<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER
21, 1994 -----------------------------------REGISTRATION NO. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ECHLIN INC.
(Exact name of registrant as specified in its charter)
Connecticut 06-0330448
- ----------- ----------
(State of incorporation) (I.R.S.
Employer
Identification
Number)
100 DOUBLE BEACH ROAD
BRANFORD, CONNECTICUT 06405
(203-481-5751)
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive office)
--------------------------
JON P. LECKERLING
VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY
100 DOUBLE BEACH ROAD
BRANFORD, CONNECTICUT 06405
(203-481-5751)
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the
public: from time to time after this Registration Statement
becomes effective.
If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment
plans, check the following box. / /
If any of the Securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, check the following box. /X/
--------------------------
CALCULATION OF REGISTRATION FEE
=================================================================
<TABLE>
<CAPTION>
Proposed Proposed
Title of maximum maximum Amount
each class Amount offering aggregate of
of securities to be price offering registration
to be registered registered per unit (1) price(1) fee
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 231,809 $28.50 $6,605,585 $2,278
par value $1.00 per share
</TABLE>
=================================================================
(1) Estimated solely for the purpose of determining the
registration fee in accordance with Rule 457(c) under the
Securities Act of 1933.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
=================================================================
<PAGE>
ECHLIN INC.
CROSS REFERENCE SHEET
---------------------
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION IN
CAPTION IN FORM S-3 PROSPECTUS
- ------------------- ----------
<S> <S> <S>
1. Forepart of Registration Facing Page of
Statement and Outside Front Registration
Cover Page of Prospectus Statement
and Cover Page
2. Inside Front and Outside Back Inside Cover Page;
Cover Pages of Prospectus Available
Information;
Incorporation of
Certain Documents by
Reference
3. Summary Information, Risk The Company
Factors and Ratio of Earnings
to Fixed Charges
4. Use of Proceeds *
5. Determination of Offering Price *
6. Dilution *
7. Selling Security Holders Cover Page; Selling
Stockholders
8. Plan of Distribution Plan of Distribution
9. Description of Securities to Description of
be Registered Capital Stock
10. Interests of Named Experts Legal Opinions;
and Counsel Experts
11. Material Changes *
12. Incorporation of Certain Incorporation of
Information by Reference Certain Documents by
Reference
13. Disclosures of Commission Indemnification of
Position on Indemnification for Directors and in
Securities Act Liabilities Part II of
Registration
Statement;
Undertakings in Part
II of Registration
Statement
</TABLE>
- -------------------------
* Omitted as inapplicable or in the negative.
<PAGE>
Preliminary Prospectus, Dated October 21, 1994
PROSPECTUS
231,809 SHARES
ECHLIN INC.
COMMON STOCK
($1.00 PAR VALUE)
--------------------------
THE SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE (THE
"COMMON STOCK"), OF ECHLIN INC. ("ECHLIN" OR THE "COMPANY") TO
WHICH THIS PROSPECTUS RELATES MAY BE OFFERED FOR SALE FROM TIME
TO TIME BY CERTAIN STOCKHOLDERS OF THE COMPANY (OR BY PLEDGES,
DONEES, TRANSFEREES OR OTHER SUCCESSORS IN INTERESTS OF SUCH
STOCKHOLDERS) IN ORDINARY BROKERAGE TRANSACTIONS ON THE NEW YORK
STOCK EXCHANGE OR OTHERWISE AT MARKET PRICES PREVAILING AT THE
TIME OF SALE OR AT NEGOTIATED PRICES.
NONE OF THE PROCEEDS FROM THE SALE OF THE COMMON STOCK WILL
BE RECEIVED BY THE COMPANY. THE COMPANY WILL BEAR ALL EXPENSES
OF THE OFFERING, EXCEPT THAT THE SELLING STOCKHOLDERS WILL PAY
ANY APPLICABLE UNDERWRITERS' COMMISSIONS AND EXPENSES, BROKERAGE
FEES OR TRANSFER TAXES. THE COMPANY AND THE SELLING STOCKHOLDERS
HAVE AGREED TO INDEMNIFY EACH OTHER AGAINST CERTAIN LIABILITIES,
INCLUDING LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT").
THE COMMON STOCK IS LISTED ON THE NEW YORK STOCK EXCHANGE
UNDER THE SYMBOL "ECH." THE LAST SALE PRICE OF THE COMMON STOCK
ON OCTOBER 19, 1994 WAS $28.50 PER SHARE, AS REPORTED ON SUCH
STOCK EXCHANGE.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------
The date of this Prospectus is
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE
ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY
SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER.
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO THE REGISTRATION
OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements
and other information concerning the Company can be inspected and
copied at the public reference facilities of the Commission's
office at 450 Fifth Street, N.W., Washington, DC 20549, and at
certain of its Regional Offices in New York (7 World Trade
Center, 13th Floor, New York, New York 10048), and Chicago (500
West Madison Street, Chicago, Illinois 60661-2511). Copies of
such material can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D. C.
20549. Such material can also be inspected and copied at the
offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005 and The Pacific Stock Exchange Inc., 618
South Spring Street, Los Angeles, California 90014, and 301 Pine
Street, San Francisco, California 94014. Additional information
regarding the Company and the Common Stock offered hereby is
contained in the Registration Statement on Form S-3 (of which
this Prospectus forms a part) and the exhibits relating thereto,
filed with the Commission under the Securities Act. The
Registration Statement and any exhibits thereto may be inspected
without charge at the offices of the Commission at 450 Fifth
Street, N.W., Washington, DC 20549, and copies thereof may be
obtained from the Commission upon the payment of the prescribed
fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are incorporated herein by reference the following
documents heretofore filed by the Company with the Commission:
(a) Annual Report on Form 10-K for the fiscal year
ended August 31, 1993; and
(b) All other reports filed since August 31, 1993 to
the date of this Prospectus pursuant to Section 13(a) or 15
(d) of the Exchange Act.
All documents filed by the Company pursuant to Sections
13(a), 13 (c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the
offering of the Common Stock shall be deemed to be incorporated
by reference into this Prospectus.
Any statement contained in a document, all or a portion of
which is incorporated or deemed to be incorporated by reference
herein, shall be deemed to be modified or superseded for purposes
of the Registration Statement and this Prospectus to the extent
that a statement contained in the Registration Statement, this
Prospectus, or any other subsequently filed document that is also
incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute
part of this Prospectus.
2
<PAGE>
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THE COMPANY WILL
PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROSPECTUS IS
DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A
COPY OF ANY OR ALL OF THE DOCUMENTS WHICH ARE INCORPORATED HEREIN
BY REFERENCE (OTHER THAN EXHIBITS, UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS).
REQUESTS SHOULD BE DIRECTED TO THE CORPORATE SECRETARY, ECHLIN
INC., 100 DOUBLE BEACH ROAD, BRANFORD, CONNECTICUT 06405.
TELEPHONE REQUESTS MAY BE DIRECTED TO (203) 481-5751.
THE COMPANY
Echlin is a worldwide manufacturer and distributor of
products used principally to maintain or improve the safety or
efficiency of motor vehicles. The Company's vehicle safety
products include hydraulic brake parts, air brake parts, brake
friction products, wheel oil seals and electric brake controls.
Vehicle efficiency products include electronic and conventional
ignition systems, electrical parts, wire and cable, cooling
systems and drive train parts. Echlin's products are sold
primarily as replacement parts for use in automobiles, trucks and
buses and also are used in off-road, farm, industrial,
recreational and residential engine-powered equipment. Sales are
made to automotive and heavy duty warehouse distributors,
automotive replacement parts manufacturers, manufacturers of
trucks and trailers and mass merchandisers for use by
professional mechanics and by car and truck owners.
Echlin was incorporated under Connecticut law in 1959,
succeeding a business which had been organized in 1924. Echlin's
principal executive office is located at 100 Double Beach Road,
Branford, Connecticut 06405; its telephone number is
203-481-5751.
SECURITIES COVERED BY THIS PROSPECTUS
The Shares of the Common Stock covered by this Prospectus
were issued or became issuable, subject to post-closing
adjustment, on September 30, 1994 to certain security holders
(the "Selling Stockholders") of Theodore Bargman Co., a Michigan
corporation (the "Acquired Company") pursuant to a Stock
Acquisition Agreement (the "Agreement") dated as of September 30,
1994; pursuant to the Agreement, the Acquired Company became a
wholly-owned subsidiary of the Company.
SELLING STOCKHOLDERS
The following table sets forth information with respect to
the number of shares of Common Stock, subject to post-closing
adjustment, which may be offered for sale by each of the Selling
Stockholders. No Selling Stockholder beneficially owns more than
one percent of the issued common stock of the Company.
3
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK WHICH MAY
NAME AND ADDRESS OF BE OFFERED FOR SALE
SELLING STOCKHOLDER AND REGISTERED
- ------------------- ------------------------
<S> <C>
A & B Associates 111,447
1533 N. Woodward Avenue, S. 240
Bloomfield Hills, MI 48304
OIG Manufacturing 78,013
2000 N. Woodward Avenue, S. 130
Bloomfield Hills, MI 48304
Thomas Gaffney 33,434
2091 Oceanview Drive #N
Tierra Verde, FL 33715-2512
James Taylor 8,915
211 E. Park Drive
Albion, IN 46701
</TABLE>
4
<PAGE>
Because the Selling Stockholders may offer all or part of
the Common Stock which they hold pursuant to the offering
contemplated by this Prospectus, no estimate can be given as to
the amount of Common Stock that will be held by the Selling
Stockholders after completion of this Offering. See "Plan of
Distribution."
One of the Selling Stockholders continued to be employed by
the Acquired Company, following the Acquired Company becoming a
subsidiary of Echlin.
PLAN OF DISTRIBUTION
The distribution of the Common Stock by the Selling
Stockholders (or by pledges, donees, transferees or other
successors in interests of such Selling Stockholders) may be
effected from time to time in ordinary brokerage transactions on
the New York Stock Exchange or otherwise at market prices
prevailing at the time of sale or at negotiated prices. The
brokers or dealers through or to whom the Common Stock may be
sold may be deemed underwriters of the shares within the meaning
of the Securities Act, in which event all brokerage commissions
or discounts and other compensation received by such brokers or
dealers may be deemed underwriting compensation. In order to
comply with certain state securities laws, if applicable, the
Common Stock will not be sold in a particular state unless the
Common Stock has been registered or qualified for sale in such
state or an exemption from registration or qualification is
available and is complied with.
The Common Stock offered hereby will be sold by the Selling
Stockholders acting as principals for their own account. The
Company will receive none of the proceeds from this offering.
The Company will bear all expenses of the offering, except
that the Selling Stockholders will pay any applicable
underwriters' commissions and expenses, brokerage fees or
transfer taxes.
The Company and the Selling Stockholders have agreed to
indemnify each other against certain liabilities including
liabilities arising under the Securities Act.
DESCRIPTION OF CAPITAL STOCK
Echlin's authorized capital stock consists of 150,000,000
shares of Common Stock, par value $1 per share, and 1,000,000
shares of Preferred Stock, without par value. None of the shares
of the Preferred Stock has been issued. The Preferred Stock may
be issued in series from time to time as determined by the Board
of Directors of the Company, who are empowered, for each series,
to fix the dividend rate, redemption provisions, liquidation
privileges, sinking fund provisions, voting powers and any
conversion rights. When any shares of Preferred Stock are
outstanding, dividends may be payable thereon at a fixed dividend
rate before dividends can be paid on outstanding shares of
Echlin's Common Stock. On dissolution, liquidation or winding-up
of Echlin, holders of Preferred Stock may be entitled to receive
a stipulated liquidation price before any distribution could be
made to the holders of the Common Stock. The Company presently
has no plans, arrangements or understandings with respect to the
issuance of any of the Preferred Stock (other than pursuant to
the Preferred Stock purchase rights described below).
5
<PAGE>
Each share of Common Stock is entitled to one vote and to
dividends as declared by the Board of Directors. Upon
liquidation, each share of Common Stock is entitled to an equal
share in all of the assets of the Company, after payment of
creditors and holders of Preferred Stock, if any. There are no
preemptive rights and no conversion, redemption or sinking fund
privileges and all shares of Common Stock outstanding are fully
paid and non-assessable.
Under the terms of a shareholder rights plan approved by the
Company's Board of Directors in June 1989 ("Echlin's Shareholder
Rights Plan"), a Preferred Stock purchase right ("Right") is
attached to and automatically trades with each outstanding share
of Common Stock.
The Rights, which are redeemable, will become exercisable
only in the event that any person or group becomes a holder of 20
percent or more of the Company's Common Stock, or commences a
tender or exchange offer which, if consummated, would result in
that person or group owning at least 20 percent of the Common
Stock. Once the Rights become exercisable they entitle all other
shareholders to purchase, by payment of a $65 exercise price,
Common Stock (or, in certain circumstances, other consideration)
with a value of twice the exercise price. In addition, at any
time after a 20 percent position is acquired, the Board of
Directors may, at its option, require each outstanding Right
(other than Rights held by the acquiring person or group) to be
exchanged for one share of Common Stock or its equivalent. The
Rights will expire on June 30, 1999 unless redeemed or exchanged
earlier.
The transfer agent and registrar for the Common Stock and
Rights Agent under Echlin's Shareholder Rights Plan is Bank of
Boston, Boston, Massachusetts.
The Common Stock is listed on the New York Stock Exchange,
The Pacific Stock Exchange and the International Stock Exchange
in London.
LEGAL OPINIONS
The legality of the Shares offered hereby will be passed
upon for Echlin by Jon P. Leckerling, Esq., Vice President,
General Counsel and Corporate Secretary of Echlin.
EXPERTS
The consolidated financial statements of the Company
incorporated in this Prospectus by reference to the Company's
Annual Report on Form 10-K for the fiscal year ended August 31,
1993 have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
6
<PAGE>
No person has been authorized
to give any information or to
make any representations other
than those contained in this
Prospectus and, if given or
made, such information or
representations must not be
relied upon as having been
authorized by the Company or
any person using this
Prospectus in connection with
the sale of shares issued in
acquisition and mergers.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information.... 2
Incorporation of Certain
Documents by Reference... 2
The Company.............. 3
Securities Covered by
this Prospectus.......... 3
Selling Stockholders..... 4
Plan of Distribution...... 5
Description of
Capital Stock............. 5
Legal Opinions............ 6
Experts................... 6
</TABLE>
This Prospectus does not
constitute an offer to sell or
a solicitation of an offer to
buy any securities other than
the Common Stock to which it
relates, or an offer to or
solicitation of any person in
any jurisdiction in which such
offer or solicitation would be
unlawful. The delivery of
this Prospectus at any time
does not imply that this
information herein is correct
as of any time subsequent to
its date.<PAGE>
231,809 Shares
ECHLIN INC.
Common Stock
__________
PROSPECTUS
__________
_________, 1994<PAGE>
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated fees and expenses payable by the Corporation
in connection with the issuance and distribution of the Common
Stock registered hereunder are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee ..... $2,278
Legal fees and expenses ................................. 1,000
Accounting fees and expenses ............................ 1,000
Printing fee ............................................ 1,000
Miscellaneous ........................................... 1,000
------
Total Fees and Expenses ................................. $6,278
======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Connecticut by statute provides for indemnification of
directors, officers, shareholders, employees and agents of a
corporation. Under Sec. 33-320a of the Connecticut Stock
Corporation Act (the "Act"), a corporation is required to
indemnify a director against judgments and other expenses of
litigation when he is sued by reason of his being a director in
any proceeding brought, other than on behalf of the corporation,
if the director:
(1) is successful on the merits in defense, or
(2) acted in good faith and in a manner
reasonably believed to be in the best interests of the
corporation, or
(3) in a criminal action or proceeding, has no
reasonable cause to believe his conduct was unlawful.
In a proceeding brought on behalf of a corporation (a
derivative action), a director is entitled to be indemnified by
the corporation for reasonable expenses of litigation, if the
director is finally adjudged not to have breached his duty to the
corporation. In addition, a director is entitled to
indemnification for both derivative and non-derivative actions,
if a court determines, upon application, that the director is
fairly and reasonably entitled to be indemnified.
A Connecticut corporation may not provide for
indemnification in any manner inconsistent with the statutory
indemnification provisions (which, however, expressly allow a
corporation to procure insurance providing greater
indemnification.)
---------------------------
<PAGE>
The Registrant maintains a directors and officers liability
insurance policy which insures the Registrant's directors and
officers against claims and liabilities arising out of negligent
errors or omissions in the course of the performance of their
official duties, including claims and liabilities arising under
the securities laws of the United States and states of applicable
jurisdiction. Fraudulent and willful acts are excluded.
--------------------------
The Registrant's Certificate of Incorporation provides by
amendment that a person who is or was a director of the
corporation shall have no personal liability to the corporation
or its shareholders for monetary damages for any breach of duty
in such capacity in excess of the compensation received by the
director for serving the corporation during the year of
violation.
The amendment was adopted to implement changes to Section
33-290 of the Act, effective October 1, 1989. Under this change
in the law, a Connecticut corporation may amend its Certificate
of Incorporation to limit the personal liability of directors to
the corporation or its shareholders for monetary damages for
breach of duty in their capacity as directors.
The limitation may not be to an amount less than the
compensation received by the director for serving the corporation
during the year of the violation and director liability cannot be
limited if the violation:
(1) involved a knowing and culpable violation of
law by the director;
(2) enabled the director or an associate to
receive an improper personal economic gain;
(3) showed a lack of good faith and a conscious
disregard for the duty of the director to the
corporation under circumstances in which the director
was aware that his conduct or omission created an
unjustifiable risk of serious injury to the
corporation;
(4) constituted a sustained and unexcused pattern
of inattention that amounted to an abdication of the
director's duty to the corporation; or
(5) created a liability under Section 33-321,
which relates to directors who vote for any
distribution of assets of a corporation to its
shareholders in violation of the Act.
II-2
<PAGE>
ITEM 16. LIST OF EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<S> <S>
2. -Stock Acquisition Agreement dated as of September 30,
1994, by which the Company acquired Theodore Bargman
Co.
4(a) -By-Laws, as amended, filed as Exhibit 3(i) to Echlin's
Annual Report on Form 10-K for the fiscal year ended
August 31, 1991, is incorporated herein by reference.
4(b) -Certificate of Incorporation, filed as Exhibit
3(3)(ii) to Echlin's Annual Report on Form 10-K for the
fiscal year ended August 31, 1987, is incorporated
herein by reference.
4(c) -Certificate of Amendment amending the Certificate of
Incorporation to Establish Series A Cumulative
Participating Preferred Stock, filed as Exhibit
3(3)(iii) to Echlin's Annual Report on Form 10-K for
the fiscal year ended August 31, 1989, is incorporated
herein by reference.
4(d) -Certificate of Amendment, amending the Certificate of
Incorporation, to limit the liability of directors for
monetary damages under certain circumstances, filed as
Item 2 to Echlin's 1989 Annual Proxy Statement, is
incorporated herein by reference.
4(e) -Rights Agreement, dated as of June 21, 1989, between
Echlin and the Connecticut Bank and Trust Company,
N.A., as Rights Agent, which includes the form of
Amendment to the company's Certificate of Incorporation
as Exhibit A, the form of Rights Certificate as Exhibit
B and the Summary of Rights to Purchase Preferred Stock
as Exhibit C, filed as Exhibit 1 to Echlin's Current
Report on Form 8-K dated June 21, 1989, is incorporated
herein by reference.
4(f) -Successor Rights Agent Agreement between Echlin and
The First National Bank of Boston appointing The First
National Bank of Boston as successor Rights Agent to
replace the Connecticut Bank and Trust Company, N.A. as
Rights Agent, filed as Exhibit 3(3)(iv) to Echlin's
Annual Report on Form 10-K for the fiscal year ended
August 31, 1990, is incorporated herein by reference.
5. -Opinion of Jon P. Leckerling, Esq. as to the legality
of the Common Stock being offered under this
Registration Statement.
24(a) -Consent of Price Waterhouse LLP.
24(b) -Consent of Counsel. (Included in Exhibit 5 hereto).
25. -Powers of Attorney. (Included on the signature page
hereto).
</TABLE>
II-3
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a) (1) To file, during any period in which
offers or sales are being made, a post-effective
amendment to this Registration Statement;
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933, as
amended (the "Securities Act");
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the
Registration Statement (or the most recent post-
effective amendment thereof) which, individually
or in the aggregate, represent a fundamental
change in the information set forth in the
Registration Statement;
(iii) To include any material information
with respect to the plan of distribution not
previously disclosed in the Registration Statement
or any material change to such information in the
Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Company pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-
effective amendment shall be deemed to be a new
Registration Statement relating to the securities
offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities which
remain unsold at the termination of the offering.
(b) That, for purposes of determining any liability
under the Securities Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference
in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
II-4
<PAGE>
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection
with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in Branford, Connecticut, on the 21st day of October,
1994.
ECHLIN INC.
By: /s/ Frederick J. Mancheski
-----------------------
Frederick J. Mancheski
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
The undersigned directors and officers of Echlin Inc. do
hereby constitute and appoint Jon P. Leckerling and Edward D.
Toole or either of them, our true and lawful attorneys-in-fact
and agents to do any and all acts and things in our name and
behalf in our capacities as directors and officers, and to
execute any and all instruments for us and in our names in the
capacities indicated below which such person or persons may deem
necessary or advisable to enable Echlin Inc. to comply with the
Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in
connection with this Registration Statement, including
specifically, but not limited to, power and authority to sign for
us, or any of us, in the capacities indicated below any and all
amendments (including post-effective amendments) hereto and we do
hereby ratify and confirm all that such person or persons shall
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities* indicated on the 21st day of October,
1994.
Name Title
---- -----
Principal Executive Officer:
/s/ Frederick J. Mancheski
- --------------------------
Frederick J. Mancheski Chairman of the Board and
Chief Executive Officer;
Director
Principal Accounting Officer:
/s/ Richard A. Wisot
- --------------------------
Richard A. Wisot Vice President And Controller
II-6
<PAGE>
/s/ C. Scott Greer
- --------------------------
C. Scott Greer President and Director
/s/ D. Allan Bromley
- --------------------------
D. Allan Bromley Director
/s/ John F. Creamer, Jr.
- --------------------------
John F. Creamer, Jr. Director
/s/ Milton P. DeVane
- --------------------------
Milton P. DeVane Director
/s/ John E. Echlin, Jr.
- --------------------------
John E. Echlin, Jr. Director
/s/ John F. Gustafson
- --------------------------
John F. Gustafson Director
/s/ Donald C. Jensen
- --------------------------
Donald C. Jensen Director
/s/ Trevor O. Jones
- --------------------------
Trevor O. Jones Director
/s/ Phillip S. Myers
- --------------------------
Phillip S. Myers Director
/s/ Frank R. O'Keefe, Jr.
- --------------------------
Frank R. O'Keefe, Jr. Director
/s/ Jerome G. Rivard
- --------------------------
Jerome G. Rivard Director
*The position of Chief Financial Officer of the Company is
presently vacant.
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <S>
2. -Stock Acquisition Agreement dated as of
September 30, 1994, by which the Company
acquired Theodore Bargman Co.
4(a) -By-Laws, as amended, filed as Exhibit 3(1) to
Echlin's Annual Report on Form 10-K for the
fiscal year ended August 31, 1991, is incorporated
herein by reference.
4(b) -Certificate of Incorporation, filed as Exhibit
3(3)(ii) to Echlin's Annual Report on Form 10-K
for the fiscal year ended August 31, 1987, is
incorporated herein by reference.
4(c) -Certificate of Amendment amending the Certificate
of Incorporation to Establish Series A Cumulative
Participating Preferred Stock, filed as Exhibit
3(3)(iii) to Echlin's Annual Report on Form 10-K
for the fiscal year ended August 31, 1989, is
incorporated herein by reference.
4(d) -Certificate of Amendment, amending the
Certificate of Incorporation, to limit the
liability of directors for monetary damages
under certain circumstances, filed as Item 2 to
Echlin's 1989 Annual Proxy Statement, is
incorporated herein by reference.
4(e) -Rights Agreement, dated as of June 21, 1989,
between Echlin and the Connecticut Bank and
Trust Company, N.A., as Rights Agent, which
includes the form of Amendment to the company's
Certificate of Incorporation as Exhibit A,
the form of Rights Certificate as Exhibit B and
the Summary of Rights to Purchase Preferred
Stock as Exhibit C, filed as Exhibit 1 to Echlin's
Current Report on Form 8-K dated June 21, 1989, is
incorporated herein by reference.
4(f) -Successor Rights Agent Agreement between Echlin
and The First National Bank of Boston appointing
The First National Bank of Boston as successor
Rights Agent to replace the Connecticut Bank and
Trust Company, N.A. as Rights Agent, filed as
Exhibit 3(3)(iv) to Echlin's Annual Report on
Form 10-K for the fiscal year ended August 31,
1990, is incorporated herein by reference.
5. -Opinion of Jon P. Leckerling, Esq. as to the
legality of the Common Stock being offered under
this Registration Statement.
24(a) -Consent of Price Waterhouse LLP.
24(b) -Consent of Counsel. (Included in Exhibit 5 hereto).
25. -Powers of Attorney. (Included on the signature page
hereto).
</TABLE>
II-9
<PAGE>
STOCK ACQUISITION AGREEMENT
This STOCK ACQUISITION AGREEMENT, dated as of September 30,
1994 among Echlin Inc., a Connecticut corporation (the "Buyer"),
Theodore Bargman Co., a Michigan corporation (the "Company"), and
the stockholders of the Company listed on Schedule 1.1 to this
Agreement (individually, a "Seller" and collectively, the
"Sellers").
Buyer desires to acquire all of the outstanding shares of
capital stock of the Company and the Sellers desire to transfer all
such shares to Buyer on the terms and conditions hereinafter set
forth.
The definitions of certain defined terms used herein are
set forth in Section 10.10 hereof.
Accordingly, in consideration of the premises and of the
respective covenants and agreements contained herein, the parties
hereto hereby agree as follows:
1. ACQUISITION AND TRANSFER OF SHARES
1.1 Acquisition and Transfer. On the terms and subject
to the conditions set forth in this Agreement, (i) the Sellers
shall transfer to Buyer, and Buyer shall acquire from the Sellers,
all of the outstanding shares of capital stock of the Company (such
shares of capital stock being hereinafter referred to as the
"Shares") for an aggregate unadjusted consideration (subject to
adjustment as provided in Section 1.4 hereof) payable in shares of
Echlin Inc. Common Stock $1 par value (the "Echlin Common Stock")
the number of which shall be determined (to the nearest whole
number of shares) by dividing (A) $6,500,000 by (B) a figure equal
to the average daily closing price (without regard to volume) of
one share of Echlin Common Stock traded on the New York Stock
Exchange during the five business day period beginning six business
days prior to the Closing Date and including the business day
preceding the Closing Date and (ii) at the Closing referred to in
Section 1.2 hereof:
(a) Each Seller shall assign, transfer and deliver to
Buyer the number of Shares set forth beside such Seller's name
on Schedule 1.1 hereto; and
(b) Buyer shall accept and acquire the Shares from the
Sellers and in consideration therefor shall deliver to the
Sellers by delivery to Lawrence S. Jackier, Esq. (the "Agent
Seller") acting for himself and as agent for the other Sellers
as provided in Section 10.14 hereof certificates representing
the unadjusted aggregate number of shares of Echlin Common
Stock to be delivered to Sellers under this Agreement less (i)
5% of such shares to be held back by Buyer until the Net Worth
as reflected in the Closing Date Balance Sheet is determined
pursuant to Section 5.9 hereof and (ii) 5% of such shares to
be held back by Buyer until the termination date referred to
in Section 9.1 hereof; provided, however, that on such
termination date Buyer may continue to hold back a number of
such shares reasonably related in value to any claim, with
respect to which the Sellers have been given written notice
prior to such termination date, until the resolution of any
such claim.
1.2 Closing. Subject to the conditions set forth in
this Agreement, the acquisition and transfer of the Shares pursuant
to this Agreement (the "Closing") shall take place at the offices
of Buyer, 100 Double Beach Road, Branford, Connecticut at 10 a.m.
on (A) September 30, 1994, or (B) such other date, not later than
September 30, 1994, time and place which is agreed to by Buyer and
the Sellers. The date on which the Closing is to occur is herein
referred to as the "Closing Date".
1.3 Deliveries at the Closing. Subject to the
conditions set forth in this Agreement, at the Closing:
(a) The Sellers shall deliver to Buyer (i) certificates
representing all the Shares accompanied by stock powers with
all necessary stock transfer and other documentary stamps
attached, and any other documents that are necessary to
transfer to Buyer good title to all the Shares, free and clear
of all pledges, liens, charges, claims, options, encumbrances,
security interests, restrictions on transfer and rights of
other persons of every nature and description whatsoever
("Security Interest"), and (ii) all opinions, certificates and
other instruments and documents required, or as reasonably may
be requested, to be delivered by the Sellers at or prior to
the Closing or otherwise required in connection herewith; and
(b) Buyer shall deliver to the Agent Seller (i)
certificates representing the shares of Echlin Common Stock as
required by Section 1.1(b) hereof with any transfer taxes
thereon duly paid by Buyer and (ii) all opinions, certificates
and other instruments and documents required to be delivered
by Buyer at or prior to the Closing or otherwise required, or
as reasonably may be requested, in connection herewith.
1.4 Consideration Adjustment. If the Net Worth as
finally determined in accordance with Section 5.9 hereof is more or
less than $3,122,292, the number of shares of Echlin Common Stock
provided for by Section 1.1 hereof shall be adjusted as follows:
(a) If less than $3,122,292, Buyer shall deliver
promptly to the Sellers by delivery to the Agent Seller the
number of shares held back by Buyer pursuant to Section
1.1(b)(i) hereof, less a number of shares having an aggregate
Share Value equal to the amount of such negative difference,
or
(b) If the amount of such negative difference is greater
than the aggregate Share Value of the shares held back by
Buyer, Buyer shall retain all the shares held back and any
such adjustment shall be limited to the shares held back, or
(c) If more than $3,122,292, Buyer shall deliver
promptly to the Sellers by delivery to the Agent Seller the
number of shares held back by Buyer, plus a number of shares
having an aggregate Share Value equal to the amount of such
positive difference; provided, however, any such upward
adjustment shall be limited to a number of shares having an
aggregate Share Value equal to $350,000, and
(d) The value of a share of Echlin Common Stock for the
purpose of this Section 1.4 shall be the same value per share
as determined for purposes of Section 1.1 hereof (the "Share
Value").
2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller hereby jointly and severally represents and
warrants to Buyer as follows:
2.1 Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority to own, lease and operate the
properties used in its business and to carry on its business as now
being conducted. The Company is duly qualified to do business and
is in good standing as a foreign corporation in the jurisdictions
set forth on Schedule 2.1 and in each other jurisdiction where
qualification as a foreign corporation is required, except for such
failures to be qualified and in good standing, if any, which when
taken together with all other such failures of the Company and its
Subsidiaries would not in the aggregate have a Material Adverse
Effect (as defined in Section 10.10 hereof). The Company has
previously delivered to Buyer complete and correct copies of its
Articles or Certificate of Incorporation and all amendments thereto
to the date hereof and its By-Laws, as presently in effect.
2.2 Subsidiaries. Set forth on Schedule 2.2 hereto is
a true and complete list of any Subsidiaries (as defined below) of
the Company stating, with respect to each Subsidiary, its
jurisdiction of incorporation, capitalization, equity ownership and
jurisdictions in which qualified to do business. As used in this
Agreement, the term "Subsidiary" shall mean any corporation in
which the Company owns beneficially securities representing 20% or
more of (i) the aggregate equity or profit interests or (ii) the
combined voting power of voting interests ordinarily entitled to
vote for management or otherwise. Each of the Subsidiaries is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own, lease and operate the
properties used in its business and to carry on its business as now
being conducted, and is duly qualified to do business and in good
standing as a foreign corporation in each jurisdiction where
qualification as a foreign corporation is required, except for such
failures to be qualified and in good standing, if any, which when
taken together with all other such failures of the Company and its
Subsidiaries would not in the aggregate have a Material Adverse
Effect. All of the outstanding shares of capital stock of the
Subsidiaries have been validly authorized and issued, are fully
paid and non-assessable, have not been issued in violation of any
preemptive rights or of any securities law, and are owned by the
Company of record and beneficially free and clear of any Security
Interest. Except as set forth on Schedule 2.2 hereto, the Company
does not own, directly or indirectly, any ownership, equity,
profits or voting interest in any corporation, partnership, joint
venture or other person (as defined in Section 10.10 hereof), and
has no agreement or commitment to purchase any such interest. The
Company has previously delivered to Buyer complete and correct
copies of the charter and by-laws (including comparable governing
instruments with different names) of each Subsidiary, as amended
and presently in effect.
2.3 Capitalization. The authorized capital stock of the
Company consists of 50,000 shares of Common Stock, no par value, of
which, as of the date hereof, 950 shares are issued and
outstanding. There is no Preferred Stock authorized, issued or
outstanding. The Shares listed on Schedule 1.1 hereto constitute
all the issued and outstanding shares of Common Stock and have been
validly authorized and issued, are fully paid and nonassessable and
have not been issued in violation of any preemptive rights or of
any securities law. There is no security, option, warrant, right,
call, subscription, agreement, commitment or understanding of any
nature whatsoever, fixed or contingent, that directly or indirectly
(i) calls for the issuance, sale, pledge or other disposition of
any shares of stock of the Company or any securities convertible
into, or other rights to acquire, any shares of stock of the
Company or (ii) obligates the Company to grant, offer or enter into
any of the foregoing or (iii) relates to the voting or control of
such stock, securities or rights, except as set forth on Schedule
2.3 hereto.
2.4 Authority, Approvals and Consents. The Company has
the corporate power and authority to enter into this Agreement and
to perform its obligations hereunder. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized and
approved by the Board of Directors of the Company and no other
corporate proceedings on the part of the Company are necessary to
authorize and approve this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of,
the Company, enforceable against the Company in accordance with its
terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general. The execution,
delivery and performance of this Agreement by the Company and the
Sellers and the consummation of the transactions contemplated
hereby do not and will not:
(i) contravene any provisions of the Articles or
Certificate of Incorporation or By-Laws of the Company;
(ii) (after notice or lapse of time or both)
conflict with, result in a breach of any provision of,
constitute a default under, result in the modification or
cancellation of, or give rise to any right of termination
or acceleration in respect of, any Company Agreement (as
defined in Section 2.15 hereof) or, except as set forth
on Schedule 2.4 hereto, require any consent or waiver of
any party to any Company Agreement;
(iii) result in the creation of any Security
Interest upon, or any person obtaining any right to
acquire, any properties, assets or rights of the Company
or any Subsidiary;
(iv) violate or conflict with any Legal
Requirements (as defined in Section 2.9 hereof)
applicable to the Company or any Subsidiary or any of
their respective businesses or properties; or
(v) require any authorization, consent, order,
permit or approval of, or notice to, or filing,
registration or qualification with, any governmental,
administrative or judicial authority.
Except as set forth or referred to above, no authorization,
consent, order, permit or approval of, or notice to, or
filing, registration or qualification with, any governmental,
administrative or judicial authority is necessary to be
obtained or made by the Company to enable the Company to
continue to conduct its business and operations and use its
properties after the Closing in a manner which is in all
material respects consistent with that in which they are
presently conducted.
2.5 Financial Statements. The Company previously has
delivered to Buyer a true and complete copy of:
(i) the balance sheets of the Company as of
December 31, 1991, December 31, 1992 and December 31,
1993, and the related statements of income and retained
earnings and cash flows for the fiscal years ended on
such dates, together with the notes thereto, in each case
examined by and accompanied by the report of Coopers &
Lybrand, independent certified public accountants;
(ii) the unaudited balance sheet of the Company as
of June 30, 1994 and the unaudited statements of income
and retained earnings and cash flows for the six-month
period ended on such date, together with any notes
thereto;
(all the foregoing financial statements, including the notes
thereto, being referred to herein collectively as the "Company
Financial Statements"). The Company Financial Statements are
in accordance with the books and records of the Company and
its Subsidiaries and fairly present the financial position,
results of operations, shareholders' equity and cash flows of
the Company and its Subsidiaries as of the dates and for the
periods indicated, in each case in conformity with generally
accepted accounting principles consistently applied (except as
disclosed on Schedule 2.5 or otherwise indicated in such
statements and except that the unaudited financial statements
do not contain the footnote disclosures required by generally
accepted accounting principles) during such periods, and the
unaudited financial statements included in the Company
Financial Statements indicate all adjustments, which consist
of only normal recurring accruals, necessary for such fair
presentations. The statements of income included in the
Company Financial Statements do not contain any items of
special or nonrecurring income except as expressly specified
therein, and the balance sheets included in the Company
Financial Statements do not reflect any writeup or revaluation
increasing the book value of any assets. The books and
accounts of the Company and its Subsidiaries are complete and
correct and fully and fairly reflect all of the transactions
of the Company and its Subsidiaries and are located solely at
the offices of the Company and its Subsidiaries and not at any
other location. At the Closing Date no material adverse
change shall have occurred in the financial condition or
results of operations of the Company and its Subsidiaries
except as disclosed in the Company Financial Statements or
disclosed on Schedule 2.5 hereto.
2.6 Absence of Undisclosed Liabilities. To the best
knowledge of the Sellers, neither the Company nor any Subsidiary
has any liability of any nature whatsoever (whether known or
unknown, disclosed or undisclosed, due or to become due, accrued,
absolute, contingent or otherwise) including, without limitation,
any unfunded obligation under employee benefit plans or
arrangements as described in Sections 2.17 and 2.18 hereof or
liabilities for Taxes (as defined in Section 2.8 hereof), except
for (i) liabilities reflected or reserved against in the balance
sheet as of December 31, 1993 included in the Company Financial
Statements (the "Company Balance Sheet"), or in the notes to the
Company Financial Statements for the twelve-month period then
ended, (ii) current liabilities incurred in the ordinary course of
business and consistent with past practice after the date of the
Company Balance Sheet which, individually and in the aggregate, do
not have a Material Adverse Effect and (iii) liabilities disclosed
on Schedule 2.6 hereto or in this Agreement or in any other
schedule hereto or in the financial statements referred to in
Section 2.5 hereof. Neither the Company nor any Subsidiary is a
party to any Company Agreement, or subject to any charter or by-law
provision, any other corporate limitation or any Legal Requirement
(as defined in Section 2.9 hereof), which has, or in the future can
reasonably be expected to have, a Material Adverse Effect, except
as set forth on Schedule 2.6 hereto or in this Agreement or in any
other schedule hereto or in the financial statements referred to in
Section 2.5 hereof.
2.7 Absence of Material Adverse Effect; Conduct of
Business. Since December 31, 1993, there has been
no Material Adverse Effect and there is no condition, development
or contingency of any kind existing or in prospect which, so far as
reasonably can be foreseen at this time, may result in any Material
Adverse Effect. Without limiting the foregoing, except as set
forth on Schedule 2.7 hereto or in this Agreement or in any other
schedule hereto or in the financial statements referred to in
Section 2.5 hereof, since December 31, 1993 there has not been,
occurred or arisen:
(i) any damage, destruction or loss to any asset of
the Company or any Subsidiary (whether or not covered by
insurance) that, individually or in the aggregate, would
have a Material Adverse Effect;
(ii) any change in any accounting principle or
method used for financial reporting purposes by the
Company or any Subsidiary except as expressly disclosed
in the Company, Financial Statements and concurred with
by the Company's independent public accountants;
(iii) any commitment, transaction or other action
by the Company or any Subsidiary other than in the
ordinary course of business and consistent with past
practice;
(iv) any amendment or other change to the Articles
or Certificate of Incorporation or By-Laws of the
Company;
(v) any declaration, setting aside, or payment of
any dividend or distribution (whether in cash, stock or
property) in respect of capital stock of the Company or
any direct or indirect redemption, purchase, or other
acquisition of shares of such capital stock or any split,
combination or reclassification of such capital stock;
(vi) any sale or other disposition of any right,
title or interest in or to any assets or properties of
the Company or any Subsidiary or any revenues derived
therefrom (other than inventories sold in the ordinary
course of business) having an aggregate value in excess
of the dollar amount set forth on Schedule 2.7 hereto;
(vii) (i) any general increase in any compensation
or benefits payable to any class or group of employees of
the Company or any Subsidiary, any increase in the
compensation payable or to become payable by the Company
or any Subsidiary to any of its directors, officers or
any of its employees whose total compensation after such
increase would exceed $75,000 per annum (collectively,
"Key Employees") or any bonus, service award, percentage
compensation, or other benefit paid, granted or accrued
to or for the benefit of any Key Employee, other than in
accordance with an ERISA Plan or Compensation Commitment
expressly disclosed on Schedule 2.17 or 2.18 hereto as in
effect on the date hereof or (ii) the adoption or
amendment in any material respect of any ERISA Plan or
any Compensation Commitment;
(viii) any creation, incurrence or assumption of
any indebtedness for money borrowed by the Company or any
Subsidiary, including obligations in respect of capital
leases or guarantees, other than (A) indebtedness under
revolving credit, line of credit and other working
capital loan agreements (all of which are described on
Schedule 2.7 hereto) providing for borrowings in the
ordinary course of business not exceeding the aggregate
dollar amount at any time outstanding set forth on
Schedule 2.7 hereto and (B) intercompany loans and
advances to or from any Subsidiary;
(ix) any capital expenditures by the Company or any
Subsidiary, except as permitted by Section 5.3(d) hereof;
(x) any labor union organizing activity, any actual
or threatened employee strikes, work stoppages, slow-
downs or other labor disputes or disturbances or any
material adverse change in its relations with employees;
(xi) any change in any accounting principle or
method or election for federal income tax purposes used
by the Company or any Subsidiary;
(xii) any change in the authorized or issued
capital stock of the Company or securities convertible
into or rights to purchase such capital stock; or
(xiii) any authorization, approval, agreement or
commitment to do any of the foregoing.
2.8 Taxes.
(a) To the best knowledge of the Sellers, the Company,
each Subsidiary and, for any period during all or part of
which the tax liability of any other corporation was
determined on a combined or consolidated basis with the
Company or any Subsidiary, any such other corporation have
filed timely all federal, state, local and foreign tax
returns, reports and declarations required to be filed (or
have obtained or timely applied for an extension with respect
to such filing) and have paid, or made adequate provision for
the payment of, all Taxes (as defined below) which are due
pursuant to said returns or pursuant to any assessment
received by the Company or any Subsidiary or any such other
corporation. Except to the extent reserves therefor are
reflected on the Company Balance Sheet, neither the Company
nor any Subsidiary is liable, or will become liable, for any
Taxes for any period ending on or prior to, or attributable to
operations through December 31, 1993 and except to the extent
reserves therefor will be reflected on the Closing Date
Balance Sheet (as defined in Section 5.9 hereof), neither the
Company nor any Subsidiary is liable, or will become liable,
for any Taxes for any period ending on or prior to, or
attributable to operations through, the Closing Date.
(b) Audits of all federal income tax returns in which
the Company or any Subsidiary is included have been completed
for all fiscal years through the fiscal year referred to on
Schedule 2.8 hereto and all adjustments proposed for such
years have been fully satisfied; no adjustment has been
proposed by the Internal Revenue Service with respect to any
return for any subsequent year. The statute of limitations on
assessment with respect to the federal income tax returns in
which the Company or any of its Subsidiaries is included has
expired for all fiscal years through the fiscal year referred
to on Schedule 2.8 hereto. Neither the Company, any
Subsidiary, nor any corporation authorized to act as agent for
the Company or any Subsidiary has given or been requested to
give any waiver of any statutes of limitations relating to the
payment of Taxes for which the Company or any Subsidiary is
liable. Neither the Company nor any Seller knows of any basis
for an assertion of a deficiency for Taxes against the Company
or any Subsidiary. The Company and its Subsidiaries shall be
entitled to control any audit of, or claim for refund with
respect to, any combined or consolidated return in which the
Company or any Subsidiary or any predecessor thereof is
included, and shall be entitled to receive any refund received
with respect to any such return, to the extent that such
audit, claim or refund relates to any item of income, gain,
loss, deduction, or credit of the Company or any Subsidiary or
any predecessor thereof. The Sellers will cooperate, and will
cause each of their Affiliates (as defined in Section 2.19
hereof) to cooperate, with the Company and its Subsidiaries in
the filing of any returns and in any audit or refund claim
proceedings involving Taxes for which the Company or any
Subsidiary may be liable or with respect to which the Company
or any Subsidiary may be entitled to a refund.
2.9 Legal Matters. Except as set forth on Schedule 2.9
hereto,
(a) (i) there is no claim, action, suit, litigation,
investigation, inquiry, review, or proceeding (collectively,
"Claims") pending against or within the past three years
asserted against, or, to the best knowledge of the Company or
any Subsidiary or Seller, threatened against or affecting, the
Company, any Subsidiary, any ERISA Plan or any of their
respective properties or rights before or by any court,
arbitrator, panel, agency or other governmental,
administrative or judicial entity and (ii) neither the Company
nor any Subsidiary is subject to any judgment, decree, writ,
injunction or order of any governmental, administrative or
judicial authority (collectively, "Judgments"). Claims and
Judgments are referred to herein collectively as "Legal
Proceedings". Neither the Company nor any Subsidiary is
subject to any Claims, which in the aggregate, if adversely
decided, could reasonably be expected to have a Material
Adverse Effect.
(b) To the best knowledge of the Sellers, the businesses
of the Company and its Subsidiaries are being and have been
conducted in compliance with all laws, ordinances, codes,
rules, regulations, standards, judgments, decrees, writs,
rulings, injunctions, orders and other requirements of all
governmental, administrative or judicial entities
(collectively, "Legal Requirements") applicable to the Company
or any Subsidiary or any of their respective businesses or
properties.
(c) To the best knowledge of the Sellers, the Company
and its Subsidiaries hold, and are and have been in compliance
with, all franchises, licenses, permits, registration,
certificates, consents, approvals or authorizations
(collectively, "Permits") required by all applicable Legal
Requirements. To the best knowledge of the Sellers, the
Company and each Subsidiary owns or holds all Permits material
to the conduct of its business. To the best knowledge of the
Sellers, no event has occurred and is continuing which
permits, or after notice or lapse of time or both would
permit, any modification or termination of any Permit.
(d) To the best knowledge of the Sellers, neither the
Company nor any Subsidiary (i) has received any notice
asserting any noncompliance with any Legal Requirement or
Permit, (ii) is subject to any Legal Requirement or Permit
which if enforced against or complied with by the Company or
any Subsidiary would have a Material Adverse Effect, or (iii)
is subject to any Legal Requirement proposed or under
consideration which, if effective, could have a Material
Adverse Effect.
(e) To the best knowledge of the Sellers, no
governmental, administrative or judicial authority has
indicated any intention to initiate any investigation, inquiry
or review involving the Company, any Subsidiary, any ERISA
Plan or any of their respective properties or rights.
2.10 Property.
(a) To the best knowledge of the Sellers, the properties
and assets owned by or leased to the Company and its
Subsidiaries are adequate for the continued conduct of their
respective businesses as presently conducted. The sale of the
Shares by the Sellers pursuant hereto will effectively convey
to Buyer the business, including all tangible and intangible
assets and properties, of the Company and its Subsidiaries.
(b) Set forth on Schedule 2.10 hereto is a list of all
interests in real property owned by or leased to the Company
or any of its Subsidiaries and of all options or other
contracts to acquire any such interest, specifying the
location of each such property and any improvements thereon
("Improvements"). The Company or one of its Subsidiaries has
good and marketable title to all such real properties, leases,
Improvements, options and contracts and to all other
properties reflected on the Company Balance Sheet or acquired
by any of them after the date thereof (other than properties
and assets sold or otherwise disposed of after the date
thereof in the ordinary course of business), and each such
property is held free and clear of (i) all leases, licenses
and other rights to occupy or use such property and (ii) all
Security Interests, rights of way, easements, restrictions,
exceptions, variances, reservations, covenants or other title
defects or limitations of any kind, except (with respect to
all such properties) those set forth on Schedule 2.10 hereto
or disclosed on the Company Balance Sheet or the notes
thereto, none of which has a material adverse effect on such
property or its present or contemplated use in the business of
the Company and its Subsidiaries. No financing statement or
notice of any Security Interest with respect to any of the
foregoing properties has been filed in any jurisdiction, and
the Company has not signed any such financing statement or any
security agreement authorizing any secured party thereunder to
file any such financing statement or notice, except as set
forth on Schedule 2.10 hereto.
(c) To the best knowledge of the Sellers, all
Improvements and all machinery, equipment and other tangible
property owned or used by or leased to the Company or any of
its Subsidiaries are in operating condition and repair for
their continued use as they have been used. To the best
knowledge of the Sellers, such tangible properties and all
Improvements owned or leased by the Company or any of its
Subsidiaries conform in all respects with all applicable
building, zoning, environmental and other land use laws,
ordinances, rules and regulations and other Legal Requirements
and such Improvements do not encroach in any respect on
property of others. To the best knowledge of the Sellers, the
present and contemplated use of such real property,
Improvements and tangible property conforms in all respects
with all applicable building, zoning, environmental and other
land use laws, ordinances, rules and regulations and other
Legal Requirements and all necessary occupancy and other
certificates and permits for the occupancy and lawful use
thereof have been issued and are presently in full force and
effect. To the best knowledge of the Sellers, all notices of
violations of Legal Requirements issued by any governmental
entity having jurisdiction against or affecting any of such
real property, Improvements or tangible property have been
complied with. To the best knowledge of the Sellers, no use
of such real property, Improvements or tangible property is
dependent upon the continuance of a non-conforming use or a
special permit or license.
(d) To the best knowledge of the Sellers; (i) Except as
set forth on Schedule 2.10, neither the Company nor any of its
Subsidiaries generates or otherwise owns or possesses, stores,
treats, disposes of or transports any "hazardous substance"
(as defined in the Comprehensive Environmental Responses,
Compensation, and Liability Act of 1980 (Public Law 96-510))
or "hazardous waste" (as defined in the Resource Conservation
and Recovery Act of 1976 (Public Law 98-616) or the
regulations promulgated thereunder or any other hazardous
substance or hazardous waste (as defined in any health, safety
or environmental protection law or the regulations promulgated
thereunder) or has at any time generated or otherwise owned or
possessed, stored, treated, disposed of or transported any
such hazardous substance or hazardous waste. (ii) Except as
set forth on Schedule 2.10, none of the real property owned or
leased by the Company or any of its Subsidiaries has been
contaminated by any such hazardous substance or hazardous
waste or is or has been the site of any dump or sanitary
landfill. (iii) Schedule 2.10 lists all permits, consents,
approvals, licenses and other like instruments issued under
environmental protection laws which are currently held by the
Company and its Subsidiaries. (iv) The Company has provided
Buyer with copies of all environmental audits, assessments,
reviews, correspondence with environmental regulators and like
documents prepared within five years of the Closing Date in
regard to the Company and its Subsidiaries.
(e) All real property and Improvements have access to
such public roads including, but not limited to, those owned
roads and driveways presently in use and such utilities and
other services as are necessary for the present and
contemplated uses thereof.
2.11 Inventories. The values at which inventories are
carried on the Company Balance Sheet reflect the normal inventory
valuation policies of the Company, and such values are in
conformity with generally accepted accounting principles
consistently applied. To the best knowledge of the Sellers, all
inventories reflected on the Company Balance Sheet or arising since
the date thereof are free of defects in manufacture and design, are
currently marketable and can reasonably be anticipated to be sold
at normal mark-ups within 365 days after the date hereof in the
ordinary course of business (subject to any reserve for obsolete,
damaged, defective or excess inventory that is set forth on the
Company Balance Sheet and as to be set forth on the Closing Date
Balance Sheet), except for any spare parts inventory which
inventory is good and usable.
2.12 Accounts Receivable. To the best knowledge of the
Sellers, all accounts receivable reflected on the Company Balance
Sheet or arising since the date thereof (subject to any reserve for
bad debts, sales returns and other sales adjustments that is
reflected on the Company Balance Sheet and as to be reflected on
the Closing Date Balance Sheet) are good and have been collected or
are collectible, without resort to litigation or extraordinary
collection activity, in the ordinary course of business of the
Company and its Subsidiaries, and are subject to no defenses, set-
offs or counterclaims other than normal cash discounts accrued in
the ordinary course of business of the Company and its
Subsidiaries. Except as set forth on Schedule 2.12 hereto all
accounts receivable reflected on the Company Balance Sheet are for
product sold in the ordinary course of business. Set forth on
Schedule 2.12 hereto is a list of accounts receivable of the
Company as of July 31, 1994 showing separately those receivables
which as of such date have been outstanding (i) 61 to 90 days and
(ii) more than 91 days.
2.13 Intellectual Property; Technology. To the best
knowledge of the Sellers, the Company and its Subsidiaries own or
have valid, binding and enforceable rights to use all patents,
trademarks, trade names, service marks, service names, copyrights,
computer software, software programs, applications therefor, and
license or other rights in respect thereof ("Intellectual
Property"), used or held for use in connection with the business of
the Company or any of its Subsidiaries, without any known conflict
with the rights of others. Schedule 2.13 hereto contains a
complete list of all Intellectual Property owned by or licensed to
the Company or any of its Subsidiaries, and any licenses or other
agreements relating thereto and, except as indicated on such
Schedule, all such Intellectual Property has been duly registered
and filed in and issued by, the United States Patent and Trademark
Office, states of the United States or the corresponding offices of
other jurisdictions. Except as set forth on Schedule 2.13 hereto,
to the best knowledge of the Sellers, the Company or one of its
Subsidiaries is the sole and exclusive owner of the patents,
copyrights and applications listed thereon and has the sole and
exclusive right to use the trademarks and trade names listed
thereon, in each case free and clear of any Security Interest and
subject to no interference or other contest proceeding. Neither
the Company or any Subsidiary has received any notice from any
other person pertaining to or challenging the right of the Company
or any Subsidiary to use any Intellectual Property or any trade
secrets, proprietary information, inventions, know-how, processes
and procedures owned or used by or licensed to the Company or any
Subsidiary ("Technology"). Neither the Company nor any Subsidiary
has granted any outstanding licenses or other rights, and has no
obligations to grant licenses or other rights, under, and no Seller
has any rights in or to, any of the Intellectual Property or
Technology owned or used by or licensed to the Company or any
Subsidiary. No claims have been made by the Company or any
Subsidiary of any violation or infringement by others of the rights
of the Company or any Subsidiary with respect to any Intellectual
Property or Technology of the Company or any Subsidiary, and
neither the Company nor any Subsidiary knows of any basis for the
making of any such claim. To the best knowledge of the Sellers,
neither the Company nor any Subsidiary has violated or infringed
any Intellectual Property or Technology rights of others in any
material manner.
2.14 Insurance. To the best knowledge of the Sellers,
all properties and assets of the Company and its Subsidiaries which
are of an insurable character are insured against loss or damage by
fire and other risks to the extent and in the manner customary for
companies engaged in similar businesses or owning similar assets.
Set forth on Schedule 2.14 hereto is a list of all policies for
such insurance and of all insurance policies held by the Company
and its Subsidiaries insuring the title of the real property owned
by the Company and its Subsidiaries and the Company previously has
furnished to Buyer true and complete copies of all such policies.
All such policies are in full force and effect and neither the
Company nor any of its Subsidiaries has received any notice of
cancellation with respect thereto.
2.15 Contracts; Etc. (a) As used in this Agreement, the
term "Company Agreement" shall mean all mortgages, indentures,
notes, agreements, contracts, leases, licenses, franchises,
obligations, instruments or other commitments, arrangements or
understandings of any kind, whether written or oral, binding or
non-binding (including all leases and other agreements referred to
on Schedule 2.10 hereto) to which the Company or any Subsidiary is
a party or by which the Company or any of its Subsidiaries or any
of their respective properties may be bound or affected. Set forth
on Schedule 2.15 hereto is a complete and accurate list of (i) each
Company Agreement which is material to the businesses, operations,
assets, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries, taken as a whole, and (ii) without
regard to materiality, each of the following Company Agreements:
(i) any mortgage, indenture, note, installment
obligation or other instrument, agreement or arrangement
for or relating to any borrowing of money by the Company
or any Subsidiary;
(ii) any guaranty, direct or indirect, by the
Company or any Subsidiary of any obligation for
borrowings or otherwise, excluding endorsements made for
collection in the ordinary course of business;
(iii) any Company Agreement made other than in the
ordinary course of its business or providing for the
grant of any preferential rights to purchase or lease any
of its assets;
(iv) any Company Agreement relating to the capital
stock or other securities of the Company or any
Subsidiary;
(v) any obligation to make payments, contingent or
otherwise, arising out of the prior acquisition of the
business, assets or stock of other companies;
(vi) any collective bargaining agreement with any
labor union;
(vii) any lease or similar arrangement for the use
by the Company of personal property involving payments of
in excess of $10,000 per annum;
(viii) any Company Agreement to which any Insider
(as defined in Section 2.19 hereof) is a party;
(ix) any Company Agreement with a term in excess of
one year or providing for aggregate payments to or by the
Company or any Subsidiary in excess of $25,000 per annum;
(x) any Company Agreement containing non-
competition or other limitations restricting the conduct
of the business of the Company or any Subsidiary;
(xi) any partnership, joint venture or similar
agreement or agreement for the acquisition of any
business;
(xii) any Company Agreement that is a franchise or
similar distributor agreement; and
(xiii) any Company Agreement with any customer with
minimum annual payments to the Company or any Subsidiary
in excess of $25,000.
True and complete copies of all written Company Agreements
referred to on Schedule 2.15 and Schedule 2.10 hereto have
heretofore been delivered or made available to Buyer, and the
Company has provided Buyer with accurate and complete written
summaries of all such Company Agreements which are unwritten.
(b) To the best knowledge of the Sellers; (i) Neither
the Company nor any Subsidiary nor, any other party thereto is
in breach of or default under any Company Agreement, no event
has occurred which (after notice or lapse of time or both)
would become a breach or default under, or would permit
modification, cancellation, acceleration or termination of,
any Company Agreement or result in the creation of any
Security Interest upon, or any person obtaining any right to
acquire, any properties, assets or rights of the Company or
any Subsidiary, no Company Agreement with any supplier is in
excess of normal or expected requirements of the Company or
any Subsidiary and prices provided therein were agreed to as
the result of arms-length negotiations conducted in the
ordinary course of business and no Company Agreement with any
customer cannot be completed without a positive gross margin
for the Company or any Subsidiary if completed in a manner
consistent with the Company's ordinary course of business
prior to the Closing. (ii) There are no material unresolved
disputes involving the Company or any of its Subsidiaries
under any Company Agreement.
2.16 Labor Relations.
(a) To the best knowledge of the Sellers, the Company
and each of its Subsidiaries has paid or made provision for
the payment of all salaries and accrued wages and has complied
in all respects with all applicable laws, rules and
regulations relating to the employment of labor, including
those relating to wages, hours, collective bargaining and the
payment and withholding of taxes, and has withheld and paid to
the appropriate government authority, or is holding for
payment not yet due to such authority, all amounts required by
law or agreement to be withheld from the wages or salaries of
its employees. There are no controversies pending or, to the
best knowledge of any Seller, threatened between the Company
or any of its Subsidiaries and any labor union or other
collective bargaining unit representing any employees of the
Company or any of its Subsidiaries.
(b) Except as set forth on Schedule 2.16 hereto, (i) no
union or other collective bargaining unit has been certified
or recognized by the Company or any of its Subsidiaries as
representing any of their respective employees and (ii) during
the past five years, (A) no strike, work stoppage, slow-down
or similar labor disruption has been recommended by any labor
union or collective bargaining unit representing any employees
of the Company or any Subsidiary, (B) nor has the membership
of such union or unit voted on any call for a strike, work
stoppage, slow-down or similar labor disruption and (C) nor
has any strike, work stoppage, slow-down or similar labor
disruption occurred with respect to such employees.
2.17 Employee Benefit Plans
(a) Set forth on Schedule 2.17 hereto is a true and
complete list of:
(i) each employee pension benefit plan, as defined
in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), maintained by
the Company or any Subsidiary ("Pension Benefit Plan");
and
(ii) each employee welfare benefit plan, as defined
in Section 3(1) of ERISA, maintained by the Company or
any Subsidiary ("Welfare Benefit Plan").
True and complete copies of all Pension Benefit Plans and
Welfare Benefit Plans (collectively, "ERISA Plans") have
heretofore been delivered or made available to Buyer together
with, as applicable to each such ERISA Plan, trust agreements,
summary plan descriptions, all Internal Revenue Service
("IRS") determination letters with respect to any Pension
Benefit Plan intended to be qualified pursuant to Section
401(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and valuation or actuarial reports, financial
statements, IRS Forms 5500 and summary annual reports for the
last three years.
(b) With respect to the ERISA Plans:
(i) there is no ERISA Plan which is a multiemployer
plan as that term is defined in Section 3(37) of ERISA
("Multiemployer Plan") other than those identified as
such on Schedule 2.17;
(ii) no event has occurred or (to the best
knowledge of the Sellers is threatened or about to occur
which would constitute a prohibited transaction under
Section 406 of ERISA subjecting the Company or any
Subsidiary to a civil penalty under Section 502(i) of
ERISA or a tax imposed by Section 4975 of the Code;
(iii) each ERISA Plan has operated since its
inception in accordance with the reporting and disclosure
requirements imposed under ERISA and the Code and has
timely filed Forms 5500 and predecessors thereof; and
(iv) no ERISA Plan is liable for any federal,
state, local or foreign taxes.
(c) Each Pension Benefit Plan intended to be qualified
under Section 401(a) of the Code:
(i) has been qualified, from its inception, under
Section 401(a) of the Code, has received a favorable
determination letter from the District Director of
Internal Revenue, and the trust established thereunder
has been exempt from taxation under Section 501(a) of the
Code and is currently in compliance with applicable
federal laws;
(ii) has been operated, since its inception, in
accordance with its terms or applicable law and there
exists no fact which would adversely affect its qualified
status;
(iii) is not currently under investigation, audit
or review by the IRS, or any other federal or state
agency and (to the best knowledge of the Sellers) no such
action is contemplated or under consideration and the IRS
has not asserted that any Pension Benefit Plan is not
qualified under Section 401(a) of the Code or that any
trust established under a Pension Benefit Plan is not
exempt under Section 501(a) of the Code.
(d) With respect to each Pension Benefit Plan which is
a defined benefit plan under Section 414(j) of the Code:
(i) no liability to the Pension Benefit Guaranty
Corporation ("PBGC") under Sections 4062-4064 of ERISA
has been incurred by the Company or any Subsidiary since
the effective date of ERISA;
(ii) the PBGC has not notified the Company, any
Subsidiary or any Pension Benefit Plan of the
commencement of proceedings under Section 4042 of ERISA
to terminate any such plan;
(iii) no event has occurred since the inception of
any Pension Benefit Plan or (to the best knowledge of the
Sellers) is threatened or about to occur which would
constitute a reportable event within the meaning of
Section 4043(b) of ERISA and no Pension Benefit Plan, or
trust established thereunder or any trustee or
administrator thereof has engaged, or as of the Closing
Date will have engaged, in a "prohibited transaction" as
defined in Section 4975 of the Code;
(iv) no Pension Benefit Plan ever has incurred any
"accumulated funding deficiency" (as defined in Section
302 of ERISA and Section 412 of the Code); and
(v) if any of such Pension Benefit Plans were to be
terminated on the Closing Date (1) no liability under
Title IV of ERISA would be incurred by the Company or any
Subsidiary and (2) all benefits accrued to the Closing
Date (whether or not vested) would be fully funded in
accordance with the actuarial assumptions and method
utilized by such plan for valuation purposes.
(e) With respect to each Pension Benefit Plan, Schedule
2.17 contains a list of all Pension Benefit Plans to which
ERISA has applied which have been or are being terminated, or
for which a termination is contemplated, and a description of
the actions taken by the PBGC and the IRS with respect
thereto.
(f) The aggregate of the amounts of Company or
Subsidiary contributions to be paid or accrued under ERISA
Plans is not expected to exceed $0 for the current fiscal
year. To the extent required in accordance with generally
accepted accounting principles, the Company Balance Sheet
reflects in the aggregate an accrual of all amounts of
employer contributions accrued but unpaid by the Company and
its Subsidiaries under the ERISA Plans as of the date thereof
and the Closing Date Balance Sheet will reflect all such
amounts as of the Closing Date.
(g) Each Welfare Benefit Plan intended to be qualified
as a voluntary employees' beneficiary association under
Section 501(c)(9) of the Code:
(i) has been qualified from its inception under
501(c)(9) of the Code and has been issued a favorable
determination letter by the IRS with respect to the
qualification of each such Welfare Benefit Plan;
(ii) is currently in compliance with applicable
federal laws;
(iii) has been operated, in all material respects,
in accordance with its terms and to the knowledge of the
Sellers, the Company or any Subsidiary, no fact exists
that would adversely affect its qualified status; and
(iv) is not currently under investigation, audit or
review by the IRS or any other federal or state agency
and, to the best knowledge of the Sellers, no such action
is contemplated or under consideration and the IRS has
not asserted that any trust established under a Welfare
Benefit Plan is not exempt under Section 501(c)(9) of the
Code.
(h) With respect to any Multiemployer Plan (1) neither
the Company nor any Subsidiary has, since December 31, 1993
made or suffered a "complete withdrawal" or "partial
withdrawal" as such terms are respectively defined in Sections
4203 and 5205 of ERISA; (2) the aggregate withdrawal liability
of the Company and its Subsidiaries under all Multiemployer
Plans, computed as if a "complete withdrawal" by the Company
and its Subsidiaries had occurred under each such Plan as of
December 31, 1993 would not exceed any amount reflected on the
Company Balance Sheet and to be reflected on the Closing Date
Balance Sheet and (3) neither the Company nor any Subsidiary
has received notice to the effect that any Multiemployer Plan
is either in reorganization (as defined in Section 4241 of
ERISA) or insolvent (as defined in Section 4245 of ERISA).
2.18 Other Benefit and Compensation Plans or
Arrangements and Company Policies
(a) Set forth on Schedule 2.18 hereto is a true and
complete list of:
(i) each stock purchase, option, stock ownership,
deferred compensation, performance, bonus, incentive,
expense reimbursement, vacation pay, holiday pay,
hospitalization, major medical, disability, life,
severance, retirement, excess benefit or other plan,
trust, insurance, arrangement or standard policy with
respect to employees which is not an ERISA Plan, whether
written or oral, which the Company or any Subsidiary
maintains or is required to make contributions to; and
(ii) each other agreement, arrangement, commitment
and understanding of any kind, whether written or oral,
with any current or former Key Employee pursuant to which
payments may be required to be made at any time following
the date hereof (including, without limitation, any
employment, deferred compensation, severance,
supplemental pension, termination or consulting agreement
or arrangement);
True and complete copies of all of the written plans,
arrangements and agreements referred to on Schedule 2.18
("Compensation Commitments"), and all employee or employment
policy manuals relating to employees of the Company or any
Subsidiary, have heretofore been delivered to Buyer together
with, where prepared by or for the Company or any Subsidiary,
any valuation, actuarial or other financial reports with
respect to each Compensation Commitment for the last three
years. An accurate and complete written summary has been
provided to Buyer with respect to any Compensation Commitment
which is unwritten.
(b) To the best knowledge of the Sellers, each
Compensation Commitment:
(i) has been operated, since its inception, in
accordance with its terms;
(ii) is not currently under investigation, audit or
review by the IRS and (to the best knowledge of the
Sellers) no such action is contemplated or under
consideration;
(iii) has no liability for any federal, state,
local or foreign taxes;
(iv) has no claims subject to dispute or litigation
except as disclosed on Schedule 2.9;
(v) has met all material applicable requirements,
if any, of the Code;
(vi) has operated since its inception in material
compliance with the reporting and disclosure requirements
imposed under ERISA and the Code; and
(vii) all benefits accrued are fully funded and
there are no liabilities for pension benefit guaranty
insurance premiums except as set forth on Schedule 2.18
hereto.
2.19 Transactions with Insiders. Set forth on Schedule
2.15(viii) and Schedule 2.19 hereto is a complete and accurate list
of and description of (i) all transactions between the Company, any
Subsidiary or an ERISA Plan, on the one hand, and any Insider, on
the other hand, that have occurred since December 31, 1990 (other
than in accordance with a Compensation Commitment expressly
disclosed on Schedule 2.18 hereto as in effect on the date hereof)
and (ii) all interests of any Insider or any employee of the
Company, any Subsidiary, any Seller or any of their respective
Affiliates, in any Company Agreement or any property, real or
personal, tangible or intangible (including, without limitation,
Technology and Intellectual Property), used in or pertaining to the
business of the Company or any Subsidiary, except for the normal
rights of each Seller as a holder of Shares.
2.20 Employees. Set forth on Schedule 2.20 hereto is a
complete and accurate list of the Key Employees and other senior
managerial employees of the Company and any Subsidiary and except
as indicated therein, no such employee (i) has indicated to the
Company, any Subsidiary or any Seller an intent to resign or (ii)
is an officer, director or employee of any Seller or its Affiliates
(other than the Company and its Subsidiaries). The Company has
previously furnished to Buyer a correct and complete list of the
officers of the Company and each Subsidiary and except as disclosed
on Schedule 2.20, no such officer is an officer, director or
employee of any Seller or its Affiliates (other than the Company
and its Subsidiaries).
2.21 Brokers. Neither the Company, nor any Subsidiary,
nor any director, officer or employee thereof, nor any Seller, has
employed any broker or finder or has incurred or will incur any
broker's, finder's or similar fees, commissions or expenses, in
each case in connection with the transactions contemplated by this
Agreement, except for the obligations of the Sellers to
_______________________ Mesirow Financial Inc.
2.22 Customers and Suppliers. Schedule 2.22 sets forth
(i) the names and addresses of, and the gross sales of the Company
and each Subsidiary for the fiscal year ended December 31, 1993 to,
the ten largest customers of the Company and each Subsidiary (by
dollar volume) in fiscal 1993; (ii) the names and addresses of the
ten largest suppliers (by dollar volume) of products and services
to the Company and each Subsidiary in fiscal 1993, indicating the
products and services supplied, and existing contractual
arrangements for continued supply from each such firm, and also
indicating whether any such firm is a sole-source supplier to the
Company or any Subsidiary. Except as otherwise indicated in
Schedule 2.22, neither the Company nor any Seller knows of any
termination, cancellation, limitation, modification or change in
the business relationships of the Company or any Subsidiary with
any supplier or customer listed therein, or of any pending or
threatened dispute of any kind with any such supplier or customer.
2.23 Warranty Claims.
(a) Except as set forth on Schedule 2.23, there are no
pending claims against the Company or any Subsidiary under
warranties, whether express or implied by the customers of the
Company or any Subsidiary. Neither the Company nor any
Subsidiary has given any guarantee or warranty or made any
representation in respect of products or services sold or
contracted to be sold by the Company or any Subsidiary except
for warranties in the standard forms attached to Schedule 2.23
and (except as aforesaid) neither the Company nor any
Subsidiary has accepted any liability or obligation to
service, repair, maintain, take back or otherwise do or not do
anything in respect of any products or services which would
apply after any such products or services have been delivered
by it.
(b) To the best knowledge of each Seller, neither the
Company nor any Subsidiary has manufactured, sold or supplied
products or services which are or were or will become in any
material respect faulty or defective or which do not comply in
any material respect with any warranties or representations
expressly or impliedly made by the Company or any Subsidiary
or with all applicable regulations, standards and requirements
in respect thereof, except to the extent reserved for on the
Company Balance Sheet and as to be set forth on the Closing
Date Balance Sheet.
2.24 Powers of Attorney. Except as disclosed on Schedule
2.24, the Company and its Subsidiaries have no powers of attorney
or comparable delegations of authority outstanding and neither the
Sellers nor any Affiliate of any Seller (other than the Company and
its Subsidiaries) nor any officer or director of any Seller or any
such Affiliate has signature authority with respect to any bank or
other similar institutional account of the Company or its
Subsidiaries.
2.25 Disclosure. To the best knowledge of the Sellers,
neither the Company nor any Seller has made any material
misrepresentation to Buyer relating to this Agreement or the Shares
nor has any Seller omitted to state to Buyer any material fact
relating to this Agreement or the Shares which is necessary in
order to make the information given by or on behalf of the Company
or the Sellers to Buyer or its representatives at or prior to
Closing not misleading or which if disclosed would reasonably
affect the decision of a person considering an acquisition of the
Shares.
3. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller hereby represents and warrants to Buyer with
respect to such Seller as follows:
3.1 Ownership of Shares; Title. Such Seller is the
owner of record and beneficially of the number and type of Shares
set forth beside such Seller's name on Schedule 1.1 hereto, and the
information set forth on Schedule 1.1 with respect to such Seller
is accurate and complete. Such Seller has, and shall transfer to
Buyer at the Closing, good and marketable title to the Shares shown
as owned by such Seller on Schedule 1.1 hereto, free and clear of
any and all Security Interests, proxies and voting or other
agreements.
3.2 Organization; Authority. Such Seller has all
requisite power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby
(including the disposition of such Seller's Shares to Buyer). This
Agreement has been duly executed and delivered by such Seller and
constitutes a valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights in general. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not:
(i) contravene any provisions of the governing
instruments of such Seller;
(ii) (after notice or lapse of time or both)
conflict with, result in a breach of any provision of,
constitute a default under, result in the modification or
cancellation of, or give rise to any right of termination
or acceleration in respect of, any contract, agreement,
commitment, understanding, arrangement or restriction of
any kind to which such Seller is a party or to which such
Seller or any of such Seller's property is subject;
(iii) violate or conflict with any Legal
Requirements (as defined in Section 2.9 hereof) to which
such Seller or any of such Seller's property is subject;
or
(iv) require any authorization, consent, order,
permit or approval of, or notice to, or filing,
registration or qualification with, any governmental,
administrative or judicial authority.
3.3 Acquisition of Stock for Investment. Such Seller is
aware that the Echlin Common Stock has not been registered under
the Securities Act of 1933, as amended (the "Securities Act").
Such Seller agrees that the Echlin Common Stock may not be sold,
transferred, offered for sale, pledged, hypothecated or otherwise
disposed of (i) without registration under the Securities Act,
except pursuant to an exemption from such registration available
under such Act and (ii) except in accordance with any applicable
provisions of state securities laws. Such Seller agrees that Buyer
may at its election affix a legend to any certificates evidencing
such shares summarizing or identifying such restrictions.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Sellers as
follows:
4.1 Incorporation of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation.
4.2 Power; Authorization; Consents. Buyer has the
requisite corporate power to enter into this Agreement and perform
its obligations hereunder. When approved by the Board of Directors
of Buyer, the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will
have been duly authorized and no other corporate proceedings on the
part of Buyer will be necessary to authorize and approve this
Agreement and the transactions contemplated hereby and this
Agreement will constitute a valid and binding obligation of, Buyer,
enforceable against Buyer in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights in general. The execution, delivery and
performance of this Agreement by Buyer and the consummation of the
transactions contemplated hereby will not:
(i) contravene any provisions of the Certificate of
Incorporation or By-Laws of Buyer;
(ii) (after notice or lapse of time or both)
conflict with, result in a breach of any provision of,
constitute a default under, result in the modification or
cancellation of, or give rise to any right of termination
or acceleration in respect of, any contract, agreement,
commitment, understanding, arrangement or restriction of
any kind to which Buyer is a party to or which Buyer or
any of Buyer's property is subject;
(iii) violate or conflict with any Legal
Requirements (as defined in Section 2.9 hereof)
applicable to Buyer or any subsidiary of Buyer or any of
their respective businesses or properties; or
(iv) require any authorization, consent, order,
permit or approval of, or notice to, or filing,
registration or qualification with, any governmental,
administrative or judicial authority.
4.3 Brokers. Neither Buyer, nor any Affiliate of Buyer,
nor any director, officer or employee thereof, has employed any
broker or finder or has incurred or will incur any broker's,
finder's or similar fees, commissions or expenses, in each case in
connection with the transactions contemplated by this Agreement.
4.4 Acquisition of Stock for Investment. Buyer is
acquiring the Shares for investment and not with a view toward, or
for sale in connection with, any distribution thereof, nor with any
present intention of distributing or selling the Shares. Buyer
agrees that the Shares may not be sold, transferred, offered for
sale, pledged, hypothecated or otherwise disposed of (i) without
registration under the Securities Act, except pursuant to an
exemption from such registration available under such Act and (ii)
except in accordance with any applicable provisions of state
securities laws.
4.5 Echlin Common Stock. The Echlin Common Stock to be
issued and delivered to the Sellers pursuant to the provisions of
this Agreement will on the Closing Date have been validly issued
and outstanding, fully paid and non-assessable, and shall be
eligible to vote in the election of the Buyer's Board of Directors
and at the Closing, Buyer shall not have received any stop order or
any similar order from the Securities and Exchange Commission ("the
SEC") or other applicable regulatory agency which would prevent the
registration of the Echlin Common Stock.
4.6 Financial Statements. The financial statements of
Buyer audited by Price Waterhouse, as at the close of business on
August 31, 1993, including the related notes, which have been
furnished to the Sellers, present fairly, in all material respects,
the financial condition on a consolidated basis of Buyer and its
consolidated subsidiaries as of said date, and said financial
statement, including the related notes, show all known material
liabilities of Buyer, direct or contingent, as of said date. At
the Closing Date there will have been no material adverse change in
the consolidated financial condition of Buyer and its subsidiaries
since the date of said financial statements.
4.7 Disclosure. Buyer has not made any material
misrepresentation to the Sellers relating to this Agreement or the
Echlin Common Stock and Buyer has not omitted to state to Sellers
any material fact relating to this Agreement or the Echlin Common
Stock which is necessary in order to make the information given by
or on behalf of Buyer to the Sellers at or prior to Closing
(including Buyer's reports under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), all of which reports
required to be filed by Section 13 or 15(d) of the Exchange Act
during the preceding 12 months have been filed) not misleading or
which if disclosed would reasonably affect the decision of a person
considering an acquisition of the Echlin Common Stock.
5. COVENANTS
5.1 Access; Confidentiality. (a) Between the date
hereof and the Closing Date, the Company will, and will cause each
Subsidiary to (i) provide, to the officers and other authorized
representatives of Buyer, full access, during normal business
hours, to any and all premises, properties, files, books, records,
documents, and other information of the Company and each Subsidiary
and will cause their officers to furnish to Buyer and their
authorized representatives any and all financial, technical and
operating data and other information pertaining to the businesses
and properties of the Company and its Subsidiaries, including,
without limitation, furnish to Buyer a list of all Permits owned or
held by the Company and its Subsidiaries specifying the
governmental authority or other person from whom such Permit has
been obtained and setting forth any actions required to be taken by
Buyer with respect to such Permits in connection with the
consummation of the transactions contemplated hereby, and (ii) make
available for inspection and copying by Buyer true and complete
copies of any documents relating to the foregoing.
(b) Buyer will hold in confidence (unless and to the
extent compelled to disclose by judicial or administrative
process or, in the opinion of its counsel, by other
requirements of law) all Confidential Information (as defined
below) and will not disclose the same to any third party
except as may reasonably be necessary to carry out this
Agreement and the transactions contemplated hereby, including
any due diligence review by or on behalf of Buyer. If this
Agreement is terminated, Buyer will promptly return to the
Company, upon the reasonable request of the Company, all
Confidential Information furnished by the Company and held by
Buyer, including all copies and summaries thereof. As used
herein, "Confidential Information" shall mean all information
concerning the Company and its Subsidiaries obtained by Buyer
from the Company in connection with the transactions
contemplated by this Agreement except information (x)
ascertainable or obtained from public information, (y)
received from a third party not employed by or otherwise
affiliated with the Company or any Subsidiary or (z) which is
or becomes known to the public other than through a breach of
this Agreement.
5.2 Furnishing Information; Announcements. The Company
will, as soon as practicable after reasonable request therefor,
furnish to Buyer all the information concerning the Company and its
Subsidiaries required for inclusion in any statement or application
made by Buyer to any governmental or regulatory body in connection
with the transactions contemplated by this Agreement. Neither the
Company nor the Sellers nor Buyer shall issue any press releases or
otherwise make any public statement with respect to the
transactions contemplated hereby, without the prior consent of the
other parties hereto, except as, in the reasonable judgment of the
party determining to issue such press release or make such public
statement, is otherwise required by law and upon prompt prior
notice to the other parties hereto.
5.3 Conduct of Business of the Company Prior to the
Closing. Except as set forth on Schedule 2.7
hereto, the Company agrees that, during the period from the date
hereof to the Closing the business and operations of the Company
and its Subsidiaries shall be conducted only in the ordinary course
of business and consistent with past practice, no change shall be
made in the Articles or Certificate of Incorporation or By-Laws, as
amended, of the Company or in the charters or by-laws of any of its
Subsidiaries and, without limiting the generality of the foregoing,
neither the Company nor any Subsidiary shall, without the prior
written consent of Buyer, directly or indirectly:
(a) (i) issue, grant or sell any shares of its capital
stock or (ii) issue, grant or sell any security, option,
warrant, call, subscription or other right of any kind, fixed
or contingent, that directly or indirectly calls for the
issuance, sale, pledge or other disposition of any shares of
capital stock of the Company or any Subsidiary, (iii) enter
into any agreement, commitment or understanding calling for
any transaction referred to in clause (i) or (ii) of this
paragraph (a) or (iv) make any other changes in its equity
capital structure;
(b) declare, set aside or pay any dividend or other
distribution (whether in cash, stock, property or any
combination thereof) in respect of any shares of the Company's
capital stock, or purchase, redeem or otherwise acquire, any
shares of the Company's capital stock;
(c) (including through its directors, officers,
employees or advisors), solicit, initiate discussions
concerning or encourage (including by way of furnishing any
non-public information concerning the Company or any
Subsidiary) any Acquisition Proposal (as defined below). The
Company will notify Buyer promptly by telephone, and
thereafter promptly confirm in writing, if any such
information is requested from, or any Acquisition Proposal is
received by, the Company and the terms thereof. As used in
this Agreement, "Acquisition Proposal" shall mean any proposal
or inquiry received by the Company for a merger or other
business combination involving the Company or any Subsidiary
or for the acquisition of, or the acquisition of a substantial
equity interest in, a substantial portion of the assets of,
the Company or any Subsidiary, other than the specific
transactions with Buyer contemplated hereby;
(d) make any capital expenditures (including
expenditures for additions to plant, property and equipment)
or appropriations or commitments with respect thereto; except
(i) to the extent of the total dollar amounts and, to the
extent indicated therein, as set forth on any budget
previously furnished to Buyer and (ii) such additional
expenditures, appropriations and commitments up to $25,000 as
Seller may deem appropriate;
(e) create, incur or assume any indebtedness for money
borrowed including obligations in respect of capital leases
other than (A) indebtedness under revolving credit, line of
credit and other working capital loan agreements described on
Schedule 2.7 hereto providing for borrowings in the ordinary
course of business not exceeding any amount reflected on the
Company Balance Sheet in the aggregate at any time outstanding
and (B) intercompany loans and advances to or from any
Subsidiary;
(f) pay, discharge or satisfy claims, liabilities or
obligations (absolute, accrued, contingent or otherwise and
whether due or to become due) which involve payments or
commitments to make payments exceeding $25,000 in the
aggregate, other than (A) liabilities or obligations incurred
in the ordinary course of business and consistent with past
practice, (B) the payment or discharge of obligations as
contemplated by this Agreement and (C) scheduled repayments of
current portions of and interest on long-term indebtedness,
the estimated amounts of which payments (which in the case of
interest payments on variable rate debt have been projected on
the basis of rates currently in effect) have prior to the
execution of this Agreement been disclosed by the Company to
Buyer in a writing which specifically refers to this Section;
(g) assume, endorse, guarantee or otherwise become
liable or responsible for (whether directly, contingently or
otherwise) any indebtedness for money borrowed or any other
obligation of any other person; provided, however, that the
Company and its Subsidiaries may endorse negotiable
instruments in the ordinary course of business;
(h) except for purchases of supplies, equipment or
services and sales of goods and services, in each case in the
ordinary course of business, enter into any transaction or
series of related transactions, whether or not in the ordinary
course of business, involving total payments to or by the
Company and its Subsidiaries of, or involving the acquisition
or disposition by the Company or any Subsidiary of property,
assets or rights having a value in excess of $100,000 or
change any warranty, product return or other business policy
or practice;
(i) (i) approve or put into effect any general increase
in any compensation or benefits payable to any class or group
of employees of the Company or any Subsidiary, (ii) grant to
any Key Employee any increase in compensation, remuneration or
benefits of any nature whatsoever, (iii) enter into any
Compensation Commitments with any Key Employee, (iv) pay any
bonus or other special compensation to any Key Employee
(except pursuant to ERISA Plans and Compensation Commitments
expressly disclosed on Schedules 2.17 and 2.18 hereto as in
effect on the date hereof) or (v) adopt or amend in any
material respect any ERISA Plan or any Compensation Commitment
or, except in the ordinary course of business and consistent
with past practice, any collective bargaining agreement;
(j) change the accounting methods, principles or
practices employed by the Company or any Subsidiary, except as
required by generally accepted accounting principles;
(k) enter into or approve any Company Agreement to which
an Insider is a party; or
(l) change any accounting principle or method or
election for federal income tax purposes used by the Company
or any Subsidiary.
The Company will use, and will cause each of its Subsidiaries to
use, its best efforts to preserve its business organization intact,
to keep available to itself the present services of its Key
Employees; and to preserve for itself its current relationships
with its suppliers, customers and others with whom business
relationships exist; provided, however, that nothing shall permit
the Company or any Subsidiary to make or agree to make any increase
in compensation, or take any other action with respect to
employees, suppliers or customers, which is inconsistent with
present policies and practices of the Company or such Subsidiary or
with any other provisions of this Agreement.
5.4 Consents; Cooperation. (a) Subject to the terms and
conditions hereof, the Company, the Sellers and Buyer will, and the
Company will cause each Subsidiary to, use their respective best
efforts at their own expense:
(i) to obtain prior to the earlier of the date
required (if so required) or the Closing Date, all
waivers, permits, licenses, approvals, authorizations,
qualifications, orders and consents of all third parties
and governmental authorities, and make all filings and
registrations with governmental authorities which are
required on their respective parts for (A) the
consummation of the transactions contemplated by this
Agreement, (B) the ownership or leasing and operating
after the Closing by the Company and each of its
Subsidiaries of all their material properties and (C) the
conduct after the Closing by the Company and each of its
Subsidiaries of their respective businesses as conducted
by such entities on the date hereof;
(ii) to defend, consistent with applicable
principles and requirements of law, any lawsuit or other
Legal Proceedings, whether judicial or administrative,
whether brought derivatively or on behalf of third
persons (including governmental authorities) challenging
this Agreement or the transactions contemplated hereby
and thereby whether prior to or after the Closing; and
(iii) to furnish each other such information and
assistance as may reasonably be requested in connection
with the foregoing.
(b) To the extent permitted by law, Buyer, the Sellers
and the Company will supply each other with copies of all
correspondence, filings or written communications between
Buyer, the Sellers, the Company or any Subsidiary or their
respective representatives and any governmental authority or
members of their respective staffs with respect to this
Agreement and the transactions contemplated hereby.
5.5 Additional Agreements. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to
use it best efforts at its own expense to take, or cause to be
taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement. In case at any time after the
Closing any further action is necessary or desirable to carry out
the purposes of this Agreement, the proper officers of the Company
shall take all such necessary action.
5.6 Interim Financial Statements. Promptly when
available after the end of each fiscal month after the date hereof,
the Company will deliver to Buyer an unaudited balance sheet and
the related statement of income of the Company for such fiscal
month.
5.7 Notification of Certain Matters. Between the date
hereof and the Closing,
(a) the Company (and the Sellers with respect to clauses
(i), (ii) and (iii) below) will give prompt notice in writing
to Buyer of: (i) any information that indicates that any
representation and warranty contained herein was not true and
correct as of the date hereof or will not be true and correct
as of the Closing, (ii) the occurrence of any event which will
result, or has a reasonable prospect of resulting, in the
failure to satisfy a condition specified in Article 6 hereof,
(iii) any notice or other communication from any third person
alleging that the consent of such third person is or may be
required in connection with the transactions contemplated by
this Agreement, and (iv) any notice of, or other communication
relating to, any default or event which, with notice or lapse
of time or both, would become a default under any Company
Agreement. The Company will (x) promptly advise Buyer of any
event that has, or could in the future have, a Material
Adverse Effect, (y) confer on a regular and frequent basis
with one or more designated representatives of Buyer to report
operational matters and to report the general status of on-
going operations, and (z) notify Buyer of any emergency or
other change in the normal course of business or in the
operation of the properties of the Company or any Subsidiary
and of any governmental complaints, investigations or hearings
(or communications indicating that the same may be
contemplated) or adjudicatory proceedings involving any
property of the Company or any of its Subsidiaries, and will
keep Buyer fully informed of such events and permit Buyer's
representatives access to all materials prepared in connection
therewith.
(b) Each Seller shall give prompt notice to Buyer of any
notice or other communication from any third person asserting
any right, title or interest in any of the Shares held by such
Seller (including, without limitation, any threat to commence,
or notice of the commencement of, any action or other
proceeding with respect to the Shares) or the occurrence of
any other event of which such Seller has knowledge which will
result, or has a reasonable prospect of resulting, in any
failure to consummate the sale of the Shares as contemplated
hereby.
5.8 Assurance by Sellers. The Sellers shall use
reasonable best efforts to cause the Company and its Subsidiaries
to comply with their respective covenants set forth in this
Agreement.
5.9 Closing Date Financial Statements.
(a) Immediately after the Closing, the Sellers (who
shall be allowed access as provided in this Section 5.9 to the
books and accounting records, facilities and employees of the
Company for the purpose) shall prepare or cause to be prepared
and shall cause the Company's independent public accountants
(i) to audit a consolidated balance sheet of the Company and
its Subsidiaries as of the Closing Date (the "Closing Date
Balance Sheet") and the related consolidated statements of
income, cash flows and of changes in shareholders' equity for
the period commencing with the start of the Company's current
fiscal year ending on such date (collectively with the Closing
Date Balance Sheet, the "Closing Date Financial Statements")
and an accompanying report thereon and (ii) to prepare a
report setting forth such accounting firm's calculation, on
the basis of the Closing Date Balance Sheet, of Net Worth as
at the date of the Closing Date Balance Sheet. The foregoing
report and the Closing Date Financial Statements shall
promptly be delivered by such accounting firm to the Sellers
and Buyer, but in no event more than 90 days after the Closing
Date. The Closing Date Financial Statements shall be prepared
in accordance with this Section 5.9 and the books and records
of the Company and its Subsidiaries and shall fairly present
the consolidated financial position, results of operations,
cash flows and changes in shareholders' equity of the Company
and its Subsidiaries as of the date thereof and for the period
indicated, in each case, subject to Section 5.9(b) hereof, in
conformity with the accounting principles consistently applied
by the Company to the extent not inconsistent with generally
accepted accounting principles which shall be controlling.
The Closing Date Balance Sheet shall reflect as an accrued
liability the cost of the audit and the preparation of the
reports. Buyer will (i) provide the Sellers and their
representatives access during normal business hours to the
facilities, personnel and accounting and other records of the
Company and the Subsidiaries to the extent determined by the
Sellers and their representatives to be necessary to permit
the Sellers to prepare and their representatives to audit the
Closing Date Financial Statements prepared by the Sellers as
herein provided; provided, however, that the Sellers and their
representatives will conduct such audit in a manner that does
not unreasonably interfere with the conduct of the business of
the Company after the Closing, and (ii) take such actions as
may be reasonably requested by the Sellers and their
representatives to close, or to assist the Company in closing,
as of the Closing Date, the books and accounting records of
the Company and its Subsidiaries and otherwise to reasonably
cooperate with the Sellers and their representatives in
preparing the Closing Date Financial Statements.
(b) For purposes of this Agreement "Net Worth" shall
mean the net book value of the total amount of assets shown on
the Closing Date Balance Sheet less the total amount of
liabilities shown thereon. For the purposes of the
preparation of the Closing Date Balance Sheet and the
determination of the Net Worth indicated thereon, the
following shall be applicable:
(i) with respect to Inventory, a physical inventory
shall be taken as of the Closing Date by the employees of
the Company, observed by representatives of the Sellers
and Buyer and, at their respective options, their
respective independent public accountants. Inventory
shall be valued on a last-in, first-out ("LIFO") basis at
the lower of the Company's cost or market, excluding from
the valuation all obsolete, damaged and defective items
of Inventory and all Excess Inventory; provided, however,
the value of the Inventory will be reduced by $100,000
based on the Inventory cost prior to application of LIFO
reserves (as much, the actual Net Worth reduction on the
Closing Date Balance Sheet will be $100,000 less the
appropriate LIFO reserve) to account for obsolete and
Excess Inventory, notwithstanding the actual value or
amount of obsolete or Excess Inventory. Therefore, no
further upward or downward adjustments will be made to
the Inventory value, notwithstanding the actual value or
amount of obsolete or Excess Inventory.
<PAGE>
(ii) no asset on the Closing Date Balance Sheet
shall be capitalized which has not been historically
capitalized in the ordinary course of business and
reflected on the balance sheets referred to in Section
2.5 hereof.
(iii) with respect to any employee compensation, all
bonuses or other benefits which may be paid under the
Compensation Commitments shall be accrued, whether or not
the Company is legally liable or obligated to make any
such payment; provided, however, that any liability for
severance shall not be accrued, except for any severance
benefits payable or which may be paid to James Taylor
and, to the extent in excess of Buyer's normal severance
policy, to Dennis Hodge.
(iv) with respect to Accounts Receivable, accounts
receivable reflected on the Closing Date Balance Sheet
will be reduced by $100,000 to account for bad debts and
doubtful accounts, notwithstanding the actual value or
amount of bad debts or doubtful accounts; provided,
however, such $100,000 reserve shall be reduced by a
dollar amount equal to the dollar amount of any bad debts
or doubtful accounts written off subsequent to June 30,
1994 and prior to the Closing Date. Therefore, no
further upward or downward adjustments will be made to
the accounts receivable value, notwithstanding the actual
value or amount of bad debts or doubtful accounts.
(c) After delivery as provided by Section 5.9(a) hereof,
Buyer shall promptly review the Closing Date Balance Sheet and
the report. The Sellers shall request, and shall use their
best efforts to cause the Company's independent public
accountants to cooperate with Buyer's auditors, Price
Waterhouse, in connection with a review by such auditors of
such reports and financial statements and to make the working
papers relating to such matters available to Price Waterhouse.
Should Buyer determine that the Closing Date Balance Sheet is
not in accordance with this Agreement, Buyer shall so notify
the Sellers within 30 days of receipt of the Closing Date
Balance Sheet of all items not in agreement (the "Notice").
The parties shall then promptly designate representatives who
shall meet for the purpose of resolving the differences
between them. If such differences have not been resolved
within 30 days after receipt by the Sellers of the Notice, the
remaining items shall be submitted to a jointly selected
independent public accountant, for resolution in accordance
with this Agreement. The decision of such accountant shall be
binding on the parties and the expense of such accountant
shall be shared equally by the parties.
5.10 Release of Third Party Guarantees. Buyer and the
Sellers shall cooperate to the end of causing the Sellers and their
affiliates to be released as of the Closing Date from any
guarantees and letters of credit issued in connection with the
business and affairs of the Company or the Subsidiaries.
5.11 Covenant Not To Compete. (a) In furtherance of the
sale to Buyer of the Shares and the business represented thereby,
for a period of three years following the Closing Date, no Seller
shall, directly or indirectly, through equity ownership or
otherwise, for himself, itself or any other person, anywhere in the
United States.
(i) compete with Buyer, the Company or the
Subsidiaries, in the business of the Company or the
Subsidiaries as conducted as of the Closing Date;
provided, however, that nothing herein shall be construed
to prevent any Seller from owning, as an investment, up
to 5% of a class of equity securities issued by any
competitor of Buyer, the Company or the Subsidiaries that
is publicly traded and registered under Section 12 of the
Securities Exchange Act of 1934 or from acquiring a
business which has a competing business provided the
competing business does not constitute more than 25% of
the revenues of the acquired business; provided, that,
any such Seller makes a bona fide offer to transfer to
Buyer, within a reasonable time following acquisition of
the business, that portion of the business in which such
Seller is prohibited from engaging or being involved
under this Section 5.11 at such value proportionate to
the purchase price for the acquired business as may be
agreed to by the parties.
(ii) communicate with or contact any customers of
the Company or the Subsidiaries for the purpose of
soliciting such customers to purchase any goods, products
or services of the type being manufactured, offered or
sold by the Company or the Subsidiaries as of the Closing
Date.
(iii) contact any employee of the Company or the
Subsidiaries for the purpose of soliciting, hiring,
attempting to hire or in any manner attempting to induce
any such employee to leave the Company or the
Subsidiaries
(iv) use or disclose to others any trade secrets or
other confidential information relating to the Company or
the Subsidiaries and the business conducted thereby,
including the names, addresses and any other information
relating to the aforesaid customers and employees and
confirms that such information shall constitute exclusive
property of the Company or the Subsidiaries and agrees
that any such property shall not be used by the Sellers
or disclosed to other persons or business enterprises.
(b) The parties intend that the covenant contained in
the preceding sentences shall be construed as a series of
separate covenants, one for each county and city included
within each state and, except for geographic coverage, each
such separate covenant shall be deemed identical. The parties
agree that the covenants deemed included in this Section 5.11
are, taken as a whole, reasonable in their geographic scope
and their duration and no party shall raise any issue of the
reasonableness of the scope or duration of the covenants in
any proceeding to enforce any such covenants. If, in any
judicial proceeding, a court shall refuse to enforce any of
the separate covenants deemed included in this paragraph, then
the unenforceable covenant shall be deemed eliminated from
these provisions for the purpose of those proceedings to the
extent necessary to permit the remaining separate covenants to
be enforced.
(c) Notwithstanding the foregoing, nothing herein shall
be construed to prevent James Taylor following the Closing
Date from accepting employment with a business competitive
with the Company or its Subsidiaries.
5.12 Certain Receivables. The Sellers will cause any
"receivables from stockholders" to be paid to the Company in full
at or prior to the Closing.
5.13 Real Property Matters. Not later than 10 business
days prior to the Closing Date, the Company shall furnish to Buyer
a policy or a commitment for a policy of title insurance on ALTA
Owner's Policy Form issued by a reputable title company with
respect to each real property owned by the Company or any of its
Subsidiaries on Schedule 2.10 hereto, containing no exceptions to
title other than exceptions (i) set forth on Schedule 2.10 hereto
or (ii) which, individually or in the aggregate, do not impair the
value, or interfere with the present use, of such property.
5.14 Certain Payments. The Company and the Subsidiaries
shall not be liable for, and the Sellers shall hold the Company and
the Subsidiaries harmless from, any liabilities or obligations of
any person to make payments to any former shareholders of the
Company or the Subsidiaries (including any predecessors thereof),
including, without limitation, with respect to the cancellation of
their shares pursuant to any merger, reorganization or other
corporate transaction, and the Sellers shall pay, or cause to be
paid, all such amounts promptly upon written notice from Buyer or
the Company, provided, however that the foregoing is not intended
to limit the payment by the Company of any liabilities or
obligations to the extent reflected on the Closing Date Balance
Sheet.
5.15 Securities Act Registration. As soon as practicable
after the Closing Date the Echlin Common Stock shall be registered
under the Securities Act as follows:
(a) Not later than 20 days after the Closing Date, Buyer
shall file with the SEC under the Securities Act, a
registration statement on Form 3, the eligibility requirements
for which are met by Buyer, under Section 5 of the Securities
Act (the "Registration Statement") for an offering to be made
on a continuous or delayed basis covering the Echlin Common
Stock. Buyer agrees to cause the Registration Statement and
any necessary state filings to become effective within 90 days
of the Closing Date and to remain effective until the
completion of the distribution of the Echlin Common Stock, but
in no event later than the second anniversary of the Closing
Date (the "Registration Period").
(b) Buyer shall pay all expenses (including the federal
and any state registration fee) incurred by Buyer in
connection with the preparation and execution of the
Registration Statement referred to in this Section 5.15;
provided, however, that Buyer shall not be obligated to pay
any underwriting or brokerage commissions, discounts or fees
relating to any sale of the Echlin Common Stock or the fees
and expenses of any counsel of any of such Sellers.
(c) Buyer shall indemnify and hold harmless the Sellers
against any and all losses, liabilities, claims, damages and
expenses and reasonable counsel fees which arise out of or are
based upon any allegedly untrue statement or alleged omission
to state a material fact in connection with the Registration
Statement; provided however, Buyer will not be liable to any
Seller in any such case to the extent that any such loss,
liability, claim, damage or expense arises out of or is based
upon any untrue statement or omission to state a material fact
made in the Registration Statement or in any amendment or
supplement thereto, in reliance upon and in conformity with
information furnished in writing by such Seller for use in the
preparation thereof. The Sellers shall cooperate with Buyer
in the preparation and filing of the Registration Statement,
amendment or supplement required hereunder and shall furnish
Buyer such information as may be needed from them in
connection with such filing and registration and each Seller
shall indemnify and save harmless Buyer, its directors,
officers and agents from any and all losses, liabilities,
claims, damages and expenses and reasonable counsel fees which
arise out of or are based upon any untrue statement or
omission to state a material fact in connection with such
filing and registration, if and to the extent such untrue
statement or omission is made in reliance upon and in
conformity with the information furnished in writing by such
Seller for use in the preparation of the Registration
Statement.
(d) In the event Buyer shall furnish the Sellers written
notice stating that, in the good faith judgment of counsel
for Buyer, the sale or transfer of the Echlin Common Stock
pursuant to the Registration Statement would, at such time,
require the disclosure of material information that Buyer has
a bona fide business purpose for preserving as confidential
the Sellers shall suspend sales of Echlin Common Stock under
the Registration Statement for a reasonable period until Buyer
determines that such confidential information may be
disclosed; provided, however, that in no event shall any such
suspension exceed 60 days in the aggregate during any 12 month
period. Each of the Sellers agrees to keep confidential any
notification by Buyer to such Seller pursuant to this Section
5.15.
(e) Upon the effectiveness of the Registration Statement
and the issuance of post acquisition financials in accordance
with Section 5.16 hereof, Buyer agrees to the removal of any
legend affixed to any certificates evidencing shares of Echlin
Common Stock; provided, however, in the absence of an
effective Registration Statement within 90 days of the Closing
Date, Buyer, in lieu of and in complete satisfaction of
Buyer's obligation to deliver consideration in the form of
shares of Echlin Common Stock under this Agreement, shall make
a payment or payments in cash to the Agent Seller on behalf of
the Sellers in an amount equal to the aggregate Share Value of
such shares delivered or deliverable under Section 1.3 hereof
and to be delivered under Section 1.4 hereof (on final
determination of Net Worth under Section 5.9 hereof) and the
Sellers simultaneously with the first payment in cash shall
redeliver to Buyer any certificates evidencing such shares
previously delivered to the Sellers and by accepting such
payment in cash shall release and waive the Sellers' rights to
any payment in the form of shares of Echlin Common Stock.
5.16 Post Acquisition Financials. Buyer shall promptly
issue financial results for the first month ending after the
Closing Date which covers at least 30 days of post Closing Date
operations combining the Company's financial results with those of
Buyer. Such results shall be included in SEC Form 8-K or 10-Q, as
appropriate, which shall be promptly filed by Buyer with the SEC
after such combined results become available (but in any event
within 45 days after the end of such first month of combined
operations). Notwithstanding anything herein to the contrary, the
Sellers shall not dispose of any Echlin Common Stock acquired
pursuant to this Agreement until after such filing; provided,
however, that such restriction shall, cease to be applicable at
such time as any affiliate (as defined under the Securities Act) of
Echlin disposes of Echlin Common Stock after the Closing Date.
5.17 Post Acquisition Insurance Coverage. Buyer agrees
that for a period of at least one year after the Closing Date it
will maintain or cause the Company to maintain insurance coverage
for the Company similar to the coverage currently maintained by the
Company.
<PAGE>
6. CONDITIONS TO THE OBLIGATIONS OF BUYER TO EFFECT
THE CLOSING
The obligations of Buyer required to be performed by it
at the Closing shall be subject to the satisfaction, at or prior to
the Closing, of each of the following conditions, each of which may
be waived by Buyer as provided herein except as otherwise required
by applicable law:
6.1 Representations and Warranties; Agreements;
Covenants. Each of the representations and
warranties of the Sellers contained in this Agreement shall be true
and correct in all respects as of the date hereof and (having been
deemed to have been made again at and as of the Closing) shall be
true and correct in all respects as of the Closing. Each of the
obligations of the Company and the Sellers required by this
Agreement to be performed by them at or prior to the Closing shall
have been duly performed and complied with in all respects as of
the Closing. At the Closing, the conditions set forth in the
preceding two sentences shall have been satisfied and there shall
have been no event that has or could in the future have, a Material
Adverse Effect.
6.2 Authorization; Consents. All corporate or other
action necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly and validly
taken by the Company and by the Sellers. All notices to, and
declarations, filings and registrations with, and consents,
authorizations, approvals and waivers from, governmental and
regulatory bodies required to consummate the transactions
contemplated hereby and all consents or waivers which, either
individually or in the aggregate, if not made or obtained, would
have a Material Adverse Effect shall have been made or obtained.
6.3 Opinions of the Company's and the Sellers'
Counsel. Buyer shall have been furnished with the
opinion of counsel for the Company and the Sellers, dated the
Closing Date, in form and substance satisfactory to Buyer, to the
effect set forth in Sections 2.1, 2.2, 2.3, 2.4, 2.9 (to the best
of such counsel's knowledge, after reasonable investigation), 3.1
and 3.2 hereof. In rendering the foregoing opinion, such counsel
may rely as to factual matters upon certificates or other documents
furnished by officers and directors of the Company and by
government officials and upon such other documents and data as such
counsel deem appropriate as a basis for their opinions. Such
counsel may specify the jurisdiction or jurisdictions in which they
are admitted to practice, that they are not admitted to the Bar in
any other jurisdiction or experts in the law of any other
jurisdiction and that such opinions are limited to the law of the
jurisdiction or jurisdictions in which they are admitted to
practice, the corporate law of the jurisdiction in which the
Company is incorporated, if different, and federal laws.
6.4 Minimum Net Worth. The chief financial officer of
the Company shall certify to Buyer that the amount of Net Worth as
at the Closing Date is at least equal to $3,122,292.
6.5 Absence of Litigation. No order, stay, injunction
or decree of any court of competent jurisdiction shall be in effect
(i) that prevents or delays the consummation of any of the
transactions contemplated hereby or (ii) would impose any material
limitation on the ability of Buyer effectively to exercise full
rights of ownership of the Shares. No action, suit or proceeding
before any court or any governmental or regulatory entity shall be
pending (or threatened by any governmental or regulatory entity),
and no investigation by any governmental or regulatory entity shall
have been commenced (and be pending) seeking to restrain or
prohibit (or questioning the validity or legality of) the
consummation of the transactions contemplated by this Agreement or
seeking material damages in connection therewith which Buyer, in
good faith and with the advice of counsel, believes makes it
undesirable to proceed with the consummation of the transactions
contemplated hereby.
6.6 Resignations. Buyer shall have received a letter,
dated the Closing Date, from each member of the Boards of Directors
of the Company and its Subsidiaries and from each of their officers
stating that such director or officer resigns such position
effective at the consummation of the Closing and releasing the
Company and its Subsidiaries from any claims that such director or
officer may have against the Company and its Subsidiaries as a
result of his services as a director or as an officer.
6.7 Environmental. The Sellers shall have furnished
Buyer with evidence satisfactory to Buyer of environmental
compliance by the Company and its Subsidiaries.
6.8 Certificates. The Sellers shall have furnished
Buyer with such certificates of officers and others as Buyer may
reasonably request to evidence compliance with the conditions set
forth in this Article 6.
7. CONDITIONS TO THE OBLIGATIONS OF THE SELLERS TO EFFECT
THE CLOSING
The obligations of the Sellers required to be performed
by them at the Closing shall be subject to the satisfaction, at or
prior to the Closing, of each of the following conditions, each of
which may be waived by the Sellers as provided herein except as
otherwise required by applicable law:
7.1 Representations and Warranties; Agreements. Each of
the representations and warranties of Buyer contained in this
Agreement shall be true and correct in all respects as of the date
hereof and (having been deemed to have been made again at and as of
the Closing) shall be true and correct in all respects as of the
Closing. Each of the obligations of Buyer required by this
Agreement to be performed by it at or prior to the Closing shall
have been duly performed and complied with in all respects as of
the Closing. At the Closing, the conditions set forth in the
preceding two sentences shall have been satisfied.
7.2 Authorization of the Agreement; Consents. All
corporate action necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly and validly
taken by Buyer.
7.3 Opinions of Buyer's Counsel. The Sellers shall have
been furnished with the opinion of counsel of Buyer, dated the
Closing Date, in form and substance satisfactory to the Company, to
the effect set forth in Sections 4.1, 4.2 and 4.5 hereof. In
rendering the foregoing opinion, such counsel may rely as to
factual matters upon certificates or other documents furnished by
officers and directors of Buyer and by government officials, and
upon such other documents and data as such counsel deems
appropriate as a basis for his opinion. Such counsel may specify
the state or states in which he is admitted to practice, that he is
not admitted to the Bar in any other state or expert in the law of
any other state and that such opinions are limited to Connecticut
law and federal laws.
7.4 Absence of Litigation. No order, stay, induction or
decree shall have been issued by any court and be in effect
restraining or prohibiting the consummation of the transactions
contemplated hereby. No action, suit or proceeding before any
court or any governmental or regulatory entity shall be pending (or
threatened by any governmental or regulatory entity), and no
investigation by any governmental or regulatory entity shall have
been commenced (and be pending) seeking to restrain or prohibit (or
questioning the validity or legality of) the consummation of the
transactions contemplated by this Agreement or seeking material
damages in connection therewith which the Sellers, in good faith
and with the advice of counsel, believe makes it undesirable to
proceed with the consummation of the transactions contemplated
hereby.
7.5 Certificates. Buyer shall have furnished the
Sellers with such certificates of its officers and others to
evidence compliance with the conditions set forth in this Article
7 as may be reasonably requested by the Sellers.
8. TERMINATION
8.1 Termination. This Agreement may be terminated at
any time prior to the Closing:
(i) by mutual consent of Buyer and the Sellers;
(ii) by Buyer or the Sellers, if the Closing shall
not have taken place on or prior to September 30, 1994,
or such later date as shall have been approved by Buyer
and the Sellers;
(iii) by Buyer or the Sellers if any court of
competent jurisdiction or other governmental body shall
have issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become
final and non-appealable;
(iv) by Buyer, if there has been any violation or
breach by the Company or any Seller of any
representation, warranty, covenant or obligation
contained in this Agreement and such violation or breach
has not been waived by Buyer; or
(v) by the Sellers, if there has been a violation
or breach by Buyer of any representation, warranty,
covenant or obligation contained in this Agreement and
such violation or breach has not been waived by the
Sellers.
If Buyer or the Sellers shall terminate this Agreement pursuant to
the provisions hereof, such termination shall be effected by notice
to the other parties specifying the provision hereof pursuant to
which such termination is made.
8.2 Effect of Termination. Except for (i) any breach of
this Agreement and (ii) the obligations contained in Sections 5.1
and 10.1 hereof, upon the termination of this Agreement pursuant to
Section 8.1 hereof, this Agreement shall forthwith become null and
void, and no party hereto or any of its officers, directors,
employees, agents, consultants, stockholders or principals shall
have any liability or obligation hereunder with respect thereto.
9. SURVIVAL AND INDEMNIFICATION
9.1 Survival. All representations, warranties,
covenants and agreements contained in this Agreement, or in any
Schedule, certificate, document or statement delivered pursuant
hereto, shall survive and shall be deemed to have been relied upon
and shall not be affected in any respect by the Closing, any
investigation conducted by any party hereto or by any information
which any party may receive. Notwithstanding the foregoing, the
representations and warranties contained in Articles 2 (other than
Section 2.4 hereof) and 4 (other than Section 4.2 hereof) of this
Agreement shall terminate on the earlier of the first anniversary
after the Closing Date or the issuance of Buyer's fiscal 1995
audited financials on SEC Form 10-K; provided, however, that such
representations and warranties, and the liability of any party with
respect thereto, shall not terminate with respect to any claim,
whether or not fixed as to liability or liquidated as to amount,
with respect to which such party has been given written notice
prior to such termination date.
9.2 Indemnification. The parties shall indemnify each
other as set forth below:
(a) Each of the Sellers shall (i) indemnify and hold
harmless Buyer and each of its directors, officers, employees,
advisors and Affiliates (including, without limitation, the
Company) from and against his or its allocable portion of any
and all losses, damages, liabilities and claims arising out
of, based upon or resulting from any inaccuracy as of the date
hereof or as of the Closing Date of any representation or
warranty of the Sellers which is contained in or made pursuant
to this Agreement or any breach by the Sellers of any of their
respective obligations contained in or made pursuant to this
Agreement and (ii) reimburse Buyer and each of its directors,
officers, employees, advisors and Affiliates for and against
his or its allocable portion of any and all Legal Expenses (as
defined below)) provided, however, that Buyer and its
directors, officers, employees, advisors and Affiliates shall
be entitled to indemnification pursuant to this Section 9.2
only if the aggregate gross amount of all amounts paid and all
other damages and losses of any kind suffered by such persons
exceed $50,000 (at which point only such amounts, damages and
losses, exceeding such initial $50,000, shall be available for
indemnification); provided, however, that the foregoing
limitation shall not apply to any amounts paid and any other
damages and losses suffered arising out of, based upon or
resulting from (x) any breach of a representation or warranty
set forth in Section 2.4 or 3.1 hereof or (y) any breach of
any covenant or agreement of the Sellers, including, without
limitation, to pay, satisfy, discharge or perform any of the
liabilities, commitments and obligations of the Company or any
Subsidiary (excluding a breach of a representation or warranty
other than as provided in (x) above), all of which amounts,
damages and losses shall be indemnified dollar-for-dollar
following the incurrence thereof and shall not, if so
indemnified, reduce the then applicable balance of such
$50,000. Notwithstanding the foregoing, any liability of the
Sellers shall be limited to an amount equal to 10% of the
aggregate value of the shares of Echlin Common Stock delivered
to the Sellers under this Agreement (excluding the Sellers'
obligation under Section 1.3 hereof). As used herein, "Legal
Expenses" of a person shall mean any and all fees, costs and
expenses of any kind reasonably incurred by such person and
its counsel in investigating, preparing for, defending against
or providing evidence, producing documents or taking other
action with respect to, any threatened or asserted claim. As
used herein, a Seller's "allocable portion" shall be equal to
the percentage obtained by dividing (x) the number of shares
of Echlin Common Stock to be received by such Seller
hereunder, by (y) the number of shares of Echlin Common Stock
to be received by all Sellers hereunder.
(b) Buyer shall (i) indemnify and hold harmless the
Sellers from any and all losses, damages, liabilities and
claims arising out of, based upon or resulting from any
inaccuracy as of the date hereof or as of the Closing Date of
any representation or warranty of Buyer which is contained in
or made pursuant to this Agreement or any breach by Buyer of
any of its obligations contained in or made pursuant to this
Agreement and (ii) reimburse the Sellers for any and all Legal
Expenses; provided, however, that the Sellers and their
respective directors, officers, employees, advisors and
Affiliates shall be entitled to indemnification pursuant to
this Section 9.2 only if the aggregate gross amount of all
amounts paid and all other damages and losses of any kind
suffered by such persons exceeds $50,000 (at which point only
such amounts, damages and losses, exceeding such initial
$50,000, shall be available for indemnification); provided,
however, that the foregoing limitation shall not apply to any
amounts paid and any other damages and losses suffered arising
out of, based upon or resulting from (x) any breach of a
representation or warranty set forth in Section 4.1 or 4.2
hereof or (y) any claim relating to any breach of any covenant
or agreement of Buyer (excluding a breach of a representation
or warranty other than as provided in (x) above, all of which
amounts, damages and losses shall be indemnified dollar-for-
dollar following the incurrence thereof and shall not, if so
indemnified, reduce the then applicable balance of such
$50,000. Notwithstanding the foregoing, any liability of
Buyer shall be limited to an amount equal to 10% of the
aggregate value of the shares of Echlin Common Stock delivered
to Sellers under this Agreement (excluding Buyer's obligations
under Sections 1.3 and 1.4 or 5.15(e) hereof).
(c) Promptly after receipt by any person entitled to
indemnification under this Section 9.2 (an "indemnified
party") of notice of the commencement of any action in respect
of which the indemnified party will seek indemnification
hereunder, the indemnified party shall notify each person that
is obligated to provide such indemnification (an "indemnifying
party") thereof in writing but any failure to so notify the
indemnifying party shall not relieve it from any liability
that it may have to the indemnified party other than under
this Article 9. The indemnifying party shall be entitled to
participate in the defense of such action and, provided that
within 15 days after receipt of such written notice the
indemnifying party confirms in writing its responsibility
therefor and reasonably demonstrates that it will be able to
pay the full amount of potential liability in connection with
any such claim, to assume control of such defense with counsel
reasonably satisfactory to such indemnified party; provided,
however, that:
(i) the indemnified party shall be entitled to
participate in the defense of such claim and to employ
counsel at its own expense to assist in the handling of
such claim;
(ii) the indemnifying party shall obtain the prior
written approval of the indemnified party before entering
into any settlement of such claim or ceasing to defend
against such claim, if pursuant to or as a result of such
settlement or cessation, injunctive or other equitable
relief would be imposed against the indemnified party;
(iii) no indemnifying party shall consent to the
entry of any judgment or enter into any settlement that
does not include as an unconditional term thereof the
giving by each claimant or plaintiff to each indemnified
party of a release from all liability in respect of such
claim; and
(iv) the indemnifying party shall not be entitled
to control (but shall be entitled to participate at its
own expense in the defense of), and the indemnified party
shall be entitled to have sole control over, the defense
or settlement of (A) any claim to the extent the claim
seeks an order, injunction or other equitable relief
against the indemnified party which, if successful, could
materially interfere with the business, operations,
assets, condition (financial or otherwise) or prospects
of the indemnified Party or (B) any claim relating to
Taxes.
After written notice by the indemnifying party to the
indemnified party of its election to assume control of the
defense of any such action, the indemnifying party shall not
be liable to such indemnified party hereunder for any Legal
Expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable
costs of investigation and of liaison counsel for the
indemnified party. If the indemnifying party does not assume
control of the defense of such claim as Provided in this
Section 9.2(c), the indemnified party shall have the right to
defend such claim in such manner as it may deem appropriate at
the cost and expense of the indemnifying party, and the
indemnifying party will promptly reimburse the indemnified
party therefor in accordance with this Section 9.2. The
reimbursement of fees, costs and expenses required by this
Section 9.2 shall be made by periodic payments during the
course of the investigations or defense, as and when bills are
received or expenses incurred.
(d) In the event that the indemnifying party shall be
obligated to indemnify the indemnified party pursuant to this
Article 9, the indemnifying party shall, upon payment of such
indemnity in full, be subrogated to all rights of the
indemnified party with respect to the claims to which such
indemnification relates.
(e) No party shall be entitled to indemnification
hereunder if such party had knowledge of the inaccuracy or
breach for which indemnification is claimed at the time of
Closing.
10. MISCELLANEOUS
10.1 Expenses. Each of the parties hereto shall pay its
own fees and expenses (including the fees of any attorneys,
accountants, investment bankers or others engaged by such party) in
connection with this Agreement and the transactions contemplated
hereby whether or not the transactions contemplated hereby are
consummated. The Company shall not bear any legal or other
expenses of any of the Sellers, including, without limitation, the
fees of Mesirow Financial Inc. and of Messrs. Silver, Gould,
Eizelman, Zoller, Upfal, Bean & Jackier; provided, however, that
the obligations to Coopers & Lybrand pursuant to the audit
contemplated by Section 5.9 hereof shall be reflected on the
Closing Date Balance Sheet as an accrued liability.
10.2 Headings. The section headings herein are for
convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any
of the Provisions hereof.
10.3 Notices. All notices or other communications
required or Permitted hereunder shall be given in writing and shall
be deemed sufficient if delivered by hand (including by courier),
mailed by registered or certified mail, postage prepaid (return
receipt requested), or sent by facsimile, as follows:
If to the Company:
Theodore Bargman Co.
211 East Park Drive
Albion, IN 46701
Attention: President
Telephone: (219) 636-3337
Facsimile:
If to the Sellers to Agent Seller:
Lawrence S. Jackier, Esq.
Silver, Gould, Eizelman, Zoller,
Upfal, Bean & Jackier
1533 North Woodward Avenue
Suite 250
Bloomfield Hills, MI 48304
Telephone: (810) 642-0500
Facsimile: (810) 642-5241
<PAGE>
If to the Company or the Sellers copy to:
Nathan Upfal, Esq.
Silver, Gould, Eizelman, Zoller, Upfal, Bean
& Jackier
1533 North Woodward Avenue
Suite 250
Bloomfield Hills, MI 48304
Telephone: (810) 642-0500
Facsimile: (810) 642-5241
If to Buyer:
Echlin Inc.
100 Double Beach Road
Branford, CT 06405
Attention: Secretary
Telephone: (203) 481-5751
Facsimile: (203) 481-6485
or such other address as shall be furnished in writing by such
party, and any such notice or communication shall be effective and
be deemed to have been given as of the date so delivered or three
days after the date so mailed or if by facsimile, on production of
a transmission report by the machine from which the facsimile was
sent which indicates that the facsimile was sent in its entirety to
the facsimile number of the recipient; provided, however, that any
notice or communication changing any of the addresses set forth
above shall be effective and deemed given only upon its receipt.
10.4 Assignments. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns, and the provisions of Article 9 and Section 10.13 hereof
shall inure to the benefit of the indemnified parties referred to
therein; provided, however, that neither this Agreement nor any of
the rights, interests, or obligations hereunder may be assigned by
any of the parties hereto without the prior written consent of the
other parties, except that this Agreement and such rights,
interests and obligations may be assigned by Buyer to an Affiliate
(provided that Buyer is not relieved of its liability hereunder).
10.5 Entire Agreement. This Agreement (including the
Schedules and Exhibits hereto) embodies the entire agreement and
understanding of the parties with respect to the transactions
contemplated hereby and supersedes all prior written or oral
commitments, arrangements or understandings with respect thereto.
There are no restrictions, agreements, promises, warranties,
covenants or undertakings with respect to the transactions
contemplated hereby other than those expressly set forth herein.
10.6 Modifications, Amendments and Waivers. At any time
prior to the Closing, to the extent permitted by law, (i) Buyer and
the Sellers may, by written agreement, modify, amend or supplement
any term or provision of this Agreement and (ii) any term or
provision of this Agreement may be waived in writing by the party
which is entitled to the benefits thereof.
10.7 Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the
same agreement and each of which shall be deemed an original.
10.8 Governing Law. This Agreement shall be governed by
the laws of the State of Connecticut (regardless of the laws that
might be applicable under principles of conflicts of law) as to all
matters including, but not limited to, matters of validity,
construction, effect and performance.
10.9 Accounting Terms. All accounting terms used herein
which are not expressly defined in this Agreement shall have the
respective meanings given to them in accordance with generally
accepted accounting principles on the date hereof.
10.10 Certain Definitions. For purposes of this
Agreement:
(a) an "Affiliate" of a specified person is a person
that directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under
common control with, the person specified,
(b) the term "Associate" used to indicate a relationship
with any person means (A) any corporation,partnership, joint
venture or other entity of which such person is an officer or
partner or is, directly or indirectly, through one or more
intermediaries, the beneficial owner of 10% or more of (1) any
class or type of equity securities or other profits interest
or (2) the combined voting power of interests ordinarily
entitled to vote for management or otherwise, and (B) any
trust or other estate in which such person has a substantial
beneficial interest or as to which such person serves as
trustee or in a similar fiduciary capacity;
(c) "best efforts" shall be deemed to not include any
obligation on the part of any person to undertake any
liabilities or perform any acts (except liabilities or
performance, other than any best efforts obligations,
expressly required to be undertaken by the terms of this
Agreement) which are materially burdensome to such person;
provided, however, that notwithstanding the foregoing, the
term "best efforts" shall include an obligation to take such
actions which are normally incident to or reasonably
foreseeable in connection with such obligation or the
transactions contemplated hereby;
(d) the term "Insider" shall mean any Seller; any
director or officer of the Company, any Subsidiary or any
Seller; and any Affiliate, Associate or Relative of any of the
foregoing persons;
(e) "Material Adverse Effect" shall mean any change in,
or effect on, the Company or any Subsidiary (including the
business thereof) which is, or with reasonable probability
might be, materially adverse to the business, operations,
assets, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries, taken as a whole (other than
changes in the industry of the Company and its Subsidiaries,
taken as a whole);
(f) "person" shall mean and include an individual,
corporation, partnership, joint venture, association, trust,
any other unincorporated organization or entity and a
governmental entity or any department or agency thereto;
(g) a "Relative" of a person shall mean such person's
spouse, such person's parents, sisters, brothers, children and
the spouses of the foregoing, and any member of the immediate
household of such person;
(h) "Taxes" shall mean all taxes, charges, fees, levies
or other assessments including, but not limited to, income,
excise, property, sales, value added, franchise, withholding,
social security, and unemployment taxes imposed by the United
States, any state, county, local or foreign government, or any
subdivision or agency thereof or taxing authority therein, and
any interest, penalties or additions to tax relating to such
taxes, charges, fees, levies or other assessments;
(i) "To the knowledge" shall mean knowledge of a person
(or of its executive officers if a corporation) after having
made due investigation and reasonable inquiry of the
appropriate employees or other persons having responsibility
for such matter or having access to such information; and
(j) the following terms have the meanings set forth in
the following Sections of this Agreement:
<TABLE>
<CAPTION>
<S> <C>
Section
Acquisition Proposal 5.3
Agent Seller 1.1
Claims 2.9
Closing 1.2
Closing Date 1.2
Closing Date Balance Sheet 5.9
Closing Date Financial Statements 5.9
Closing Payment 1.1
Code 2.17
Common Stock 2.3
Company Agreement 2.15
Company Balance Sheet 2.6
Company Financial Statements 2.6
Compensation Commitment 2.18
Confidential Information 5.1
Echlin Common Stock 1.1
ERISA 2.17
ERISA Plan 2.17
Exchange Act 4.7
Improvements 2.10
Indemnified party 9.2
Indemnifying party 9.2
Intellectual Property 2.13
IRS 2.17
Judgments 2.9
Key Employees 2.7
Legal Expenses 9.2
Legal Proceedings 2.9
Legal Requirements 2.9
Multiemployer Plan 2.17
Net Worth 5.9
PBGC 2.17
Pension Benefit Plan 2.17
Permits 2.9
Pre-Closing Date 6.4
Preferred Stock 2.3
SEC 4.5
Securities Act 3.3
Security Interest 1.3
Shares 1.1
Subsidiary 2.2
Technology 2.13
Welfare Benefit Plan 2.17
</TABLE>
10.11 Severability. If any one or more of the provisions
of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the
remaining provisions of this Agreement shall not be affected
thereby and this Agreement will be construed and enforced as if
such invalid, illegal or unenforceable provisions had not been
included herein. To the extent permitted by applicable law, each
party waives any provision of law which renders any provision of
this Agreement invalid, illegal or unenforceable in any respect.
10.12 Specific Performance. Buyer, the Company and the
Sellers recognize that any breach of the terms of this Agreement
may give rise to irreparable harm for which money damages would not
be an adequate remedy, and accordingly agree that, in addition to
other remedies, any non-breaching party shall be entitled to
enforce the terms of this Agreement by a decree of specific
performance without the necessity of proving the inadequacy as a
remedy of money damages.
10.13 Consent to Jurisdiction. Each of the Sellers
hereby submits to the non-exclusive jurisdiction of the courts of
the State of Connecticut and the federal courts of the United
States of America located in such state solely in respect of the
interpretation and enforcement of the provisions of this Agreement,
and hereby waives, and agrees not to assert, as a defense in any
action, suit or proceeding for the interpretation or enforcement of
this Agreement, that he or it is not subject thereto or that such
action, suit or proceeding may not be brought or is not
maintainable in said courts or that this Agreement may not be
enforced in or by said courts or that his property is exempt or
immune from execution, that the suit, action or proceeding is
brought in an inconvenient forum, or that the venue of the suit,
action or proceeding is improper. Each of the Sellers agrees that
service of process may be made upon him or it in any manner
permitted by the laws of the State of Connecticut or the federal
laws of the United States or by service upon the Agent Seller at
the address provided for purposes of Section 10.3 hereof in any
such action, suit or proceeding against the Sellers with respect to
this Agreement, and hereby irrevocably designates and appoints the
Agent Seller as his or its authorized agent upon which process may
be served in any such action, suit or proceeding, it being
understood that such appointment and designation shall become
effective without any further action on the part of the Sellers.
Service of process upon such authorized agent shall be deemed, in
every respect, effective service of process upon the Sellers and
shall remain effective until the Sellers shall appoint another
agent for service of process acceptable to Buyer. The Sellers
agree that final judgment (with all right of appeal having expired
or been waived) against them in any such action, suit or proceeding
shall be conclusive and that Buyer is entitled to enforce such
judgment in any other jurisdiction by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence
of the fact and amount of indebtedness arising from such judgment.
10.14 Agent Seller. Any payment required to be made
pursuant to this Agreement by Buyer to the Sellers may be made to
the Agent Seller, who or which shall act as agent for the other
Sellers and pay or otherwise allocate to such Sellers their
allocable share of such payment.
10.15 Currency. All dollar amounts under this Agreement
are in dollars of the United States of America.
10.16 Third Parties. Nothing in this Agreement shall be
deemed to be the for the benefit of, or enforceable by or on behalf
of, any employee or former employee of the Company or of any
Subsidiary, any dependent or beneficiary of any such employee, any
labor union or other party or organization, any obligee, owner or
holder of any obligation or liability, other than the parties to
this Agreement.
10.17 Adjustment of Shares. Certain share adjustments
may be required as follows:
(a) The number of shares of stock to be delivered or
redelivered under this Agreement (and any per share price set
forth herein) shall be subject to adjustment to take into
account and fully reflect the effect of any stock split, stock
dividend or recapitalization with respect to such stock.
(b) Buyer shall not be required to issue fractional
shares hereunder; all shares to be issued by it, shall be
issued to the nearest whole number of shares.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
ECHLIN INC. (BUYER)
By: /s/ Thomas Marchese
------------------------------
Name: Thomas Marchese
Title: Director of Business
Development
THEODORE BARGMAN CO. (THE COMPANY)
By: /s/ Barry T. Shapiro
------------------------------
Name: Barry T. Shapiro
Title: Chairman
THE SELLERS
OIG MANUFACTURING, a Michigan
co-partnership
By: /s/ Robert H. Orley
------------------------------
Name: Robert H. Orley
Its Partner
A & B ASSOCIATES, a Michigan
co-partnership
By: /s/ Barry T. Shapiro
------------------------------
Name: Barry T. Shapiro
Its Partner
/s/ Thomas Gaffney
------------------------------
THOMAS GAFFNEY
/s/ James Taylor
------------------------------
JAMES TAYLOR
Acceptance of the
Agency described in
this Agreement
/s/ Lawrence S. Jackier
- ---------------------------------
Lawrence S. Jackier, Seller Agent<PAGE>
ECHLIN INC. [LOGO]
100 Double Beach Road
Branford, CT 06405
October 21, 1994
Echlin Inc.
100 Double Beach Road
Branford, CT 06405
Gentlemen:
In connection with the registration under the Securities Act
of 1933, as amended, of 231,809 shares of common stock, one
dollar ($1.00) par value, of Echlin Inc., a Connecticut
corporation ("Echlin"), I have examined such corporate records
and other documents, including the registration statement on Form
S-3, to be filed with the Securities and Exchange Commission,
relating to such shares (the "Registration Statement"), and have
reviewed such matters of law as I have deemed necessary for this
opinion. Based on such examination, I advise you that in my
opinion:
1. Echlin is a corporation duly organized and existing
under the laws of the state of Connecticut.
2. All necessary corporate action on the part of Echlin
has been taken to authorize the registration of shares
of common stock by Echlin, and when sold as
contemplated in the Registration Statement, such shares
will be legally issued, fully paid and nonassessable.
I consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Jon P. Leckerling
-------------------------
Jon P. Leckerling
JPL/jeh<PAGE>
<PAGE>
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Prospectus constituting part of this Registration Statement on
Form S-3 of our report dated September 24, 1993, except as to
Note 13, which is as of October 21, 1993, which appears on page
33 of the 1993 Annual Report to Shareholders of Echlin Inc.,
which is incorporated by reference in Echlin Inc's Annual Report
on Form 10-K for the year ended August 31, 1993. We also consent
to the incorporation by reference of our report on the Financial
Statement Schedules, which apears on page 12 of such Annual
Report on Form 10-K. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
- -------------------------
PRICE WATERHOUSE LLP
Stamford, Connecticut
October 21, 1994
