AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY
9, 1996 --------------------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, 229,450 $38.00 $8,719,100 $3,007
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 February 9, 1996
PROSPECTUS
229,450 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 PLEDGEES,
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 ________________, 1996 WAS $______ PER SHARE, AS REPORTED ON
SUCH STOCK EXCHANGE.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY 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, 1995; and
(b) All other reports filed since August 31, 1995 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. The
Company's products are sold primarily as replacement products for
use by professional mechanics and by car and truck owners. Sales
are made to automotive and heavy duty warehouse distributors,
retailers, other parts manufacturers and parts remanufacturers.
The Company also sells its products to original equipment
manufacturers in both the automotive and heavy duty markets.
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, on January 23, 1996 to certain
security holders (the "Selling Stockholders") of Plains Plastics,
Inc., a Kansas corporation (the "Acquired Company") pursuant to
an Agreement and Plan of Reorganization (the "Agreement") dated
as of January 23, 1996; 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 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>
Richard R. Johnson 162,850
1340 North Maple
McPherson, KS 67460
Justus H. Fugate 33,013
7622 Dublin
Wichita, KS 67206
James S. Adams 13,918
1214 Turkey Creek
McPherson, KS 67460
Erin J. Branting 1,739
1217 South Linden
Wichita, KS 67207
Floyd C. Jaggers 558
RT. E. Box 74
McPherson, KS 67460
John S. Dwyer 626
14116 Dresden Court
Apple Valley, MN 55124
W. Kent Christy 1,962
10436 West 16th
Wichita, KS 67212
Wesley Kent Christy, IRA 2,909
The Trust Company of Kansas
250 North Water
Suite 315
Wichita, KS 67202
Floyd C. Jaggers, IRA 1,184
The Trust Company of Kansas
250 North Water
Suite 315
Wichita, KS 67202
Brooke J. Blomberg 2,297
1308 Northglen
McPherson, KS 67460
Larry R. Busby 349
620 Sonora Drive
McPherson, KS 67460
Kenneth J. Fugate 695
6311 East 8th
Wichita, KS 62708
Helen L. Martin 695
11715 Hickory
Wichita, KS 67212
Charles J. Singleton 349
908 Mallard Drive
McPherson, KS 67460
John C. Hamilton 349
220 North Ash
McPherson, KS 67460
Haynes L. Eslinger, IRA 6,957
The Trust Company of Kansas
250 North Water
Suite 315
Wichita, KS 67202
</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."
The Selling Stockholders have deposited, on a pro rata
basis, 11,473 shares of the Common Stock in escrow with Fleet
National Bank of Connecticut, as Escrow Agent, to secure their
obligations to indemnify Echlin pursuant to the terms of the
Agreement.
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,
1995 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>
<PAGE>
229,450 Shares
ECHLIN INC.
Common Stock
__________
PROSPECTUS
__________
_________, 1996
<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 ..... $3,007
Legal fees and expenses ................................. 1,000
Accounting fees and expenses ............................ 1,000
Printing fee ............................................ 1,000
Miscellaneous ........................................... 1,000
------
Total Fees and Expenses ................................. $7,007
======
</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. -Agreement and Plan of Reorganization dated as of
January 23, 1996, by which the Company acquired Plains
Plastics, Inc.
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 9th day of February,
1996.
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 9th day of February,
1996.
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
- --------------------------
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/ 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. -Agreement and Plan of Reorganization dated as of
January 23, 1996, by which the Company acquired
Plains Plastics, Inc.
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-8
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION, dated as of
January 23, 1996 among Echlin Inc., a Connecticut corporation
(the "Buyer"), Plains Plastics, Inc., a Kansas 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, (a) 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 consideration 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 (i) $8,500,000 by (ii) 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 thirty business day period
beginning thirty five business days prior to the Closing Date and
including the sixth business day preceding the Closing Date; and
(b) at the Closing referred to in Section 1.2 hereof:
(i) 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
(ii) Buyer shall accept and acquire the Shares from the
Sellers and in exchange therefor shall deliver to the
Sellers by delivery to Richard R. Johnson (the "Agent
Seller") acting for himself and as agent for the other
Sellers as provided in Section 10.14 hereof Echlin Common
Stock representing the aggregate consideration to be
delivered to Sellers under this Agreement less an amount
equal to 5% of the value of such shares to be paid into an
escrow account (the "Escrow Account") in accordance with an
escrow agreement (the "Escrow Agreement", in the form
attached hereto as Exhibit A and made a part hereof.
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 Ayesh Law Offices, 8100 East 22nd Street North,
Wichita, Kansas at 10 a.m. on (a) January 23, 1996, subject to
the expiration or termination of any waiting period required by
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.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SELLERS
The Company and each Seller hereby jointly and
severally represent and warrant 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 any Subsidiaries would not in the
aggregate have a Material Adverse Effect (as defined in Section
10.10 hereof). The Company has provided Buyer with complete and
correct copies of the Company's 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
provided Buyer with 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 2,000,000 shares of Common Stock, $1.00
par value, of which, as of the date hereof, 329,700 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. 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.
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 June
30, 1995, 1994 and 1993 and the related statements of
income, 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 Chesser & Company, independent certified
public accountants;
(ii) the unaudited balance sheet of the Company
as of November 30, 1995 and the unaudited statements of
income for the five month period then ended;
(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 any Subsidiaries and fairly present the
financial position, results of operations, shareholders'
equity of the Company and any 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 write-up or revaluation
increasing the book value of any assets. The books and
accounts of the Company and any Subsidiaries are complete
and correct and fully and fairly reflect all of the
transactions of the Company and any Subsidiaries. At the
Closing Date no material adverse change shall have occurred
or shall be reasonably likely to occur in the financial
condition or results of operations of the Company and any
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 Company or any Seller 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 10.10 hereof),
except for (i) liabilities reflected or reserved against in the
most recent balance sheet included in the Company Financial
Statements (the "Company Balance Sheet"), (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. 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.
2.7 Absence of Material Adverse Effect; Conduct of
Business. Since June 30, 1995, 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, since June 30, 1995 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 $100,000
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) 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. The Company and any Subsidiaries
constitute an affiliated group eligible to file consolidated
federal income tax returns. 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 the date of the
Company Balance Sheet and except to the extent reserves
therefor will be reflected on the books and records of the
Company and any Subsidiaries, 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 ended
June 30, 1992 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 ended
June 30, 1992. 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 to the best knowledge of Company or any Seller,
(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) The businesses of the Company and any 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) The Company and any 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. The Company and each
Subsidiary owns or holds all Permits material to the conduct
of its business. 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) 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) 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) The properties and assets owned by or leased to
the Company and any 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 any 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 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 a Subsidiary 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, none of which has a
material adverse effect on such property or its present or
contemplated use in the business of the Company and any
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) Except as set forth on Schedule 2.10 all
Improvements and all machinery, equipment and other tangible
property owned or used by or leased to the Company or any
Subsidiaries are in good operating condition and in good
repair reasonable wear and tear excepted. Such tangible
properties and all Improvements owned or leased by the
Company or any 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. The present 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. 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. 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) (i) Except as set forth on Schedule 2.10, neither
the Company nor any Subsidiary generates or otherwise owns
or possesses, stores, treats, disposes of or transports any
"hazardous substance", "hazardous material" or "hazardous
waste" (as defined in or under the Comprehensive
Environmental Response, Compensation, and Liability Act of
1980, as amended (42 USC Sec 9601, et seq.), the Resource
Conservation and Recovery Act of 1976, as amended (42 USC
Sec 6901, et seq.), the Toxic Substances Control Act, as
amended (15 USC Sec 2601, et seq.), or the regulations
promulgated thereunder or any other hazardous substance,
material or 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, material or waste. (ii)
Except as set forth on Schedule 2.10, none of the real
property owned or leased by the Company or any Subsidiaries
has been contaminated by any such hazardous substance,
material or 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 any Subsidiaries. (iv)
The Company has provided Buyer with complete and correct
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 any 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. 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 reflected on the books and records of the Company and
any Subsidiaries), except for any spare parts inventory which
inventory is good and usable.
2.12 Accounts Receivable. All accounts receivable
reflected on the Company Balance Sheet or arising since the date
thereof (subject to the reserve for bad debts, sales returns and
other sales adjustments that is reflected on the Company Balance
Sheet and as reflected on the books and records of the Company
and any Subsidiaries) are good and have been collected or are
collectible, without resort to litigation or extraordinary
collection activity, within 120 days of the date thereof, 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 any 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 all
accounts receivable of the Company as of October 31, 1995 showing
separately those receivables which as of such date have been
outstanding (i) 1 to 29 days, (ii) 30 to 59 days, (iii) 60 to 89
days, (iv) 90 to 119 days and (v) more than 119 days.
2.13 Intellectual Property; Technology. The Company
and any 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
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
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, the
Company or a Subsidiary 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. Neither the Company nor any Subsidiary has
violated or infringed any Intellectual Property or Technology
rights of others.
2.14 Insurance. All properties and assets of the
Company and any 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 any
Subsidiaries insuring the title of the real property owned by the
Company and any 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 Subsidiary 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 Subsidiary 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 any 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 10.10 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 or
vendor 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) Neither the Company nor any Subsidiary nor, to the
best knowledge of the Company or any Seller, 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. There are no material unresolved
disputes involving the Company or any Subsidiary under any
Company Agreement.
2.16 Labor Relations.
(a) The Company and each Subsidiary 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 the
Company or any Seller, threatened between the Company or any
Subsidiaries and any labor union or other collective
bargaining unit representing any employees of the Company or
any 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 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 Company or any Seller) 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 and 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 Company or any
Seller) 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 Company or any Seller) 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 $60,000 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 any 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 best
knowledge of the Company or any Seller, 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 Company or any
Seller, 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 June 30, 1995 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 any Subsidiaries under all Multiemployer Plans,
computed as if a "complete withdrawal" by the Company and
any Subsidiaries had occurred under each such Plan as of
June 30, 1995 would not exceed $N/A 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) 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
Company or any Seller) 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.
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 June 30,
1994 (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 any 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 any 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 set
forth on Schedule 2.21.
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 June 30,
1995 to, the ten largest customers of the Company and each
Subsidiary (by dollar volume) in fiscal 1995; (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 1995, 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 the Company or any
Seller, neither the Company nor any Subsidiary has
manufactured, sold or supplied products or services which
are or were or (subject to any reserve for warranty claims
reflected on the Company Balance Sheet and as to be
reflected on the Closing Date Balance Sheet) 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.
2.24 Powers of Attorney. Except as disclosed on
Schedule 2.24, the Company and any 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 any 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 any Subsidiaries.
2.25 Disclosure. Neither the Company nor any Seller
has made any material misrepresentation to Buyer relating to this
Agreement or the Shares and neither the Company nor any Seller
has omitted to state to Buyer any known 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.
To the best knowledge of the Company or any Seller no fact,
event, condition or contingency exists or has occurred which has
a Material Adverse Effect, which has not been disclosed in the
Company Financial Statements or the Schedules to this Agreement.
3. 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 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 Company and
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. 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
entitled to vote in the election of Buyer's Board of Directors.
4.6 Financial Statements. The financial statements of
Buyer audited by Price Waterhouse, as at the close of business on
August 31, 1995, 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 known 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 filings under the Securities
Exchange Act of 1934) 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 any
Subsidiaries, including, without limitation, furnish to Buyer a
list of all Permits owned or held by the Company and any
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 any 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 any 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 any Seller 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. The Company agrees that, during the
period from the date hereof to the Closing the business and
operations of the Company and any 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 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 $100,000
as the Company 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 $100,000 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 any 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 (including following the
Closing) the present services of its Key Employees; and to
preserve for itself (including following the Closing) 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
Subsidiary of all their material properties and (C) the
conduct after the Closing by the Company and each
Subsidiary 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
consolidated balance sheet and the related statement of income of
the Company and any Subsidiaries.
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 Subsidiary, 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 cause the
Company and any Subsidiaries to comply with their respective
covenants set forth in this Agreement.
5.9 Financial Statements. The Company and 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 the Companys financial statements and to
make the working papers relating to such matters available to
Price Waterhouse. Should any party determine that any accounting
matter is not in accordance with this Agreement, 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, any remaining
differences shall be submitted to a jointly selected independent
public accountant, for resolution. 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 shall
cause the Sellers and their affiliates to be released as of the
Closing Date from the guarantees and letters of credit issued in
connection with the business and affairs of the Company or any
Subsidiaries as listed and described on Schedule 5.10.
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 five years following the Closing Date,
neither Richard Johnson nor Justus Fugate shall, directly or
indirectly, through equity ownership or otherwise, for himself,
or any other person, anywhere in the United States, Mexico or
Canada.
(i) compete with Buyer, the Company or the
Subsidiaries, in the business of the Company or the
Subsidiaries as conducted and proposed to be 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 any 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 10% of the
revenues of the acquired business provided, however, 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 a price proportionate to the purchase price
for the acquired business.
(ii) communicate with or contact any customers of the
Company or any 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 any Subsidiaries as of the Closing Date.
(iii) contact any employee of the Company or any
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 any Subsidiary.
(iv) use or disclose to others any trade secrets or
other confidential information relating to the Company or
any Subsidiary 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 any Subsidiary 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.
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
the current ALTA Owner's Policy Form issued by a reputable title
company with respect to each real property owned by the Company
or any Subsidiary on Schedule 2.10 hereto, including the
operating facilities to be acquired from affiliated companies,
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. The Company shall furnish a
current survey of the real property certified to Buyer, prepared
by a licensed surveyor and conforming to current ALTA Minimum
Detail Requirements for Land Title Surveys, disclosing the
location of all improvements, easements, party walls, sidewalks,
roadways, utility lines, and other matters shown customarily on
such surveys, and showing access affirmatively to public streets
and roads (the "Survey"). The Survey shall not disclose any
survey defect or encroachment from or onto the real property
which has not been cured or insured over prior to the Closing.
5.14 Certain Payments. The Company and any Subsidiary
shall not be liable for, and the Sellers shall hold the Company
and any Subsidiary harmless from, any liabilities or obligations
of any person to make payments to any former shareholders of the
Company or any Subsidiary (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 Employment Agreements. On the Closing Date, Buyer
and Messrs. Richard R. Johnson and Justus H. Fugate shall enter
into employment agreements in form approved by Buyer and such
individuals.
5.16 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 Securities and Exchange Commission
(the "SEC") under the Securities Act on an appropriate form
as Buyer in its sole discretion shall determine, a
registration statement 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 use its best efforts to cause the
Registration Statement and any necessary state filings to
become effective 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 5.16;
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 5.16.
(e) Upon the effectiveness of the Registration
Statement and the issuance of post acquisition financials in
accordance with Section 5.17 hereof, Buyer agrees to the
removal of any legend affixed to any certificates evidencing
shares of Echlin Common Stock.
5.17 Post Acquisition Financials. Buyer shall promptly
issue financial results for the first calendar 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 other appropriate SEC form, 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.
5.18 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.
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 Company and 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,
Buyer shall have received a certificate, dated the Closing Date
and duly executed by an officer of the Company, to the effect
that the conditions set forth in the preceding two sentences have
been satisfied and that there has been no event that has or could
in the future have, a Material Adverse Effect.
6.2 Authorization; 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 the
Company and by Buyer's Board of Directors. Any filings required
to be made in connection with the transactions contemplated
hereby shall have been made and all applicable waiting periods
with respect to each such filing, including any extensions
thereof, shall have expired or been terminated. 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) and
3.1 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 the net worth
reflected on the Company Balance Sheet.
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 any 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 such 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 any Subsidiaries.
6.8 Certificates and Escrow Agreement. The Sellers
shall have furnished Buyer with an executed Escrow Agreement and
such certificates of officers and others as Buyer may reasonably
request to evidence compliance with the conditions set forth in
this Article 6.
6.9 Satisfactory Completion of Buyer's Investigation.
Buyer's due diligence investigation shall not have disclosed
facts which would have a Material Adverse Effect on the Company
or any Subsidiaries or after written notice thereof the Sellers
shall fail to furnish assurance satisfactory to Buyer that such
matters will not have a Material Adverse Effect on the Company or
any Subsidiaries.
6.10 Satisfactory Market Conditions. There shall not
have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the New York Stock
Exchange, which suspension or limitation shall continue for three
or more consecutive trading days, (ii) any decline in Buyer's
stock value in excess of 15%, measured from the date of this
Agreement, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States,
(iv) any limitation (whether or not mandatory) by any government
or governmental authority or agency, domestic or foreign, on, or
other event that might materially affect, the extension of credit
by banks or other lending institutions, (v) a commencement of a
war or armed hostilities or other national or international
calamity directly or indirectly involving the United States which
would reasonably be expected to have a material adverse impact on
the capital markets of the United States, or (vi) in the case of
any of the foregoing existing on the date of this Agreement, a
material acceleration or worsening thereof.
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 Sellers shall have
received a certificate, dated the Closing Date and duly executed
by an officer of Buyer, to the effect that the conditions set
forth in the preceding two sentences 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. Any filings required to be made in connection
with the transactions contemplated hereby shall have been made
and all applicable waiting periods with respect to each such
filing (including any extensions thereof) shall have expired or
been terminated.
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 the law of the jurisdiction or jurisdictions in which he is
admitted to practice, the corporate law of the jurisdiction in
which, Buyer is incorporated, if different, 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 and Escrow Agreement. Buyer shall
have furnished the Sellers with an executed Escrow Agreement and
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 January 31,
1996, 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 and 4 of
this Agreement shall terminate on the earlier of the first
anniversary after the Closing Date or the issuance of Buyer's
fiscal 1996 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) The Sellers jointly and severally 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 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 Company or the Sellers which is contained in
or made pursuant to this Agreement or any breach by the
Company or 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 from and
against 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 $100,000 (at which point all such amounts, damages
and losses, including such initial $100,000, 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, 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
$100,000. 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
Seller's 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.
(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 $100,000 (at which point all such amounts, damages
and losses, including such initial $100,000, 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 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 $100,000. 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 the Sellers under this
Agreement (excluding Buyer's obligation under Section 1.3
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) In determining a party's obligation to indemnify
pursuant to this Section 9.2, all references in this
Agreement or in any certificates delivered in connection
herewith to the terms "material", "materiality" or variants
thereof, or to the phrase "to the knowledge of", or variants
thereof, shall be disregarded for the purpose of determining
any misrepresentation, breach of warranty or non-fulfillment
of any covenant.
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 bear any such fees or
expenses incurred on behalf of the Company or any of the Sellers
in connection with this Agreement and the transactions
contemplated hereby in an amount not to exceed $75,000, any
excess, whether incurred on behalf of the Company or the Sellers,
shall be paid by the Sellers.
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:
Plains Plastics, Inc.
1132 West First, Drawer 708
McPherson, KS 67460
Attention: President
Telephone: (316) 241-5119
Facsimile: (316) 241-0977
If to the Sellers to Agent Seller:
Mr. Richard R. Johnson
Plains Plastics, Inc.
1132 West First, Drawer 708
McPherson, KS 67460
Telephone: (316) 241-5119
Facsimile: (316) 241-0977
If to the Company or the Sellers copy to:
Mark G. Ayesh, Esq.
Ayesh Law Offices
8100 East 22nd Street North
Wichita, KS 67226
Telephone: (316) 682-7381
Facsimile: (316) 682-1729
Donald W. Chesser
Chesser & Company
356 North Rock Road
Suite A
Wichita, KS 67206
Telephone: (316) 683-2067
Facsimile: (316) 683-2822
Justus H. Fugate
7622 Dublin
Wichita, KS 67206
Telephone: (316) 634-0415
Facsimile: (316) 634-1201
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 Kansas (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) "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;
(f) "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 any Subsidiaries or the
ownership or value thereof, taken as a whole;
(g) "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;
(h) 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;
(i) "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; and
(j) the following terms have the meanings set forth in
the following Sections of this Agreement:
<TABLE>
<CAPTION>
Section
<S> <S>
Acquisition Proposal 5.3
Agent Seller 1.1
Claims 2.9
Closing 1.2
Closing Date 1.2
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
Escrow Account 1.1
Escrow Agreement 1.1
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
Securities Act 3.3
Security Interest 1.3
Shares 1.1
Subsidiary 2.2
Survey 5.13
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. Buyer hereby submits to
the non-exclusive jurisdiction of the courts of the State of
Kansas 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. Buyer agrees that service of
process may be made upon him or it in any manner permitted by the
laws of the State of Kansas or the federal laws of the United
States.
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 for the benefit of, or enforceable by or on
behalf of any party, including, without limitation, 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.
By: /s/ T. P. Marchese
------------------------
Name: T. P. Marchese
Title: Assistant Vice President -
Corporate Development
PLAINS PLASTICS, INC.
By: /s/ Richard R. Johnson
--------------------------
Name: Richard R. Johnson
Title: President
SELLERS
/s/ Richard R. Johnson
------------------------
Name: Richard R. Johnson
/s/ Justus H. Fugate
------------------------
Name: Justus H. Fugate
*
----------------------
Name: James S. Adams
*
----------------------
Name: Erin J. Branting
*
----------------------
Name: Floyd C. Jaggers
*
----------------------
Name: John S. Dwyer
*
----------------------
Name: W. Kent Christy
*
----------------------
Name: Wesley Kent Christy, IRA
The Trust Company of Kansas
*
----------------------
Name: Floyd C. Jaggers, IRA
The Trust Company of Kansas
*
----------------------
Name: Brooke J. Blomberg
*
----------------------
Name: Larry R. Busby
*
----------------------
Name: Kenneth J. Fugate
*
----------------------
Name: Helen L. Martin
*
----------------------
Name: Charles J. Singleton
*
----------------------
Name: John C. Hamilton
*
----------------------
Name: Haynes L. Eslinger, IRA
The Trust Company of Kansas
*By /s/ Richard R. Johnson
--------------------------
Richard R. Johnson
Attorney-in-Fact
Acceptance of the
Agencies described in
this Agreement
/s/ Richard R. Johnson
- -----------------------
Seller Agent Name: Richard R. Johnson
<PAGE>
ECHLIN INC. [LOGO]
100 Double Beach Road
Branford, CT 06405
February 9, 1996
Echlin Inc.
100 Double Beach Road
Branford, CT 06405
Gentlemen:
In connection with the registration under the Securities Act
of 1933, as amended, of 229,450 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
:jeh
<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 22, 1995, which appears on
page 31 of Echlin Inc.'s 1995 Annual Report on Form 10-K for the
year ended August 31, 1995. We also consent to the incorporation
by reference of our report on the Financial Statement Schedule,
which appears on page 12 of such Annual Report on Form 10-K. We
also consent to the references to us under the heading "Experts"
in such Prospectus.
PRICE WATERHOUSE LLP
Stamford, Connecticut
February 7, 1996
