exhibit B actually knew and was aware of such fact or other
matter.
"Ancillary Documents" -- the Disclosure Letter and the Post-Closing Escrow
Agreement.
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"Applicable Contract" -- any Contract (a) under which any Acquired Company has
or may acquire any rights, (b) under which any Acquired Company has or may
become subject to any obligation or liability, or (c) by which any Acquired
Company or any of the assets owned or used by it is or may become bound.
"Balance Sheets" -- as defined in Section 4.2.
"Base Purchase Price" -- as defined in Section 2.2.
"B.O.T.T. Escrow Agreement" -- an Escrow Agreement between Sellers, Hitachi
Metals America, Ltd. and the Escrow Agent of even date herewith regarding the
Company's guaranty of certain indebtedness of EMI Company to The Bank of Tokyo -
Mitsubishi, Ltd. (formerly The Bank of Tokyo Trust Company).
"B.O.T.T. Escrow Amount" -- the sum of Two Million Six Hundred Sixty Thousand
Dollars ($2,660,000.00).
"Breach" -- a "Breach" of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, that
continues beyond any applicable cure period, or (b) any meritorious claim (by
any Person) or other occurrence or circumstance that is or was inconsistent with
such representation, warranty, covenant, obligation, or other provision, and the
term "Breach" means any such inaccuracy, breach, failure, meritorious claim,
occurrence, or circumstance.
"Buyer" -- as defined in the first paragraph of this Agreement.
"Carpenter" -- Carpenter Enterprises Limited, a Michigan corporation and an
indirect wholly-owned Subsidiary of the Company.
"Closing" -- as defined in Section 2.3.
"Closing Date" -- April 8, 1999.
"Company" -- as defined in the Recitals of this Agreement.
"Consent" -- any approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization).
"Contemplated Transactions" -- all of the transactions contemplated by this
Agreement, including:
(a) the sale of the Shares by Sellers to Buyer;
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(b) the execution, delivery, and performance of the Ancillary
Documents;
(c) the performance by Buyer and Sellers of their respective covenants
and obligations under this Agreement; and
(d) Buyer's acquisition and ownership of the Shares and exercise of
control over the Acquired Companies.
"Contract" -- any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied), including without
limitation any purchase order or price quotation, that is legally binding.
"Damages" -- as defined in Section 6.2.
"Disclosure Letter" -- the disclosure letter delivered by Sellers to Buyer
concurrently with the execution and delivery of this Agreement.
"Effective Time" -- as defined in Section 2.3.
"Encumbrance" -- any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, voting agreement or trust, easement, zoning ordinance, restrictive
covenant or other restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Environment" -- soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"Environmental, Health, and Safety Liabilities" -- any cost, damages, expense,
liability, obligation, or other responsibility of any Acquired Company arising
from or under Environmental Law or Occupational Safety and Health Law and
consisting of or relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off- site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective actions, including any
investigation,
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cleanup, removal, containment, or other remediation or response actions
("Cleanup") required by applicable Environmental Law or Occupational Safety and
Health Law (whether or not such Cleanup has been required or requested by any
Governmental Body or any other Person) and for any natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and Health Law.
The terms "corrective action," "removal," "remedial," and "response action,"
include but are not limited to the types of activities covered by the United
States Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. section 9601 et seq., as amended ("CERCLA") and the Resource Conservation
and Recovery Act, 42 U.S.C. section 6901 et seq., as amended ("RCRA").
"Environmental Law" -- any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and used
so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(g) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them,
for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
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"Escrow Agent" -- Firstar Bank, N.A.
"Escrow Agreements" -- the B.O.T.T. Escrow Agreement, the Household Escrow
Agreement, the Post-Closing Escrow Agreement and the Sanwa Escrow Agreement.
"Escrow Amounts" -- the sum of the Post-Closing Escrow Amount, the Phantom Stock
Escrow Amount, the B.O.T.T. Escrow Amount, the Household Escrow Amount and the
Sanwa Escrow Amount.
"Facilities" -- any real property, leaseholds, or other interests currently or
formerly owned or operated by any Acquired Company and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently or formerly owned or operated by any Acquired Company.
"GAAP" -- generally accepted United States accounting principles, applied on a
basis consistent with the basis on which the Balance Sheets and the other
financial statements referred to in Section 4.2 were prepared.
"Governmental Authorization" -- any approval, consent, license, permit, waiver,
or other authorization issued, granted, given, or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"Governmental Body" -- any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Hazardous Activity" -- the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use of Hazardous Materials in, on,
under, about, or from the Facilities or any part thereof into the Environment,
and any other act, business, operation, or thing that increases the danger, or
risk of danger, or poses an unreasonable risk of harm to persons or property on
or off the Facilities, or that may affect the value of the Facilities or the
Acquired Companies.
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"Hazardous Materials" -- any waste or other substance that is listed, defined,
designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials, and all materials
containing any such waste or other substance.
"Household Escrow Agreement" -- an Escrow Agreement between Sellers, Household
Commercial Financial Services, Inc. ("Household"), Escrow Agent and Hitachi
Metals, Ltd. of even date herewith regarding the Company's guarantee of certain
indebtedness of EMI Company to Household.
"Household Escrow Amount" -- the sum of Five Million Five Hundred Thousand
Dollars ($5,500,000.00).
"HSR Act" -- the Hart-Scott-Rodino Antitrust Improvements Act of 1976 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Intellectual Property Assets" -- as defined in Section 4.20.
"Interim Balance Sheet" -- as defined in Section 4.2.
"IRC" -- the Internal Revenue Code of 1986, as amended. All citations to the
Code, or to the Treasury Regulations promulgated thereunder, shall include any
amendments or any substitute or successor provisions thereto.
"IRS" -- the United States Internal Revenue Service or any successor agency,
and, to the extent relevant, the United States Department of the Treasury.
"Knowledge" -- an individual will be deemed to have "Knowledge" of a particular
fact or other matter if:
(a) such individual is actually aware of such fact or other matter; or
(b) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of such fact or
other matter.
An Acquired Company will be deemed to have "Knowledge" of a particular fact or
other matter only if any individual listed on Exhibit B hereto has, or at any
time had, Knowledge of such fact or other matter.
"Letter of Intent" -- the letter of intent from Buyer to the Company dated
December 8, 1998, as amended.
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"Legal Requirement" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Material Contract" -- as defined in Section 4.15.
"Occupational Safety and Health Law" -- any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"Order" -- any award, decision, injunction, judgment, order, ruling, subpoena,
or verdict entered, issued, made, or rendered by any court, administrative
agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" -- an action taken by a Person will be deemed to
have been taken in the "Ordinary Course of Business" only if such action is
consistent with the past practices of such Person and is taken in the ordinary
course of the normal day-to-day operations of such Person.
"Organizational Documents" -- (a) the articles or certificate of incorporation
and the regulations, bylaws and any similar documents of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) any charter or similar document adopted or filed
in connection with the creation, formation, organization or governance of a
Person; and (e) any amendment to any of the foregoing.
"Owned Real Property" -- as defined in Section 4.4.
"Person" -- any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"Phantom Stock Amount" -- Three Million One Hundred Forty-Five Thousand Five
Hundred Fifty One Dollars ($3,145,551.00).
"Phantom Stock Closing Payment" -- The Phantom Stock Amount less the Phantom
Stock Escrow Amount.
"Phantom Stock Escrow Amount" -- Five Hundred Thousand Dollars ($500,000).
"Phantom Stock Plan" -- The Carpenter Enterprises Limited Amended 1993 Phantom
Stock Plan, as amended.
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"Plan" -- as defined in Section 4.11(a).
"Post-Closing Escrow Agreement" -- as defined in Section 2.4(c).
"Post-Closing Escrow Amount" -- Four Million Five Hundred Thousand Dollars
($4,500,000.00).
"Proceeding" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Purchase Price" -- the Base Purchase Price plus the amounts paid to the
Sellers' Representative from the Escrow Amounts (other than the Phantom Stock
Escrow Amount).
"Real Property Interest" -- as defined in Section 4.4.
"Related Person" -- with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, executor,
or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
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(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or
(c).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse, (iii) any other natural person who
is related to the individual or the individual's spouse within the second
degree, and (iv) any other natural person who resides with such individual, and
(b) "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 10% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 10% of the outstanding equity securities or
equity interests in a Person.
"Release" -- any spilling, leaking, emitting, discharging, depositing, escaping,
leaching, dumping, or other releasing into the Environment, whether intentional
or unintentional, which is unpermitted by any Governmental Body.
"Representative" -- with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
"Response" -- as defined in Section 6.3.
"Sanwa Escrow Agreement" -- an Escrow Agreement between Sellers, Hitachi Metals
America, Ltd. and Escrow Agent of even date herewith regarding the Company's
guaranty of certain indebtedness of EMI Company to The Sanwa Bank Limited.
"Sanwa Escrow Amount" -- the sum of Two Million Six Hundred Sixty Thousand
Dollars ($2,660,000.00)
"Securities Act" -- the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"Sellers" -- as defined in the first paragraph of this Agreement.
"Sellers' Closing Documents" -- as defined in Section 3.1(a).
"Sellers' Representative" -- as defined in Section 6.9.
"Shares" -- as defined in the Recitals of this Agreement.
"Subsidiary" -- with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise
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having the power to direct the business and policies of that corporation or
other Person (other than securities or other interests having such power only
upon the happening of a contingency that has not occurred) are held by the Owner
or one or more of its Subsidiaries; when used without reference to a particular
Person, "Subsidiary" means a Subsidiary of the Company.
"Tax" or "Taxes" -- any and all federal, state, local, foreign and other taxes,
levies, fees, imposts, duties and charges of whatever kind (including any
interest, penalties or additions to the tax imposed in connection therewith or
with respect thereto), whether or not imposed on any Acquired Company,
including, without limitation, taxes imposed on, or measured by, income,
franchise, profits, or gross receipts, and also ad valorem, value added, sales,
use, service, service use, real or personal property, capital stock, license,
payroll, withholding, employment, social security, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premium, windfall
profits, transfer, and gains taxes, and customs duties.
"Tax Return" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release" -- a substantial likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may result
from such Release.
"Threatened" -- a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made (in
writing, or, to the Knowledge of any Acquired Company, orally) or any notice has
been given (in writing, or, to the Knowledge of any Acquired Company, orally),
or if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, Sellers are
selling and transferring the Shares to Buyer, and Buyer is purchasing the Shares
from Sellers.
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2.2 PURCHASE PRICE
(a) The base purchase price (the "Base Purchase Price") for the Shares
is Twenty-Two Million Five Hundred Eighty-Nine Thousand Nine Hundred Forty-Nine
Dollars ($22,589,949.00) (representing Forty-One Million Fifty-Five Thousand
Five Hundred Dollars ($41,055,500.00) LESS the Phantom Stock Closing Payment and
the Escrow Amounts).
(b) Buyer has delivered the Escrow Amounts in escrow pursuant to the
Escrow Agreements to secure certain obligations of the Sellers, Mr. E. C. Dietz
and the Acquired Companies. If and when released from escrow to Sellers'
Representative pursuant to the terms of the Escrow Agreements, payments made
with respect to the Escrow Amounts (and all earnings thereon) other than the
Phantom Stock Escrow Amount shall be deemed to be additional purchase price to
the Sellers, and payments made with respect to the Phantom Stock Escrow Amount
shall be applied to satisfy Carpenter's obligations under the Phantom Stock
Plan.
(c) Sellers irrevocably appoint Sellers' Representative as their paying
agent for the Purchase Price and agree that payment to or at the direction of
the Sellers' Representative constitutes payment to the Sellers. Sellers
acknowledge and agree that Buyer has fully satisfied its obligation to pay for
the Shares by paying the Base Purchase Price to Sellers' Representative and
delivering the Escrow Amounts in escrow to the Escrow Agent under the Escrow
Agreements.
2.3 CLOSING
The purchase and sale of the Shares (the "Closing") provided for in
this Agreement shall be deemed to have occurred effective as of 12:01 a.m.
(local time) on March 1, 1999 (the "Effective Time") (it being understood and
agreed that Buyer does not owe any interest on the Purchase Price from the
Effective Time to the date of this Agreement).
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) Sellers are delivering to Buyer:
(i) certificates representing the Shares, duly endorsed (or accompanied
by duly executed stock powers) for transfer to Buyer;
(ii) an opinion of Proskauer Rose LLP;
(iii) an opinion of Pepper Hamilton LLP;
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(iv) a certificate of Charterhouse Group International, Inc.; and
(v) releases of guarantees from each of The Bank of Tokyo - Mitsubishi,
Ltd., Household Commercial Financial Services, Inc. and The Sanwa Bank Limited.
(b) Buyer is paying:
(i) the Base Purchase Price and the Phantom Stock Closing Payment by
wire transfer to Sellers' Representative; and
(ii) the Escrow Amounts by wire transfer to the Escrow Agent.
(c) Buyer, Sellers and Mr. E.C. Dietz are entering into an escrow
agreement (the "Post-Closing Escrow Agreement") with the Escrow Agent.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller severally (and not jointly) represents and warrants to
Buyer as follows:
3.1 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation
of such Seller, enforceable against such Seller in accordance with its terms.
The Post-Closing Escrow Agreement, and any other documents executed and
delivered by Sellers at the Closing (collectively, the "Sellers' Closing
Documents") constitute the legal, valid, and binding obligations of such Seller,
enforceable against such Seller in accordance with their respective terms. Such
Seller has the absolute and unrestricted right, power, authority, and capacity
to execute and deliver this Agreement and the Sellers' Closing Documents and to
perform its obligations under this Agreement and the Sellers' Closing Documents.
(b) Except as set forth in Part 3.1 of the Disclosure Letter, neither
the execution and delivery of this Agreement nor the consummation or performance
of any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A) any
provision of the Organizational Documents of such Seller or any Acquired
Company, or (B) any resolution adopted by the board of directors or other
governing body or the stockholders or other equity owners of such Seller or any
Acquired Company;
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(ii) contravene, conflict with, or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which any Acquired Company or such Seller,
or any of the assets owned or used by any Acquired Company, may be subject; or
(iii) contravene, conflict with, or result in a violation or breach of
any provision of, or give any Person the right to declare a default or exercise
any remedy under, any Contract to which such Seller or any of such Seller's
Shares are subject or bound.
Except as set forth in Part 3.1 of the Disclosure Letter, neither such Seller
nor any Acquired Company is or will be required to give any notice to or obtain
any Consent from any Person in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the Contemplated
Transactions.
3.2 CAPITALIZATION
The authorized equity securities of the Company consist of 215,000
shares of common stock, par value $0.001 per share, of which 195,535.80 shares
are issued and outstanding and constitute the Shares. Such Seller has and is
transferring to Buyer the record and beneficial ownership of the Shares listed
as owned by him, her or it on Part 3.2 of the Disclosure Letter, free and clear
of all Encumbrances. Part 3.2 of the Disclosure Letter contains a complete list
of all record and beneficial owners and holders of the Shares and all other
equity securities of each Acquired Company. Except as set forth in Part 3.2 of
the Disclosure Letter, and with the exception of the Shares (which are owned by
Sellers), all of the outstanding equity securities and other securities of each
Acquired Company are owned of record and beneficially by one or more of the
Acquired Companies, free and clear of all Encumbrances. All of the outstanding
equity securities of each Acquired Company (including without limitation the
Shares) have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in Part 3.2 of the Disclosure Letter, there
are no Contracts relating to the issuance, sale, or transfer of any equity
securities or other securities of any Acquired Company. None of the outstanding
equity securities or other securities of any Acquired Company was issued in
violation of the Securities Act or any other Legal Requirement.
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4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to indemnification by the Sellers under Section 6.2 below, the
Company represents and warrants to Buyer as follows:
4.1 ORGANIZATION AND GOOD STANDING
(a) Part 4.1 of the Disclosure Letter contains a complete and accurate
list for each Acquired Company of its name, its jurisdiction of incorporation,
and any other jurisdictions in which it is authorized to do business. Each
Acquired Company is a corporation duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under Applicable Contracts. Each
Acquired Company is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the nature
of the activities conducted by it, requires such qualification.
(b) The Company has delivered to Buyer true and correct copies of the
Organizational Documents of each Acquired Company, as currently in effect.
4.2 FINANCIAL STATEMENTS
The Company has delivered to Buyer: (a) audited consolidated balance
sheets of the Acquired Companies and audited balance sheets of Carpenter as at
June 30 in each of the years 1996 and 1997, and the related audited statements
of income, changes in stockholders' equity, and cash flow (consolidated in the
case of the Acquired Companies) for each of the fiscal years then ended,
together with the report thereon of Ernst & Young, independent certified public
accountants, (b) an audited consolidated balance sheet of the Acquired Companies
and an audited balance sheet of Carpenter as at June 30, 1998 (including the
notes thereto, the "Balance Sheets"), and the related statements of income,
changes in stockholders' equity, and cash flow for the fiscal year then ended
(consolidated in the case of the Acquired Companies), together with the report
thereon of Ernest & Young, independent certified public accountants, and (c) an
unaudited balance sheet of Carpenter as at February 28, 1999 (the "Interim
Balance Sheet") and the related unaudited statement of income for the seven
months then ended, including in each case the notes thereto. Such financial
statements and notes fairly present the financial condition and the results of
operations, changes in stockholders' equity, and cash flow of the Acquired
Companies and Carpenter, as applicable, as at the respective dates of and for
the periods referred to in such financial statements, all in accordance with
GAAP, subject, in the case of interim financial statements, to normal year-end
adjustments (the effect of which will not, individually or in the aggregate, be
materially adverse) and the
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absence of notes (that, if presented, would not differ materially from those
included in the Balance Sheets); the financial statements referred to in this
Section 4.2 reflect the consistent application of such accounting principles
throughout the periods involved, except as disclosed in the notes to such
financial statements. No financial statements of any Person other than the
Acquired Companies are required by GAAP to be included in the consolidated
financial statements of the Company.
4.3 BOOKS AND RECORDS
The books of account, minute books, stock record books, and other
records of the Acquired Companies, all of which have been made available to
Buyer, are complete and correct and have been maintained in accordance with
sound business practices. The minute books of the Acquired Companies contain
accurate and complete records of all meetings held of, and corporate action
taken by, the stockholders and the Boards of Directors of the Acquired
Companies, and no meeting of any such stockholders or Board of Directors has
been held for which minutes have not been prepared and are not contained in such
minute books. No committee of the Board of Directors of any Acquired Company has
taken any action (i) inconsistent with any action of the applicable Board of
Directors, or (ii) involving any transaction that is material to the applicable
Acquired Company. At the Closing, all of those books and records will be in the
possession of the Acquired Companies.
4.4 TITLE TO PROPERTIES; ENCUMBRANCES
(a) Part 4.4 of the Disclosure Letter contains a complete and accurate
list of all real property (freehold or leaseholds) or other interests in real
property owned by any Acquired Company ("Real Property Interests"). The Company
has delivered or made available to Buyer true and correct copies of the deeds
and other instruments (as recorded) by which the Acquired Companies acquired
such Real Property Interests, and copies of all title insurance policies,
opinions, abstracts, and surveys, in each case in the possession of Sellers or
the Acquired Companies and relating to such Real Property Interests.
(b) The Acquired Companies own (with good and marketable title in the
case of real property, subject only to the matters permitted by the following
subsection (c)) all the properties and assets (whether real, personal, or mixed
and whether tangible or intangible) that they purport to own located in the
facilities owned or operated by the Acquired Companies or reflected as owned in
the books and records of the Acquired Companies, including all of the properties
and assets reflected in the Balance Sheets and the Interim Balance Sheets
(except for assets held under capitalized leases disclosed or not required to be
disclosed in Part 4.15 of the Disclosure Letter and personal property sold since
the date of the Balance Sheets and the Interim Balance Sheets, as the case may
be, in the Ordinary Course of Business), and all of the properties and assets
purchased or otherwise acquired by the Acquired Companies since the date of the
Balance Sheets
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(except for personal property acquired and sold since the date of the Balance
Sheets in the Ordinary Course of Business and consistent with past practice).
(c) Except as disclosed on Part 4.4 of the Disclosure Letter, all
properties and assets reflected in the Balance Sheets and the Interim Balance
Sheets and all other assets of the Acquired Companies are free and clear of all
Encumbrances and are not, in the case of real property, subject to any rights of
way, zoning ordinances, building use restrictions, exceptions, variances,
reservations, or limitations of any nature except, with respect to all such
properties and assets, (i) mortgages or security interests listed on Part 4.4 of
the Disclosure Letter, securing specified liabilities or obligations shown on
the Balance Sheets, with respect to which no default (or event that, with notice
or lapse of time or both, would constitute a default) exists, (ii) liens for
current taxes not yet due and payable without interest or penalties, and (iii)
with respect to real property, (A) easements and other restrictions of record,
if any, which do not individually or in the aggregate materially detract from
the value or impair the current use of the property subject thereto, or impair
the current operations of any Acquired Company, and (B) zoning laws and other
land use restrictions that do not impair the present use of the property subject
thereto.
(d) Except as disclosed on Part 4.4 of the Disclosure Letter, each Real
Property Interest listed as "owned" on Part 4.4 of the Disclosure Letter ("Owned
Real Property") is properly zoned for its current use without any variance and
no portion of any Owned Real Property is the subject of, or to the Knowledge of
the Acquired Companies is affected by, any condemnation or eminent domain
proceeding, change in zoning, or assessment currently pending, Threatened or, to
the Knowledge of the Acquired Companies, proposed. The use of any Owned Real
Property by any Acquired Company is not a nonconforming use grandfathered under
any applicable Legal Requirement. No person other than an Acquired Company has
any right to occupy any Owned Real Property; an Acquired Company currently holds
exclusive possession thereof, and no person has any right to purchase or lease
all or any portion of any Owned Real Property.
(e) Except as set forth on Part 4.4 of the Disclosure Letter, all
buildings, plants, and structures owned by the Acquired Companies lie wholly
within the boundaries of the real property owned by the Acquired Companies and
do not encroach upon the property of, or otherwise conflict with the property
rights of, any other Person.
(f) The applicable Acquired Company has the right under valid and
subsisting leases to occupy and control as a tenant all Real Property Interests
listed as "leased" on Part 4.4 of the Disclosure Letter.
(g) Except as set forth on Part 4.4 of the Disclosure Letter, all Owned
Real Property is serviced by water, gas, electric, sewer and all other necessary
utilities, the utility lines for such service enter such Owned Real Property
from a public street, no utility line servicing any Owned Real Property
encroaches on any adjoining real property, and all such utilities are sufficient
for the continued conduct of the Acquired Companies'
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businesses after the Closing in substantially the same manner as conducted prior
to the Closing.
(h) Neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time) result in the imposition or creation
of any Encumbrance upon or with respect to any of the assets owned or used by
any Acquired Company.
4.5 CONDITION AND SUFFICIENCY OF ASSETS
Except as disclosed in Part 4.5 of the Disclosure Letter, to the
Knowledge of the Acquired Companies, the buildings, plants, structures,
improvements and equipment of the Acquired Companies are structurally sound, are
in good operating condition and repair, ordinary wear and tear excepted, and are
adequate for the uses to which they are being put; none of such buildings,
plants, structures, improvements or equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost, and none of such buildings, plants, structures,
improvements or equipment violate any Legal Requirements, including without
limitation any building, safety, fire or other codes. The building, plants,
structures, improvements and equipment of the Acquired Companies are sufficient
for the continued conduct of the Acquired Companies' businesses after the
Closing in substantially the same manner as conducted prior to the Closing.
4.6 ACCOUNTS RECEIVABLE
All accounts receivable of the Acquired Companies that are reflected
on the
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Balance Sheets or the Interim Balance Sheets or on the accounting records of the
Acquired Companies as of the Closing Date (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from sales
actually made or services actually performed in the Ordinary Course of Business.
There is no contest, claim, or right of set-off, other than returns in the
Ordinary Course of Business, under any Contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable. Part
4.6 of the Disclosure Letter contains a complete and accurate list of all
Accounts Receivable as of the date of the Interim Balance Sheets, which list
sets forth the aging of such Accounts Receivable.
4.7 INVENTORY
All inventory of the Acquired Companies reflected in the Balance Sheets
or the Interim Balance Sheet consists of a quality and quantity usable and
salable in the Ordinary Course of Business, except for obsolete items and items
of below-standard quality, all of which have been written off or written down to
net realizable value in the Balance Sheets or the Interim Balance Sheet or on
the accounting records of the Acquired Companies as of the Closing Date, as the
case may be. All inventories not written off have been priced at the lower of
cost or market on a first in, first out basis. The quantities of each item of
inventory (whether raw materials, work-in-process, or finished goods) are not
excessive, but are reasonable in the present circumstances of the Acquired
Companies.
4.8 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 4.8 of the Disclosure Letter, the Acquired
Companies have no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the Balance Sheets
or the Interim Balance Sheets, liabilities arising on or after the date thereof
under Contracts (other than as a result of a Breach thereof) and current
liabilities incurred in the Ordinary Course of Business since the respective
dates thereof.
4.9 TAXES
(a) Except as otherwise disclosed in Part 4.9(a) of the Disclosure
Letter:
(i) Each Acquired Company has filed (or received an appropriate
extension of time to file, which extension is listed on Part 4.9(a) of the
Disclosure Letter) all Tax Returns required to be filed by it, and in each case,
the applicable Acquired Company has paid all Taxes shown to be due on such Tax
Returns or otherwise due, and has made appropriate provision on the Balance
Sheets for any Taxes not yet due, and all such Tax Returns were, are and will be
true, correct and complete;
(ii) From June 19, 1987 through the Closing Date, the Acquired
Companies filed consolidated federal income tax returns as members of an
affiliated group of which the Company is the common parent;
(iii) None of the Tax Returns filed by or on behalf of any Acquired
Company which remain open to examination or assessment under the applicable
statutes of limitations of any taxing jurisdiction (an "Open Return") contains a
disclosure statement under Section 6662 of the IRC or any similar provision of
state, local, foreign or other law; and
(iv) The Company has delivered to Buyer (A) copies of any written tax
sharing agreements or arrangements between any Acquired Company, any affiliate,
or any third party, (B) true and complete descriptions of any such agreement,
arrangement or practice not reduced to writing, and (C) a written statement
setting forth (1) the amount, if any, owed by or to any Acquired Company (and
the party or parties to or by which any such amounts are owed) under any such
agreement, arrangement or practice as of the date such
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statement was given, and (2) a good-faith calculation, which shall be materially
correct, of the estimated amounts, if any, that any Acquired Company will pay
(and the party to which or by which such payment will be made) thereunder
between the date of the statement described in clause (1) and the Closing Date.
(b) Part 4.9(b) of the Disclosure Letter contains a list of all Open
Returns; none of such Open Returns have been examined by the applicable taxing
authority.
(c) Except as otherwise disclosed in Part 4.9(c) of the Disclosure
Letter:
(i) All tax deficiencies asserted or assessed against any Acquired
Company or its affiliates have been paid or finally settled;
(ii) Each Acquired Company and its affiliates have made all payments of
estimated Taxes required to be made under Section 6655 of the IRC and any
comparable provisions of state, local, foreign or other law;
(iii) All amounts that are required to be collected or withheld by any
Acquired Company have been duly collected or withheld, and have been duly
remitted or deposited in accordance with law;
(iv) There is no outstanding request for any extension of time within
which to pay any Taxes;
(v) There has been no waiver or extension of any applicable statute of
limitations for the assessment or collection of any Taxes;
(vi) There is no pending or threatened action, audit, proceeding or
investigation for the assessment or collection of any Taxes;
(vii) There are no liens for Taxes (other than for current Taxes not
yet due and payable) upon the assets of any Acquired Company;
(viii) There are no requests for rulings, subpoenas, or requests for
information pending with respect to any taxing authority;
(ix) Any adjustment of Taxes made by the IRS in any examination which
is required to be reported to state, local, foreign or other taxing authorities
has been so reported, and any additional Taxes due with respect thereto have
been paid; and
(x) No power of attorney has been granted by any Acquired Company and
is currently in force with respect to any matter relating to Taxes.
(d) Except as otherwise disclosed in Part 4.9(d) of the Disclosure
Letter:
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(i) No taxing authority has raised any issue with respect to the
liability of any Acquired Company or any affiliate for any Tax that, by the
application of similar principles, might result in the issuance of a Notice of
Deficiency or similar notice of intention to assess Taxes by any taxing
authority;
(ii) No Acquired Company or any affiliate has taken any action that
would have the effect of deferring any liability for Taxes for any Acquired
Company from any taxable period ending on or before the Closing Date to any
taxable period ending thereafter that has not been disclosed on an Open Return
or as part of the work papers for such Open Return;
(iii) No excess loss account (within the meaning of Treas. Regs.
Section 1.1502-19) exists with respect to any Subsidiary;
(iv) No Acquired Company has any deferred gain or loss arising from
deferred intercompany transactions, within the meaning of Treas. Regs. Section
1.1502-13;
(v) No consent has been filed under Section 341(f) of the IRC with
respect to any Acquired Company;
(vi) No payment which will or may be made by any Acquired Company will
be characterized as an "excess parachute payment" within the meaning of Section
280G(b)(1) of the IRC;
(vii) No Acquired Company has participated in or cooperated with any
international boycott, within the meaning of Section 999 of the IRC;
(viii) No Acquired Company is required to include in income any
adjustment pursuant to Section 481(a) of the IRC (or any similar provision of
law or regulations) by reason of a change in accounting method; neither the IRS
nor any other taxing authority is asserting any such change in accounting
method, nor to the Knowledge of any Acquired Company is the IRS or any other
taxing authority considering any such change in accounting method; from the
period beginning July 1, 1998 and ending on the Closing Date, no Acquired
Company has made any change in any accounting method;
(ix) No Acquired Company has disposed of any property which has been
accounted for Tax purposes under the installment method;
(x) No Acquired Company is a party to any interest rate swap, currency
swap or similar transaction;
(xi) No Acquired Company has issued or assumed any corporate
acquisition indebtedness, within the meaning of Section 279(b) of the IRC, or
any obligation described in Section 279(a)(2) of the IRC;
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(xii) The net operating loss and other carryovers available to each
Acquired Company as of the Closing Date will be as set forth in Part 4.9(d)(xii)
of the Disclosure Letter; as of the Closing Date the ability of the Company and
each Subsidiary to use such carryovers will not have been affected by Sections
382, 383 or 384 of the IRC or by the SRLY or CRCO limitations of Treas. Regs.
Sections 1.1502-21A or 1.1502-22A except as a consequence of the sale of the
Shares;
(xiii) No Acquired Company owns any interest in an entity which is
characterized as a partnership for federal income tax purposes;
(xiv) As of the Closing Date, no Acquired Company will have sustained
an "overall foreign loss" within the meaning of Section 904(f) of the IRC;
(xv) As of the Closing Date, no Acquired Company will have any
"non-recaptured net section 1231 losses," within the meaning of Section 1231(c)
of the IRC other than any such losses disclosed in the Tax Returns for the five
most recent preceding taxable years or any work papers for such Tax Returns;
(xvi) No election under Section 1504(d) of the IRC has been made with
respect to any Acquired Company;
(xvii) None of the assets of any Acquired Company is property which is
required to be treated as being owned by any other person pursuant to the
so-called "safe harbor lease" provisions of former Section 168(f)(8) of the IRC;
(xviii) None of the assets of any Acquired Company directly or
indirectly secures any debt the interest on which is tax-exempt under Section
103(a) of the IRC;
(xix) None of the assets of any Acquired Company is "tax-exempt use
property" within the meaning of Section 168(h) of the IRC;
(xx) No Acquired Company has made a consent dividend election under
Section 565 of the IRC;
(xxi) No Acquired Company is, and has not been, a United States real
property holding corporation (as defined in Section 897(c)(2) of the IRC) during
the applicable period specified in Section 897(c)(1)(A)(ii) of the IRC;
(xxii) No Acquired Company has or has ever had a permanent
establishment in any foreign country, as defined in any applicable Tax treaty or
convention between the United States of America and such foreign country; and
(xxiii) The transactions contemplated herein are not subject to the tax
withholding provisions of Section 3406 of the IRC, or of Subchapter A of Chapter
3 of the IRC or of any other provision of law.
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(e) The Acquired Companies have delivered to Buyer true, complete and
correct copies of all Open Returns and all work papers with respect to such Open
Returns.
(f) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time):
(i) cause Buyer or any Acquired Company to become subject to, or to
become liable for the payment of, any Tax; or
(ii) cause any of the assets owned by any Acquired Company to be
reassessed or revalued by any taxing authority or other Governmental Body under
any Applicable Contract.
4.10 NO MATERIAL ADVERSE CHANGE
Since the date of the Balance Sheets, there has not been any material
adverse change in the business, operations, properties, prospects, assets, or
financial condition of any Acquired Company, and no event has occurred or
circumstance exists that may result in such a material adverse change.
4.11 EMPLOYEE BENEFITS
(a) As used in this Section 4.11, the following terms have the meanings
set forth below.
"Company Other Benefit Obligation" means an Other Benefit Obligation owed,
adopted, or followed by an Acquired Company or an ERISA Affiliate of an Acquired
Company.
"Company Plan" means all Plans of which an Acquired Company or an ERISA
Affiliate of an Acquired Company is or was a Plan Sponsor, or to which an
Acquired Company or an ERISA Affiliate of an Acquired Company otherwise
contributes or has contributed, or in which an Acquired Company or an ERISA
Affiliate of an Acquired Company otherwise participates or has participated. All
references to Plans are to Company Plans unless the context requires otherwise.
"ERISA Affiliate" means, with respect to an Acquired Company, any other person
that, together with the Company, would be treated as a single employer under IRC
section 414.
"Multi-Employer Plan" has the meaning given in ERISA section 3(37)(A).
"Other Benefit Obligations" means all obligations, arrangements, or customary
practices, whether or not legally enforceable, to provide benefits, other than
salary, as
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compensation for services rendered, to present or former directors, employees,
or agents, other than obligations, arrangements, and practices that are Plans.
Other Benefit Obligations include without limitation consulting agreements under
which the compensation paid does not depend upon the amount of service rendered,
bonus plans, "phantom stock" or similar plans, sabbatical policies, severance
payment policies, and fringe benefits within the meaning of IRC section 132.
"Plan" has the meaning given in ERISA section 3(3).
"Plan Sponsor" has the meaning given in ERISA section 3(16)(B).
"Qualified Plan" means any Plan that meets or purports to meet the requirements
of IRC section 401(a).
"Welfare Plan" has the meaning given in ERISA section 3(1).
(b)
(i) Part 4.11(b)(i) of the Disclosure Letter contains a complete and
accurate list of all Company Plans and Company Other Benefit Obligations with
respect to employees or former employees of the Acquired Companies.
(ii) None of the Company Plans or Company Other Benefit Obligations are
defined benefit plans (as defined in ERISA section 3(35)) subject to Title IV of
ERISA, Multi-Employer Plans, money purchase pension plans subject to IRC section
412, or cafeteria plans subject to IRC section 125. None of the Company Plans or
Company Other Benefit Obligations are funded through a trust fund other than the
Qualified Plans subject to IRC section 401(k). None of the Company Plans or
Company Other Benefit Obligations provides or is required to provide
post-retirement or post-employment welfare benefits other than as required by
the continuation coverage provisions of ERISA sections 601-606.
(iii) Since 1992, no ERISA Affiliate of an Acquired Company has ever
maintained, sponsored, or contributed to or has ever been required to maintain,
sponsor or contribute to a defined benefit plan (as defined in ERISA section
3(35)) subject to Title IV of ERISA or a Multi-Employer Plan.
(c) The Company has delivered to Buyer:
(i) all documents that set forth the terms of each Company Plan and
Company Other Benefit Obligation, including (A) all summary plan descriptions of
Company Plans for which the Acquired Companies are required to prepare, file,
and distribute summary plan descriptions, and (B) all summaries and descriptions
furnished to participants and beneficiaries regarding Company Plans or Company
Other Benefit Obligations for which a plan description or summary plan
description is not required;
(ii) all personnel, payroll, and employment manuals and policies;
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(iii) all collective bargaining agreements pursuant to which
contributions have been made or obligations incurred (including both pension and
welfare benefits) by the Acquired Companies and the ERISA Affiliates of the
Acquired Companies, and all collective bargaining agreements pursuant to which
contributions are being made or obligations are owed by such entities;
(iv) a written description of any Company Plan or Company Other Benefit
Obligation that is not otherwise in writing;
(v) all registration statements filed with respect to any Company Plan;
(vi) all insurance policies purchased by or to provide benefits under
any Company Plan;
(vii) all contracts with third party administrators, actuaries,
investment managers, consultants, and other independent contractors that relate
to any Company Plan or Company Other Benefit Obligation;
(viii) all reports submitted within the four years preceding the date
of this Agreement by third party administrators, actuaries, investment managers,
consultants, or other independent contractors with respect to any Company Plan
or Company Other Benefit Obligation;
(ix) a sample notification to employees of their rights under ERISA
section 601-606.
(x) the Form 5500 filed in each of the most recent three plan years
with respect to each Company Plan and Other Benefit Obligations, including all
schedules thereto and the opinions of independent accountants;
(xi) all correspondence between any Acquired Company or any employee of
an Acquired Company in his or her role as representative of any Company Plan and
the IRS or the Department of Labor relating to any Company Plan, during the four
years preceding the date of this Agreement.
(xii) with respect to the Company Plans that are subject to IRC section
401(k), a copy of the most recent favorable determination letters, or if the
Company Plan is a standardized prototype plan, a copy of the most recent
favorable opinion letter issued to the prototype plan sponsor.
(d) Except as set forth in Part 4.11(d) of the Disclosure Letter:
(i) The Acquired Companies have performed all of their respective
obligations under all Company Plans and Company Other Benefit Obligations. The
Acquired Companies have made appropriate entries in their financial records and
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statements for all obligations and liabilities under such Plans and Obligations
that have accrued but are not due.
(ii) No statement, either written or oral, has been made by any
Acquired Company to any Person with regard to any Plan or Other Benefit
Obligation that was not in accordance with the Plan or Other Benefit Obligation
and that could have an adverse economic consequence to any Acquired Company or
to Buyer.
(iii) The Acquired Companies, with respect to all Company Plans and
Company Other Benefits Obligations, are, and each Company Plan and Company Other
Benefit Obligation, is, in full compliance with ERISA, the IRC, and other
applicable Laws including the provisions of such Laws expressly mentioned in
this Section 4.11, and with any applicable collective bargaining agreement.
(A) No transaction prohibited by ERISA section 406 and no
"prohibited transaction" under IRC section 4975(c) have occurred with
respect to any Company Plan.
(B) No Seller or Acquired Company has any liability to the IRS
with respect to any Plan, including any liability imposed by Chapter 43
of the IRC.
(C) No Seller or Acquired Company has any liability under
ERISA section 502.
(D) All filings required by ERISA and the IRC as to each Plan
have been timely filed, and all notices and disclosures to participants
required by either ERISA or the IRC have been timely provided.
(E) All contributions and payments made or accrued with
respect to all Company Plans and Company Other Benefit Obligations are
deductible under IRC section 162 or section 404. No amount, or any
asset of any Company Plan is subject to tax as unrelated business
taxable income.
(iv) Each Company Plan can be terminated within thirty days, without
payment of any additional contribution or amount and without the vesting or
acceleration of any benefits promised by such Plan.
(v) Since January 1, 1994, there has been no establishment or amendment
of any Company Plan or Company Other Benefit Obligation.
(vi) No event has occurred or circumstance exists that could result in
a material increase in premium costs of Company Plans and Company Other Benefit
Obligations that are insured, or a material increase in benefit costs of such
Plans and Obligations that are self-insured.
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(vii) Other than claims for benefits submitted by participants or
beneficiaries, no claim against, or legal proceeding involving, any Company Plan
or Company Other Benefit Obligation, is pending or, to Sellers' Knowledge, is
Threatened.
(viii) Each Qualified Plan of each Acquired Company is qualified in
form and operation under IRC section 401(a); each trust for each such Plan is
exempt from federal income tax under IRC section 501(a). No event has occurred
or circumstance exists that will or could give rise to disqualification or loss
of tax-exempt status of any such Plan or trust.
(ix) No Seller or ERISA Affiliate of an Acquired Company has any
outstanding liability as of the date of this Agreement with respect to any
Multi-Employer Plan or defined benefit plan (as defined in ERISA section 3(35))
subject to Title IV of ERISA.
(x) Sellers and all Acquired Companies have complied with the
provisions of ERISA section 601 et seq. and IRC section 4980B.
(xi) No payment that is owed or may become due to any director,
officer, employee, or agent of any Acquired Company will be non-deductible to
the Acquired Companies or subject to tax under IRC section 280G or section 4999;
nor will any Acquired Company be required to "gross up" or otherwise compensate
any such person because of the imposition of any excise tax on a payment to such
person.
(xii) The consummation of the Contemplated Transactions will not result
in the payment, vesting, or acceleration of any benefit.
4.12 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Part 4.12 of the Disclosure Letter:
(i) each Acquired Company is, and at all times since January 1, 1994
has been, in full compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of its business or the ownership
or use of any of its assets;
(ii) no event has occurred or circumstance exists that (with or without
notice or lapse of time) (A) may constitute or result in a violation by any
Acquired Company of, or a failure on the part of any Acquired Company to comply
with, any Legal Requirement, or (B) may give rise to any obligation on the part
of any Acquired Company to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature; and
(iii) no Acquired Company has received, at any time since January 1,
1994, any notice or other communication (written or, to the Knowledge of the
Acquired Companies, oral) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential violation of, or
failure to comply with, any Legal
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Requirement, or (B) any actual, alleged, possible, or potential obligation on
the part of any Acquired Company to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature.
(b) Part 4.12 of the Disclosure Letter contains a complete and accurate
list of each Governmental Authorization that is held by any Acquired Company or
that otherwise relates to the business of, or to any of the assets owned or used
by, any Acquired Company. Each Governmental Authorization listed or required to
be listed in Part 4.12 of the Disclosure Letter is valid and in full force and
effect. Except as set forth in Part 4.12 of the Disclosure Letter:
(i) each Acquired Company is, and at all times since January 1, 1994
has been, in full compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified in Part 4.12
of the Disclosure Letter;
(ii) no event has occurred or circumstance exists that may (with or
without notice or lapse of time) (A) constitute or result directly or indirectly
in a violation of or a failure to comply with any term or requirement of any
Governmental Authorization listed or required to be listed in Part 4.12 of the
Disclosure Letter, or (B) result directly or indirectly in the revocation,
withdrawal, suspension, cancellation, or termination of, or any modification to,
any Governmental Authorization listed or required to be listed in Part 4.12 of
the Disclosure Letter;
(iii) no Acquired Company has received, at any time since January 1,
1994, any notice or other communication (written or, to the Knowledge of the
Acquired Companies, oral) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential violation of or
failure to comply with any term or requirement of any Governmental
Authorization, or (B) any actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification to any
Governmental Authorization;
(iv) all applications required to have been filed for the renewal of
the Governmental Authorizations listed or required to be listed in Part 4.12 of
the Disclosure Letter have been duly filed on a timely basis with the
appropriate Governmental Bodies, and all other filings required to have been
made with respect to such Governmental Authorizations have been duly made on a
timely basis with the appropriate Governmental Bodies; and
(v) neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time) contravene,
conflict with, or result in a violation of any of the terms or requirements of,
or give any Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate, or modify, any Governmental Authorization that is held by any
Acquired Company or that otherwise relates to the business of, or any of the
assets owned or used by, any Acquired Company.
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The Governmental Authorizations listed in Part 4.12 of the Disclosure Letter
collectively constitute all of the Governmental Authorizations necessary to
permit the Acquired Companies to lawfully conduct and operate their businesses
in the manner they currently conduct and operate such businesses and to permit
the Acquired Companies to own and use their assets in the manner in which they
currently own and use such assets.
4.13 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 4.13 of the Disclosure Letter:
(i) there is no pending Proceeding that has been commenced by or
against any Acquired Company or that otherwise relates to or may affect the
business of, or any of the assets owned or used by, any Acquired Company, or
that challenges, or that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the Contemplated Transactions.
(ii) no Proceeding described in clause (i) above has been Threatened,
and no event has occurred or circumstance exists that may give rise to or serve
as a basis for the commencement of any such Proceeding.
The Company has delivered or made available to Buyer true and correct copies of
all pleadings, correspondence, and other documents relating to each Proceeding
listed in Part 4.13 of the Disclosure Letter.
(b) Except as set forth in Part 4.13 of the Disclosure Letter:
(i) there is no Order to which any of the Acquired Companies, or any of
the assets owned or used by any Acquired Company, is subject; and
(ii) no officer, agent, or employee of any Acquired Company is subject
to any Order that prohibits such officer, agent, or employee from engaging in or
continuing any conduct, activity, or practice relating to the business of any
Acquired Company.
(c) Except as set forth in Part 4.13 of the Disclosure Letter:
(i) each Acquired Company is, and at all times since January 1, 1994
has been, in full compliance with all of the terms and requirements of each
Order to which it, or any of the assets owned or used by it, is or has been
subject;
(ii) no event has occurred or circumstance exists that may constitute
or result in (with or without notice or lapse of time) a violation of or failure
to comply with any term or requirement of any Order to which any Acquired
Company, or any of the assets owned or used by any Acquired Company, is subject;
and
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(iii) no Acquired Company has received, at any time since January 1,
1994, any notice or other communication (whether written or, to the Knowledge of
the Acquired Companies, oral) from any Governmental Body or any other Person
regarding any actual, alleged, possible, or potential violation of, or failure
to comply with, any term or requirement of any Order to which any Acquired
Company, or any of the assets owned or used by any Acquired Company, is or has
been subject.
4.14 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 4.14 of the Disclosure Letter, since the
date of the Balance Sheets, the Acquired Companies have conducted their
businesses only in the Ordinary Course of Business and there has not been any:
(a) change in any Acquired Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock of
any Acquired Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by any Acquired Company of any shares of any such capital
stock; or declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of any Acquired Company;
(c) payment or increase by any Acquired Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of any
Acquired Company;
(e) damage to or destruction or loss of any asset or property of any
Acquired Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
the Acquired Companies, taken as a whole;
(f) entry into, termination of, or receipt of notice of termination of
any Material Contract;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of any Acquired
Company or mortgage, pledge, or imposition of any lien or other encumbrance on
any material asset or property of any Acquired Company, including the sale,
lease, or other disposition of any of the Intellectual Property Assets;
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(h) cancellation or waiver of any claims or rights with a value to any
Acquired Company in excess of $100,000;
(i) material change in the accounting methods used by any Acquired
Company; or
(j) agreement, whether written or, to the Knowledge of the Acquired
Companies, oral, by any Acquired Company to do any of the foregoing.
4.15 CONTRACTS; NO DEFAULTS
(a) Part 4.15(a) of the Disclosure Letter contains a complete and
accurate list, and the Company has delivered to Buyer true and complete copies,
of (each a "Material Contract"):
(i) each Applicable Contract that involves performance of services or
delivery of goods or materials to one or more Acquired Companies of an amount or
value in excess of $100,000;
(ii) Each Applicable Contract pursuant to which an Acquired Company is
currently receiving services or has outstanding obligations with any director,
officer, employee, consultant, agent or any other independent contractor;
(iii) each Applicable Contract involving any indebtedness for borrowed
money of any Acquired Company (including any mortgages, security agreements,
pledge agreements or similar Contracts executed in connection therewith) and any
guarantee by an Acquired Company of indebtedness, obligations or liability of
another Person;
(iv) each lease, rental or occupancy agreement, license, installment
and conditional sale agreement, and other Applicable Contract affecting the
ownership of, leasing of, title to, use of, or any leasehold or other interest
in, any real or personal property (except personal property leases and
installment and conditional sales agreements having a value per item or
aggregate payments of less than $100,000);
(v) each licensing agreement or other Applicable Contract with respect
to patents, trademarks, copyrights, or other intellectual property, including
agreements with current or former employees, consultants, or contractors
regarding the appropriation or the non-disclosure of any of the Intellectual
Property Assets;
(vi) each collective bargaining agreement and other Applicable Contract
to or with any labor union or other employee representative of a group of
employees;
(vii) each joint venture, partnership, and other Applicable Contract
(however named) involving a sharing of profits, losses, costs, or liabilities by
any Acquired Company with any other Person;
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(viii) each Applicable Contract containing covenants that in any way
purport to restrict the business activity of any Acquired Company or any
Affiliate of an Acquired Company or limit the freedom of any Acquired Company or
any Affiliate of an Acquired Company to engage in any line of business anywhere
in the world or to compete with any Person anywhere in the world;
(ix) each Applicable Contract providing for payments to or by any
Person based on sales, purchases, or profits, other than direct payments for
goods;
(x) each power of attorney that is currently effective and outstanding;
(xi) Each Applicable Contract relating to indemnification or
contribution for liabilities, including, without limitation, any liability
relating to environmental matters;
(xii) Each Applicable Contract relating to the disposal of surplus or
waste products;
(xiii) Each Applicable Contract and related documentation relating to
the sale of any Subsidiary, division or line of business (assets or stock) by
any Acquired Company or former Subsidiary of the Company (or any divisions)
since June 19, 1987;
(xiv) Each Applicable Contract entered into other than in the Ordinary
Course of Business that contains or provides for an express undertaking by any
Acquired Company to be responsible for consequential damages;
(xv) Each Applicable Contract granting any right of first refusal to
acquire any business or assets, or pursuant to which any Acquired Company has
granted any such rights;
(xvi) Each Applicable Contract relating to the acquisition of any real
estate or the construction of any improvements on real estate since June 19,
1987;
(xvii) The form of each warranty, guaranty, and or other similar
undertaking with respect to products sold or contractual performance extended by
any Acquired Company during the past five years (other than as set forth in the
standard terms and conditions in purchase orders from customers);
(xviii) Each other Applicable Contract (other than Applicable Contracts
not required to be listed above by reason of not meeting dollar amounts) that is
material to any Acquired Company; and
(xix) Any contracts in process of negotiation that would be included in
the foregoing if in force.
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(b) Except as set forth in Part 4.15(b) of the Disclosure Letter:
(i) no Seller (and no Related Person of a Seller) has or may acquire
any rights under, and no Seller has or may become subject to any obligation or
liability under, any Contract that relates to the business of, or any of the
assets owned or used by, any Acquired Company; and
(ii) no officer, agent, employee, consultant, or contractor of any
Acquired Company is bound by any Contract that purports to limit the ability of
such officer, agent, employee, consultant, or contractor to (A) engage in or
continue any conduct, activity, or practice relating to the business of any
Acquired Company, or (B) assign to any Acquired Company or to any other Person
any rights to any invention, improvement, or discovery.
(c) Except as set forth in Part 4.15(c) of the Disclosure Letter, each
Contract identified or required to be identified in Part 4.15(a) of the
Disclosure Letter (other than under Section 4.15(a)(xx)) is in full force and
effect and is valid and enforceable in accordance with its terms.
(d) Except as set forth in Part 4.15(d) of the Disclosure Letter:
(i) each Acquired Company is, and at all times has been, in full
compliance with all applicable terms and requirements of each Contract under
which such Acquired Company has or had any obligation or liability or by which
such Acquired Company or any of the assets owned or used by such Acquired
Company is or was bound;
(ii) to the Knowledge of the Acquired Companies, each Person other than
an Acquired Company that has or had any obligation or liability under any
Contract under which an Acquired Company currently has or had during the past
five (5) years any rights is, and at all times has been, in full compliance with
all applicable terms and requirements of such Contract;
(iii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or result in a
violation or breach of, or give any Acquired Company or other Person the right
to declare a default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate, or modify, any Applicable Contract;
(iv) no Acquired Company has given to or received from any other
Person, at any time since January 1, 1994, any notice or other communication
(whether written or, to the Knowledge of the Acquired Companies, oral) regarding
any actual, alleged, possible, or potential violation or breach of, or default
under, any Contract; and
(v) neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time) contravene,
conflict with, or result in a violation or breach of any provision of, or give
any Person the right to declare a default or
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exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Applicable Contract.
(e) Except as set forth in Part 4.15(e) of the Disclosure Letter, there
are no renegotiations of, attempts to renegotiate, or outstanding rights to
renegotiate any material amounts paid or payable to any Acquired Company under
current or completed Contracts with any Person and no such Person has made
written demand for such renegotiation.
(f) The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Acquired Companies have been entered
into in the Ordinary Course of Business and have been entered into without the
commission of any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is or would be in violation of
any Legal Requirement.
(g) The Company has delivered to Buyer true and correct copies of each
Applicable Contract that involves performance of services or delivery of goods
or materials by one or more Acquired Companies of an amount or value in excess
of $100,000.
4.16 INSURANCE
(a) The Acquired Companies have delivered or made available to Buyer:
(i) true and complete copies of all policies of insurance to which any
Acquired Company is a party or under which any Acquired Company, or any director
of any Acquired Company, is or has been covered at any time within the five (5)
years preceding the date of this Agreement;
(ii) true and complete copies of all pending applications for policies
of insurance; and
(iii) any statement by the auditor of any Acquired Company's financial
statements with regard to the adequacy of such entity's coverage or of the
reserves for claims.
(b) Part 4.16(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting any Acquired
Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of insurance, for
the transfer or sharing of any risk by any Acquired Company; and
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(iii) all obligations of the Acquired Companies to third parties with
respect to insurance (including such obligations under leases and service
agreements) and identifies the policy under which such coverage is provided.
(c) Part 4.16(c) of the Disclosure Letter sets forth, by year, for the
current policy year and each of the four (4) preceding policy years:
(i) a summary of the loss experience under each policy; and
(ii) a statement describing each claim under an insurance policy for an
amount in excess of $100,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of insurance,
and period of coverage; and
(C) the amount and a brief description of the claim.
(d) Except as set forth on Part 4.16(d) of the Disclosure Letter:
(i) All policies to which any Acquired Company is a party or that
provide coverage to any Acquired Company, or any director or officer of an
Acquired Company:
(A) are valid, outstanding, and enforceable;
(B) to the Knowledge of the Acquired Companies, are issued by
an insurer that is financially sound and reputable;
(C) are sufficient for compliance with all Legal Requirements
and Contracts to which any Acquired Company is a party or by which any
of them is bound; and
(D) do not provide for any retrospective premium adjustment or
other experienced-based liability on the part of any Acquired Company.
(ii) No Acquired Company has received (A) any refusal of coverage or
any notice that a defense will be afforded with reservation of rights, or (B)
any notice of cancellation or any other indication that any insurance policy is
no longer in full force or effect or will not be renewed or that the issuer of
any policy is not willing or able to perform its obligations thereunder.
(iii) The Acquired Companies have paid all premiums due, and have
otherwise performed all of their respective obligations, under each policy to
which any Acquired Company is a party or that provides coverage to any Acquired
Company or director thereof.
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(iv) The Acquired Companies have given timely notice to the insurer of
all claims that may be insured thereby which notice is required under the policy
to establish coverage.
(v) The Acquired Companies have given timely notice to the insurer of
all potential claims or occurrences that could develop into claims that may be
insured thereby which notice is required under the policy to establish coverage.
4.17 ENVIRONMENTAL MATTERS
Except as set forth in Part 4.17 of the Disclosure Letter:
(a) Each Acquired Company is, and at all times has been, in full
compliance with, and has not been and is not in violation of or liable under,
any Environmental Law. No Acquired Company has any basis to expect, nor has any
of them or any other Person for whose conduct they are or may be held to be
responsible received, any actual or Threatened order, notice, or other
communication from (i) any Governmental Body or private citizen acting in the
public interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets (whether real,
personal, or mixed) in which any Acquired Company has had an interest, or with
respect to any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or processed by
any Acquired Company, or any other Person for whose conduct they are or may be
held responsible, or from which Hazardous Materials have been transported,
treated, stored, handled, transferred, disposed, recycled, or received.
(b) There are no pending or Threatened claims, Encumbrances, or other
restrictions of any nature, resulting from any Environmental, Health, and Safety
Liabilities or arising under or pursuant to any Environmental Law, with respect
to or affecting any of the Facilities or any other properties and assets
(whether real, personal, or mixed) in which any Acquired Company has or had an
interest.
(c) No Acquired Company has any basis to expect, nor has any of them or
any other Person for whose conduct they are or may be held responsible,
received, any citation, directive, inquiry, notice, Order, summons, warning, or
other communication that relates to Hazardous Activity or Hazardous Materials
which may give rise to any Environmental Health and Safety Liability, or any
alleged, actual, or potential violation or failure to comply with any
Environmental Law, or of any alleged, actual, or potential obligation to
undertake or bear the cost of any Environmental, Health, and Safety Liabilities
with respect to any of the Facilities or any other properties or assets (whether
real, personal, or mixed) in which any Acquired Company had an interest, or with
respect to any property or facility to which Hazardous Materials generated,
manufactured,
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refined, transferred, imported, used, or processed by any Acquired Company, or
any other Person for whose conduct they are or may be held responsible, have
been transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(d) No Acquired Company, or any other Person for whose conduct they are
or may be held responsible, has any Environmental, Health, and Safety
Liabilities with respect to the Facilities or with respect to any other
properties and assets (whether real, personal, or mixed) in which any Acquired
Company (or any predecessor), has or had an interest, or at any property
geologically or hydrologically adjoining the Facilities or any such other
property or assets.
(e) There are no Hazardous Materials present on, under or in the
Environment at the Facilities, including but not limited to any Hazardous
Materials contained in barrels, drums, totes, above or underground storage
tanks, landfills, land deposits, dumps, surface impoundments, equipment (whether
moveable or fixed) or other containers, either temporary or permanent, and
deposited or located in land, water, sumps, or any other part of the Facilities
or such adjoining property, or incorporated into any structure therein or
thereon, except for the storage in appropriate non-leaking containers and use of
consumables in the Ordinary Course of Business of an Acquired Company in amounts
used in the Ordinary Course of Business of an Acquired Company, which Hazardous
Materials are being generated, used, handled, stored, labelled, registered and
disposed of in compliance with all applicable Legal Requirements. No Acquired
Company, any other Person for whose conduct they are or may be held responsible,
or any other Person, has, with respect to any Hazardous Materials used,
generated or stored at any Real Property Interest, disposed or arranged for the
disposal of or released such Hazardous Materials on property other than a Real
Property Interest. No Acquired Company, any other Person for whose conduct they
are or may be held responsible, or any other Person, has permitted or conducted,
or is aware of, any Hazardous Activity conducted with respect to the Facilities
or any other properties or assets (whether real, personal, or mixed) in which
any Acquired Company has or had an interest.
(f) There has been no Release or Threat of Release of any Hazardous
Materials at or from the Facilities or at any other locations where any
Hazardous Materials were generated, manufactured, refined, transferred,
produced, imported, used, or processed from or by the Facilities, or from or by
any other properties and assets (whether real, personal, or mixed) in which any
Acquired Company has or had an interest, whether by any Acquired Company, or any
other Person.
(g) The Acquired Companies have delivered to Buyer true and complete
copies and results of any reports, studies, analyses, tests, or monitoring
possessed or initiated by any Acquired Company pertaining to Hazardous Materials
or Hazardous Activities in, on, or under the Facilities, or concerning
compliance by any Acquired Company, or any other Person for whose conduct they
are or may be held responsible, with Environmental Laws.
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4.18 EMPLOYEES
(a) Part 4.18 of the Disclosure Letter contains a complete and accurate
list of the following information for each employee of the Acquired Companies,
including each employee on leave of absence or layoff status: employer; name;
job title; current compensation paid or payable and any change in compensation
since January 1, 1996; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under any Acquired Company's pension,
retirement, profit-sharing, thrift-savings, deferred compensation, stock bonus,
stock option, cash bonus, employee stock ownership (including investment credit
or payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, other Employee Pension Benefit Plan or Employee Welfare Benefit
Plan, or any other employee benefit plan or any Director Plan.
(b) No employee of any Acquired Company is a party to, or is otherwise
bound by, any agreement or arrangement, including any confidentiality,
noncompetition, or proprietary rights agreement, between such employee and any
other Person ("Proprietary Rights Agreement") that in any way adversely affects
or will affect (i) the performance of his duties as an employee of the Acquired
Companies, or (ii) the ability of any Acquired Company to conduct its business,
including any Proprietary Rights Agreement with Sellers or the Acquired
Companies by any such employee or director.
(c) Part 4.18 of the Disclosure Letter also contains a complete and
accurate list of the following information for each category of retired employee
or director of the Acquired Companies, or their dependents, receiving benefits
or scheduled to receive benefits in the future: number of category members,
pension benefit, pension option election, retiree medical insurance coverage,
retiree life insurance coverage, and other benefits.
4.19 LABOR RELATIONS; COMPLIANCE
(a) Part 4.19 of the Disclosure Letter contains a complete list of any
collective bargaining Contract to which any Acquired Company has been a party
since January 1, 1994 or is a party. Each applicable Acquired Company is in full
compliance with and has performed all of its obligations under, all collective
bargaining Contracts to which it is a party or by which it is bound.
(b) Except as set forth on Part 4.19 of the Disclosure Letter,
(i) No grievance or arbitration proceeding arising out of or under any
collective bargaining Contracts is pending or has been Threatened and to the
Knowledge of the Acquired Companies no basis for any such grievance or
arbitration proceeding exists;
(ii) Since January 1, 1994 there has not been, there is not presently
pending or existing, and there is not presently Threatened:
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(A) any strike, slowdown, picketing, or work stoppage,
(B) any Proceeding against or affecting any Acquired Company
relating to the alleged violation of any Legal Requirement pertaining
to labor relations or employment matters, including any charge or
complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission,
Occupational Safety and Health Administration or any comparable
Governmental Body, or
(C) any application for certification of a collective
bargaining agent or, to the Knowledge of the Acquired Companies, any
union organizing activity against or affecting any Acquired Company.
(c) To the Knowledge of the Acquired Companies, no event has occurred
or circumstance exists that could provide the basis for any work stoppage or
other labor dispute other than business conditions generally.
(d) There is no lockout of any employees by any Acquired Company, and
no such action is contemplated by any Acquired Company.
(e) Each Acquired Company has complied in all respects with all Legal
Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. No Acquired Company is liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
(f) No Contract imposes restrictions on any Acquired Company from
relocating or closing any of its facilities or requires prior notice,
consultation or bargaining in connection therewith in addition to any such
restrictions imposed by law.
4.20 INTELLECTUAL PROPERTY
(a) Intellectual Property Assets--The term "Intellectual Property
Assets" includes:
(i) the name "Carpenter Enterprises, Ltd.", all fictional business
names, trading names, registered and unregistered trademarks, service marks, and
applications (collectively, "Marks");
(ii) all patents, patent applications, and inventions and discoveries
that may be patentable (collectively, "Patents");
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(iii) all copyrights in both published works and unpublished works
(collectively, "Copyrights");
(iv) all rights in mask works (collectively, "Rights in Mask Works");
and
(v) all know-how, trade secrets, confidential information, customer
lists, software, technical information, data, process technology, plans,
drawings, and blue prints (collectively, "Trade Secrets"); owned, used, or
licensed by any Acquired Company as licensee or licensor.
(b) Part 4.20(b) of the Disclosure Letter contains a complete and
accurate list and summary description, including any royalties paid or received
by the Acquired Companies, of all Contracts relating to the Intellectual
Property Assets to which any Acquired Company is a party or by which any
Acquired Company is bound, except for any license implied by the sale of a
product and perpetual, paid-up licenses for commonly available software programs
with a value of less than $50,000.00 under which an Acquired Company is the
licensee. There are no outstanding and no Threatened disputes or disagreements
with respect to any such agreement.
(c) Know-How Necessary for the Business
(i) The Intellectual Property Assets are all those necessary for the
operation of the Acquired Companies' businesses as they are currently conducted.
One or more of the Acquired Companies is the owner of all right, title, and
interest in and to each of the Intellectual Property Assets, free and clear of
all liens, security interests, charges, encumbrances, equities, and other
adverse claims, and has the right to use without payment to a third party all of
the Intellectual Property Assets.
(ii) No employee of any Acquired Company has entered into any Contract
that restricts or limits in any way the scope or type of work in which the
employee may be engaged or requires the employee to transfer, assign, or
disclose information concerning his work to anyone other than one or more of the
Acquired Companies.
(d) The Acquired Companies have no Patents, Copyrights or Marks.
(e) Trade Secrets
(i) With respect to each Trade Secret, the documentation relating to
such Trade Secret is current, accurate, and sufficient in detail and content to
identify and explain it and to allow its full and proper use without reliance on
the knowledge or memory of any individual.
(ii) The Acquired Companies have taken all reasonable precautions to
protect the secrecy, confidentiality, and value of their Trade Secrets.
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(iii) One or more of the Acquired Companies has good title and an
exclusive absolute right to use the Trade Secrets. No Trade Secret is subject to
any adverse claim or has been challenged or threatened in any way.
4.21 CERTAIN PAYMENTS
Since January 1, 1994, no Acquired Company or director, officer, agent,
or employee of any Acquired Company, or any other Person associated with or
acting for or on behalf of any Acquired Company, has directly or indirectly made
any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or
other payment to any Person, private or public, regardless of form, whether in
money, property, or services (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of any Acquired Company or any Affiliate of an Acquired Company, or
(iv) in violation of any Legal Requirement.
4.22 DISCLOSURE
(a) No representation or warranty of Sellers or the Company in this
Agreement and no statement in the Disclosure Letter omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
(b) There is no fact known to any Acquired Company that has specific
application to any Acquired Company (other than general economic or industry
conditions) and that materially adversely affects or materially threatens, the
assets, business, prospects, financial condition, or results of operations of
the Acquired Companies (on a consolidated basis) that has not been set forth in
this Agreement or the Disclosure Letter.
4.23 RELATIONSHIPS WITH RELATED PERSONS
No Seller or any Related Person of Sellers or of any Acquired Company
has, or since July 1, 1995 has had, any interest in any property (whether real,
personal, or mixed and whether tangible or intangible), used in or pertaining to
the Acquired Companies' businesses. Except as set forth in Part 4.23 of the
Disclosure Letter, no Seller or any Related Person of Sellers or of any Acquired
Company is, or since July 1, 1995 has owned (of record or as a beneficial owner)
an equity interest or any other financial or profit interest in, a Person that
has had business dealings or a material financial interest in any transaction
with any Acquired Company other than business dealings or transactions conducted
in the Ordinary Course of Business with the Acquired Companies at prevailing
market prices and on prevailing market terms. Except as set forth in Part 4.23
of the Disclosure Letter, no Seller or any Related Person of Sellers or of any
Acquired
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Company is a party to any Contract with, or has any claim or right against, any
Acquired Company.
4.24 BROKERS OR FINDERS
Sellers and their agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
5.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Michigan.
5.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms. Upon the
execution and delivery by Buyer of the Post-Closing Escrow Agreement and any
other documents executed and delivered by Buyer at Closing (collectively, the
"Buyer's Closing Documents"), the Buyer's Closing Documents will constitute the
legal, valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms. Buyer has the absolute and unrestricted
right, power, and authority to execute and deliver this Agreement and the
Buyer's Closing Documents and to perform its obligations under this Agreement
and the Buyer's Closing Documents.
(b) Neither the execution and delivery of this Agreement by Buyer nor
the consummation or performance of any of the Contemplated Transactions by Buyer
will give any Person the right to prevent, delay, or otherwise interfere with
any of the Contemplated Transactions pursuant to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or the
stockholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be subject; or
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(iv) any Contract to which Buyer is a party or by which Buyer may be
bound.
Buyer is not and will not be required to obtain any Consent from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
5.3 INVESTMENT INTENT
Buyer acknowledges that the Shares have not been registered under the
Securities Act or any state securities laws. Buyer is acquiring the Shares for
its own account and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act. Buyer has such knowledge and experience in
financial and business matters and investments in general that make it capable
of evaluating the merits and risks of the ownership and acquisition of the
Shares. Buyer is an "accredited investor" within the meaning of Rule 501(a)
under the Securities Act. Buyer acknowledges and agrees that the certificate
representing the Shares will contain substantially the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY OTHER
STATE OR FEDERAL SECURITIES STATUTE. NO REOFFER, SALE, TRANSFER, PLEDGE
OR OTHER DISPOSITION THEREOF MAY BE MADE UNLESS THE INTERESTS ARE
REGISTERED UNDER THE ACT AND ANY OTHER APPLICABLE SECURITIES STATUTE,
OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS APPLICABLE TO
SUCH TRANSACTION.
5.4 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyer
and that challenges, or may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the Contemplated Transactions. To
Buyer's Knowledge, no such Proceeding has been Threatened.
5.5 BROKERS OR FINDERS
Buyer and its officers and agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement and will
indemnify and hold Sellers harmless from any such payment alleged to be due by
or through Buyer as a result of the action of Buyer or its officers or agents.
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5.6 PREPAYMENT PENALTIES
The prepayment penalty on Carpenter's indebtedness to NBD Bank is
$325,000. If Carpenter pays less than $325,000 to NBD Bank as a prepayment
penalty on such indebtedness, then the Purchase Price shall be increased by
one-half of the difference between $325,000 and the prepayment penalty actually
paid.
5.7 ENVIRONMENTAL KNOWLEDGE
Buyer does not have knowledge as of the date hereof of any
Environmental, Health and Safety Liabilities with respect to Carpenter that are
not disclosed in the reports listed on Attachment A to Part 4.17 of the
Disclosure Letter
6. INDEMNIFICATION; REMEDIES
6.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
All representations, warranties, and obligations in this Agreement, the
Disclosure Letter and any other certificate or document delivered pursuant to
this Agreement will survive the Closing. The representations and warranties of
the Company in Section 4 will terminate and expire on October 8, 2000, provided,
however that any representation and warranty that is the subject of a claim for
indemnification as of that date shall survive with respect to such claim until
final resolution of such claim. The right to indemnification, payment of Damages
or other remedy based on such representations, warranties, covenants, and
obligations will not be affected by any investigation conducted with respect to,
or any Knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, or obligation. The waiver of any condition based on
the accuracy of any representation or warranty, or on the performance of or
compliance with any obligation, will not affect the right to indemnification,
payment of Damages, or other remedy based on such representations, warranties,
and obligations.
6.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Subject to the limitations in this Section 6, including but not limited
to Sections 6.5 and 6.6 below, each Seller will indemnify and hold harmless
Buyer, the Acquired Companies, and their respective Representatives,
stockholders, controlling persons, and affiliates (collectively, the
"Indemnified Persons") for, and will pay to the Indemnified Persons the amount
of, any loss, liability, claim, damage (including incidental and consequential
damages), expense (including costs of investigation and defense and
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reasonable attorneys' fees) or diminution of value, whether or not involving a
third- party claim (collectively, "Damages"), arising, directly or indirectly,
from or in connection with:
(a) any Breach of any representation or warranty made by such Seller in
this Agreement, the Disclosure Letter or any other certificate or document
delivered by Sellers pursuant to this Agreement;
(b) Any Breach of any representation or warranty made by the Company in
this Agreement, the Disclosure Letter or any other certificate or document
delivered by Sellers pursuant to this Agreement;
(c) any item listed on Schedule 6.2(c) hereto;
(d) any product shipped or manufactured by, or any services provided
by, any Acquired Company prior to the Closing Date (other than with respect to
nonconforming parts rejected by customers in the Ordinary Course of Business);
(e) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with any Seller or any Acquired
Company (or any Person acting on their behalf) in connection with any of the
Contemplated Transactions;
(f) any liability, obligation or expense incurred by such Seller or any
Acquired Company in connection with the negotiation and preparation of this
Agreement, any of the Ancillary Documents, the Disclosure Letter or the Letter
of Intent, or otherwise in connection with the Contemplated Transactions; and
(g) any Damages with respect to indebtedness or obligations of EMI
Company or Charterhouse - EMI Holdings, Inc., including without limitation any
liability under a Guaranty dated September 30, 1991 in favor of Household
Commercial Financial Services, Inc., a Guaranty Agreement dated January 18, 1995
in favor of The Bank of Tokyo Trust Company and/or a Joint and Several Letter of
Guaranty dated January 18, 1995 in favor of The Sanwa Bank Limited.
Sellers waive and release any claim for contribution or indemnification
from, and any claim of subrogation to any rights of Buyer against, any Acquired
Company.
The remedies provided in this Section 6.2 and Section 6.3 below are the
exclusive remedy available to Buyer and the other Indemnified Persons with
respect to this Agreement and the Contemplated Transactions, except for any
claim based on fraud or deceit.
Sellers shall not be required to indemnify Buyer or any Acquired
Company for any Breach of a representation and warranty arising out of an
increase in Taxes to the extent resulting from a position taken on any Income
Tax Return filed after the Closing
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Date that is different from the position taken on a prior tax return with
respect to the applicable subject matter.
6.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS-- ENVIRONMENTAL
MATTERS
(a) In addition to the provisions of Section 6.2, and subject to the
limitations in this Section 6, including but not limited to Sections 6.5 and 6.6
below, each Seller will indemnify and hold harmless Buyer, the Acquired
Companies, and the other Indemnified Persons for, and will pay to Buyer, the
Acquired Companies, and the other Indemnified Persons the amount of, any Damages
(including costs of investigation, defense, cleanup, containment, or other
remediation (a "Response")) arising, directly or indirectly, from or in
connection with:
(i) any Environmental, Health, and Safety Liabilities arising out of or
relating to: (i) (A) the ownership, operation, or condition at any time on or
prior to the Closing Date of the Facilities or any other properties and assets
(whether real, personal, or mixed and whether tangible or intangible) in which
Sellers or any Acquired Company has or had an interest, or (B) any Hazardous
Materials or other contaminants that were present on, at or under the Facilities
or such other properties and assets at any time on or prior to the Closing Date;
or (ii) (A) any Hazardous Materials or other contaminants, wherever located,
that were, or were allegedly, generated, transported, stored, treated, Released,
or otherwise handled by Sellers or any Acquired Company or by any other Person
for whose conduct they are or may be held responsible at any time on or prior to
the Closing Date, or (B) any Hazardous Activities that were, or were allegedly,
conducted by Sellers or any Acquired Company or by any other Person for whose
conduct they are or may be held responsible; or
(ii) any bodily injury (including illness, disability, and death, and
regardless of when any such bodily injury occurred, was incurred, or manifested
itself), personal injury, property damage (including trespass, nuisance,
wrongful eviction, and deprivation of the use of real property), or other damage
of or to any Person, including any employee or former employee of Sellers or any
Acquired Company or any other Person for whose conduct they are or may be held
responsible, in any way arising from or allegedly arising from any Hazardous
Activity conducted or allegedly conducted with respect to the Facilities or the
operation of the Acquired Companies prior to the Closing Date, or from Hazardous
Material that was (i) present or suspected to be present on or before the
Closing Date on, at or under the Facilities (or present or suspected to be
present on any other property, if such Hazardous Material emanated or allegedly
emanated from any of the Facilities and was present or suspected to be present
on, at or under any of the Facilities on or prior to the Closing Date) or (ii)
Released or allegedly Released by Sellers or any Acquired Company or any other
Person for whose conduct they are or may be held responsible, at any time on or
prior to the Closing Date.
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(b) Sellers' Representative will be entitled to control any Response,
and any related Proceeding, and, except as provided in the following sentence,
any other Proceeding with respect to which indemnity may be sought under this
Section 6.3, provided that the following shall apply: (i) it will be
conclusively established for purposes of this Agreement that the Response is
within the scope of and subject to indemnification under this Section 6.3, (ii)
such Response shall be performed by an environmental consulting firm or firms of
national recognition reasonably acceptable to Buyer (each, a "Consultant");
(iii) Buyer may take split or duplicate samples of any samples taken by any
Consultants, or perform such other testing as Buyer deems appropriate, in each
case at Buyer's sole cost; (iv) any reports, documents, correspondence, or other
items to be submitted to or filed with a Governmental Body shall be provided to
Buyer at least fourteen (14) business days in advance of submission or filing,
unless required to be filed sooner under a Legal Requirement, in which case it
shall be provided to Buyer as far in advance as is practical under the
circumstances, and shall be subject to Buyer's approval, which shall not be
unreasonably withheld, (v) Buyer shall have the right to participate in any
meetings (including telephonic conferences) with representatives of Governmental
Bodies, and Sellers' Representative shall use reasonable efforts to give Buyer
at least five (5) days prior notice of any such meetings, or as much advance
notice as is practical under the circumstances, (vi) Buyer shall receive copies
of all correspondence received from Governmental Bodies by Sellers or any
Consultant with respect to such Response, (vii) such Response shall be conducted
in a manner that minimizes disruption of the operations of the Acquired
Companies; and (viii) such Response shall be pursued diligently, as promptly as
possible and in accordance with good engineering practices. If Sellers, or any
Consultant engaged by Sellers, fail to perform any obligation in this Section
6.3, then Buyer shall be entitled to assume control of any Response and Sellers
shall remain obligated to indemnify Buyer for any and all Damages in connection
therewith (including, but not limited to, any expenses incurred related to
assumption of control over such Response). If Sellers effect a Response, then
Sellers shall indemnify and hold Buyer and the Acquired Companies harmless from
and against any and all Damages caused by, arising out of or related to such
Response, including but not limited to any damage to the assets of any Acquired
Company by a Consultant. The procedure described in Section 6.7 regarding third
party claims will apply to any claim solely for monetary damages relating to a
matter covered by this Section 6.3.
(c) Buyer shall not, and shall cause the Acquired Companies not to,
conduct any soil or groundwater sampling or testing at any Facilities after the
Closing Date unless (i) required by a Legal Requirement, or (ii) Buyer or an
Acquired Company has a reasonable basis to suspect that Hazardous Substances may
be present at, on or under a Facility at levels that give rise to an
Environmental, Health and Safety liability that triggers liability under this
Section 6.3, and except as may be required in connection with item 2 on Schedule
6.2(c). Notwithstanding the foregoing, Sellers' agree that any purchaser or
potential purchaser of any Facility shall have the right to do such sampling and
testing as it deems appropriate, and may share any data or reports with the
Acquired Companies.
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(d) Sellers shall only be required to remediate any Facility to the
minimum standards required by applicable Legal Requirements for an industrial
facility.
6.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers, and will pay to Sellers
the amount of any Damages arising, directly or indirectly, from or in connection
with (a) any Breach of any representation or warranty made by Buyer in this
Agreement or in any certificate delivered by Buyer pursuant to this Agreement,
(b) any Breach by Buyer of any covenant or obligation of Buyer in this
Agreement, or (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions.
6.5 LIMITATIONS ON AMOUNT--SELLERS
(a) Sellers will have no liability (for indemnification or otherwise)
with respect to the matters described in clauses (b) or (d) of Section 6.2, or
of Section 6.3, until the total of all Damages with respect to such matters
exceeds $300,000, and then only for the amount by which such Damages exceeds
$300,000. However, this Section 6.5(a) will not apply to any Breach of any
representations and warranties of which any Acquired Company or any Seller had
Actual Knowledge at any time prior to the date hereof.
(b) The indemnification liability of Sellers with respect to any claim
under Sections 6.2 or 6.3 shall be reduced by the net amount of proceeds from
insurance policies actually received by any Acquired Company with respect to
such claim (it being understood and agreed that any deductible, self-insured
retention, retro premium or similar payment by any Acquired Company shall apply
to the $300,000 deductible referenced in subsection (a) above). The Acquired
Companies shall use reasonable efforts to obtain payment under applicable
insurance policies, provided that the Acquired Companies shall not be required
to commence litigation. If the Acquired Companies are unable to obtain payment
under any policy which provides applicable coverage for a claim for which
Sellers have indemnified Buyer or the Acquired Companies, then the Acquired
Companies shall assign their rights against the insurance carriers with respect
to such claim, to the extent assignable, to Sellers' Representative.
(c) Notwithstanding anything in this Agreement to the contrary, no
Seller shall have any liability under this Agreement in excess of his, her or
its proportionate share of the Purchase Price based on his, her or its
shareholdings in the Company.
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<PAGE> 51
6.6 ESCROW; LIMITATION TO ESCROW AMOUNT
(a) Buyer has placed Five Million Dollars ($5,000,000) of the Purchase
Price (consisting of the Post-Closing Escrow Amount and the Phantom Stock Escrow
Amount) in escrow pursuant to the Post-Closing Escrow Agreement (which amount
will be reduced on September 1, 1999 to $2,500,000, PLUS the amount of any paid
or then-pending claims, under the terms of the Post-Closing Escrow Agreement) to
secure performance of the Sellers' indemnification obligations in Sections 6.2
and 6.3. If Buyer has a claim for indemnification under Sections 6.2 or 6.3, it
may assert a claim against the Post-Closing Escrow Amount and the Phantom Stock
Escrow Amount pursuant to the provisions of the Post-Closing Escrow Agreement.
(b) Except for claims for indemnification relating to any Breach of
representations and warranties of which any Seller or any Acquired Company had
Actual Knowledge at any time prior to the date hereof (it being understood and
agreed that there will be no limit to the Post-Closing Escrow Amount with
respect to any such claims for indemnification), Buyer's claims for
indemnification under Sections 6.2(b), 6.2(c), 6.2(d) or 6.3 shall be limited to
the Post-Closing Escrow Amount.
6.7 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party of notice of the
commencement of any Proceeding against it subject to indemnification under
Section 6.2, 6.4 or (to the extent provided in the last sentence of Section
6.3(b)) Section 6.3, such indemnified party will, if a claim is to be made
against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is prejudiced by
the indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section 6.7(a) is brought against
an indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the claim
involves Taxes, be entitled to participate in such Proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel reasonably
satisfactory to the indemnified party and, after notice from the indemnifying
party to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will not, as long as it diligently conducts
such defense, be liable to the indemnified party under this Section 6 for any
fees of other counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the
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<PAGE> 52
indemnified party in connection with the defense of such Proceeding, other than
reasonable costs of investigation. If the indemnifying party assumes the defense
of a Proceeding, (i) it will be conclusively established for purposes of this
Agreement that the claims made in that Proceeding are within the scope of and
subject to indemnification; (ii) no compromise or settlement of such claims may
be effected by the indemnifying party without the indemnified party's consent
(which will not be unreasonably withheld) unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not, within ten
days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
indemnified party may, by notice to the indemnifying party, assume the exclusive
right to defend, compromise, or settle such Proceeding, but the indemnifying
party will not be bound by any determination of a Proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction of any
court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on Sellers with respect to such a claim anywhere in the
world.
(e) With respect to the handling of any inquiry, examination or
proceeding that could result in a determination with respect to Taxes due or
payable by any Acquired Company for which Sellers may be required to indemnify
Buyer or the other Indemnified Persons (a "Tax Contest"), Buyer shall give
Sellers' Representative reasonable notice of the progress of, and reasonable
opportunity to participate in, all aspects of the Tax Contest, and Buyer shall,
at its sole expense, exercise control over the Tax Contest. Buyer shall not
settle any Tax Contest in a manner that would cause Buyer to incur Damages for
which Sellers would be required to indemnify Buyer without the written consent
of Sellers' Representative, which consent will not be unreasonably withheld.
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<PAGE> 53
6.8 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is sought
with a reasonably detailed explanation of such claim.
6.9 SELLERS' REPRESENTATIVE
Each of the Sellers hereby irrevocably designates Charterhouse Group
International, Inc. ("Sellers' Representative") as its representative under this
Agreement and any Ancillary Document. Each of the Sellers agrees that Buyer may
give any required notice to such Seller by giving notice to the Sellers'
Representative in accordance with Section 7.3 below. Each Seller hereby
irrevocably appoints Sellers' Representative as its lawful attorney in fact with
respect to this Agreement and any Ancillary Document, with full power and
authority to act for such Seller in any matter arising under this Agreement or
any Ancillary Document, including without limitation with respect to any claim
by Buyer for indemnification under this Section 6 and any claim by Buyer under
the Escrow Agreement. Each Seller acknowledges and agrees that such power of
attorney is coupled with an interest and is irrevocable.
7. GENERAL PROVISIONS
7.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants. Buyer will pay the HSR Act filing fee. Sellers will
cause the Acquired Companies not to incur, and will reimburse the Acquired
Companies for, any out-of-pocket expenses in connection with this Agreement or
the Contemplated Transactions. In the event of termination of this Agreement,
the obligation of each party to pay its own expenses will be subject to any
rights of such party arising from a Breach of this Agreement by another party.
7.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as Buyer determines. Buyer will not unreasonably
withhold consent to Sellers placing a "tombstone" advertisement in financial
publications.
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7.3 NOTICES
All notices and other communications by any party hereunder shall be in
writing to the other parties and shall be deemed to have been duly given (i)
when delivered personally, regardless of whether the recipient is open for
business or any representative is available or signs for such delivery, if
delivered by 5:00 p.m. on a business day, otherwise the next business day, (ii)
on the third business day following the date of deposit, if deposited by 5:00
p.m. on a business day, otherwise following the first business day after the
date of deposit, in United States certified mail, regardless of whether returned
undelivered, (iii) on the date of delivery by a courier service, as conclusively
evidenced by a receipt from such service, regardless of whether the recipient is
open for business or any representative is available or signs for such delivery,
if delivered by 5:00 p.m. on a business day, otherwise the next business day, or
(iv) on the date of telecopy if telecopied prior to 5:00 p.m. local time of the
recipient on a business day, otherwise on the next business day, in any case
addressed or telecopied as follows:
(a) If to Sellers or any Seller:
c/o Charterhouse Group International, Inc.
535 Madison Avenue
New York, New York 10022-4299
Attention: Ms. Patricia A. M. Riley
Facsimile No.: (212) 750-9704
with a required copy to:
Pepper Hamilton LLP
36th Floor
100 Renaissance Center
Detroit, MI 48243-1157
Attention: Michael B. Staebler, Esq.
Facsimile No.: (313) 259-7926
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<PAGE> 55
(b) If to Buyer:
Hillsdale Tool & Manufacturing Co.
135 E. South Street
Hillsdale, MI 49242
Attention: William D. Oeters
Facsimile No.: (517) 439-0280
with a required copy to:
Eagle-Picher Industries, Inc.
250 East Fifth Street, 5th Floor
Cincinnati, OH 45202
Attention: General Counsel
Facsimile No.: (513) 629-2572
7.4 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement or any of the Ancillary Documents
may be brought against any of the parties in the courts of the State of
Michigan, County of Wayne, or, if it has or can acquire jurisdiction, in the
United States District Court for the Eastern District of Michigan, Southern
Division, in Detroit, Michigan, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world pursuant to the notice provisions
contained herein. Each Seller hereby irrevocably appoints Sellers'
Representative as its agent for service of process and agrees that service on
such Seller may be made by service on Sellers' Representative.
7.5 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
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7.6 CERTAIN TAX RETURNS
Buyer, at its expense, shall be responsible for the timely preparation
of the federal, state, and local income tax returns required to be filed after
the date of this Agreement by any Acquired Company for periods that end on or
before the Closing Date, including the federal consolidated income tax return to
be filed by the Company for the period the begins July 1, 1998 and ends on the
Closing Date.
7.7 WAIVER
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
7.8 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter (including the Letter of Intent) and constitutes
(along with the documents referred to in this Agreement) a complete and
exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended or waived
except by a written agreement executed by the party to be charged with the
amendment or waiver.
7.9 DISCLOSURE LETTER
(a) The disclosures in the Disclosure Letter must relate only to the
representations and warranties in the Section of the Agreement to which they
expressly relate and not to any other representation or warranty in this
Agreement except as expressly cross referenced therein.
(b) In the event of any inconsistency between the statements in the
body of this Agreement and those in the Disclosure Letter (other than an
exception expressly set
53
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forth as such in the Disclosure Letter with respect to a specifically identified
representation or warranty), the statements in the body of this Agreement will
control.
7.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without
the prior consent of the other parties except that Buyer may assign any of its
rights under this Agreement to any affiliate of Buyer. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
7.11 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
7.12 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
7.13 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
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7.14 GOVERNING LAW
This Agreement will be governed by the internal laws of the State of
Michigan without regard to conflicts of laws principles.
7.15 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
7.16 RELEASE
Each Seller, on behalf of itself and each of its Related Persons,
hereby releases and forever discharges the Buyer, the Company and each of the
other Acquired Companies, and each of their respective individual, joint or
mutual, past, present and future Representatives, affiliates, stockholders,
controlling persons, Subsidiaries, successors and assigns (individually, a
"Releasee" and collectively, "Releasees") from any and all claims, demands,
Proceedings, causes of action, Orders, obligations, contracts, agreements, debts
and liabilities whatsoever, whether known or unknown, suspected or unsuspected,
both at law and in equity, which any of the Sellers or any of their respective
Related Persons now has, have ever had or may hereafter have against the
respective Releasees arising contemporaneously with or prior to the Closing or
on account of or arising out of any matter, cause or event occurring
contemporaneously with or prior to the Closing, known or unknown and whether or
not relating to claims pending on, or asserted after, the Closing; provided,
however, that nothing contained herein shall operate to release any obligations
of Buyer arising under this Agreement or any Ancillary Document.
7.17 STOCKHOLDERS' AGREEMENT
Sellers agree that the Stockholders' Agreement dated June 19, 1987, as
amended, among the Sellers and the Company is hereby terminated.
7.18 INSURANCE DIVIDENDS
The Company shall pay to Sellers' Representative any dividends received
after the Effective Time with respect to the retrospective premium endorsement
to Carpenter's Workers' Compensation and Employers' Liability Policy for policy
years beginning July 22, 1994 and ending July 22, 1997.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
HILLSDALE TOOL & MANUFACTURING CO.
By: /s/ William D. Oeters
------------------------------------------
Name: William D. Oeters
------------------------------------------
Title: President
------------------------------------------
CHARTERHOUSE AUTOMOTIVE GROUP, INC.
By: /s/ Stephen A. Rhodes
------------------------------------------
Name: Stephen A. Rhodes.
------------------------------------------
Title: President
------------------------------------------
<TABLE>
<CAPTION>
SELLERS:
<S> <C>
Stephen A. Rhodes CHARTERHOUSE MEZZANINE PARTNERS, L.P.
Joseph P. S. Pampel
Dover Street III, LP By: Charterhouse Investors, Inc.
Slough Parks Holdings Incorporated Its: General Partner
Electra Investment Trust P.L.C.
Charterhouse Finance Corporation Limited
Merifin N.V. By: /s/ Patricia A.m. Riley
Merril M. Halpern --------------------------------
Jerome Katz Name: Patricia A.m. Riley
A. Lawrence Fagan --------------------------------
Kipp Gosewehr Title: Senior Vice President
Patricia A. M. Riley (f/k/a Patricia R. Merrick) --------------------------------
CHEF Nominees Limited
Thomas C. Dircks
David G. Hoffman
Phyllis Haberman
</TABLE>
By: CHARTERHOUSE GROUP
INTERNATIONAL, INC.,
as attorney-in-fact
By: /s/ Patricia A.m. Riley
--------------------------------
Name: Patricia A.m. Riley
--------------------------------
Title: Managing Director
--------------------------------
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EXHIBIT A
---------
Charterhouse Mezzanine Partners, L.P.
Stephen A. Rhodes
Joseph P. S. Pampel
Dover Street III, LP
Slough Parks Holdings Incorporated
Electra Investment Trust P.L.C.
Charterhouse Finance Corporation Limited
Merifin N.V.
Merril M. Halpern
Jerome Katz
A. Lawrence Fagan
Kipp Gosewehr
Patricia A.M. Riley (f/k/a Patricia R. Merrick)
CHEF Nominees Limited
Thomas C. Dircks
David G. Hoffman
Phyllis Haberman
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<PAGE> 61
EXHIBIT B
---------
Mr. E. C. Dietz
Mr. John O'Connell
Mr. John Clark
Mr. Kent Kopriva
Mr. Richard Kent
Mr. Michael Shepler
Mr. Morgan Moss
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<PAGE> 62
Schedule 6.2(c) - Certain Indemnification Matters
Omitted.
The registrant will furnish supplementally a copy to the Commission upon
request.
59
<PAGE> 1
EAGLE-PICHER AUTOMOTIVE EXHIBIT 99.1
News Release
News about: Hillsdale Division
For further information, please contact: Cathy Williams (313) 278-5956
or
Julie Pompa (419) 893-2500
The Lauerer Markin Group, Inc.
EAGLE-PICHER HILLSDALE DIVISION ACQUIRES
CARPENTER ENTERPRISES FOR $71.5 MILLION
HILLSDALE, Mich., April 14, 1999 --Eagle-Picher Automotive's Hillsdale
Division has acquired Traverse City, Mich.-based Carpenter Enterprises,
expanding its component design and manufacturing offerings for engine, chassis
and suspension systems. The purchase price is estimated at $71.5 million.
"Carpenter Enterprises is a strategic addition to our corporation,"
said Andries Ruijssenaars, Eagle-Picher Industries president and chief executive
officer. "This acquisition illustrates the commitment of Eagle-Picher to growing
the business, not just by purchasing companies but by seeking the ideal types of
businesses which will enhance the overall technologies, value and product lines
offered to our customers."
"This is an excellent marriage of products, processes, customers and
capabilities," said William Oeters, president of Eagle-Picher Automotive's
Hillsdale Division. "Carpenter's products and manufacturing processes are quite
complementary to ours. In addition, we share a similar `corporate culture' in
that we are customer focused, dedicated to the highest quality operations,
strong in both technology and manufacturing, and have a lean management
philosophy.
-more-
<PAGE> 2
Julie Pompa
The Lauerer Markin Group, Inc.
1700 Woodlands Dr.
Maumee, Ohio 43537
(419) 893-2500
www.lmgnet.com
"We have both been leaders in our niche markets, so our combined
operations will be even stronger in those areas, as well as in entirely new
market applications. This also allows further growth with international
customers, both in North America and worldwide," Oeters said.
Hillsdale Division is the leader in the development and manufacture of
transmission oil pump systems and torsional and linear vibration damping
systems. In addition, the division manufactures driveline products and precision
machined components. Carpenter machines such engine products as front engine
covers, connecting rods, intake/exhaust manifolds and engine bracketry; and
conducts machining and assembly of chassis and suspension system products
including front and rear knuckles, wheel spindle housings and damper forks.
Carpenter Enterprises was established in 1974 in Fenton, Mich., to
supply General Motors Corporation with precision machined components. The
company soon expanded its operations to Traverse City, and its customer base to
include both OEMs and Tier One suppliers. Today Carpenter Enterprises operates
two facilities in Michigan (in Traverse City and a new plant in Mt. Pleasant)
with a total manufacturing capability of approximately 300,000 sq. ft., and
employs 324. The company provides low to high volume, robotic-assisted machining
of ferrous and non-ferrous castings and steel and powdered metal forgings.
Carpenter's annual sales are $130 million.
With the addition of Carpenter Enterprises, Hillsdale Division consists
of 12 manufacturing facilities. Hillsdale operates six facilities in the
Hillsdale, Mich., area and has operations in Hamilton, Ind., Manchester, Tenn.,
San Luis Potosi, Mexico, and Tamworth, United Kingdom. The division is the only
North American damper manufacturer with custom rubber compounding and advanced
manufacturing capabilities.
-more-
<PAGE> 3
Julie Pompa
The Lauerer Markin Group, Inc.
1700 Woodlands Dr.
Maumee, Ohio 43537
(419) 893-2500
www.lmgnet.com
In addition, Hillsdale operates a 16,000 sq. ft. technical center
dedicated to damper development, engine and chassis dynamometer testing, a
comprehensive vibration control test laboratory, a metallurgical laboratory,
prototype machining facilities and CAD/CAM/FEA capabilities. Hillsdale also has
a powertrain pump technologies team capable of design, development and testing
of a variety of oil and hydraulic pump systems.
Hillsdale Division is one of six Eagle-Picher Automotive business
units. The others include Fluid Systems Division, Brighton, Mich.; Michigan
Automotive Research Corporation (MARCO) Division, Ann Arbor, Mich.; Ross
Aluminum Foundries Division, Sidney, Ohio; Rubber Molding Division, Norwich,
Conn.; and Wolverine Gasket Division, Inkster, Mich.
Eagle-Picher Automotive's international operations include Eagle-Picher
Hillsdale, Ltd., and Eagle-Picher Fluid Systems, Ltd., in England; Eagle-Picher
Industries Europe B.V. in The Netherlands; Eagle-Picher Automotive GmbH and
Eagle-Picher Wolverine GmbH in Germany; Eagle-Picher Rubber Molding S.A. in
Spain; and Eagle-Picher Far East in Japan. Contact Eagle-Picher Automotive and
its divisions at www.epcorp.com.
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