UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
HOWELL INDUSTRIES, INC.
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
44307310
(CUSIP Number)
Fredrick M. Miller, Esq.
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
(313) 568-6800
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 21, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3)
or (4), check the following box [ ]
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act.
CUSIP No. 44307310
1. Name of Reporting Person: Oxford Automotive, Inc.
S.S. or I.R.S. Identification No.
of above person (optional): 38-3262809
2. Check the Appropriate Box if a Member of a Group:
(a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds: BK, WC, OO
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e):
[ ]
6. Citizenship or Place of Organization: Michigan
Number of Shares 7. Sole Voting Power
-0-
Beneficially 8. Shared Voting Power
202,972
Owned by Each 9. Sole Dispositive Power
-0-
Reporting Person 10. Shared Dispositive Power
With 202,972
11. Aggregate Amount Beneficially Owned by Each Reporting Person
202,972
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares
[ ]
13. Percent of Class Represented by Amount in Row (11)
32.6%
14. Type of Reporting Person: CO
PAGE
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Item 1. Security and Issuer.
This Statement relates to the common stock (the "Common
Stock"), of Howell Industries, Inc., a Michigan corporation (the
"Issuer"). The address of the principal executive office of the
Issuer is 17515 West Nine Mile Road, Suite 650, Southfield,
Michigan 48075.
Item 2. Identity and Background.
This Statement is filed on behalf of Oxford Automotive, Inc.
(the "Company"), a Michigan corporation. The primary business of
the Company is the manufacture and sale of automotive parts and
components. The address of the principal executive office of the
Company is 2365 Franklin Road, Bloomfield Hills, Michigan 48203.
During the past five years the Company has not been convicted in
a criminal proceeding (excluding traffic violations or similar
misdemeanors) nor been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a
result of which a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws was issued nor in
which there was a finding of any violation with respect to such
laws.
Background information for each of the directors and
executive officers of the Company is set forth below, including
as to each his (a) name, (b) residence or business address and
(c) present principal occupation or employment and the name,
principal business and address of any corporation or other
organization in which such employment is conducted. All such
persons are United States citizens (except that Manfred J. Walt
and Lawrence C. Cornwall are Canadian citizens). During the last
five years, none of such persons has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors)
or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
1. (a) Selwyn Isakow
(b) 2000 North Woodward Avenue
Bloomfield Hills, Michigan 48304
(c) Chairman of the Board of Directors
of the Company and President of
The Oxford Investment Group, Inc., a
private investment and corporate
development company ("Oxford
Investment")
2000 North Woodward Avenue
Bloomfield Hills, Michigan 48304
2. (a) Rex E. Schlaybaugh, Jr.
(b) 2000 North Woodward Avenue
Bloomfield Hills, Michigan 48304
(c) Vice Chairman of the Board and Secretary
of the Company; Vice Chairman of
Oxford Investment; Member,
Dykema Gossett PLLC, attorneys,
1577 North Woodward Avenue, Suite 300
Bloomfield Hills, Michigan 48304
3. (a) Steven M. Abelman
(b) 2365 Franklin Road
Bloomfield Hills, Michigan 48203
(c) Director, President and Chief
Executive Officer of the Company
4. (a) Manfred J. Walt
(b) Suite 4440 BCE Place
181 Bay Street
Toronto, Ontario Canada M5J 2T3
(c) Managing Partner - Financial Services
of the Edper Group Limited, a diversified
Canadian Merchant Bank with operations
in natural resources, power generating,
financial services and real estate
5. (a) Charles L. Dardas
(b) 2365 Franklin Road
Bloomfield Hills, Michigan 48203
(c) Vice President, Chief Financial Officer
and Treasurer of the Company
6. (a) Lawrence C. Cornwall
(b) 2365 Franklin Road
Bloomfield Hills, Michigan 48203
(c) Senior Vice President - Sales and
Engineering of the Company
7. (a) John H. Ferguson
(b) 2000 North Woodward Avenue
Bloomfield Hills, Michigan 48304
(c) Vice President - Financial Operations
of the Company
Item 3. Source and Amount of Funds or Other Consideration.
The Company is reporting its beneficial ownership of Common
Stock which may be acquired upon exercise of an option (the
"Option") granted to the Company to purchase 202,972 shares of
the Common Stock (the "Shares") pursuant to the terms of a
shareholder agreement, dated as of May 21, 1997 (the "Shareholder
Agreement"), by and among the Company, HI Acquisition, Inc., a
Michigan corporation and a wholly-owned subsidiary of the
Company ("Acquisition"), and NBD Bank, a Michigan banking
corporation, and Morton Schiff, co-trustees of the Herbert H.
Freedland Marital Trusts established under The Herbert H.
Freedland Trust Agreement dated November 3, 1972 (the
"Shareholder"). The Option is currently exercisable; however,
the Shareholder's obligation to sell the Shares is subject to the
satisfaction of certain conditions precedent, including approval
of the Shareholder Agreement by the Probate Court of Oakland
County, Michigan. In the event that the Option is exercised by
the Company, and such conditions precedent are satisfied, payment
of the exercise price ($37.00 per Share, or $7,509,964, if
exercised in full, subject to adjustment as provided in the
Shareholder Agreement) will be made from funds made available
through borrowings from banks, the identity of which is not yet
known, or from funds then otherwise available to the Company.
The Shareholder Agreement is attached hereto as Exhibit 1 and is
incorporated herein by reference.
Item 4. Purpose of Transaction.
The Company entered into the Shareholder Agreement in
connection with the execution of an Agreement and Plan of Merger
among the Company, Acquisition and the Issuer, dated as of May
21, 1997 (the "Merger Agreement"), providing for, among other
things, the Merger of Acquisition with and into the Issuer, with
the Issuer as the surviving corporation (the "Merger") and the
Company as its sole stockholder. In connection with the Merger,
the shares of outstanding Common Stock of the Issuer would be
converted into the right to receive $37.00 in cash from the
Company, will thereafter cease to be authorized to be quoted on
the American Stock Exchange and will be eligible for termination
of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended. The Merger Agreement is
attached hereto as Exhibit 2 and is incorporated herein by
reference.
Except as set forth in the Merger Agreement and the
Shareholder Agreement, neither the Company nor, to the best of
the Company's knowledge, any person listed in response to Item 2
hereof, has any plans or proposals which relate to or would
result in: (a) the acquisition by any person of additional
securities of the Issuer, or the disposition of securities of the
Issuer; (b) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Issuer; (c)
a sale or transfer of a material amount of assets of the Issuer;
(d) any change in the present Board of Directors or management of
the Issuer, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the
board; (e) any material change in the present capitalization or
dividend policy of the Issuer; (f) any other material change in
the Issuer's business or corporate structure; (g) changes in the
Issuer's charter, bylaws or instruments corresponding thereto or
other actions which may impede the acquisition of control of the
Issuer by any person; (h) causing a class of securities of the
Issuer to be delisted from a national securities exchange or to
cease to be authorized to be quoted in an inter-dealer quotation
system of a registered national securities association; (i) a
class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (j) any
action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) As of the date hereof, the Company may be deemed to
beneficially own the Shares. None of the individuals named in
response to Item 2 are beneficial owners of any of the Shares
reported hereby.
(b) Pursuant to the Shareholder Agreement, the Shareholder
has agreed with the Company (i) to vote the Shares as set forth
therein; and (ii) not to sell or otherwise transfer or encumber
the Shares or the voting rights thereof (See Item 6, below).
Accordingly, the Company may be deemed to share the power to
vote, direct the vote, dispose or direct the disposition of the
Shares. Upon acquisition of the Shares pursuant to the Option,
the Company would have the sole power to vote, direct the vote,
dispose and direct the disposition of the Shares.
(c) Other than the Merger Agreement and the Shareholder
Agreement, no transactions have been effected in the Common Stock
during the past sixty days by the Company or any of the
individuals named in response to Item 2.
(d) Pursuant to the terms of the Shareholder Agreement, the
Shareholder is entitled to receive any and all dividends and
other distributions that may be declared, set aside or paid by
the Company with respect to the Shares during the term of the
Shareholder Agreement.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
Pursuant to the Option granted under the Shareholder
Agreement, the Company has the right to acquire from the
Shareholder all of the Shares. The Option shall terminate and
shall no longer be exercisable, nor shall the Shares be
purchasable thereunder, from and after the earlier of (i)
termination of the Merger Agreement by mutual written consent of
the Company and the Issuer pursuant to Section 7.1(a) of the
Merger Agreement; and (ii) December 31, 1997.
The obligation of the Shareholder to sell the Shares is
subject to the following conditions:
(i) neither the Company nor Acquisition shall be in
breach in any material respect of the Merger Agreement;
(ii) all waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and any
securities laws applicable to the exercise of the Option shall
have expired or been terminated;
(iii) there shall be no preliminary or permanent
injunction or other order, decree or ruling issued by any
governmental or regulatory authority or agency (a "Governmental
Entity"), nor any statute, rule, regulation or order promulgated
or enacted by any Governmental Entity prohibiting, or otherwise
restraining, such exercise of the Option; and
(iv) the Shareholder shall have received an order of
the Probate Court for the County of Oakland, Michigan (the
"Probate Court"), approving the Shareholder Agreement.
The Company may terminate the Merger Agreement if, within 45
days of the date of the Merger Agreement, the Shareholder has not
received the requisite approval of the Probate Court.
In the Shareholder Agreement, the Shareholder agrees that
(for so long as the Merger Agreement is in effect), at any
meeting of the holders of the Common Stock, however called, or in
connection with any written consent of the holders of the Common
Stock, it shall vote (or cause to be voted) the Shares (a) in
favor of the Merger, the execution and delivery by the Issuer of
the Merger Agreement and the approval of the terms thereof and
each of the other actions contemplated by the Merger Agreement
and the Shareholder Agreement and any actions required in
furtherance of the Merger Agreement and the Shareholder
Agreement; (b) against any action or agreement that would result
in a breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of the Issuer under
the Merger Agreement or of the Shareholder under the Shareholder
Agreement; and (c) except as otherwise agreed to in writing in
advance by the Company, against any of the following actions or
agreements (other than the Merger Agreement or the transactions
contemplated thereby): (i) any action or agreement that is
intended, or could reasonably be expected to impede, interfere
with, delay, postpone or attempt to discourage or adversely
affect the Merger, and the transactions contemplated by the
Shareholder Agreement and the Merger Agreement; (ii) any
extraordinary corporate transaction, such as merger,
consolidation or other business combination involving the Issuer
and its subsidiaries; (iii) a sale, lease or transfer of a
material amount of assets of the Issuer or its subsidiaries or a
reorganization, recapitalization, dissolution or liquidation of
the Issuer or its subsidiaries; (iv) any change in the management
or Board of Directors of the Issuer, except as proposed by the
Company; (v) any change in the present capitalization or dividend
policy of the Issuer; (vi) any amendment of the Issuer's articles
of incorporation or bylaws; or (vii) any other material change in
the Issuer's corporate structure or business.
The Shareholder has also agreed in the Shareholder Agreement
that, so long as the Shareholder Agreement is in effect, it will
not (i) offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to the
offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any of the Shares or any
interest therein, (ii) grant any proxies or powers of attorney,
deposit any of the Shares into a voting trust or enter into a
voting agreement with respect to any of the Shares or (iii) take
any action that would make any representation or warranty of the
Shareholder contained in the Shareholder Agreement untrue or
incorrect or have the effect of preventing or disabling the
Shareholder from performing its obligations under the Shareholder
Agreement. In addition, the Shareholder has made certain
customary representations, warranties and additional covenants in
the Shareholder Agreement.
Item 7. Material To Be Filed As Exhibits.
1. Shareholder Agreement, dated May 21, 1997, by and among the
Company, Acquisition and the Shareholder.
2. Agreement and Plan of Merger, dated as of May 21, 1997, by
and among the Company, Acquisition and the Issuer.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
Dated: June 5, 1997
OXFORD AUTOMOTIVE, INC.
By: /S/ REX E. SCHLAYBAUGH
Name: Rex E. Schlaybaugh
Title: Vice Chairman
PAGE
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EXHIBIT INDEX
1. Shareholder Agreement, dated May 21, 1997, by and among the
Company, Acquisition and the Shareholder.
2. Agreement and Plan of Merger, dated as of May 21, 1997, by
and among the Company, Acquisition and the Issuer.
SHAREHOLDER AGREEMENT
This SHAREHOLDER AGREEMENT (the "Agreement") is entered into
as of May 21, 1997 by and among Oxford Automotive, Inc., a
Michigan corporation ("Parent"), HI Acquisition, Inc., a Michigan
corporation and a wholly owned subsidiary of Parent ("Merger
Sub"), and NBD Bank, a Michigan banking corporation, and Morton
Schiff, co-trustees of the Herbert H. Freedland Marital Trusts
established under the Herbert H. Freedland Trust Agreement dated
November 3, 1972 (the "Shareholder").
RECITALS
WHEREAS, concurrently herewith, Parent and Merger Sub are
entering into an Agreement and Plan of Merger (the "Merger
Agreement") with Howell Industries, Inc., a Michigan corporation
(the "Company"), pursuant to which Parent will acquire the
Company, on the terms and subject to the conditions set forth in
the Merger Agreement, by means of a merger (the "Merger") of
Merger Sub into the Company (capitalized terms used herein and
not otherwise defined are used as defined in the Merger
Agreement); and
WHEREAS, as of the date hereof the Shareholder beneficially
owns directly or indirectly 202,972 shares of Company Common
Stock (the "Shares"), which Shares constitute approximately 32.6%
of the issued and outstanding shares of Company Common Stock; and
WHEREAS, as an inducement to Parent to acquire the Company,
and as a condition to Parent's willingness to enter into the
Merger Agreement and consummate the transactions contemplated
thereby, Parent and Merger Sub have required that the Shareholder
agree, and the Shareholder has agreed (i) to grant Parent and
Merger Sub an irrevocable option to buy the Shares at $37.00 per
share, subject to adjustment as provided herein (the "Option");
and (ii) in the event such option is not theretofore exercised,
to vote the Shares in favor of the Merger; and
WHEREAS, the Board of Directors of the Company has approved
this Agreement, the Merger Agreement, the Merger and the
transactions contemplated thereby.
NOW THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, and
such other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. Option.
1.1 Grant of Option.
(a) In order to induce Parent and Merger Sub to enter
into the Merger Agreement, the Shareholder hereby irrevocably
grants to Parent and Merger Sub the Option exercisable in whole
but not in part from and after the date hereof, to purchase
Shares at a purchase price of $37.00 per Share (or, if increased
subsequent to the date hereof, the Merger Consideration set forth
in Section 1.6(a) of the Merger Agreement). The Option shall
terminate and shall no longer be exercisable, nor shall the
Shares subject to the Option be purchasable hereunder at a
Closing (as defined below) notwithstanding any notice of exercise
contemplated by Section 1.1(c) with respect thereto, from and
after the earlier of (i) termination of the Merger Agreement
pursuant to Section 7.1(a) thereof or (ii) December 31, 1997.
(b) The obligation of the Shareholder to sell the
Shares at Closing is subject to the following conditions:
(i) neither Parent nor Merger Sub shall be in
breach in any material respect of the Merger Agreement;
(ii) all waiting periods under the HSR Act and any
securities laws applicable to the exercise of the Option shall
have expired or been terminated;
(iii) there shall be no preliminary or
permanent injunction or other order, decree or ruling issued by
any governmental or regulatory authority or agency (a
"Governmental Entity"), nor any statute, rule, regulation or
order promulgated or enacted by any Governmental Entity
prohibiting, or otherwise restraining, such exercise of the
Option; and
(iv) the Shareholder shall have received an order
of the Probate Court for the County of Oakland, Michigan,
approving this Agreement.
(c) In the event Parent or Merger Sub wish to exercise
the Option, Parent shall deliver notice thereof to the
Shareholder, specifying the date, time and place for the closing
of such purchase. A closing of the purchase of the Shares
pursuant to the Option (a "Closing") shall take place on the
date, at the time and at the place specified in such notice;
provided, that if at such date any of the conditions specified in
Section 1.1(b) hereof shall not have been satisfied or waived,
Parent may postpone such Closing until a date within two business
days after such conditions are satisfied or waived. At the
Closing, the Shareholder will deliver to Parent or Merger Sub (in
accordance with Parent's instructions) the certificates
representing the Shares being purchased pursuant to Section
1.1(a), duly endorsed or accompanied by stock powers duly
executed in blank. At such Closing, Parent or Merger Sub shall
either (i) wire transfer to the account designated by the
Shareholder or (ii) deliver to the Shareholder a certified or
bank cashier's check payable to or upon the order of the
Shareholder, in each case in an amount equal to the number of
Shares being purchased from the Shareholder at such Closing
multiplied by $37.00 in immediately available funds.
1.2 Assignment of Dividends and Other Distributions. The
Shareholder shall be entitled to receive any and all dividends
and other distributions that may be declared, set aside or paid
by the Company with respect to the Shares during the term of this
Agreement.
1.3 No Liens. The Shareholder agrees that, in connection
with the transfer of Shares to Parent or Merger Sub pursuant to
the Option, it shall transfer to and unconditionally vest in the
Parent or Merger Sub, as the case may be, good and valid title to
the Shares, free and clear of all claims, liens, restrictions,
security interests, pledges, limitations and encumbrances
whatsoever, except those arising hereunder.
1.4 No Purchase. Parent and Merger Sub may allow the
Option to terminate without purchasing all or any Shares pursuant
to the exercise thereof.
2. Voting.
The Shareholder hereby agrees that (for so long as the
Merger Agreement is in effect), at any meeting of the holders of
Company Common Stock, however called, or in connection with any
written consent of the holders of Company Common Stock, it shall
vote (or cause to be voted) the Shares (a) in favor of the
Merger, the execution and delivery by the Company of the Merger
Agreement and the approval of the terms thereof and each of the
other actions contemplated by the Merger Agreement and this
Agreement and any actions required in furtherance thereof and
hereof; (b) against any action or agreement that would result in
a breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of the Company
under the Merger Agreement or of the Shareholder under this
Agreement; and (c) except as otherwise agreed to in writing in
advance by Parent, against any of the following actions or
agreements (other than the Merger Agreement or the transactions
contemplated thereby): (i) any action or agreement that is
intended, or could reasonably be expected, to impede, interfere
with, delay, postpone or attempt to discourage or adversely
affect the Merger, and the transactions contemplated by this
Agreement and the Merger Agreement; (ii) any extraordinary
corporate transaction, such as a merger, consolidation or other
business combination involving the Company and its subsidiaries;
(iii) a sale, lease or transfer of a material amount of assets of
the Company or its subsidiaries or a reorganization,
recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (iv) any change in the management or Board of
Directors of the Company, except as proposed by Parent; (v) any
change in the present capitalization or dividend policy of the
Company; (vi) any amendment of the Company's articles of
incorporation or bylaws; or (vii) any other material change in
the Company's corporate structure or business.
3. Representation and Warranties. The Shareholder
represents and warrants to Parent and Merger Sub as follows:
3.1 Ownership of Shares. On the date hereof, the
Shareholder is the record owner of the Shares and, on the date
hereof, the Shares constitute all of the shares of Company Common
Stock owned of record and beneficially by the Shareholder. The
Shareholder has sole voting power, sole power of disposition and
sole power to agree to all of the matters set forth in this
Agreement with respect to all of the Shares, with no limitations,
qualifications or restrictions on such rights, and the Shares are
the only shares of Company Common Stock over which the
Shareholder has such powers or otherwise are owned of record or
beneficially by the Shareholder as of the date hereof. The
Shareholder has received written evidence (a copy of which has
been provided to Parent and Merger Sub) that the Company's Board
of Directors has taken all action necessary to ensure that, upon
the execution and delivery of this Agreement or exercise of the
Option, the Parent or Merger Sub, as the case may be, (a) shall
have the unencumbered right to vote the Shares, (b) will not
become an "acquiring person" or acquire "control shares" as such
terms are used or defined in Section 790 through Section 799 of
the Michigan Business Corporation Act (the "MBCA"), and (c) will
not become an "interested shareholder" as such term is used or
defined in Section 775 through 784 of the MBCA.
3.2 Power, Binding Agreement. The Shareholder has the
legal capacity, power and authority to enter into and perform all
of its obligations under this Agreement. The execution, delivery
and performance of this Agreement by the Shareholder will not
violate any other agreement to which the Shareholder is a party,
including without limitation any voting agreement, shareholders
agreement or voting trust. This Agreement has been duly and
validly executed and delivered by the Shareholder and constitutes
a valid and binding agreement of the Shareholder, enforceable
against the Shareholder in accordance with its terms, except that
such enforceability may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights.
3.3 No Conflicts. Except for filings under the HSR Act and
the Exchange Act, (a) no filing with, and no permit,
authorization, consent or approval of, any Federal, state or
foreign public body or authority is necessary for the execution
of this Agreement by the Shareholder and the consummation by the
Shareholder of the transactions contemplated hereby and (b)
neither the execution and delivery of this Agreement by the
Shareholder nor the consummation by the Shareholder of the
transactions contemplated hereby nor compliance by the
Shareholder with any of the provisions hereof shall (i)conflict
with or result in any breach of any applicable organizational
documents applicable to the Shareholder, (ii) result in a
violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party
right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other
instrument or obligation to which the Shareholder is a party or
by which the Shareholder or any of its properties or assets may
be bound or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Shareholder or any
of its properties or assets.
3.4 Encumbrances. The Shares and the certificates
representing the Shares are now, and at all times during the term
hereof will be, held by the Shareholder, or by a nominee or
custodian for the benefit of the Shareholder, free and clear of
all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other
encumbrances whatsoever, except for any such encumbrances or
proxies arising hereunder.
3.5 Finder's Fees. No investment banker, broker, financial
advisor, finder or other person is entitled to a commission or
fee from Parent, Merger Sub or the Company in respect of this
Agreement or the transactions contemplated hereby based upon any
arrangement or agreement made by or on behalf of the Shareholder,
except as otherwise specifically provided in the Merger Agreement
or arrangements or agreements made by or on behalf of Parent or
Merger Sub by its authorized representatives.
3.6 Reliance by Parent. The Shareholder understands and
acknowledges that Parent is entering into, and causing Merger Sub
to enter into, the Merger Agreement in reliance upon the
Shareholder's execution and delivery of this Agreement and the
representations, warranties and covenants of the Shareholder set
forth herein.
3.7 Ownership of Shares. All Shares owned beneficially or
of record by the Shareholder were acquired at such a time and in
such a manner as set forth on the certificate attached hereto as
Exhibit 3.7.
4. Other Covenants of the Shareholder. The Shareholder
hereby covenants and agrees as follows:
4.1 No Solicitation. The Shareholder shall not (in the
capacity of a shareholder of the Company or otherwise), directly
or indirectly solicit (including by way of furnishing
information) or respond to any inquiries or the making of any
proposal by any person or entity (other than Parent or any
affiliate of Parent) concerning any Acquisition Proposal, except
as permitted by Section 4.2 of the Merger Agreement. If the
Shareholder receives any such inquiry or proposal with respect to
the sale of the Shares, then the Shareholder shall promptly
inform Parent in the same manner as set forth in Section 4.2 of
the Merger Agreement. The Shareholder shall immediately cease
and cause to be terminated any existing activities, discussions
or negotiations with any parties conducted heretofore with
respect to any of the foregoing.
4.2 Restriction on Transfer, Proxies and Non-Interference;
Stop Transfer Order.
(a) The Shareholder hereby agrees, while this
Agreement is in effect, and except as specifically contemplated
hereby, not to (i) offer for sale, sell, transfer, tender,
pledge, encumber, assign or otherwise dispose of, or enter into
any contract, option or other arrangement or understanding with
respect to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any of the
Shares or any interest therein, (ii) grant any proxies or powers
of attorney, deposit any of the Shares into a voting trust or
enter into a voting agreement with respect to any of the Shares
or (iii) take any action that would make any representation or
warranty of the Shareholder contained herein untrue or incorrect
or have the effect of preventing or disabling the Shareholder
from performing its obligations under this Agreement.
(b) In furtherance of the provisions of Section 4.2(a)
hereof, concurrently herewith the Shareholder shall and hereby
does authorize the Company's counsel to notify the Company's
transfer agent that there is a stop transfer order with respect
to all of the Shares and that this Agreement places limits on the
voting and transfer of the Shares.
4.3 Notice of Additional Shares. The Shareholder hereby
agrees to promptly notify Parent in writing of the number of
After-Acquired Shares (as defined below) that may be acquired by
the Shareholder, if any, after the date hereof. Any
After-Acquired Shares shall become Shares subject to the terms of
this Agreement.
4.4 No Inconsistent Agreements. The Shareholder shall not
enter into any agreement or understanding with any person or
entity the effect of which would be inconsistent or violative of
the provisions of this Agreement.
4.5 Further Assurances. From time to time, at the other
party's request and without further consideration, each party
hereto shall execute and deliver such additional documents and
take all such further action as may be necessary or desirable to
consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, the Shareholder
shall use its best efforts to satisfy the condition set forth in
Section 1.1(b)(iv) within 30 days of the date hereof.
5. Miscellaneous.
5.1 Fees and Expenses. All costs and expenses incurred in
connection with this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the party
incurring such expenses.
5.2 Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall
survive the delivery of and payment for the Shares.
5.3 Amendment and Modification. This Agreement may be
amended, modified and supplemented in any and all respects by
written agreement of the parties hereto.
5.4 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other
parties, except that Merger Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations
hereunder to Parent. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be
enforceable by, the parties and their respective successors and
assigns.
5.5 Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants
or agreements contained in this Agreement will cause the other
party to sustain damages for which it would not have an adequate
remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the
aggrieved party shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and
other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity. Without limiting the
generality of the foregoing, Section 2 hereof constitutes a
voting agreement under Section 461 of the MBCA.
5.6 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon
personal delivery, facsimile transmission (which is confirmed),
telex or delivery by an overnight express courier service
(delivery, postage or freight charges prepaid), or on the fourth
day following deposit in the United States mail (if sent by
registered or certified mail, return receipt requested, delivery,
postage or freight charges prepaid), addressed to the parties at
the following addresses (or at such other address for a party as
shall be specified by like notice):
If to the Shareholder:
NBD Bank
1116 W. Long Lake Road
Bloomfield Hills, Michigan 48302
Attention: Lyle F. Dahlberg, Vice President
Telephone No.: (248) 645-7301
Telecopy No.: (248) 645-6849
with a copy to:
John A. Thurber, Esq.
Miller, Canfield, Paddock & Stone P.L.C.
Suite 100
1400 N. Woodward
Bloomfield Hills, Michigan 48304
If to Parent or Merger Sub, to:
Oxford Automotive, Inc.
2000 North Woodward Avenue
Bloomfield Hills, Michigan 48304
Attention: President
Telephone No.: (248) 540-0031
Telecopy No.: (248) 540-7280
with a copy to:
Oxford Automotive, Inc.
2000 North Woodward Avenue
Bloomfield Hills, Michigan 48304
Attention: Rex E. Schlaybaugh, Jr., Esq., Secretary
Telephone No.: (248) 540-0031
Telecopy No.: (248) 540-7280
5.7 Definitions; Interpretation.
(a) As used in this Agreement, (i) the term
"After-Acquired Shares" shall mean any shares of Company Common
Stock acquired directly or indirectly, or otherwise beneficially
owned, by the Shareholder in any capacity after the date hereof
and prior to the termination hereof, whether upon the exercise of
options, warrants or rights, the conversion or exchange of
convertible or exchangeable securities, or by means of a
purchase, dividend, distribution, gift, bequest, inheritance or
as a successor in interest in any capacity (including a fiduciary
capacity) or otherwise; (ii) the term "affiliate(s)" shall have
the meaning set forth in Rule 12b-2 of the Exchange Act and (ii)
the phrases "beneficially own" or "beneficial ownership" with
respect to any securities shall mean having "beneficial
ownership" of such securities (as determined pursuant to Rule
13d-3 under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in
writing (without duplicative counting of the same securities by
the same holder, securities beneficially owned by a person shall
include securities beneficially owned by all other persons with
whom such Person would constitute a "group" within the meaning of
Rule 13d-5 of the Exchange Act).
(b) When a reference is made in this Agreement to a
Section, such reference shall be to a Section in this Agreement
unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The descriptive
headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement.
5.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be considered one and the
same agreement and shall become effective when two or more
counterparts have been signed by each of the parties and
delivered to the other party, it being understood that all
parties need not sign the same counterpart.
5.9 Entire Agreement, No Third Party Beneficiaries, Rights
of Ownership. This Agreement (a) constitutes the entire
agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the
subject matter hereof, and (b) is not intended to confer upon any
person other than the parties hereto any rights or remedies
hereunder.
5.10 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void,
unenforceable or against its regulatory policy, the remainder of
the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.
[This space intentionally left blank.]
5.11 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Michigan
without giving effect to the principles of conflicts of law
thereof.
IN WITNESS WHEREOF, Parent, Merger Sub and the Shareholder
have caused this Agreement to be duly executed as of the day and
year first above written.
OXFORD AUTOMOTIVE, INC.
By:
Name:
Title:
HI ACQUISITION, INC.
By:
Name:
Title:
NBD BANK, Co-Trustee
By:
Name: Lyle F. Dahlberg
Title: First Vice President
Morton Schiff, Co-Trustee
Execution Copy
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
OXFORD AUTOMOTIVE, INC. AND
HI ACQUISITION, INC.
and
HOWELL INDUSTRIES, INC.
Dated as of May 21, 1997
<PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I THE MERGER..................................2
SECTION 1.1 The Merger..................................2
SECTION 1.2 Effective Time..............................2
SECTION 1.3 Effect of the Merger........................2
SECTION 1.4 Articles of Incorporation, By-Laws..........2
SECTION 1.5 Directors and Officers......................3
SECTION 1.6 Effect on Capital Stock.....................3
SECTION 1.7 Exchange of Certificates....................4
SECTION 1.8 Stock Transfer Books........................5
SECTION 1.9 No Further Ownership Rights in
Company Common Stock........................5
SECTION 1.10 Lost, Stolen or Destroyed Certificates......6
SECTION 1.11 Taking of Necessary Action; Further Action..6
SECTION 1.12 Material Adverse Effect.....................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF
THE COMPANY.................................6
SECTION 2.1 Organization and Qualification;
Subsidiaries................................7
SECTION 2.2 Articles of Incorporation and By-Laws.......7
SECTION 2.3 Capitalization..............................7
SECTION 2.4 Authority Relative to this Agreement........8
SECTION 2.5 Material Agreements; No Conflict;
Required Filings and Consents...............9
SECTION 2.6 Compliance, Permits.........................10
SECTION 2.7 SEC Filings; Financial Statements...........11
SECTION 2.8 Absence of Certain Changes or Events........11
SECTION 2.9 No Undisclosed Liabilities..................12
SECTION 2.10 Absence of Litigation.......................12
SECTION 2.11 Employee Benefit Plans, Employment
Agreements..................................12
SECTION 2.12 Labor Matters...............................14
SECTION 2.13 Restrictions on Business Activities.........14
SECTION 2.14 Title to Property...........................14
SECTION 2.15 Taxes.......................................14
SECTION 2.16 Environmental Matters.......................16
SECTION 2.17 Intellectual Property.......................18
SECTION 2.18 Interested Party Transactions...............19
SECTION 2.19 Insurance...................................19
SECTION 2.20 Opinion of Financial Advisor................20
SECTION 2.21 Brokers.....................................20
SECTION 2.22 Change in Control Payments..................20
SECTION 2.23 Expenses....................................20
SECTION 2.24 Products Liability and Warranty Claims......20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB..............................21
SECTION 3.1 Organization and Qualification;
Subsidiaries................................21
SECTION 3.2 Articles of Incorporation and By-Laws.......21
SECTION 3.3 Authority Relative to this Agreement........21
SECTION 3.4 No Conflict, Required Filings and Consents..21
SECTION 3.5 Share Ownership.............................22
SECTION 3.6 Ownership of Merger Sub; No Prior
Activities..................................22
SECTION 3.7 Financing...................................22
SECTION 3.8 Solvency....................................22
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER......23
SECTION 4.1 Conduct of Business by the Company
Pending the Merger..........................23
SECTION 4.2 No Solicitation.............................25
ARTICLE V ADDITIONAL AGREEMENTS.......................27
SECTION 5.1 HSR Act.....................................27
SECTION 5.2 Shareholder Meeting.........................27
SECTION 5.3 Access to Information; Confidentiality......27
SECTION 5.4 Consents; Approvals.........................27
SECTION 5.5 Indemnification and Insurance...............28
SECTION 5.6 Notification of Certain Matters.............29
SECTION 5.7 Further Action..............................29
SECTION 5.8 Public Announcements........................29
SECTION 5.9 Conveyance Taxes............................29
SECTION 5.10 Shareholder Agreement; Michigan Law.........29
SECTION 5.11 Title Policy and Survey.....................30
ARTICLE VI CONDITIONS TO THE MERGER....................31
SECTION 6.1 Conditions to Obligation of Each
Party to Effect the Merger..................31
SECTION 6.2 Additional Conditions to Obligations of
Parent and Merger Sub.......................32
SECTION 6.3 Additional Conditions to Obligation of
the Company.................................33
ARTICLE VII TERMINATION.................................34
SECTION 7.1 Termination.................................34
SECTION 7.2 Effect of Termination.......................36
SECTION 7.3 Fees and Expenses...........................36
ARTICLE VIII GENERAL PROVISIONS..........................37
SECTION 8.1 Effectiveness of Representations,
Warranties and Agreements; Knowledge, Etc...37
SECTION 8.2 Notices.....................................37
SECTION 8.3 Certain Definitions.........................39
SECTION 8.4 Amendment...................................40
SECTION 8.5 Waiver......................................40
SECTION 8.6 Headings....................................40
SECTION 8.7 Severability................................40
SECTION 8.8 Entire Agreement............................40
SECTION 8.9 Assignment; Guarantee of Merger Sub.........40
SECTION 8.10 Parties in Interest.........................40
SECTION 8.11 Failure or Indulgence Not Waiver; Remedies
Cumulative..................................41
SECTION 8.12 Governing Law...............................41
SECTION 8.13 Counterparts................................41
Section 2.1 Organization and Qualification;
Subsidiaries
Section 2.3 Capitalization
Section 2.5(a) Material Agreements
Section 2.5(b) Agreement Defaults
Section 2.5(c) No Conflict
Section 2.6(a) Compliance
Section 2.6(b) Permits
Section 2.7(a) SEC Filings; Financial Statements
Section 2.8 Absence of Changes
Section 2.9 Undisclosed Liabilities
Section 2.10 Absence of Litigation
Section 2.11(a) Employee Plans and Agreements
Section 2.11(b) Employee Benefit Matters
Section 2.11(c) Employee Option Plans
Section 2.11(d) Agreements with Employees and
Consultants
Section 2.12 Labor Matters
Section 2.15(b) Taxes
Section 2.16(a) Environmental Matters
Section 2.17(b) Intellectual Property
Section 2.17(c) Intellectual Property Licenses
Section 2.18 Interested Party Transactions
Section 2.19 Insurance
Section 2.22 Change in Control Payments
Section 2.23 Expenses
Section 2.24 Product Liability and Warranty Claims
Section 4.1(e) Conduct of Business
PAGE
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 21, 1997 (this
"Agreement"), among Oxford Automotive, Inc., a Michigan
corporation ("Parent"), HI Acquisition, Inc., a Michigan
corporation and a wholly owned subsidiary of Parent ("Merger
Sub"), and Howell Industries, Inc., a Michigan corporation (the
"Company").
WITNESSETH:
WHEREAS, the Boards of Directors of Parent, Merger Sub and
the Company have each determined that it is advisable and in the
best interests of their respective shareholders for Parent to
enter into a business combination with the Company upon the terms
and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards of
Directors of Parent, Merger Sub and the Company have each
approved the merger of Merger Sub with and into the Company (the
"Merger") in accordance with the applicable provisions of the
Michigan Business Corporation Act (the "MBCA") and upon the terms
and subject to the conditions set forth herein;
WHEREAS, pursuant to the Merger, each outstanding share (a
"Share") of the Company's common stock (the "Company Common
Stock"), shall be converted into the right to receive the Merger
Consideration (as defined in Section 1.6(a)), upon the terms and
subject to the conditions set forth herein; and
WHEREAS, as an inducement to Parent to acquire the Company,
and as a condition to Parent's willingness to enter into this
Agreement, Parent, Merger Sub and the Herbert H. Freedland Trust
(the "Shareholder") are entering into a shareholder agreement
(the "Shareholder Agreement") pursuant to which the Shareholder
has agreed to (i) grant Parent and Merger Sub an irrevocable
option to buy its Shares at $37.00 per Share, and (ii) in the
event that such irrevocable option is not theretofore exercised,
to vote its Shares in favor of the Merger, in each case upon the
terms and subject to the conditions set forth therein;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending
to be legally bound hereby, Parent, Merger Sub and the Company
hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger.
(a) Effective Time. At the Effective Time (as defined in
Section 1.2), and subject to and upon the terms and conditions of
this Agreement, and the MBCA, Merger Sub shall be merged with and
into the Company, the separate corporate existence of Merger Sub
shall cease, and the Company shall continue as the surviving
corporation. The Company as the surviving corporation after the
Merger is hereinafter sometimes referred to as the "Surviving
Corporation."
(b) Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have
been abandoned pursuant to Section 7.1 and subject to the
satisfaction or waiver of the conditions set forth in Article VI,
the consummation of the Merger will take place as promptly as
practicable (and in any event within two business days) after
satisfaction or waiver of the conditions set forth in Article VI,
at the offices of Dykema Gossett PLLC, 1577 North Woodward
Avenue, Suite 300, Bloomfield Hills, Michigan, unless another
date, time or place is agreed to in writing by the parties hereto
(the "Closing").
SECTION 1.2 Effective Time. As promptly as practicable
after the satisfaction or waiver of the conditions set forth in
Article VI, the parties hereto shall cause the Merger to be
consummated by filing a certificate of merger as contemplated by
the MBCA (the "Certificate of Merger"), together with any
required related certificates, with the Department of Consumer
and Industry Services of the State of Michigan, in such form as
required by, and executed in accordance with the relevant
provisions of, the MBCA (the time of such filing being the
"Effective Time").
SECTION 1.3 Effect of the Merger. At the Effective Time,
the effect of the Merger shall be as provided in this Agreement,
the Certificate of Merger and the applicable provisions of the
MBCA. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Merger Sub
shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become
the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.4 Articles of Incorporation, By-Laws.
(a) Articles of Incorporation. Unless otherwise determined
by Parent prior to the Effective Time, at the Effective Time the
Articles of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter
amended in accordance with the MBCA and such Articles of
Incorporation.
(b) By-Laws. Unless otherwise determined by Parent prior
to the Effective Time, the By-Laws of the Company, as in effect
immediately prior to the Effective Time, shall be the By-Laws of
the Surviving Corporation until thereafter amended in accordance
with the MBCA, the Articles of Incorporation of the Surviving
Corporation and such By-Laws.
SECTION 1.5 Directors and Officers. The Board of
Directors of Merger Sub immediately prior to the Effective Time
shall be the initial Board of Directors of the Surviving
Corporation, each member to hold office in accordance with the
Articles of Incorporation and By-Laws of the Surviving
Corporation, and the officers of Merger Sub immediately prior to
the Effective Time shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 1.6 Effect on Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part
of the Parent, Merger Sub, the Company or the holders of any of
the following securities:
(a) Conversion of Securities. Each Share issued and
outstanding immediately prior to the Effective Time (excluding
any Shares to be canceled pursuant to Section 1.6(b)) shall be
converted into the right to receive $37.00, in cash, without
interest (the "Merger Consideration").
(b) Cancellation. Each Share owned by Parent, Merger Sub
or any direct or indirect wholly owned subsidiary of the Company
or Parent immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the
holder thereof, cease to be outstanding, be canceled and retired
without payment of any consideration therefor and cease to exist.
(c) Stock Options. At or immediately prior to the Effective
Time, each outstanding employee and director stock option to
purchase Shares (an "Option") granted under the Howell
Industries, Inc. 1995 Stock Incentive Plan for Key Employees
(such plans or arrangements, the "Company Stock Option Plan"),
shall be canceled, and each holder of any such Option, whether or
not then vested or exercisable, shall be paid by the Company, at
or immediately prior to the Effective Time for each such Option,
in consideration therefor an amount in cash determined by
multiplying (i) the excess, if any, of $37.00 per Share over the
applicable exercise price of such Option by (ii) the number of
Shares such holder could have purchased (assuming full vesting of
all Options) had such holder exercised such Option in full
immediately prior to the Effective Time. The Company shall use
all reasonable efforts to effectuate the foregoing, including
without limitation, amending the Option Plans and obtaining any
necessary consents from Option holders; provided, however, that
prior to the Effective Time, the Board of Directors of the
Company shall adopt such resolutions or take such other actions
as are required to adjust and which action, if any, shall be
acceptable in all reasonable respects to the Parent, effective
immediately prior to the Effective Time, the terms of each
outstanding Option as to which any such consent is not obtained
prior to the Effective Time to provide that such Option shall be
converted into the right, upon exercise of such Option at any
time after the Effective Time, to receive an amount in cash equal
to $37.00 for each Share subject to such Option, or,
alternatively, upon the surrender and cancellation of such Option
at any time after the Effective Time to receive an amount in cash
determined by multiplying (i) the excess, if any, of $37.00 per
Share over the applicable exercise price of such Option by (ii)
the number of Shares subject to such Option, in either case
without interest or any other adjustment thereto.
(d) Capital Stock of Merger Sub. Each share of common
stock, without par value, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into
and exchanged for one validly issued, fully paid and
nonassessable share of common stock, without par value, of the
Surviving Corporation.
SECTION 1.7 Exchange of Certificates.
(a) Exchange Agent. Parent shall designate NBD Bank,
Comerica Bank, Michigan National Bank, or other bank or trust
company satisfactory to the Company, to act as agent for holders
of Company Common Stock (the "Exchange Agent"), to receive funds
to which such holders shall become entitled pursuant to Section
1.6(a). Parent shall deposit immediately prior to or at the
Effective Time such funds with the Exchange Agent. Such funds
shall be invested by the Exchange Agent as directed by Parent or
the Surviving Corporation in trust for the benefit of the holders
of Company Common Stock, for payment in accordance with this
Section 1.7 in exchange for outstanding Shares.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, Parent will instruct the
Exchange Agent to mail to each holder of record of Certificates
(i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other
provisions as Parent and the Company may reasonably specify), and
(ii) instructions to effect the surrender of the Certificates in
exchange for payment of the Merger Consideration. Upon surrender
of a Certificate for cancellation to the Exchange Agent together
with such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration, and the
Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of Shares which is not
registered in the transfer records of the Company as of the
Effective Time, the Merger Consideration may be paid in
accordance with this Article I to a transferee if the Share is
presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer pursuant to this
Section 1.7(b) and by evidence that any applicable stock transfer
taxes have been paid. Until surrendered as contemplated by this
Section 1.7(b) such Certificates shall represent solely the right
to receive the Merger Consolidation with respect to each of the
Shares represented thereby.
(c) Transfers of Ownership. If any Merger Consideration
is to be paid in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a
condition to the payment thereof that the Certificate so
surrendered will be properly endorsed and otherwise in proper
form for transfer and that the person requesting such exchange
will have paid to Parent or any agent designated by it any
transfer or other taxes required by reason of the payment of the
Merger Consideration to any name other than that of the
registered holder of the certificate surrendered, or have
established to the satisfaction of Parent or any agent designated
by it that such tax has been paid or is not payable.
(d) Termination of Fund; No Liability. At any time
following six months after the Effective Time, the Surviving
Corporation shall be entitled to require the Exchange Agent to
deliver to it any funds (including interest received with respect
thereto) which had been made available to the Exchange Agent and
which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat or
other similar laws) only as general creditors thereof with
respect to the Merger Consideration payable upon the surrender of
their Certificates, without any interest thereon.
Notwithstanding the foregoing, neither Parent, Merger Sub nor the
Company shall be liable to any holder of Company Common Stock for
any Merger Consideration delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(e) Withholding Rights. Parent or the Exchange Agent shall
be entitled to deduct and withhold from the Merger Consideration
otherwise payable pursuant to this Agreement to any holder of
Company Common Stock such amounts as Parent or the Exchange Agent
is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended
(the "Code"), or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of
the Shares in respect of which such deduction and withholding was
made by Parent or the Exchange Agent.
SECTION 1.8 Stock Transfer Books. At the Effective Time,
the stock transfer books of the Company shall be closed, and
there shall be no further registration of transfers of Company
Common Stock thereafter on the records of the Company.
SECTION 1.9 No Further Ownership Rights in Company Common
Stock. The Merger Consideration delivered upon the surrender for
exchange of Shares in accordance with the terms hereof shall be
deemed to have been issued in full satisfaction of all rights
pertaining to such Shares, and there shall be no further
registration of transfers on the records of the Surviving
Corporation of Shares which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Shares are
presented to the Surviving Corporation for any reason, they shall
be canceled and exchanged as provided in this Article I.
SECTION 1.10 Lost, Stolen or Destroyed Certificates. In
the event any Certificates shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, the Merger
Consideration as provided in this Article; provided, however,
that Parent may, in its discretion and as a condition precedent
to the payment thereof, require the owner of such lost, stolen or
destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made
against Parent or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
SECTION 1.11 Taking of Necessary Action; Further Action.
Each of Parent, Merger Sub and the Company will take all such
reasonable and lawful action as may be necessary or appropriate
in order to effectuate the Merger in accordance with this
Agreement as promptly as practicable. If, at any time after the
Effective Time, any such further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the
Surviving Corporation with full right, title and possession to
all assets, property, rights, privileges, powers and franchises
of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub immediately prior to the Effective Time
are fully authorized in the name of their respective corporations
or otherwise to take, and will take, all such lawful and
necessary action.
SECTION 1.12 Material Adverse Effect. When used in
connection with the Company or any of its subsidiaries, or Parent
or any of its subsidiaries, as the case may be, the term
"Material Adverse Effect" means any change, effect or
circumstance that, individually or when taken together with all
other such changes, effects or circumstances that have occurred
prior to the date of determination of the occurrence of the
Material Adverse Effect, (a) is or is reasonably likely to be
materially adverse to the business, assets (including intangible
assets), financial condition or results of operations of the
Company and its subsidiaries or Parent and its subsidiaries, as
the case may be, in each case taken as a whole, or (b) is or is
reasonably likely to prevent the consummation of the transactions
contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Merger Sub that, except as set forth in the written disclosure
schedule delivered on or prior to the date hereof by the Company
to Parent that is arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article II
(the "Company Disclosure Schedule"):
SECTION 2.1 Organization and Qualification; Subsidiaries.
Each of the Company and each of its subsidiaries is a corporation
duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority necessary to own, lease
and operate the properties it purports to own, operate or lease
and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing and in good
standing or to have such power, authority and Approvals could not
reasonably be expected to have a Material Adverse Effect. Each
of the Company and each of its subsidiaries is duly qualified or
licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its
properties owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary,
except for such failures to be so duly qualified or licensed and
in good standing that could not reasonably be expected to have a
Material Adverse Effect. A true and complete list of all of the
Company's subsidiaries, together with the jurisdiction of
incorporation of each subsidiary, the authorized capitalization
of each subsidiary, and the percentage of each subsidiary's
outstanding capital stock owned by the Company or another
subsidiary, is set forth in Section 2.1 of the Company Disclosure
Schedule. Except as set forth in Section 2.1 of the Company
Disclosure Schedule, the Company does not directly or indirectly
own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership, joint
venture or other business association or entity, with respect to
which interest the Company has invested or is required to invest
$100,000 or more, excluding securities in any publicly traded
company held for investment by the Company and comprising less
than five percent of the outstanding stock of such company.
SECTION 2.2 Articles of Incorporation and By-Laws. The
Company has heretofore furnished to Parent a complete and correct
copy of its Articles of Incorporation and By-Laws as amended to
date, and has furnished or made available to Parent the Articles
of Incorporation and By-Laws (or equivalent organizational
documents) of each of its subsidiaries (the "Subsidiary
Documents"). Such Articles of Incorporation, By-Laws and
Subsidiary Documents are in full force and effect. Neither the
Company nor any of its subsidiaries is in violation of any of the
provisions of its Articles of Incorporation or By-Laws or
Subsidiary Documents.
SECTION 2.3 Capitalization. The authorized capital stock
of the Company consists of (i) 2,500,000 shares of Company Common
Stock and (ii) 250,000 shares of preferred stock, $1.00 par
value, none of which preferred stock is issued and outstanding.
As of May 20, 1997, (i) 622,738 shares of Company Common Stock
were issued and outstanding, all of which are validly issued,
fully paid and nonassessable, (ii) no shares of Company Common
Stock were held by subsidiaries of the Company, and (iii) 10,000
shares of Company Common Stock were reserved for future issuance
pursuant to outstanding stock options granted under the Company
Stock Option Plans. No material change in such capitalization
has occurred between May 20, 1997 and the date hereof. Except as
set forth in Section 2.3 or Section 2.11 of the Company
Disclosure Schedule, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of the Company
or any of its subsidiaries or obligating the Company or any of
its subsidiaries to issue or sell any shares of capital stock of,
or other equity interests in, the Company or any of its
subsidiaries. All shares of Company Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable,
shall be duly authorized, validly issued, fully paid and
nonassessable. Except as disclosed in Section 2.3 of the Company
Disclosure Schedule, there are no obligations, contingent or
otherwise, of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of Company
Common Stock or the capital stock of any subsidiary or to provide
funds to or make any investment (in the form of a loan, capital
contribution, guaranty or otherwise) in any such subsidiary or
any other entity. Except as set forth in Sections 2.1 and 2.3 of
the Company Disclosure Schedule, all of the outstanding shares of
capital stock of each of the Company's subsidiaries is duly
authorized, validly issued, fully paid and nonassessable, and all
such shares are owned by the Company or another subsidiary of the
Company free and clear of all security interests, liens, claims,
pledges, agreements, limitations in the Company's voting rights,
charges or other encumbrances of any nature whatsoever
(collectively, "Liens").
SECTION 2.4 Authority Relative to this Agreement. (a) The
Company has all necessary corporate power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to
consummate the transactions so contemplated (other than the
approval of this Agreement by the holders of at least a majority
of the outstanding shares of Company Common Stock entitled to
vote in accordance with the MBCA and the Company's Articles of
Incorporation and By-Laws). The Board of Directors of the
Company has determined that it is advisable and in the best
interest of the Company's shareholders for the Company to enter
into a business combination with Parent upon the terms and
subject to the conditions of this Agreement, and has unanimously
recommended that the Company's shareholders approve and adopt
this Agreement and the Merger. This Agreement has been duly and
validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by Parent and Merger
Sub, as applicable, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms.
(b) The Board of Directors of the Company has duly and
validly approved and taken all corporate action required to be
taken by the Board of Directors for the consummation of the
transactions contemplated by this Agreement and the Shareholder
Agreement including, but not limited to, all actions required to
render the provisions of Section 775 through Section 784 of the
MBCA restricting business combinations with "interested
shareholders" inapplicable to such transactions and to provide
that none of Parent, Merger Sub or any of their affiliates shall
become an"interested shareholder" upon the execution and delivery
of the Shareholder Agreement or the acquisition of Shares
pursuant thereto, such that any business combination thereafter
proposed among Parent or Merger Sub or their affiliates and the
Company shall be exempt from the requirements of such Sections.
The Company has taken all action necessary to opt out of Sections
790 through 799 of the MBCA in order to render the provisions of
such statutes restricting voting rights of "control shares"
inapplicable to Shares acquired by Parent, Merger Sub or their
affiliates pursuant to the Merger or the Shareholder Agreement.
SECTION 2.5 Material Agreements; No Conflict; Required
Filings and Consents.
(a) Section 2.5(a) of the Company Disclosure Schedule
includes a list of (i) all loan agreements, indentures,
mortgages, pledges, conditional sale or title retention
agreements, security agreements, guaranties, standby letters of
credit, equipment leases or lease purchase agreements to which
the Company or any of its subsidiaries is a party or by which any
of them is bound, other than office equipment and vehicle leases
in an aggregate amount not exceeding $50,000; (ii) all contracts,
agreements, commitments or other understandings or arrangements
to which the Company or any of its subsidiaries is a party or by
which any of them or any of their respective properties or assets
are bound or affected, but excluding contracts, agreements,
commitments or other understandings or arrangements entered into
in the ordinary course of business and involving, in each case,
payments or receipts by the Company or any of its subsidiaries of
less than $20,000 in any single instance; and (iii) all
agreements which, as of the date hereof, are required to be filed
as "material contracts" with the Securities Exchange Commission
("SEC") pursuant to the requirements of the Securities Exchange
Act of 1934, as amended, and the SEC's rules and regulations
thereunder (the "Exchange Act").
(b) Except as disclosed in Section 2.5(b) of the Company
Disclosure Schedule, (i) neither the Company nor any of its
subsidiaries has breached, is in default under, or has received
written notice of any breach of or default under, any of the
agreements, contracts or other instruments referred to in clauses
(i), (ii) or (iii) of Section 2.5(a), (ii) to the best knowledge
of the Company, no other party to any of the agreements,
contracts or other instruments referred to in clauses (i), (ii)
or (iii) of Section 2.5 (a) has breached or is in default of any
of its obligations thereunder, and (iii) each of the agreements,
contracts and other instruments referred to in clauses (i), (ii)
or (iii) of Section 2.5(a) is in full force and effect.
(c) Except as set forth in Section 2.5(c) of the Company
Disclosure Schedule, the execution and delivery of this Agreement
by the Company does not, and the performance of this Agreement by
the Company and the consummation of the transactions contemplated
hereby will not, (i) conflict with or violate the Articles of
Incorporation or By-Laws of the Company, (ii) conflict with or
violate any federal, foreign, state or provincial law, rule,
regulation, order, judgment or decree (collectively, "Laws")
applicable to the Company or any of its subsidiaries or by which
its or any of their respective properties is bound or affected,
or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a
default under), or impair the Company's or any of its
subsidiaries' rights or alter the rights or obligations of any
third party under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company
or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries or its or any of their respective
properties is bound or affected.
(d) The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the
Company will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any federal,
foreign, state or provincial governmental or regulatory authority
except (i) for applicable requirements, if any, of the Securities
Act, the Exchange Act, state securities laws ("Blue Sky Laws"),
the pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
any required foreign antitrust or similar filings and the filing
and recordation of appropriate merger or other documents as
required by the MBCA, and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent consummation of the
Merger, or otherwise prevent the Company from performing its
obligations under this Agreement, or would not otherwise have a
Material Adverse Effect. As provided by Section 762(2)(a) and
(b) of the MBCA, no shareholder is entitled to dissent from the
Merger. Neither the Articles of Incorporation or By-laws provide
the shareholders with, nor has the Board of Directors of the
Company provided, pursuant to resolution or otherwise, the
shareholders with, a right to dissent from the Merger in
accordance with the provisions of Section 762(1)(f) of the MBCA.
SECTION 2.6 Compliance, Permits.
(a) Except as disclosed in Section 2.6(a) of the Company
Disclosure Schedule, neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of,
(i) any Law applicable to the Company or any of its subsidiaries
or by which its or any of their respective properties is bound or
affected or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or its
or any of their respective properties is bound or affected.
(b) Except as disclosed in Section 2.6(b) of the Company
Disclosure Schedule, the Company and its subsidiaries hold all
permits, licenses, easements, variances, exemptions, consents,
certificates, orders and approvals from governmental authorities
which are necessary for the operation of the business of the
Company and its subsidiaries taken as a whole as it is now being
conducted (collectively, the "Company Permits"). The Company and
its subsidiaries are in compliance with the terms of the Company
Permits, except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect.
SECTION 2.7 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents
required to be filed with the SEC and has made available to
Parent (i) its Annual Reports on Form 10-K for the fiscal years
ended July 31, 1996, 1995 and 1994, (ii) its Quarterly Reports on
Form 10-Q for the periods ended October 31, 1996 and January 31,
1997, (iii) all proxy statements relating to the Company's
meetings of Shareholders (whether annual or special) since August
1, 1993, (iv) all other reports or registration statements filed
by the Company with the SEC, and (v) all amendments and
supplements to all such reports and registration statements filed
by the Company with the SEC (collectively, the "Company SEC
Reports"). Except as disclosed in Section 2.7 of the Company
Disclosure Schedule, the Company SEC Reports (i) were prepared in
all material respects in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and
(ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then
on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. None of the Company's subsidiaries is
required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in
the Company SEC Reports was prepared in accordance with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in
the notes thereto), and each fairly presents in all material
respects the consolidated financial position of the Company and
its subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows and
shareholders equity for the periods indicated, except that the
unaudited interim financial statements may not include footnotes
and were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in
amount.
SECTION 2.8 Absence of Certain Changes or Events. Except
as set forth in Section 2.8 of the Company Disclosure Schedule or
the Company SEC Reports, since August 1, 1996, the Company has
conducted its business in the ordinary course and there has not
occurred: (a) any Material Adverse Effect; (b) any amendments or
changes in the Articles of Incorporation or By-laws of the
Company except as contemplated by this Agreement; (c) any damage
to, destruction or loss of any asset of the Company (whether or
not covered by insurance) that could reasonably be expected to
have a Material Adverse Effect; (d) any material change by the
Company in its accounting methods, principles or practices; (e)
any material revaluation by the Company of any of its assets,
including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than
in the ordinary course of business; (f) any other action or event
that would have required the consent of Parent pursuant to
Section 4.1 had such action or event occurred after the date of
this Agreement; or (g) any sale of a material amount of property
or assets of the Company or any of its subsidiaries, except in
the ordinary course of business.
SECTION 2.9 No Undisclosed Liabilities. Except as is
disclosed in Section 2.9 of the Company Disclosure Schedule or
the Company's SEC Reports, neither the Company nor any of its
subsidiaries has any liabilities or obligations of any nature
(absolute, accrued, contingent or otherwise) that have had, or
could reasonably be likely to have, a Material Adverse Effect or
would be required to be disclosed or provided for in a balance
sheet (or in the notes thereto) prepared in accordance with
generally accepted accounting principles, except liabilities or
obligations (a) adequately provided for in the Company's audited
balance sheet (including any related notes thereto) for the
fiscal year ended July 31, 1996 contained in the Company's Annual
Report on Form 10-K for such year (the "1996 Company Balance
Sheet") or (b) immaterial liabilities or obligations incurred
since July 31, 1996 in the ordinary course of business consistent
with past practice.
SECTION 2.10 Absence of Litigation. Except as set forth
in Section 2.10 of the Company Disclosure Schedule, there are no
claims, actions, suits, proceedings or investigations pending or,
to the knowledge of the Company, threatened against the Company
or any of its subsidiaries, or any properties or rights of the
Company or any of its subsidiaries, before any federal, foreign,
state or provincial court, arbitrator or administrative,
governmental or regulatory authority or body that could
reasonably be expected to have a Material Adverse Effect.
SECTION 2.11 Employee Benefit Plans, Employment
Agreements.
(a) Section 2.11 (a) of the Company Disclosure Schedule
lists all employee pension plans (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), all employee welfare plans (as defined in Section
3(1) of ERISA, and all other material bonus, stock option, stock
purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar fringe or employee
benefit plans, programs or arrangements, and any employment,
executive compensation, consulting or severance agreements,
written or otherwise, for the benefit of, or relating to, any
current or former employee, officer or director (including any
beneficiary of any such employee) of, or any current or former
consultant (including any beneficiary of any such consultant) to,
the Company, any trade or business (whether or not incorporated)
which is a member of a controlled group including the Company or
which is under common control with the Company (an "ERISA
Affiliate") within the meaning of Section 414 of the Code, or any
subsidiary of the Company under which the Company currently has a
liability, as well as each plan with respect to which the Company
or an ERISA Affiliate could incur liability under Section 4069
(if such plan has been or were terminated) or Section 4212(c) of
ERISA (all such plans, practices and programs are referred to as
the "Company Employee Plans"). The Parent has been provided true
and correct copies of (i) each such written Company Employee Plan
(other than those referred to in Section 4(b)(4) of ERISA), (ii)
the three (3) most recent annual report on Form 5500 series, with
accompanying schedules and attachments, filed with respect to
each Company Employee Plan required to make such a filing, and
(iii) the three (3) most recent actuarial evaluations or
assessments, if any, prepared with respect to any such Company
Employee Plan.
(b) Except as shown on Section 2.11(b) of the Company
Disclosure Schedule (i) none of the Company Employee Plans
promises or provides retiree medical or other retiree welfare
benefits to any person, and neither the Company nor any ERISA
Affiliate has ever maintained, contributed to, or been required
to contribute to, any plan that is or was a "multi-employer plan"
as such term is defined in Section 3(37) of ERISA, a pension plan
subject to Title IV of ERISA or a plan subject to Part 3 of Title
I of ERISA; (ii) there has been no "prohibited transaction," as
such term is defined in Section 406 of ERISA and Section 4975 of
the Code, with respect to any Company Employee Plan, which could
result in any material liability of the Company or any of its
subsidiaries; (iii) all Company Employee Plans are in compliance
in all material respects with the requirements prescribed by any
and all Laws (including ERISA and the Code), currently in effect
with respect thereto (including all applicable requirements for
notification to participants or the Department of Labor,
Internal Revenue Service (the "IRS") or Secretary of the
Treasury), and the Company and each of its subsidiaries have
performed all material obligations required to be performed by
them under, are not in any material respect in default under or
violation of, and have no knowledge of any default or violation
by any other party to, any of the Company Employee Plans; (iv)
each Company Employee Plan intended to qualify under Section
401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code is the subject of a favorable
determination letter from the IRS, and nothing has occurred which
may reasonably be expected to impair such determination; and (v)
there are no lawsuits or other claims (other than claims for
benefits in the ordinary course) pending or, to the best
knowledge of the Company, threatened with respect to any Company
Employee Plan.
(c) Section 2.3 or Section 2.11(c) of the Company
Disclosure Schedule sets forth a true and complete list of each
current or former employee, officer or director of the Company or
any of its subsidiaries who holds (i) any option to purchase
Company Common Stock as of the date hereof, together with the
number of shares of Company Common Stock subject to such option,
the option price of such option (to the extent determined as of
the date hereof), whether such option is intended to qualify as
an incentive stock option within the meaning of Section 422(b) of
the Code (an "ISO"), and the expiration date of such option; (ii)
any other right, directly or indirectly, to acquire Company
Common Stock, together with the number of shares of Company
Common Stock subject to such right. Section 2.3 or Section
2.11(c) of the Company Disclosure Schedule also sets forth the
total number of such ISOs, such nonqualified options and such
other rights.
(d) Section 2.11(d) of the Company Disclosure Schedule
sets forth a true and complete list of: (i) all employment
agreements with employees, officers or directors of the Company
or any of its subsidiaries; (ii) all agreements with consultants
who are individuals with the Company or any of its subsidiaries;
(iii) all employees of, or consultants to, the Company or any of
its subsidiaries who have executed a non-competition agreement
with the Company or any of its subsidiaries; (iv) all severance
agreements, programs and policies of the Company or any of its
subsidiaries with or relating to its employees, officers or
directors, excluding programs and policies required to be
maintained by law; and (v) all plans, programs, agreements and
other arrangements of the Company or any of its subsidiaries with
or relating to its employees, officers or directors which contain
change in control provisions.
SECTION 2.12 Labor Matters. There are no controversies
pending or, to the knowledge of the Company or any of its
subsidiaries, threatened, between the Company or any of its
subsidiaries and any of their respective employees, which
controversies have or could reasonably be expected to have a
Material Adverse Effect. Except as set forth in Section 2.12 of
the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries is a party to any collective bargaining
agreement or other labor union contract applicable to persons
employed by the Company or its subsidiaries, nor does the Company
or any of its subsidiaries know of any activities or proceedings
of any labor union to organize any such employees. Neither the
Company nor any of its subsidiaries has any knowledge of any
strikes, slowdowns, work stoppages, lockouts, or threats thereof,
by or with respect to any employees of the Company or any of its
subsidiaries.
SECTION 2.13 Restrictions on Business Activities. Except
for this Agreement, there is no agreement, judgement injunction,
orderor decree binding upon the Company or any of its
subsidiaries which has or could reasonably be expected to have
the effect of prohibiting or impairing any business practice of
the Company or any of its subsidiaries, any acquisition of
property by the Company or any of its subsidiaries or the conduct
of business by the Company or any of its subsidiaries as
currently conducted or as proposed to be conducted by the
Company.
SECTION 2.14 Title to Property. The Company and each of its
subsidiaries have good and marketable title to all of their
properties and assets, free and clear of all liens, charges and
encumbrances, except liens for taxes not yet due and payable and
such liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the
present use of the property affected thereby, and, with respect
to real property, except for defects which will be disclosed as
contemplated by Section 5.11. All leases pursuant to which the
Company or any of its subsidiaries lease from others material
amounts of real or personal property are in good standing, valid
and effective in accordance with their respective terms, and
there is not, under any of such leases, any existing material
default or event of default (or event which with notice or lapse
of time, or both, would constitute a material default).
SECTION 2.15 Taxes.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall
mean taxes, fees, levies, duties, tariffs, imposts, and
governmental impositions or charges of any kind in the nature of
(or similar to) taxes, payable to any federal, state, local or
foreign taxing authority, including (without limitation) (i)
income, franchise, profits, gross receipts, ad valorem, net
worth, value added, sales, use, service, real or personal
property, special assessments, capital stock, license, payroll,
withholding, employment, social security, workers' compensation,
unemployment compensation, utility, severance, production,
excise, stamp, occupation, premiums, windfall profits, transfer
and gains taxes, and (ii) interest, penalties, additional taxes
and additions to tax imposed with respect thereto; and "Tax
Returns" shall mean returns, reports, and information statements
with respect to Taxes required to be filed with the IRS or any
other federal, foreign, state or provincial taxing authority,
domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns.
(b) Other than as disclosed in Section 2.15(b) of the
Company Disclosure Schedule, (i) the Company and its subsidiaries
have timely filed all Tax Returns required to be filed by them,
(ii) the Company and its subsidiaries have paid and discharged
all Taxes shown to be due on such returns and have withheld all
Taxes required to be withheld with respect to employees in
connection with or with respect to the periods or transactions
covered by such Tax Returns and have paid all other Taxes as are
due, except such as are being contested in good faith by
appropriate proceedings (to the extent that any such proceedings
are required) and with respect to which the Company is
maintaining adequate reserves, and (iii) there are no other Taxes
that would be due if asserted by a taxing authority, except with
respect to which the Company is maintaining reserves to the
extent currently required and Taxes which in the aggregate do not
exceed $50,000 in amount. Except as disclosed in Section 2.15(b)
of the Company Disclosure Schedule: (i) there are no tax liens
on any assets of the Company or any subsidiary thereof; (ii)
neither the Company nor any of its subsidiaries has granted any
waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax; (iii)
neither the Company nor any of its subsidiaries has received any
written notice of any Tax deficiency outstanding, proposed or
assessed against the Company or any of its subsidiaries, or of
any audit or other examination threatened, proposed or currently
in progress of any Tax Return of the Company or any of its
subsidiaries; (iv) there is no contract, agreement plan or
arrangement, including but not limited to the provisions of the
Agreement, covering any employee or former employee of the
Company or any of its subsidiaries that, individually or
collectively, could give rise to the payment of any amount that
would not be deductible pursuant to Section 280G or subject to
the excise tax pursuant to Section 4999 of the Code; (v) neither
the Company nor any of its subsidiaries is a party to or bound by
any tax indemnity, tax sharing or tax allocation agreements; (vi)
neither the Company nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to
have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as defined in Section 341(f)(4) of the
Code) owned by the Company; and (vii) neither the Company nor any
of its subsidiaries has ever been a member of an affiliated group
of corporations within the meaning of Section 1504 of the Code.
The accruals and reserves for Taxes (including deferred taxes)
reflected in the 1996 Company Balance Sheet are adequate to cover
all Taxes required to be accrued through the date thereof
(including interest and penalties, if any, thereon and Taxes
being contested) in accordance with generally accepted accounting
principles.
(c) Neither the Company nor any of its subsidiaries is, or
has been, a United States real property holding corporation (as
defined in Section 897(c)(2) of the Code) during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code. To the
best knowledge of the Company, neither the Company nor any of its
subsidiaries owns any property of a character, the indirect
transfer of which, pursuant to this Agreement, would give rise to
any material documentary, stamp or other transfer tax.
SECTION 2.16 Environmental Matters.
(a) Except as set forth on the Company Disclosure Schedule,
which matters as so disclosed will not in the aggregate involve
liability of the Company or any of its subsidiaries in excess of
$600,000, and other conditions that are not reasonably likely to
have a Material Adverse Effect, the Company and each of its
subsidiaries represent and warrant:
(i) Each of the Company and its subsidiaries are and
have been in substantial compliance with all
applicable Environmental Laws (as defined below);
(ii) There is no suit, claim, action, demand, executive
or administrative order, directive, investigation
or proceeding pending or threatened, before any
court, governmental agency or board or other forum
against it or any of its subsidiaries (A) for
alleged noncompliance (including by any
predecessor) with, or liability under, any
Environmental Law or (B) relating to the presence
of or release into the environment of any
Hazardous Material (as defined below) or oil,
whether or not occurring at or on a site owned,
leased or operated by it or any of its
subsidiaries;
(iii) There is no reasonable basis for any suit, claim,
action, demand, executive or administrative order,
directive or proceeding of a type described in
Section 2.16(a)(ii).
(iv) The properties currently or formerly owned or
operated by the Company or any of its subsidiaries
(including, without limitation, soil, groundwater
or surface water on, under or adjacent to the
properties, and buildings thereon) do not contain
any Hazardous Material (as defined below) in
excess of what is permitted under applicable
Environmental Law (provided, however, that with
respect to properties formerly owned or operated
by the Company or any of its subsidiaries, such
representation is limited to the period the
Company or any such subsidiary owned or operated
such properties);
(v) Neither the Company nor any of its subsidiaries
has received any notice, demand letter, executive
or administrative order, directive or request for
information from any Federal, state, local or
foreign governmental entity or any third party
indicating that it may be in violation of, or
liable under, any Environmental Law;
(vi) There are no underground storage tanks on, in or
under any properties of the Company or any of its
subsidiaries and no underground storage tanks have
been closed or removed from any properties which
are or where previously owned by the Company or
any of its subsidiaries (provided, however, that
with respect to properties formerly owned or
operated by the Company or any of its
subsidiaries, such representation is limited to
the period the Company or any such subsidiary
owned or operated such properties);
(vii) During the period of the Company's or any of
its subsidiaries, ownership or operation of
any of their respective current properties,
there has been no contamination by or release
of Hazardous Material or oil in, on, under or
affecting such properties. Prior to the
period of the Company's or any of its
subsidiaries' ownership or operation of any
of their respective current properties, there
was no contamination by or release of
Hazardous Material or oil in, on, under or
affecting any such property.
(b) The following definitions apply for purposes of this
Section 3.21: "Environmental Law" means (A) any federal, state
or local law, statute, ordinance, rule, regulation, code,
license, permit, authorization, approval, consent, legal
doctrine, order, directive, executive or administrative order,
judgment, decree, injunction, requirement or agreement with any
governmental entity, (x) relating to the protection, preservation
or restoration of the environment (which includes, without
limitation, air, water vapor, surface water, groundwater,
drinking water supply, structures, soil, surface land, subsurface
land, plant and animal life or any other natural resource), or to
human health or safety, or (y) the exposure to, or the use,
storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal
of, Hazardous Materials, in each case as amended and as now in
effect, including all current Environmental Laws. The term
Environmental Law includes, without limitation, the federal
Comprehensive Environmental Response Compensation and Liability
act of 1980, the Superfund Amendments and Reauthorization Act,
the federal Water Pollution Control Act of 1972, the federal
Clean Air Act, the federal Clean Water Act, the federal Resource
Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the federal Solid Waste
Disposal and the federal Toxic Substances Control Act, the
Federal insecticide, Fungicide and Rodenticide Act, the Federal
Occupational Safety and Health Act of 1970, the Federal Hazardous
Materials Transportation Act, or any so called "Superfund" or
"Superlien" law, each as amended and as now or hereafter in
effect, and (B) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as
negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to,
or threatened as a result of, the presence of or exposure to any
Hazardous Material; and (iv) "Hazardous Material" means any
substance in any concentration which is or could be detrimental
to human health or safety or to the environment, currently or
hereafter listed, defined, designated or classified as hazardous,
toxic, radioactive or dangerous, or otherwise regulated, under
any Environmental Law, whether by type or by quantity, including
any substance containing any such substance as a component.
Hazardous Material includes, without limitation, any toxic waste,
pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance, oil or
petroleum or any derivative or by-product thereof, radon,
radioactive material, asbestos, asbestos-containing material,
urea formaldehyde foam insulation, lead and polychlorinated
biphenyl.
SECTION 2.17 Intellectual Property.
(a) The Company, directly or indirectly, owns, or is
licensed or otherwise possesses legally enforceable rights to
use, all patents, trademarks, trade names, service marks,
copyrights, and any applications therefor, technology, know-how,
computer software programs or applications (in both source code
and object code form), and tangible or intangible proprietary
information or material that are material to the business of the
Company and its subsidiaries as currently conducted or as
proposed to be conducted by the Company or its subsidiaries (the
"Company Intellectual Property Rights").
(b) Section 2.17(b) of the Company Disclosure Schedule sets
forth a complete list of all patents, trademarks, registered
copyrights, trade names and service marks, and any applications
therefor, included in the Company Intellectual Property Rights,
and specifies, where applicable, the jurisdictions in which each
such Company Intellectual Property Right has been issued or
registered or in which an application for such issuance and
registration has been filed, including the respective
registration or application numbers and the names of all
registered owners.
(c) Section 2.17(c) of the Company Disclosure Schedule
sets forth a complete list of all material licenses, sublicenses
and other agreements as to which the Company or any of its
subsidiaries is a party and pursuant to which the Company, any of
its subsidiaries or any other person is authorized to use any
Company Intellectual Property Right or other trade secret
material to the Company or any of its subsidiaries, and includes
the identity of all parties thereto, a description of the nature
and subject matter thereof, the applicable royalty (if any) and
the term thereof. None of the Company or any of its subsidiaries
is in violation of any license, sublicense or agreement described
on such list except such violations as do not materially impair
the Company's or such subsidiary's rights under such license,
sublicense or agreement. The execution and delivery of this
Agreement by the Company, and the consummation of the
transactions contemplated hereby, will neither cause the Company
or any of its subsidiaries to be in violation or default under
any such license, sublicense or agreement, nor entitle any other
party to any such license, sublicense or agreement to terminate
or modify such license, sublicense or agreement.
(d) Either the Company or one of its subsidiaries is the
sole and exclusive owner or licensee of, with all right, title
and interest in and to (free and clear of any liens or
encumbrances) the Company Intellectual Property Rights, and has
sole and exclusive rights to the use thereof or the material
covered thereby in connection with the services or products in
respect of which the Company Intellectual Property Rights are
being used. No claims with respect to the Company Intellectual
Property Rights have been asserted or, to the knowledge of the
Company, are threatened by any person nor are there any valid
grounds, to the knowledge of the Company, for any bona fide
claims (i) to the effect that the manufacture, sale or use of any
of the products of the Company or any of its subsidiaries as now
manufactured, sold or licensed or used or proposed for
manufacture, use, sale or licensing by the Company or any of its
subsidiaries infringes on any copyright, patent, trade mark,
service mark or trade secret, (ii) against the use by the Company
or any of its subsidiaries of any trademarks, service marks,
trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used in
the business of the Company and its subsidiaries as currently
conducted or as proposed to be conducted, or (iii) challenging
the ownership by the Company or any of its subsidiaries, or the
validity or effectiveness, of any of the Company Intellectual
Property Rights. All registered trademarks, service marks and
copyrights held by the Company are valid and subsisting. To the
knowledge of the Company, there is no unauthorized use,
infringement or misappropriation of any of the Company
Intellectual Property Rights by any third party, including any
employee or former employee of the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries
has entered into any agreement under which the Company or its
subsidiaries is restricted from selling, licensing or otherwise
distributing any of its products to any class of customers, in
any geographic area, during any period of time or in any segment
of the market.
SECTION 2.18 Interested Party Transactions. Except as set
forth in Section 2.18 of the Company Disclosure Schedule, since
July 31, 1996, no event has occurred that would be required to be
reported as a Certain Relationship or Related Transaction,
pursuant to Item 404 of Regulation S-K promulgated by the SEC.
SECTION 2.19 Insurance. All material fire and casualty,
general liability, business interruption, product liability,
professional liability and sprinkler and water damage insurance
policies maintained by the Company or any of its subsidiaries are
in character and amount at least equivalent to that carried by
persons engaged in similar businesses and subject to the same or
similar perils or hazards, and all such policies are with
reputable insurance carriers, provide full and adequate coverage
for all normal risks incident to the business of the Company and
its subsidiaries and their respective properties and assets.
Section 2.19 of the Company Disclosure Schedule contains a
complete and accurate list of all such insurance policies.
SECTION 2.20 Opinion of Financial Advisor. The Company has
been advised by its financial advisor, Roney & Co., that in its
opinion, as of the date hereof, the Merger Consideration set
forth herein is fair to the holders of Shares from a financial
point of view.
SECTION 2.21 Brokers. No broker, finder or investment
banker (other than Roney & Co., the fees and expenses of whom
will be paid by the Company) is entitled to any brokerage,
finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or its
subsidiaries or affiliates. The Company has heretofore furnished
to Parent a complete and correct copy of all agreements between
the Company and Roney & Co. pursuant to which such firm would be
entitled to any payment relating to the transactions contemplated
hereunder.
SECTION 2.22 Change in Control Payments. Except as set
forth on Section 2.11(d) or Section 2.22 of the Company
Disclosure Schedule, neither the Company nor any of its
subsidiaries have any plans, programs or agreements to which they
are parties, or to which they are subject, pursuant to which
payments may be required or acceleration of benefits may be
required upon a change of control of the Company.
SECTION 2.23 Expenses. Section 2.23 of the Company
Disclosure Schedule attached hereto sets forth a description of
the expenses of the Company and its subsidiaries which the
Company expects to incur, or has incurred, in connection with the
transactions contemplated by this Agreement. True and complete
copies of any written agreements relating to such expenses have
been provided to Parent.
SECTION 2.24 Products Liability and Warranty Claims.
Except as set forth on the Company Disclosure Schedule:
(a) the Company has not made any oral or written warranties
with respect to the quality or absence of defects of its products
or services which are in force as of the date of this Agreement
except for warranties made to General Motors Corporation,
Chrysler Corporation and Ford Motor Company in the ordinary
course of business pursuant to customary purchase orders or
supply agreements;
(b) there are no liabilities of or claims against the
Company and, to the knowledge of the Company, no liabilities or
claims are threatened against the Company, with respect to any
product liability (or similar claim) of the Company or product
warranty (or similar claim) of the Company that relates to any
product manufactured or sold by the Company;
(c) the Company has no knowledge of any facts or
circumstances which might reasonable give rise to such
liabilities or claims.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally,
represent and warrant to the Company that, except as set forth in
the written disclosure schedule delivered on or prior to the date
hereof by Parent to the Company that is arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained
in this Article III (the "Parent Disclosure Schedule"):
SECTION 3.1 Organization and Qualification; Subsidiaries.
Each of Parent and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate
power and authority to carry on its business as it is now being
conducted, except where the failure to be so organized, existing
and in good standing or to have such power, authority and
Approvals could not reasonably be expected to have a Material
Adverse Effect.
SECTION 3.2 Articles of Incorporation and By-Laws. Parent
and Merger Sub have heretofore furnished to the Company complete
and correct copies of its Articles of Incorporation and By-Laws,
as amended to date. Such Articles of Incorporation and By-Laws
are in full force and effect. Neither Parent nor Merger Sub is
in violation of any of the provisions of its Articles of
Incorporation or By-Laws.
SECTION 3.3 Authority Relative to this Agreement. Each of
Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement and to perform
its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement by Parent and Merger Sub and the consummation by Parent
and Merger Sub of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on
the part of Parent and Merger Sub, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate the transactions
contemplated thereby. This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub and, assuming the
due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of Parent and
Merger Sub enforceable against each of them in accordance with
its terms.
SECTION 3.4 No Conflict, Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent
and Merger Sub do not, and the performance of this Agreement by
Parent and Merger Sub will not, (i) conflict with or violate the
Articles of Incorporation or By-Laws of Parent or Merger Sub,
(ii) conflict with or violate any Law applicable to Parent or any
of its subsidiaries or by which its or their respective
properties are bound or affected, or (iii) result in any breach
of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or impair
Parent's or any of its subsidiaries' rights or alter the rights
or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation
of, or result in the creation of a Lien on any of the properties
or assets of Parent or any of its subsidiaries pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to
which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or its or any of their
respective properties are bound or affected.
(b) The execution and delivery of this Agreement by Parent
and Merger Sub does not, and the performance of this Agreement by
Parent and Merger Sub will not, require any consent, approval,
authorization or permit of, or filing with or notification to,
any governmental or regulatory authority, domestic or foreign,
except (i) for the pre-merger notification requirements of the
HSR Act, or any foreign antitrust or similar filings and the
filing and recordation of appropriate merger or other documents
as required by the MBCA, and (ii) where the failure to obtain
such consents, approvals, authorizations or permits, or to make
such filings or notifications, would not prevent consummation of
the Merger, or otherwise prevent Parent or Merger Sub from
performing their respective obligations under this Agreement, and
would not have a Material Adverse Effect.
SECTION 3.5 Share Ownership. Neither Parent, Merger Sub
nor any of their affiliates own any shares of Company Common
Stock.
SECTION 3.6 Ownership of Merger Sub; No Prior Activities.
(a) Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement.
(b) As of the date hereof and the Effective Time, except
for obligations or liabilities incurred in connection with its
incorporation or organization and the transactions contemplated
by this Agreement and except for this Agreement and any other
agreements or arrangements contemplated by this Agreement, Merger
Sub has not and will not have incurred, directly or indirectly,
through any subsidiary or affiliate, any obligations or
liabilities or engaged in any business activities of any type or
kind whatsoever or entered into any agreements or arrangements
with any person.
SECTION 3.7 Financing. Parent has received reasonable
assurances that it shall have financing available to complete the
transaction.
SECTION 3.8 Solvency. Upon consummation of the
transaction, Parent and the Company each will be able to meet its
debts as they mature and have assets in excess of its
liabilities.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.1 Conduct of Business by the Company Pending the
Merger. The Company covenants and agrees that, during the period
from the date of this Agreement and continuing until the earlier
of the termination of this Agreement or the Effective Time,
unless Parent shall otherwise agree in writing, the Company shall
conduct its business and shall cause the businesses of its
subsidiaries to be conducted only in, and the Company and its
subsidiaries shall not take any action except in, the ordinary
course of business and in a manner consistent with past practice
other than actions taken by the Company or its subsidiaries in
contemplation of the Merger; and the Company shall use all
reasonable commercial efforts to preserve substantially intact
the business organization of the Company and its subsidiaries, to
keep available the services of the present officers, employees
and consultants of the Company and its subsidiaries and to
preserve the present relationships of the Company and its
subsidiaries with customers, suppliers and other persons with
which the Company or any of its subsidiaries has significant
business relations. By way of amplification and not limitation,
except as contemplated by this Agreement, neither the Company nor
any of its subsidiaries shall, during the period from the date of
this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, directly or
indirectly do, or propose to do, any of the following without the
prior written consent of Parent:
(a) amend or otherwise change the Articles of
Incorporation or By-Laws of the Company or any of its
subsidiaries;
(b) issue, sell, pledge, dispose of or encumber, or
authorize the issuance, sale, pledge, disposition or encumbrance
of, any shares of capital stock of any class, or any options,
warrants, convertible securities or other rights of any kind to
acquire any shares of capital stock, or any other ownership
interest (including, without limitation, any phantom interest) in
the Company, any of its subsidiaries or affiliates (except for
the issuance of shares of Company Common Stock issuable pursuant
to Stock Options which were granted under the Company Stock
Option Plan and are outstanding on the date hereof).
(c) sell, pledge, dispose of or encumber any assets of the
Company or any of its subsidiaries (except for (i) sales of
assets in the ordinary course of business and in a manner
consistent with past practice, (ii) dispositions of obsolete or
worthless assets, and (iii) sales of immaterial assets not in
excess of $10,000 in the aggregate);
(d) (i) declare, set aside, make or pay any dividend or
other distribution (whether in cash, stock or property or any
combination thereof) in respect of any of its capital stock,
except that a wholly owned subsidiary of the Company may declare
and pay a dividend to its parent and except that the Company may
pay normal quarterly dividends of $.25 per Share to shareholders
of record on August 31, 1997 and on November 30, 1997, (ii)
split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock, or (iii) amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise
acquire, or permit any subsidiary to purchase, repurchase, redeem
or otherwise acquire, any of its securities or any securities of
its subsidiaries, including, without limitation, shares of
Company Common Stock or any option, warrant or right, directly or
indirectly, to acquire shares of Company Common Stock, or propose
to do any of the foregoing;
(e) (i) acquire (by merger, consolidation, or acquisition
of stock or assets) any corporation, partnership or other
business organization or division thereof, except as described in
Section 2.8 of the Company Disclosure Schedule; (ii) incur any
indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse or otherwise as an accommodation
become responsible for, the obligations of any person or, except
in the ordinary course of business consistent with past practice,
make any loans or advances; (iii) enter into or amend any
material contract or agreement calling for aggregate payments in
excess of $25,000; (iv) authorize any capital expenditures or
purchase of fixed assets which are, in the aggregate, in excess
of $50,000 (other than for office furnishings in an amount in the
aggregate not to exceed $10,000 and capital expenditures
described in Section 4.1(e) of the Company Disclosure Schedule)
for the Company and its subsidiaries taken as a whole; or (v)
enter into or amend any contract, agreement, commitment or
arrangement to effect any of the matters prohibited by this
Section 4.1(e);
(f) other than the payment of normal cash bonuses payable
to employees for the year ending July 31, 1997 in an aggregate
amount not to exceed $260,000, and normal raises reasonably
acceptable to Parent, increase the compensation payable or to
become payable to its officers or employees, or grant any
severance or termination pay to, or enter into any employment or
severance agreement with any director, officer or other employee
of the Company or any of its subsidiaries, or establish, adopt,
enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any current or former
directors, officers or employees, except, in each case, as may be
required by law;
(g) take any action to change accounting policies or
procedures (including, without limitation, procedures with
respect to revenue recognition, payments of accounts payable and
collection of accounts receivable);
(h) make any material tax election inconsistent with past
practice or settle or compromise any material federal, state,
local or foreign tax liability or agree to an extension of a
statute of limitations;
(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business and consistent
with past practice of liabilities reflected or reserved against
in the financial statements contained in the Company SEC Reports
filed prior to the date of this Agreement or incurred in the
ordinary course of business and consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of
the actions described in Sections 4.1 (a) through (i) above, or
any action which would make any of the representations or
warranties of the Company contained in this Agreement untrue or
incorrect or prevent the Company from performing or cause the
Company not to perform its covenants hereunder.
SECTION 4.2 No Solicitation.
(a) The Company and its subsidiaries and affiliates will
not, and the Company and its subsidiaries and affiliates will use
their best efforts to ensure that their respective officers,
directors, employees, investment bankers, attorneys, accountants
and other agents do not, directly or indirectly: (i) initiate,
solicit or encourage, or take any action to facilitate the making
of, any offer or proposal which constitutes or is reasonably
likely to lead to any Acquisition Proposal (as defined below) of
the Company or any subsidiary or affiliate or an inquiry with
respect thereto, or (ii) in the event of an unsolicited
Acquisition Proposal for the Company, or any subsidiary or
affiliate, engage in negotiations or discussions with, or provide
any information or data to any Person (as defined below) relating
to any Acquisition Proposal, unless (i) such unsolicited
Acquisition Proposal is in writing and meets the requirements of
an Acceptable Offer (as defined below) and (ii) the Company's
Board of Directors determines in good faith after consultation
with outside legal counsel to the Company that the failure to
engage in such negotiation or discussions or provide such
information would result in a breach of the Board of Directors'
fiduciary duties under applicable law.
(b) The Company shall notify Parent and Merger Sub orally
and in writing of any such offers, proposals or Acquisition
Proposals (including without limitation the terms and conditions
thereof and the identity of the Person making it), within 24
hours of the receipt thereof, and will keep Parent fully apprised
of all developments with respect to any such Acquisition
Proposal. The Company shall give Parent written notice (an
"Intent Notice") of each Acquisition Proposal that the Company
intends to accept as an Acceptable Offer in accordance with the
terms hereof (which shall include without limitation the terms
and conditions thereof, the identity of the Person who made the
Acceptable Offer and evidence of compliance with the provisions
of Sections 4.2(e) hereof) at least ten calendar days prior to
accepting such offer or otherwise entering into any agreement or
understanding with respect thereto, in order to provide Parent
with the right of first refusal to substantially match the terms
thereof, in which event the Company shall execute an amendment to
this Agreement presented to it by Parent to reflect such new
terms (the "Right of First Refusal"). For purposes hereof, any
modification of an Acceptable Offer shall constitute a new
Acquisition Proposal.
(c) The Company shall, and shall cause its Subsidiaries and
affiliates, and their respective officers, directors, employees,
investment bankers, attorneys, accountants and other agents to,
immediately cease and cause to be terminated all existing
discussions and negotiations, if any, with any parties conducted
heretofore with respect to any Acquisition Proposal relating to
the Company. Notwithstanding anything to the contrary, nothing
contained in this Section 4.2 shall prohibit the Company or its
Board of Directors from (i) taking and disclosing to the
Company's shareholders a position with respect to a tender offer
by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act, or (ii) making such disclosure to the
Company's shareholders which the Board of Directors of the
Company determines, in good faith after consultation with outside
legal counsel to the Company, it is required to make under
applicable law.
(d) As used in this Agreement, "Acquisition Proposal" when
used in connection with any Person shall mean any tender or
exchange offer involving such Person, any proposal for a merger,
consolidation or other business combination involving such Person
or any subsidiary of such Person, any proposal or offer to
acquire in any manner a substantial equity interest in, or a
substantial portion of the business or assets of, such Person or
any subsidiary of such Person, any proposal or offer with respect
to any recapitalization or restructuring with respect to such
Person or any subsidiary of such Person or any proposal or offer
with respect to any other transaction similar to any of the
foregoing with respect to such Person, or any subsidiary of such
Person; provided, however, that, as used in this Agreement, the
term "Acquisition Proposal shall not apply to any transaction of
the type described in this subsection (d) involving Parent,
Merger Sub or their affiliates. As used in this Section 4.2,
"Person" shall mean any corporation, partnership, person or other
entity or group (including the Company and its affiliates and
representatives, but excluding Parent or any of its affiliates or
representatives).
(e) As used in this Agreement, "Acceptable Offer" shall
mean an unsolicited bona fide executed written offer for an
Acquisition Proposal received by the Company in accordance with
Section 4.2 hereof; provided, that (i) concurrently with the
receipt by the Company of such offer, the offeror demonstrates
proof of its financial capability and authority to consummate the
transactions contemplated by such offer (including without
limitation the payment required by Section 4.2(e)(ii) below);
(ii) unless Parent has exercised the Right of First Refusal, the
offeror or the Company shall on the tenth calendar day following
delivery to Parent of the Intent Notice, pay to Parent, in
immediately available funds, the Fee (as defined in Section
7.3(b)); and (iii) such offer provides for net cash proceeds to
the Company or to each shareholder (in addition to amounts paid
pursuant to clause (ii) above) in an amount greater than that
provided for hereunder (or, in the event such amount has been
increased pursuant to the exercise by Parent of its Right of
First Refusal, such greater amount).
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 HSR Act. As promptly as practicable after the
date of the execution of this Agreement, the Company and Parent
shall file notifications under and in accordance with the HSR Act
and any applicable antitrust or similar acts in connection with
the Merger and the transactions contemplated hereby and respond
as promptly as practicable to any inquiries received from the
Federal Trade Commission (the "FTC"), the Antitrust Division of
the Department of Justice (the "Antitrust Division"), and any
applicable foreign agencies or authorities having jurisdiction
for additional information or documentation and to respond as
promptly as practicable to all inquiries and requests received
from any State Attorney General or other governmental authority
in connection with antitrust matters.
SECTION 5.2 Shareholder Meeting. The Company shall call
and hold a meeting of the shareholders of the Company (the
"Shareholder Meeting") as promptly as practicable and in
accordance with applicable laws for the purpose of voting upon
the adoption of this Agreement and the approval of the Merger.
The Company shall use all reasonable efforts to solicit from its
shareholders proxies in favor of the adoption of this Agreement
and approval of the transactions contemplated hereby and shall
take all other action necessary or advisable to secure the vote
or consent of shareholders to obtain such approvals. Subject to
fiduciary duties under applicable law as determined in good faith
after consultation with outside legal counsel to the Company, the
Board of Directors of the Company shall recommend and declare
advisable such adoption and approval.
SECTION 5.3 Access to Information; Confidentiality. Upon
reasonable notice, the Company shall (and shall cause its
subsidiaries to) afford to the officers, employees, accountants,
counsel and other representatives of Parent, reasonable access,
during the period to the Effective Time, to all its properties,
books, contracts, commitments and records and, during such
period, the Company shall (and shall cause its subsidiaries to)
furnish promptly to Parent all information concerning its
business, properties and personnel as Parent may reasonably
request, and shall make available to Parent the appropriate
individuals (including attorneys, accountants and other
professionals) for discussion of the Company's business,
properties and personnel as Parent may reasonably request. Parent
shall keep such information confidential in accordance with the
terms of the confidentiality agreement, dated November 20, 1997
(the "Confidentiality Agreement"), between Parent and the
Company.
SECTION 5.4 Consents; Approvals. The Company and Parent
shall each use their reasonable best efforts to obtain all
consents, waivers, approvals, authorizations or orders
(including, without limitation, all United States and foreign
governmental and regulatory rulings and approvals), and the
Company and Parent shall make all filings (including, without
limitation, all filings with United States and foreign
governmental or regulatory agencies) required in connection with
the authorization, execution and delivery of this Agreement by
the Company and Parent and the consummation by them of the
transactions contemplated hereby, in each case as promptly as
practicable.
SECTION 5.5 Indemnification and Insurance.
(a) The By-laws of the Surviving Corporation shall contain
the provisions with respect to indemnification set forth in the
By-laws of the Company, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at the Effective Time were
directors, officers, employees or agents of the Company, unless
such modification is required by law.
(b) The Company shall, to the fullest extent permitted
under applicable law or under the Company's Articles of
Incorporation, By-laws or any applicable indemnification
agreements and regardless of whether the Merger becomes
effective, indemnify, defend and hold harmless, and, after the
Effective Time, the Surviving Corporation shall, to the fullest
extent permitted under applicable law, indemnify, defend and hold
harmless, each present and former director, officer or employee
of the Company or any of its subsidiaries (collectively, the
"Indemnified Parties") against any costs or expenses (including
attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, with respect to any
acts or omissions occurring at or prior to the Effective Time.
Subject to the indemnification agreements disclosed in the
Company Disclosure Schedule, any determination required to be
made with respect to whether an Indemnified Party's conduct
complied with the standards set forth under Michigan law, the
Company's Articles of Incorporation, By-laws or indemnification
agreements, as the case may be, shall be made by independent
counsel mutually acceptable to Parent and the Indemnified Party.
(c) The Surviving Corporation shall maintain in effect for
three years from the Effective Time the current directors and
officers liability insurance policies maintained by the Company
(or policies of at least the same coverage containing terms and
conditions which are not materially less favorable to the
Indemnified Parties) with respect to matters occurring prior to
the Effective Time, provided that the Surviving Corporation shall
not be required to pay more than 125% of the current annual cost
of such insurance.
(d) This Section shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company,
the Surviving Corporation and the Indemnified Parties, shall be
binding on all successors and assigns of the Surviving
Corporation and shall be enforceable by the Indemnified Parties.
SECTION 5.6 Notification of Certain Matters. The Company
shall give prompt notice to Parent of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of
which would be likely to cause any representation or warranty
contained in this Agreement to become materially untrue or
inaccurate, or (ii) any failure of the Company materially to
comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section shall
not limit or otherwise affect the remedies available hereunder to
Parent or Merger Sub; and provided further that failure to give
such notice shall not be treated as a breach of covenant for the
purposes of Section 6.2(b) unless the failure to give such notice
results in material prejudice to Parent or Merger Sub.
SECTION 5.7 Further Action. Upon the terms and subject to
the conditions hereof each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, to
obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings,
and otherwise to satisfy or cause to be satisfied all conditions
precedent to its obligations under this Agreement. The foregoing
covenant shall not include any obligation by Parent or the
Company to agree to divest, abandon, license or take similar
action with respect to any assets (tangible or intangible) of
Parent or the Company.
SECTION 5.8 Public Announcements. Parent and the Company
shall consult with each other before issuing any press release
with respect to the Merger or this Agreement and shall not issue
any such press release or make any such public statement without
the prior consent of the other party, which shall not be
unreasonably withheld; provided, however, that a party may,
without the prior consent of the other party, issue such press
release or make such public statement as may upon the advice of
counsel be required by law or the rules and regulations of the
American Stock Exchange, if it has used all reasonable efforts to
consult with the other party prior thereto.
SECTION 5.9 Conveyance Taxes. Parent and the Company
shall cooperate in the preparation, execution and filing of all
returns, questionnaires, applications, or other documents
regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any
transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions
contemplated hereby that are required or permitted to be filed at
or before the Effective Time.
SECTION 5.10 Shareholder Agreement; Michigan Law. The
Company, regardless of any termination of this Agreement (other
than a termination of this Agreement pursuant to Section 7.1(a)
or 7.1(h) hereof), shall not (a) take any action which, in the
reasonable judgment of Parent, would impede, interfere with or
attempt to discourage the transactions contemplated by this
Agreement or the Shareholder Agreement, (b) amend, revoke,
withdraw or modify the approval of the Merger and the other
transactions contemplated hereby so as to render the restrictions
of Section 775 through Section 784 of the MBCA applicable to
Parent, Merger Sub or their affiliates, or to any business
combination proposed by any of them before or after, or as the
result of, the execution and delivery of the Shareholder
Agreement or the acquisition of Shares pursuant thereto, or (c)
opt in to Section 790 through Section 799 of the MBCA, or (d)
take action rendering the requirements of any of the Sections of
the MBCA cited in this Section 5.11 inapplicable to any other
Person or any business combination between the Company and any
other Person or its affiliates.
SECTION 5.11 Title Policy and Survey.
(a) Within forty-five (45) days of the date of this
Agreement, the Company shall deliver to the Parent (i) a complete
title search issued by a title insurance company, reasonably
acceptable to Parent ("Title Insurer"), for an ALTA form of
owner's policy of title insurance, committing the Title Insurer
to issue such policy at Closing, insuring the Parent as the
holder of a fee simple title to the Owned Real Property, as
defined below, in an amount equal to the fair market value of the
Owned Real Property as agreed upon by the Company and the Parent
or, if the Company and the Parent are not able to so agree, as
determined by a third party, independent real property appraiser,
such insurance to meet he requirements set forth in the following
paragraph (the "Title Commitment"), and (ii) copies of all
recorded documents affecting the Owned Real Property that
constitute encumbrances against the Owned Real Property or
exceptions to the Company's title. If the Title Commitment shall
contain any encumbrances or exceptions (other than the Permitted
Title Exceptions, as defined below) to which the Parent has
objections, Parent shall notify the Company of such objections in
writing within ten (10) days of the date on which the Parent has
received the Title Commitment and copies of all recorded
documents and the survey required by this Section 5.11. The
Company shall use its best efforts to eliminate all such objected
to encumbrances or exceptions within thirty (30) days following
such notice, and shall be required, at or before the Closing, to
discharge at or before the Closing the lien or encumbrance. With
respect to any encumbrances or exceptions which are properly
objected to by the Parent and which the Company shall fail to
eliminate within the thirty (30) day period, the Parent may, at
its sole discretion:
(i) Waive its objections to and accept title subject
to such encumbrances or exceptions; or
(ii) Terminate this Agreement.
The Title Commitment shall commit the Title Insurer to
provide coverage as set forth in Section 5.11(a), and to delete
the preprinted or so-called "standard" exceptions, including a
survey exception. The Title Commitment shall include the
following endorsements: (i) insuring the gap between the date of
the closing and the date on which any deeds are recorded, if
necessary, whichever is later, (ii) ALTA 3.1 zoning with parking,
(iii) contiguity, (iv) ALTA 9 comprehensive, (v) tax parcel, (vi)
survey, and (vii) a legal description of the Owned Real Property
in a form and contents satisfactory to the Parent. The Company
shall deliver to the Title Insurer such instruments, documents,
indemnities and releases as the Title Insurer shall reasonably
require to obtain the deletions of those preprinted or "standard"
exceptions. The Title Commitment shall be updated at Closing to
confirm that no new liens or encumbrances have been filed against
the Owned Real Property, and shall be endorsed by the Title
Insurer as of the date of Closing. At the Closing, the Parent
may elect to be issued the policy of title insurance meeting the
requirements of this Section 5.11.
(b) Within forty-five (45) days of the date of this
Agreement, the Company shall deliver to the Parent an ALTA/ASCM
survey of the Owned Real Property certified to the Parent and the
Title Insurer for the purpose of permitting the Title Insurer to
issue the title insurance policy described in this Section 5.11
(the "Survey"). The expense of the Survey shall be paid by the
Company. In the event the Survey discloses material
encroachments or other conditions unacceptable to the Parent, the
Parent shall so notify the Company within thirty (30) days of
receipt of the Survey, and the Company shall eliminate or correct
such conditions to the satisfaction of the Parent within thirty
(30) days. If the Company shall fail to correct such conditions
within the thirty (30) day period, the Parent shall have the
remedies provided in Section 5.11(a). If this Agreement is
terminated on account of such Survey disclosures, the Survey and
any copies of the Survey shall be delivered to and become the
sole property of the Company.
(c) "Owned Real Property" shall mean all real property
owned by the Company, including property located at (i) 170
Sharon Bedford, Masury, Ohio, and (ii) 100 Fair Street, Lapeer,
Michigan. "Permitted Title Exceptions" shall mean (i) liens for
Taxes and assessments not yet due and payable for which reserves
are established on the company's consolidated financial
statements, and (ii) any other encumbrances or exceptions not
objected to by the Parent pursuant to Section 5.11(a), which in
the reasonable opinion of Parent do not materially detract from
the value of or interfere with the present use of the property
affected thereby.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 Conditions to Obligation of Each Party to
Effect the Merger. The respective obligations of each party to
effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a) Shareholder Approval. This Agreement and the Merger
shall have been approved and adopted by the requisite vote of the
shareholders of the Company;
(b) HSR Act. The waiting period applicable to the
consummation of the Merger under the HSR Act and any applicable
foreign antitrust or similar acts shall have expired or been
terminated;
(c) No Injunctions or Restraints; Illegality. No
temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation
of the Merger shall be in effect, nor shall any proceeding
brought by any administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign,
seeking any of the foregoing be pending; and there shall not be
any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger,
which makes the consummation of the Merger illegal; and
(d) Governmental Actions. There shall not have been
instituted, pending or threatened any action or proceeding (or
any investigation or other inquiry that might result in such an
action or proceeding) by any governmental authority or
administrative agency before any governmental authority,
administrative agency or court of competent jurisdiction, nor
shall there be in effect any judgment, decree or order of any
governmental authority, administrative agency or court of
competent jurisdiction, in either case, seeking to prohibit or
limit Parent from exercising all material rights and privileges
pertaining to its ownership of the Surviving Corporation or the
ownership or operation by Parent or any of its subsidiaries of
all or a material portion of the business or assets of Parent or
any of its subsidiaries, or seeking to compel Parent or any of
its subsidiaries to dispose of or hold separate all or any
material portion of the business or assets of Parent or any of
its subsidiaries (including the Surviving Corporation and its
subsidiaries), as a result of the Merger or the transactions
contemplated by this Agreement.
SECTION 6.2 Additional Conditions to Obligations of
Parent and Merger Sub. The obligations of Parent and Merger Sub
to effect the Merger are also subject to the following
conditions:
(a) Representations and Warranties. The representations
and warranties of the Company contained in this Agreement shall,
if qualified by materiality, be true and correct and, if not so
qualified, be true and correct in all material respects at and as
of the Effective Time as if made at and as of such time, except
for (i) changes contemplated by this Agreement, and (ii) those
representations and warranties which address matters only as of a
particular date (which shall have been true and correct to the
extent required as of such date), with the same force and effect
as if made at and as of the Effective Time, and Parent and Merger
Sub shall have received a certificate to such effect signed by
the President and the Chief Financial Officer of the Company;
(b) Agreements and Covenants. The Company shall have
performed or complied in all material respects with all
agreements and covenants required by this Agreement to be
performed or complied with by it at or prior to the Effective
Time, and Parent and Merger Sub shall have received a certificate
to such effect signed by the President and the Chief Financial
Officer of the Company;
(c) Consents Obtained. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and
all filings required to be made, by the Company for the due
authorization, execution and delivery of this Agreement and the
consummation by it of the transactions contemplated hereby shall
have been obtained and made by the Company;
(d) Estoppel Certificates. Each of the firms providing
services to the Company with respect to legal services,
accounting services, investment banking services, printing
services, environmental services and other miscellaneous services
with respect to the transaction contemplated by this Agreement
shall provide to the Company, in a form reasonably satisfactory
to Parent, a certificate setting forth the total fees owed such
person by the Company with respect to the transaction. Such
fees, in the aggregate, shall not exceed the amounts set forth in
Section 2.23 of the Company Disclosure Schedule;
(e) Agreement Amendments. The Employment Agreement of
Morton I. Schiff, dated August 18, 1994, as amended December 12,
1996, shall have been amended in a manner reasonably acceptable
to Parent so that the total of all amounts received by Morton I.
Schiff from the Company as a result of the transactions
contemplated by this Agreement do not exceed the maximum amount
permitted by Section 280G of the Code so as to prohibit the
Company from deducting such payment as an ordinary and necessary
business expense.
(f) Shareholder Agreement. Section 1.1 of the Shareholder
Agreement shall have been approved by the Probate Court for the
County of Oakland without material modification; and
(g) Opinion of Counsel. Parent and Merger Sub shall have
received the opinion of Honigman Miller Schwartz and Cohn,
counsel to the Company, the form and substance of which shall be
reasonably satisfactory to parent and Merger Sub and their
counsel.
SECTION 6.3 Additional Conditions to Obligation of the
Company. The obligation of the Company to effect the Merger is
also subject to the following conditions:
(a) Representations and Warranties. The representations
and warranties of Parent and Merger Sub contained in this
Agreement shall, if qualified by materiality, be true and correct
and, if not so qualified, be true and correct in all material
respects on and as of the Effective Time, except for (i) changes
contemplated by this Agreement and, (ii) those representations
and warranties which address matters only as of a particular date
(which shall have been true and correct to the extent required as
of such date) with the same force and effect as if made on and as
of the Effective Time, and the Company shall have received a
certificate to such effect signed by the Chairman and the Chief
Financial Officer of Parent;
(b) Agreements and Covenants. Parent and Merger Sub shall
have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be
performed or complied with by them on or prior to the Effective
Time, and the Company shall have received a certificate to such
effect signed by the Chairman and the Chief Financial Officer of
Parent;
(c) Consents Obtained. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and
all filings required to be made, by Parent and Merger Sub for the
authorization, execution and delivery of this Agreement and the
consummation by them of the transactions contemplated hereby
shall have been obtained and made by Merger Sub; and
(d) Opinion of Counsel. The Company shall have received
the opinion of Dykema Gossett PLLC, counsel to Parent and Merger
Sub, the form and substance of which shall be reasonably
satisfactory to the Company and its counsel.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. This Agreement may be terminated
at any time prior to the Effective Time, notwithstanding approval
thereof by the shareholders of the Company:
(a) by mutual written consent duly of the Boards of
Directors of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall
not have been consummated by December 31, 1997 (provided that the
right to terminate this Agreement under this Section 7.1(b) shall
not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted
in the failure of the Merger to occur on or before such date); or
(c) by either Parent or the Company if a court of
competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued a
nonappealable final order, decree or ruling or taken any other
action having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger (provided that the right to
terminate this Agreement under this Section 7.1(c) shall not be
available to any party who has not complied with its obligations
under Section 5.7 and such noncompliance materially contributed
to the issuance of any such order, decree or ruling or the taking
of such action); or
(d) by Parent or the Company, if the requisite vote of the
shareholders of the Company shall not have been obtained by
December 15, 1997, except that the Company shall not be entitled
to elect to terminate this Agreement unless it has complied with
its obligations under Section 5.2; or
(e) by Parent or the Company, respectively (i) if any
representation or warranty of the Company or Parent,
respectively, set forth in this Agreement shall be untrue when
made or become untrue, or (ii) upon a breach of any covenant or
agreement on the part of the Company or Parent, respectively, set
forth in this Agreement, such that in either case of (i) or (ii)
above the conditions set forth in Section 6.2(a) or 6.2(b), or
Section 6.3(a) or 6.3(b), as the case may be, would not be
satisfied (either (i) or (ii) above being a "Terminating
Breach"). Notwithstanding the foregoing, if a Terminating Breach
of the type described in (i) above is cured by eliminating the
facts or circumstances giving rise to the untruth (and not by
simply correcting or supplementing the disclosure with respect
thereto) (A) within 30 days of the earlier of (i) the date it
becomes known to officers of Parent or the Company, as the case
may be, or (ii) the date on which notice is given by the Company
to Parent under Section 5.6 of the Agreement or notice is given
by the Parent to the Company, as the case may be; and (B) upon
terms reasonably satisfactory to the other party (and, in the
case of the Company, without the payment of money), then neither
Parent nor the Company, respectively, may terminate this
Agreement on account of such Terminating Breach; provided, that
the right to cure provided in this sentence shall not be
available for any untruth constituting an intentional
misstatement or omission;
(f) by Parent, if: (i) the Board of Directors of the
Company shall withdraw, modify or change its approval or
recommendation of this Agreement or the Merger in a manner
adverse to Parent or shall have resolved to do so; or (ii) the
Board of Directors of the Company shall have recommended to the
shareholders of the Company an Acquisition Proposal, or has
resolved to do so; or
(g) by Parent, if any person (or "group", as defined in
Section 13(d)(3) of the Exchange Act) other than Parent or its
affiliates or the Shareholder is or becomes the beneficial owner
of 19.9% or more of the outstanding Shares; or
(h) by the Company, if the Company shall have accepted an
Acceptable Offer in compliance with the terms of Section 4.2
hereof as evidenced by the execution of a definitive agreement
with respect thereto; or
(i) by Parent, within 15 calendar days after the date
hereof if the Parent reasonably determines, based on the advice
of its environmental consultant, that (i) the representation in
Section 2.16 is incorrect, or (ii) environmental liabilities of
the Company over the three (3) year period subsequent to the
Closing are reasonably anticipated to exceed $600,000; or (iii)
the Company's liabilities relating to the real property
previously conveyed by the Company to Wilkie Brothers Conveyers,
Inc. ("Wilkie"), including, but not limited to, liabilities to
Wilkie, the City of Marysville and the State of Michigan, related
to the environmental contamination of such real property are
likely to exceed $580,000.
(j) by Parent, if the condition set forth in Section 6.2(f)
is not satisfied within forty five (45) days of the date hereof;
or
(k) by Parent, pursuant to Section 5.11 or if the condition
set forth in Section 6.2(d) has not been satisfied.
SECTION 7.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 7.1, this
Agreement shall forthwith become void and there shall be no
liability on the part of any party hereto or any of its
affiliates, directors, officers or shareholders except (i) for a
Terminating Breach (A) under Section 7.1(e)(i) if the untruth in
the representation or warranty arose from an intentional
misstatement or omission or (B) under Section 7.1(e)(ii), (ii) as
set forth in Section 7.3 and Section 8.1 hereof, and (iii)
nothing herein shall relieve any party from liability for any
breach of a covenant or agreement contained in this Agreement.
SECTION 7.3 Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the Merger is
consummated, except that the Company shall promptly reimburse the
Parent for one-half of the filing fee paid by the Parent pursuant
to the HSR Act.
(b) The Company shall pay Parent a fee of $1,000,000 (the
"Fee") upon the first to occur of the following events:
(i) the termination of this Agreement by Parent or the
Company pursuant to Section 7.1(d) at a time when the Parent
is also entitled to terminate this Agreement pursuant to
Section 7.1(f), as a result of the failure to receive the
requisite vote for approval and adoption of this Agreement
and Merger by the shareholders of the Company at the
Shareholder Meeting; or
(ii) the termination of this Agreement by Parent
pursuant to Section 7.1(f); or
(iii) the termination of this Agreement by Parent
pursuant to Section 7.1(g) if, within one year of any such
termination, a person shall acquire or beneficially own a
majority of the then outstanding shares of the Company
Common Stock or obtained representation on the Company's
Board of Directors or shall enter into a definitive
agreement with the Company with respect to an Acquisition
Proposal or similar business combination; or
(iv) the termination of this Agreement by the Company
pursuant to Section 7.1(h).
(c) The Company shall reimburse Parent its reasonable out-of-pocket
fees and expenses relating to the transactions
contemplated by this Agreement in the event that (i) this
Agreement is terminated by Parent or the Company pursuant to
Section 7.1(d) as the result of the failure to receive the
requisite vote for approval and adoption of this Agreement and
the Merger by the shareholders of the Company at the Shareholder
Meeting, and (ii) the Parent is not entitled to terminate this
Agreement pursuant to Section 7.1(f).
(d) The Fee and expenses payable pursuant to Sections
7.3(b) or 7.3(c) shall be paid within one business day after the
first to occur of any of such events, except to the extent
otherwise provided in Section 4.2(e).
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Effectiveness of Representations, Warranties
and Agreements; Knowledge, Etc.
(a) Except as otherwise provided in this Section 8.1, the
representations, warranties and agreements of each party hereto
shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any other party hereto,
any person controlling any such party or any of their officers or
directors, whether prior to or after the execution of this
Agreement. The representations, warranties and agreements in
this Agreement shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to Section 7.1, as the
case may be, except that the agreements set forth in this
Section 8.1 shall survive independently; those set forth in
Article I and in Section 5.5 shall survive the Effective Time
indefinitely; those set forth in Section 5.10 shall survive such
termination for so long as the Shareholder Agreement is in full
force and effect; and those set forth in Section 7.3 shall
survive such termination indefinitely. The Confidentiality
Agreement shall survive termination of this Agreement as provided
therein.
(b) Notwithstanding anything to the contrary contained in
this Agreement, the Company Disclosure Schedule or the Parent
Disclosure Schedule, any information disclosed in one section of
this Agreement, the Company Disclosure Schedule or the Parent
Disclosure Schedule shall be deemed to be disclosed with respect
to this Agreement, and all sections of the Company Disclosure
Schedule or the Parent Disclosure Schedule, as the case may be,
into which they are specifically incorporated by reference.
SECTION 8.2 Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given or made if and when delivered
personally or by overnight courier to the parties at the
following addresses or sent by electronic transmission, with
confirmation received, to the telecopy numbers specified below
(or at such other address or telecopy number for a party as shall
be specified by like notice):
(a) If to Parent or Merger Sub:
Oxford Automotive, Inc.
2000 North Woodward Avenue, Suite 130
Bloomfield Hills, Michigan 48304
Telecopier No.: (810) 540-7280
Telephone No.: (810) 540-0031
Attention: President
With a copy to:
Rex E. Schlaybaugh, Jr., Secretary
Oxford Automotive, Inc.
2000 North Woodward Avenue, Suite 130
Bloomfield Hills, Michigan 48304
Telecopier No.: (810) 540-7280
Telephone No.: (810) 540-0031
(b) If to the Company:
Howell Industries, Inc.
Suite 650
17515 West Nine Mile Road
Southfield, Michigan 48075
Telecopier No.: (810) 424-8131
Telephone No.: (810) 424-8220
Attention: President
With a copy to:
Cyril Moscow, Esq.
Honigman Miller Schwartz and Cohn
First National Building
Detroit, Michigan 48286
Telecopier No.: (313) 962-0176
Telephone No.: (313) 256-7718
SECTION 8.3 Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliates" means a person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first
mentioned person; including, without limitation, any partnership
or joint venture in which the first mentioned person (either
alone, or through or together with any other subsidiary) has,
directly or indirectly, an interest of 5% or more;
(b) "beneficial owner" with respect to any shares of
Company Common Stock means a person who shall be deemed to be the
beneficial owner of such shares (i) which such person or any of
its affiliates or associates (as such term is defined in Rule
12b-2 of the Exchange Act) beneficially owns, directly or
indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject only to
the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (B) the right to
vote pursuant to any agreement, arrangement or understanding, or
(iii) which are beneficially owned, directly or indirectly, by
any other persons with whom such person or any of its affiliates
or associates has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any
shares;
(c) "business day" means any day other than a day on which
banks in the State of Michigan are required or authorized to be
closed;
(d) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or
cause the direction of the management or policies of a person,
whether through the ownership of stock, as trustee or executor,
by contract or credit arrangement or otherwise;
(e) "person" means an individual, corporation,
partnership, association, trust, unincorporated organization,
other entity or group (as defined in Section 13(d)(3) of the
Exchange Act); and
(f) "subsidiary" or "subsidiaries" of the Company, Parent
or any other person means any corporation, partnership, joint
venture or other legal entity of which the Company, the Surviving
Corporation, Parent or such other person, as the case may be
(either alone or through or together with any other subsidiary),
owns, directly or indirectly, more than 50% of the stock or other
equity interests the holders of which are generally entitled to
vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
SECTION 8.4 Amendment. This Agreement may be amended by
the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective
Time; provided, however, that, after approval of the Merger by
the shareholders of the Company, no amendment may be made which
by law requires further approval by such shareholders without
such further approval. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto.
SECTION 8.5 Waiver. At any time prior to the Effective
Time, any party hereto may with respect to any other party hereto
(a) extend the time for the performance of any of the obligations
or other acts, (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered
pursuant hereto, or (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
SECTION 8.6 Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 8.7 Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected
in any manner adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of
being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner to the
end that the transactions contemplated hereby are fulfilled to
the fullest extent possible.
SECTION 8.8 Entire Agreement. This Agreement constitutes
the entire agreement and supersedes all prior agreements and
undertakings (other than the Confidentiality Agreement), both
written and oral, among the parties, or any of them, with respect
to the subject matter hereof.
SECTION 8.9 Assignment; Guarantee of Merger Sub
Obligations. This Agreement shall not be assigned by operation
of law or otherwise, except that Parent and Merger Sub may assign
all or any of their rights hereunder to any subsidiary thereof
provided that no such assignment shall relieve the assigning
party of its obligations hereunder. Parent guarantees the full
and punctual performance by Merger Sub of all the obligations
hereunder of Merger Sub or any such assignees.
SECTION 8.10 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement, including, without limitation, by way of
subrogation, other than Section 5.5 (which is intended to be for
the benefit of the Indemnified Parties and may be enforced by
such Indemnified Parties).
SECTION 8.11 Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of any party hereto
in the exercise of any right hereunder shall impair such right or
be construed to be a waiver of, or acquiescence in, any breach of
any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude any other
or further exercise thereof or of any other right. All rights
and remedies existing under this Agreement are cumulative to, and
not exclusive of, any rights or remedies otherwise available.
SECTION 8.12 Governing Law. This Agreement shall be
governed by, and construed in accordance with, the internal laws
of the State of Michigan applicable to contracts executed and
fully performed within the State of Michigan.
SECTION 8.13 Counterparts. This Agreement may be executed
in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall
constitute one and the same agreement.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be executed as of the date first written
above by their respective officers thereunto duly authorized.
OXFORD AUTOMOTIVE, INC.
By:................................
Name: Selwyn Isakow
Title: Chairman
HI ACQUISITION, INC.
By:................................
Name:
Title:
HOWELL INDUSTRIES, INC.
By:..................................
Name: Morton I. Schiff
Title: President
