SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 9, 1998
THOR INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-9235 93-0768752
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(State of Incorporation) (Commission File No.) (IRS Employer Identification No.)
419 West Pike Street, Jackson Center, Ohio 45334
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (937) 596-6849
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Page 2 of 44 Pages
Item 2. Acquisition or Disposition of Assets
- ------- ------------------------------------
On February 9, 1998, Thor Industries, Inc., a Delaware
corporation (the "Registrant"), through its wholly-owned subsidiary, Champion
Bus, Inc., a Delaware corporation (the "Purchaser"), acquired substantially all
of the assets and certain of the liabilities of Champion Motor Coach, Inc., a
Michigan corporation (the "Seller"). The assets of the Seller acquired included,
among other things, plant, equipment, inventory and accounts receivable.
The purchase price paid on February 9, 1998 was $10,163,356 cash
(the "Closing Date Purchase Price"), which represented ninety-five (95%) percent
of the stockholder's equity as reflected on the unaudited balance sheet of the
Seller as of November 1, 1997. The Closing Date Purchase Price shall be adjusted
based on the audited balance sheet of the Seller, which shall be prepared on or
before April 10, 1998. The funds required for the Closing Date Purchase Price
were acquired by the Registrant from working capital.
There was no material relationship between the Registrant (or any
affiliate, including the Purchaser, any director or officer of the Registrant,
or any associate of any such director or officer) and the Seller.
The Seller is engaged in the business of manufacturing mid-size
buses. The business and operations of the Seller will be continued by the
Registrant substantially as they were conducted prior to the acquisition.
The business of the Seller is not "significant" to the
Registrant, as such is defined in Rule 11-01(b) of Regulation S-X, as amended.
Item 7. Financial Statements and Exhibits
- ------- ---------------------------------
(c) Exhibits
2.1 Asset Purchase Agreement, dated as of December 23,
1997, by and among the Seller and the Registrant.
2.2 Assignment of Purchaser's Interest in Asset Purchase
Agreement, dated January 29, 1998, by and between the
Registrant and the Purchaser.
99.1 Press release dated February 10, 1998.
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Page 3 of 44 Pages
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
THOR INDUSTRIES, INC.
/S/ WALTER L. BENNETT
----------------------------------
By: Walter L. Bennett
Senior Vice President
(Finance) and Secretary
Date: February 23, 1998
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Page 4 of 44 Pages
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
2.1 Asset Purchase Agreement, dated as of
December 23, 1997, by and among the Seller
and the Registrant. 5
2.2 Assignment of Purchaser's Interest in Asset
Purchase Agreement, dated January 29, 1998,
by and between the Registrant and the Purchaser. 43
99.1 Press release dated February 10, 1998 44
Page 5 of 44 Pages
EXHIBIT 2.1
Execution Copy
ASSET PURCHASE AGREEMENT
by and between
CHAMPION MOTOR COACH, INC.
a Michigan corporation,
and
THOR INDUSTRIES, INC.
a Delaware corporation,
Dated: December 23, 1997
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Page 6 of 44 Pages
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1. SALE OF PURCHASED ASSETS; PURCHASE PRICE; CLOSING..... 1
1.1. Purchase and Sale of Assets........................... 1
1.2. Purchased Assets; Excluded Assets..................... 1
1.3. Liabilities of Seller................................. 4
1.4. Purchase Price; Allocation............................ 6
1.5. Closing............................................... 9
1.6. Further Assurances, Post-Closing Cooperation.......... 9
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLER.............. 10
2.1. Corporate Existence................................... 10
2.2. Authority............................................. 10
2.3. Consents and Approvals; No Violation.................. 10
2.4. Legal Proceedings..................................... 10
2.5. Tax Matters........................................... 11
2.6. Title to Property..................................... 11
2.7. Brokers............................................... 11
2.8. Financial Statement................................... 11
2.9. Contracts and Commitments............................. 11
2.10. Real Property......................................... 12
2.11. Litigation............................................ 12
2.12. Compliance with Laws.................................. 12
2.13. Inventory............................................. 12
2.14. Employees............................................. 12
2.15. Product Liability..................................... 13
2.16. Warranties and Service Practices...................... 14
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER........... 14
3.1. Corporate Existence................................... 14
3.2. Authority............................................. 14
3.3. No Conflicts.......................................... 14
3.4. Legal Proceeding...................................... 14
3.5. Brokers............................................... 15
3.6. Due Diligence......................................... 15
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Page 7 of 44 Pages
Page
----
ARTICLE 4. COVENANTS OF SELLER................................... 15
4.1. HSR Act............................................... 15
4.2. Fulfillment of Conditions............................. 15
4.3. Conduct of Business................................... 15
4.4. Non-Competition Agreements............................ 16
4.5. License Agreement..................................... 16
4.6. Access to Information................................. 16
ARTICLE 5. COVENANTS OF PURCHASER................................ 16
5.1. HSR Act............................................... 16
5.2. Fulfillment of Conditions............................. 16
5.3. Payment and Performance Bonds; Third Party Releases... 16
ARTICLE 6. CONDITIONS TO OBLIGATIONS OF PURCHASER................ 17
6.1. Representations and Warranties........................ 17
6.2. Performance........................................... 17
6.3. Officers' Certificate................................. 17
6.4. HSR Act............................................... 17
6.5. MESC Contribution Liability........................... 17
6.6. Deliveries............................................ 17
6.7. Title Insurance....................................... 17
6.8. No Material Adverse Effect............................ 17
6.9. Consent............................................... 18
ARTICLE 7. CONDITIONS TO OBLIGATIONS OF SELLER................... 18
7.1. Representations and Warranties........................ 18
7.2. Performance........................................... 18
7.3. Officers' Certificate................................. 18
7.4. HSR Act............................................... 18
7.6. Consent............................................... 18
ARTICLE 8. EMPLOYEE MATTERS...................................... 19
8.1. Employees of the Business; Termination................ 19
8.2. Employment Claims..................................... 19
8.3. Worker's Compensation Claims and Worker's
Occupational Diseases Claim........................... 20
8.4. Severance............................................. 20
8.5. Other Agreements, Plans, Understandings and
Practice.............................................. 20
8.6. Termination or Layoffs................................ 20
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Page 8 of 44 Pages
Page
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ARTICLE 9. TERMINATION OF AGREEMENT.............................. 21
9.1. Events of Termination................................. 21
9.2. Effect of Termination................................. 21
ARTICLE 10. SURVIVAL; NO OTHER REPRESENTATIONS;
INDEMNIFICATION....................................... 21
10.1. Survival.............................................. 21
10.2. Indemnification....................................... 22
10.3. Limitations on Seller's Indemnification............... 22
10.4. Notice of Indemnification Claim....................... 22
10.5. Third Party Claims.................................... 22
10.6. Other Indemnification Claims.......................... 23
10.7. Reimbursement......................................... 23
10.8. No Other Representations; Limitations on Breach of
Representations and Warranties........................ 24
10.9. Limited Guaranty...................................... 24
ARTICLE 11. DEFINITIONS........................................... 24
11.1. Definitions........................................... 24
ARTICLE 12. MISCELLANEOUS......................................... 29
12.1. Notices............................................... 29
12.2. Bulk Sales Act........................................ 30
12.3. Entire Agreement...................................... 30
12.4. Expenses.............................................. 30
12.5. Waiver................................................ 30
12.6. Amendment............................................. 30
12.7. No Third Party Beneficiary............................ 30
12.8. No Assignment Binding Effect.......................... 31
12.9. Heading............................................... 31
12.10. Invalid Provisions.................................... 31
12.11. Governing Law......................................... 31
12.12. Schedules and Exhibits................................ 31
12.13. Counterparts.......................................... 31
12.14. Public Announcements: Confidentiality................. 31
12.15. Name of Seller........................................ 32
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Page 9 of 44 Pages
SCHEDULES
---------
Page
----
Schedule 1.2(a)(iv) 2
Schedule 1.2(a)(v) 2
Schedule 1.2(a)(vi) 2
Schedule 1.3(a)(v) 5
Schedule 1.4(e) 8
Schedule 2.3 10
Schedule 2.4 10
Schedule 2.6 11
Schedule 2.11 12
Schedule 2.14(a) 13
Schedule 2.14(b) 13
Schedule 2.14(c) 13
Schedule 2.16 14
Schedule 5.3 16
Schedule 6.9 18
Schedule 8.4 20
Schedule 11.1(a)-1 27
Schedule 11.1(a)-2 27
EXHIBITS
Page
----
Exhibit 1.5(a) 9
Exhibit 1.5(b) 9
Exhibit 1.5(c) 9
Exhibit 2.8 11
Exhibit 4.4 16
Exhibit 4.5 16
Exhibit 6.3 17
Exhibit 7.3 18
Exhibit 10.9 24
iv
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Page 10 of 44 Pages
Execution Copy
ASSET PURCHASE AGREEMENT
-------------------------
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated December 23,
1997, is made and entered into by and between CHAMPION MOTOR COACH, INC., a
Michigan corporation ("Seller"), and THOR INDUSTRIES, INC., a Delaware
corporation ("Purchaser").
WITNESSETH:
-----------
WHEREAS, Seller is engaged in the business of designing,
manufacturing, marketing and selling mid-size buses (the "Business"); and
WHEREAS, Seller desires to sell, transfer and assign to Purchaser, and
Purchaser desires to purchase and acquire from Seller, the Business, and certain
of the assets, properties and rights of the Business, subject to the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1.
SALE OF PURCHASED ASSETS;
-------------------------
PURCHASE PRICE; CLOSING
-----------------------
1.1. Purchase and Sale of Assets. At the Closing, Seller shall sell,
---------------------------
transfer, convey, assign and deliver to the Purchaser, and the Purchaser shall
purchase, pay for, accept, assume and receive the Purchased Assets described in
Section 1.2(a) hereof, on and subject to the terms and conditions set forth in
this Agreement.
1.2. Purchased Assets; Excluded Assets.
---------------------------------
(a) Purchased Assets. The assets and properties to be purchased
-----------------
hereunder by Purchaser shall mean and include, as they exist on the Closing
Date, all of the Business and goodwill of the Seller and all of the assets and
properties (other than the Excluded Assets) owned by, leased to or otherwise
used by the Seller in the conduct of the Business, whether tangible or
intangible, wherever located (the "Purchased Assets"), it being understood that
the Purchased Assets include, and as of the Closing Date shall include, all of
the assets necessary for the conduct by Buyer of the Business as it is now and
on the Closing Date shall be conducted by the Seller. Without limiting the
generality of the foregoing, the Purchased Assets shall include:
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Page 11 of 44 Pages
(i) Accounts Receivable. All trade and other accounts receivable
-------------------
and prepaid expenses of the Business (collectively, the "Accounts Receivable");
(ii) Inventory. All inventories, including Seller's interest in
---------
consignment inventory, of raw materials, work-in-process, finished goods,
supplies, parts, packaging materials and other accessories related thereto which
are used or held for use by Seller in the conduct of the Business (collectively,
the "Inventory"), but not the Excluded Inventory as hereafter defined;
(iii)Intellectual Property. All Intellectual Property, but not
----------------------
the Excluded Intellectual Property as hereafter defined;
(iv) Tangible Personal Property. All furniture, fixtures,
-----------------------------
machinery and equipment and other tangible personal property (other than the
Inventory, personal effects and the personal property listed on Schedule
--------
1.2(a)(iv) attached hereto), wherever located, used or held for use primarily in
- ----------
the conduct of the Business, whether or not capitalized on the Seller's books
(collectively, the "Tangible Personal Property");
(v) Contracts and Commitments. The full benefit of (i) any and
--------------------------
all purchase orders placed with, and accepted by, the Seller on, or prior to,
the Closing Date, and which have not been completely performed, or filled, prior
to the Closing Date, and any and all quotations, bids or requests for proposals
submitted by the Seller to any other person, covering the purchase from the
Seller of products to be supplied by the Seller, or covering the rendition by
the Seller of service on products supplied by the Seller (excluding all
deposits, progress payments and credits) and listed on Schedule 1.2(a)(v)
-------------------
hereto; (ii) the purchase orders (including but not limited to purchase orders
for goods on consignment) placed by the Seller prior to the Closing Date which
have not been completely performed prior to the Closing Date, covering the
purchase by the Seller of supplies, materials or services and listed in Schedule
1.2(a)(v) hereto; (iii) the leases of real and personal property and other
agreements listed in Schedule 1.2(a)(v) hereto; (iv) all agreements (if any)
-------------------
with dealers and distributors of Seller's products as listed in Schedule
--------
1.2(a)(v); and (v) all other purchase orders, quotations, bids or requests for
- ---------
proposals as described in (i) or (ii) above placed by or with Seller covering
the payment or receipt by the Seller each in the amount of Ten Thousand Dollars
($10,000) or less, and all other leases of real and personal property wherein
the annual rental payable with regard to any such lease is Ten Thousand Dollars
($10,000) or less (the items described in (i) through (v) above are,
collectively, the "Contracts and Commitments");
(vi) Real Property. The Real Property as set forth on Schedule
-------------- --------
1.2(a)(vi) attached hereto;
- ----------
(vii)All transferable local, state and federal franchises,
licenses, bonds, permits and similar items pertaining to the Business and/or the
Purchased Assets;
(viii) Other Assets. The customer lists and supplier lists (if
------------
any) relating to the Business and blueprints (if any) applicable to the
Inventory; all rights under express or implied warranties from manufacturers,
vendors and suppliers (to the extent assignable);
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Page 12 of 44 Pages
(ix) All shop reports, drawings, imprints, blueprints, computer
software, including, but not limited to, design software, and engineering and
design information used or held for use by the Seller in the conduct of the
Business;
(x) All supplies and sundry items, including, but not limited
to, telephone numbers, keys and lock combinations, customer records, and books
and records of, or relating to and material to the operation of the Business
(including all customer files, supplier records, purchase orders, invoices,
customer lists, warranty information and records relating to accounts
receivable) and the assets acquired and any obligations assumed pursuant hereto;
and
(xi) All personnel records and payroll records for all employees
employed by the Seller as of the Closing Date who are retained or employed by
Purchaser.
(b) Excluded Assets. Notwithstanding anything contained in this
----------------
Agreement to the contrary, the following shall be excluded from and shall not
constitute any part of the Purchased Assets (the "Excluded Assets"):
(i) Cash. Cash (including (a) checks received by Seller on or
----
prior to the Closing Date, and (b) cash in bank accounts), commercial paper,
certificates of deposit and other bank deposits, treasury bills, other cash
equivalents and bank accounts;
(ii) Excluded Inventory. All inventory of raw materials, work-in-
------------------
process, finished goods, supplies, parts, packaged materials and other
accessories related to recreational vehicles and the RV Business (as defined in
Section 1.3(b)) (the "Excluded Inventory");
(iii)Excluded Intellectual Property. The name, tradename and
--------------------------------
trademark, whether registered or unregistered, "Champion," "Champion Motor
Coach" or "Champion Bus," or any derivatives thereof, the stock exchange symbol
"CHB," and the corporate names, logos, designs, or other marks associated
therewith or incorporating any of the foregoing, and any other name, logo,
design or other mark that has such a near resemblance thereto as may be likely
to cause confusion or mistake to the public, or other otherwise deceive the
public (collectively, the "Excluded Intellectual Property");
(iv) Insurance. Life insurance policies of officers, directors
---------
and employees or other representatives of Seller, and all other liability,
property, casualty and other insurance policies relating to the Purchased Assets
or the operation of the Business;
(v) Employee Benefit Plans. All assets owned or rights held
------------------------
under any Employee Benefit Plan;
(vi) Tax Refunds. All refunds or credits, if any, of Taxes of
------------
Seller for all Pre-Closing Tax Periods; and
(vii)Books and Records. The minute books, stock transfer books
-----------------
and corporate seal of Seller (the "Books and Records") of Seller.
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Page 13 of 44 Pages
(c) Assignment of Contracts and Commitments. On the Closing Date,
without limiting the generality of Section 1.2 hereof, the Seller shall assign
to the Purchaser all of the Seller's rights under the Contracts and Commitments
set forth on Schedule 1.2(a)(v) and under each other contract, lease or
-------------------
agreement relating to the conduct of the Business by which the Seller is bound,
other than an Excluded Liability (and, as provided in Section 1.3(a)(ii), the
Purchaser shall assume and agree to perform the unexecuted portion of the
Seller's duties thereunder).
(i) Consent. Seller covenants and agrees that the beneficial
interest in and to each agreement set forth in Schedule 1.2(a)(v) shall, to the
-------------------
extent permitted by the relevant agreement and/or by law, pass to Purchaser, and
Seller covenants and agrees: (i) that it will hold and declare that it holds all
such agreements in trust for the benefit of Purchaser, its successors and
assigns, from and after the Closing Date; (b) to use all reasonable efforts to
obtain and secure any and all consents and approvals that may be necessary to
effect such assignment or assignments of the same; (c) to make or complete such
assignment or assignments as soon as reasonably possible; and (d) to cooperate
with Purchaser (and Purchaser covenants and agrees that it shall so cooperate)
in any other reasonable arrangement designed to provide for actions necessary to
enable Seller to fulfill any such agreements until an effective assignment
thereof to Buyer can be obtained, and the parties agree to cooperate and take
all necessary actions, including accountings between parties, to assure that
Purchaser shall receive all of such benefits, rights, obligations and duties
under such agreements. The provisions of this Section 1.2(c)(i) do not
constitute a waiver of the conditions to Closing contained in Section 1.3(a)(ii)
or Section 6.9 hereof.
1.3. Liabilities of Seller.
(a) Assumed Liabilities. In connection with the sale, transfer,
conveyance, assignment and delivery of the Purchased Assets pursuant to this
Agreement, on the terms and subject to the conditions set forth in this
Agreement, at the Closing, Purchaser shall assume and agree to pay, perform and
discharge when due the following Liabilities (but not the Excluded Liabilities)
of Seller (the "Assumed Liabilities"), as specified below:
(i) Balance Sheet Liabilities. All Liabilities of Seller as
reflected in the Audited Closing Balance Sheet, including but not limited to all
trade payables (subject, however, to adjustment as to any liabilities reflected
on the Audited Closing Balance Sheet which are subject to pro rations as
provided in Section 1.4(d) hereof;
(ii) Contracts and Commitments. All Liabilities of Seller under
Contracts and Commitments, whether or not any necessary consents to the
assignment of any Contracts and Commitments to Seller have been obtained
(subject however to the following sentence) and including any Liabilities of
Seller which may arise on account of the termination of any Contracts or
Commitments subsequent to the date of Closing (including, but not limited to any
repurchase obligations which may arise in the event of termination of any
agreements with dealers or distributors of Seller's products). Notwithstanding
the foregoing, Purchaser shall not be obligated to assume any contract other
than "Chassis Contracts" (as hereafter defined), and such contract shall not be
deemed assigned to Purchaser, for which the consent, if required, of the
contracting party has not been obtained if the failure to obtain such consent
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Page 14 of 44 Pages
would materially impair the ability of Purchaser to receive the intended rights,
benefits, duties and obligations of such contract and written notice of such
election by Purchaser shall have been delivered to Seller not less than ten (10)
days prior to the Closing; provided that, in such event, Seller shall have no
liability or responsibility to Purchaser due to the failure to obtain such
consent; and further provided that, in such event, Seller may, at its option,
elect to terminate this Agreement if the aggregate of such un-assumed contracts
would exceed $50,000. As used herein, "Chassis Contracts" mean those contracts
existing as of the date hereof and listed on Schedule 1.2(a)(v) providing for
the purchase of chassis used by Seller in the conduct of the Business.
(iii)Employee Liabilities. Accrued holiday and vacation pay as
---------------------
reflected on the Audited Closing Balance Sheet and all Liabilities and
obligations assumed by Purchaser pursuant to Article 8 in respect of the former
and current employees of the Business who are employed or retained by Purchaser
on or after the Closing Date;
(iv) Warranty and Service Claims. All claims and/or obligations
---------------------------
relating to any warranties made by Seller and/or service practices or policies
of Seller (but only to the extent such service practices or policies are
consistent with the service practices and policies of Purchaser as of the date
hereof), covering or relating to any products or property manufactured, sold,
repaired or leased by the Seller and for services furnished by the Seller
(without regard to or otherwise limited by the amount of any warranty reserve
reflected in the Financial Statement or the Audited Closing Balance Sheet),
limited in all events to the repair or replacement of the defective product or
parts; but specifically excluding therefrom any claims arising from Seller's
ownership and operation of the RV Business (as hereafter defined); and
(v) Other Contractual Liabilities. All other contractual
---------------------------------
liabilities as set forth in Schedule 1.3(a)(v) attached hereto (the "Contractual
------------------
Liabilities").
(b) Excluded Liabilities. Purchaser shall not assume or have any
---------------------
liability or obligation whatsoever for any liabilities or obligations whatsoever
of the Seller, whether accrued, absolute, contingent, known or unknown, or
otherwise, and whether due or to become due, other than the Assumed Liabilities
(the "Excluded Liabilities") including, by way of example and not of limitation,
the following: (a) any liability for any Taxes (unless reflected on the Audited
Closing Balance Sheet or otherwise provided herein as the obligation of
Purchaser); (b) any liability (other than warranty claims or service claims
relating to the repair or replacement of defective products or parts) resulting
from or claimed to have been incurred by reason of an alleged defect or defects
in any products sold or distributed by the Seller prior to the Closing Date; (c)
any Environmental Liabilities; (d) any RV Liabilities; (e) any liability under
any Employee Benefit Plan (but Purchaser shall assume all payroll-related taxes
and deductions, and all accrued vacation and holiday pay, as reflected on the
Audited Closing Balance Sheet); and (f) any other liabilities of any kind or
nature, whether now in existence or arising hereafter, not constituting Assumed
Liabilities. The Seller agrees to discharge, promptly when due, all Excluded
Liabilities. As used herein, the following terms shall have the meanings set
forth below:
"Environmental Liabilities" shall mean and refer to any claims or
liabilities now existing or which may hereafter arise on account of (i) Seller's
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Page 15 of 44 Pages
operation of the Business or the Purchased Assets on or prior to the Closing
Date; (ii) Seller's or Seller's predecessors use and occupancy of the Real
Property on or prior to the Closing Date; or (iii) the condition of the Real
Property as of the Closing Date, in violation of Environmental Laws.
"Environmental Laws" means all federal, state or local (including
but not limited to, any governmental department or agency or any other
commission, board or agency or instrumentality) statute, law, rule, regulation,
permit, agreement, ordinance, or judicial or administrative order relating to or
concerning the pollution or protection of the environment, human health or
safety, or the generation, storage, transportation, treatment, disposal or
handling of hazardous materials, substances or waste, including without
limitation, the Clean Air Act, the Clean Water Act, the Solid Waste Disposal
Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1986, the Federal Insecticide,
Fungicide and Rodenticide Act, the Occupational Safety and Health Act, and the
Emergency Planning and Community Right-to-Know Act of 1986.
"RV Liabilities" shall mean and refer to any claims or
liabilities now existing or which may hereafter arise on account of Seller's
ownership and operation of the business of designing, manufacturing, marketing
and selling recreational vehicles (the "RV Business") prior to the date hereof.
Seller has previously discontinued the RV Business and the Purchased Assets do
not include any assets or properties with regard thereto.
1.4. Purchase Price; Allocation.
--------------------------
(a) Purchase Price. The aggregate purchase price for the Purchased
---------------
Assets (the "Purchase Price") shall be the Audited Closing Stockholders Equity
as of the Closing Date as reflected in the Audited Closing Balance Sheet, plus
$420,000, plus the assumption of the Assumed Liabilities. On the Closing Date,
Purchaser shall pay to Seller a sum on account of the Purchase Price (the
"Purchase Price Estimate") which shall be equal to ninety-five percent (95%) of
the stockholder's equity as reflected on the Financial Statement (as defined in
Section 2.8). Such amount shall be payable in United States dollars by Purchaser
to Seller by wire transfer of immediately available funds to such account or
accounts as Seller may direct. The amount retained from the Purchase Price
Estimate shall be referred to as the "Hold Back Amount."
(b) Audited Closing Balance Sheet; Hold Back Amount.
-----------------------------------------------
(i) Seller shall cause Price Waterhouse, L.L.P., certified
public accountants (the "Auditor"), to perform an audit ("Audit") of the balance
sheet of the Seller as of the Closing Date (the "Audited Closing Balance Sheet")
and a related statement of income of the Seller for the period of December 29,
1996 to the Closing Date (collectively, the "Audited Closing Financial
Statements"). The Audit will be prepared at Seller's sole cost and expense. In
connection with the preparation of the Audited Closing Financial Statements, the
Seller shall conduct a physical inventory count as of the Closing Date, which
physical inventory shall be observed by the Auditor. A copy of such inventory
count shall be delivered to Purchaser with the Audited Closing Financial
Statements. Purchaser shall be entitled to appoint representatives, who may be
members of its internal accounting staff or its independent certified public
accountants, to observe the preparation of the Audited Closing Financial
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Page 16 of 44 Pages
Statements and such inventory count. The Audited Closing Financial Statements
(x) shall contain line items substantially consistent with the line items in the
unaudited financial statements of the Seller as of and for the period ended
November 1, 1997, (y) shall be prepared in accordance with GAAP except to the
extent the requirements of clauses (a) and (b) below may not be in accordance
with generally accepted accounting principles consistently applied ("GAAP") and
(z) shall fairly present the financial position of the Seller as of the dates
indicated and the results of its operations for the periods indicated. Purchaser
acknowledges that the Audited Closing Balance Sheet may vary from the November
1, 1997 balance sheet included in the Financial Statement as to various items
including, but not limited to, the following:
(a) increase in the provision for excess, slow-moving and obsolete
inventory in the amount of $150,000; and
(b) increase in the warranty reserve in the amount of $270,000.
Purchaser further agrees that any adjustments, as reflected in the Audited
Closing Balance Sheet, to the November 1, 1997 balance sheet with regard to the
preceding items (a) and (b) shall be limited to the amounts as specified above.
(ii) In performance of the Audit, the Auditor shall conduct the
examination of the Seller in accordance with generally accepted auditing
standards consistently applied. The Auditor shall use its best efforts to
complete the Audit as soon as possible (but in no event later than sixty (60)
days) after the Closing Date and the Audited Closing Financial Statements shall
be delivered to Purchaser and the Seller immediately upon completion thereof,
together with a calculation of the Audited Closing Stockholders Equity of the
Seller and its work papers, and its opinion that the foregoing were prepared in
accordance with this Section. The Purchaser shall have thirty (30) days after
receipt of the Audited Closing Financial Statements and the calculation of the
Audited Closing Stockholders Equity of the Seller and the Auditor's work papers
to deliver a written notice to the Seller of any objections thereto. Any such
notice of objections shall be in writing and shall state, in reasonable detail,
the basis for each objection and the amount of adjustment which the Purchaser
believes is required in respect thereto. If the aggregate amount of all such
objections raised by Purchaser shall be $350,000 or less, then the Audited
Closing Financial Statements and the calculation of the Audited Closing
Stockholders Equity as determined by the Auditor shall be deemed correct, final
and binding upon the Purchaser and the Seller. If the aggregate amount of all
such objections shall exceed $350,000, and if Purchaser and Seller cannot agree
with respect to the Audited Closing Financial Statements or the calculation of
the Audited Closing Stockholders Equity within thirty (30) days after the
delivery of such notice of objections or such later date as may be agreed upon
by Purchaser and Seller, then, but only as to such amounts in excess of
$350,000, the dispute shall be resolved by arbitration by an independent
accounting firm agreed upon by Purchaser and the Seller (the "Independent
Accounting Firm"). Any items not in dispute shall be deemed stipulated by
Purchaser and the Seller and shall not be determined by the Independent
Accounting Firm. The determination of the Independent Accounting Firm shall be
binding and conclusive upon the matters determined thereby and may be entered as
a judgment by any court of competent jurisdiction; provided, however, the
Audited Closing Financial Statements and the calculation of the Audited Closing
-7-
<PAGE>
Page 17 of 44 Pages
Stockholders Equity shall be adjusted only by the amount by which such
determination exceeds $350,000. All costs and expenses relating to the services
provided by the Independent Accounting Firm shall be paid equally by Purchaser
and Seller.
(iii)In the event that the Purchase Price Estimate exceeds the
Audited Closing Stockholders Equity of the Seller by more than $420,000, then
the amount of such excess which is greater than $420,000 (the "Overpayment")
shall be deducted from the Hold Back Amount and if the Overpayment exceeds the
Hold Back Amount, the Seller shall immediately repay to Purchaser the amount of
the difference together with interest at an annual rate of six percent (6%) from
the Closing Date until paid in full. In the event that the Purchase Price
Estimate is less than the Audited Closing Stockholders Equity of the Seller plus
the sum of $420,000, the Purchaser shall immediately pay to the Seller the
amount of the difference together with interest at an annual rate of six percent
(6%) from the Closing Date until paid in full.
(iv) For purposes hereof the following term shall have the
following meaning:
"Audited Closing Stockholders Equity" means an
--------------------------------------
amount equal to the stockholders equity account,
plus the net intercompany balance with Champion,
and as adjusted for Excluded Assets and Excluded
Liabilities, reflected in the Audited Closing
Balance Sheet as the same may be adjusted upon
resolution of any questions or disputes with
respect thereto pursuant to Section 1.4(b) above.
(c) Any undisbursed portion of the Hold Back Amount shall be paid to
the Seller at such time as the amounts determined pursuant to Section
1.4(b)(iii) are paid.
(d) Pro Rations.
-----------
(i) Property Taxes; Special Assessments. Real and personal
--------------------------------------
property Taxes and installments of special assessments shall
be prorated between Seller and Purchaser as of the Closing
Date in accordance with local practice; and
(ii) Other. All revenue stamps and all other items normally
-----
prorated in transactions of a similar kind shall be prorated
in accordance with GAAP.
(e) Allocation of Consideration. The consideration paid by Purchaser
---------------------------
for the Purchased Assets shall be allocated as set forth in
Schedule 1.4(e) annexed hereto. Each party hereto agrees (i) that
---------------
any such allocation shall be consistent with the requirements of
Section 1060 of the Code and the regulations promulgated
thereunder, (ii) to complete jointly and to file separately Form
8594 with its Federal income Tax Return consistent with such
allocation for the tax year in which the Closing Date occurs, and
(iii) that no party hereto shall take a position on any income,
transfer or gains Tax Return, before any Governmental or
Regulatory Authority charged with the collection of any such Tax
or in any judicial proceeding, that is in any manner inconsistent
with the terms of any such allocation without the consent of the
other party, which consent shall not be unreasonably withheld or
delayed.
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<PAGE>
Page 18 of 44 Pages
1.5. Closing. The Closing shall take place at the offices of Seller in
-------
Auburn Hills, Michigan, or at such other place as Purchaser and Seller mutually
agree, at 10:00 a.m. local time, on January 30, 1998 or at such other time and
place as Purchaser and Seller may agree. The date on which the Closing actually
occurs is referred to herein as the "Closing Date". At the Closing, Purchaser
shall pay the Purchase Price less the Hold Back Amount as provided in Section
1.4, and simultaneously with such payment, (a) Seller shall assign, transfer and
convey to Purchaser the Purchased Assets, "as is, where is," without any
warranty except as otherwise specifically provided herein, by delivery of (i) a
General Assignment and Bill of Sale substantially in the form of Exhibit 1.5(a)
--------------
hereto (the "General Assignment"), duly executed by Seller, (ii) a Warranty Deed
in the form of Exhibit 1.5(b) hereto (the "Warranty Deed"), and (iii) such other
--------------
good and sufficient instruments of conveyance, assignment and transfer, in form
and substance reasonably satisfactory to Purchaser, as shall be effective to
vest in Purchaser all of Seller's right, title and interest in and to the
Purchased Assets (the General Assignment, Warranty Deed and the other
instruments referred to in clause (a)(iii) of this sentence, being referred to
herein as the "Assignment Instruments"); and (b) Purchaser shall assume from
Seller the due payment, performance and discharge of the Assumed Liabilities by
delivery of (i) an Assumption Agreement substantially in the form of Exhibit
-------
1.5(c) hereto (the "Assumption Agreement"), duly executed by Purchaser, and (ii)
- ------
such other good and sufficient instruments of assumption, in form and substance
reasonably acceptable to Seller, as shall be effective to cause Purchaser to
assume the Assumed Liabilities as and to the extent provided in Section 1.3(a)
(the Assumption Agreement and such other instruments referred to in clause
(b)(ii) of this sentence being referred to herein as the "Assumption
Instruments"). At the Closing, there shall also be delivered to Seller and
Purchaser the certificates and other contracts, documents and instruments
required to be delivered under Articles 6 and 7 hereof.
1.6. Further Assurances, Post-Closing Cooperation.
--------------------------------------------
(a) Subject to the terms and conditions of this Agreement, at any
time and from time to time after the Closing, at Purchaser's reasonable request,
Seller shall execute and deliver to Purchaser such other instruments of sale,
transfer, conveyance, assignment and confirmation, provide such materials and
information and take such other actions as Purchaser may reasonably deem
necessary or desirable in order to more effectively transfer, convey and assign
to Purchaser, and to confirm Purchaser's title to, all of the Purchased Assets
and, to the fullest extent permitted by Law, to put Purchaser in actual
possession and operating control of the Purchased Assets, and to assist
Purchaser in exercising all rights with respect thereto, and otherwise to cause
Seller to fulfill its obligations under this Agreement.
(b) Subject to the terms and conditions of this Agreement, at any
time and from time to time after the Closing, at Seller's reasonable request,
Purchaser shall execute and deliver to Seller such other instruments of
assumption, provide such materials and information and take such other actions
as Seller may reasonably deem necessary or desirable in order to more
effectively give effect to Purchaser's obligations under Section 1.3(a) of this
Agreement and to assist Seller in exercising all rights with respect to this
Agreement, and otherwise to cause Purchaser to fulfill its obligations under
this Agreement.
(c) Seller shall have and be entitled to, and Purchaser shall so
permit and provide Seller, access to the books and records of the Business to
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<PAGE>
Page 19 of 44 Pages
the extent such information is reasonably helpful to Seller in connection with
(i) the defense of any claims arising under any indemnification obligations, or
(ii) any other proper business purpose.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF SELLER
------------------------------------------
Seller hereby represents and warrants to Purchaser as follows:
2.1. Corporate Existence. Seller is a corporation duly incorporated,
--------------------
validly existing and in good standing under the Laws of its jurisdiction of
incorporation. Seller has full corporate and other power and authority to
conduct the Business as and to the extent now conducted by it, and to transfer
(pursuant to this Agreement) the Purchased Assets.
2.2. Authority. Seller has full corporate power and authority to
---------
execute and deliver this Agreement and the Related Agreements to which it is a
party, to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. All corporate and other acts or
proceedings required to be taken by Seller to authorize the execution, delivery
and performance of this Agreement and all transactions contemplated hereby have
been duly and properly taken. This Agreement is and the Related Agreements will
be duly executed and delivered by the Seller and is and will be the legal, valid
and binding obligation of the Seller, enforceable against the Seller in
accordance with their terms.
2.3. Consents and Approvals; No Violation. Except as disclosed on
----------------------------------------
Schedule 2.3 hereto, the execution, delivery and performance by the Seller of
- ------------
this Agreement and the documents and instruments to be executed and delivered by
Seller pursuant hereto do not and will not: (a) violate any provision of the
Seller's articles of incorporation or by-laws; (b) require any consent,
approval, authorization or action by, notice or disclosure to, or filing or
registration with, or permit of, any governmental body, agency or official, or
court except for the applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"); (c) contravene or
constitute a default under any indenture, mortgage, lease or other agreement to
which the Seller is a party or is bound, or by which any of the properties or
assets of the Seller may be bound or affected (other than any consents which may
be required in connection with the assignment to Purchaser of any Contracts or
Commitments) (Schedule 2.3 further sets forth, to the Knowledge of Seller, those
------------
written agreements which require the consent of third parties in connection with
the assignments thereof to Purchaser); or (d) result in a violation of any law,
statute, ordinance, regulation, judgment, injunction, order, decree or award of
any court or governmental authority or body having jurisdiction over the Seller
or is bound, or by which any of the properties or assets of the Seller may be
bound or affected.
2.4. Legal Proceedings. Except as disclosed on Schedule 2.4 attached
------------------ ------------
hereto, there are no Orders outstanding against Seller which, individually or in
the aggregate, have had or could reasonably be expected to have a material
adverse effect on the ability of Seller to consummate the transactions
contemplated by this Agreement.
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<PAGE>
Page 20 of 44 Pages
2.5. Tax Matters. All federal, state, local and foreign income,
------------
profits, franchise, sales, use, occupation, property, excise and other taxes
(including interest and penalties), if any, which if not paid would result in an
Encumbrance (as defined in Section 2.6) against the Purchased Assets have been
paid through the date of this Agreement or will be paid by Seller, subject to
any prorations as contemplated by this Agreement. The Seller (a) has filed all
federal, state and local tax returns required by law in the prescribed time and
manner, and paid all taxes, assessments and penalties due and payable (unless
reflected on the Audited Closing Balance Sheet); (b) has made all payments
required by any governmental program of workers' social security or unemployment
compensation; (c) has withheld and paid over to the appropriate governmental
authority all amounts required by law to be withheld from the wages or salaries
of employees; (d) is not liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing; and (e) has paid or
will pay over to the appropriate governmental authority all sales or use taxes
referable to the Seller's operations due as of the Closing Date, and has made or
will make provisions for payment of all such taxes accrued as of such date, but
not yet due. There are no claims pending or, to the best knowledge of the
Seller, threatened against the Seller for past due taxes, nor are there any
outstanding waivers or agreements by the Seller for the extension of the time
for the assessment of any tax.
2.6. Title to Property. Except as set forth in the Schedules and
------------------
Exhibits hereto, and except for Inventory held on consignment, Seller has good
and marketable title to all the Purchased Assets to be transferred to Purchaser
under this Agreement, and will at the Closing transfer such properties and
assets to Purchaser free and clear of all the following (collectively referred
to as "Encumbrances"): security interests, liens, pledges, claims, charges,
escrows, encumbrances, options, rights of first refusal, mortgages, indentures,
security agreements or other agreements, arrangements, contracts, commitments,
understandings or obligations, whether written or oral, other than this
Agreement, except liens for current taxes not yet due and payable and
Encumbrances disclosed on Schedule 2.6 ("Permitted Encumbrances").
------------
2.7. Brokers. All negotiations relative to this Agreement and the
-------
transactions contemplated hereby and thereby have been carried out by Seller
directly with Purchaser without the intervention of any Person on behalf of
Seller in such manner as to give rise to any valid claim by any Person against
Purchaser for a finder's fee, brokerage commission or similar payment.
2.8. Financial Statement.
-------------------
2.8.1 Exhibit 2.8 hereto contains the unaudited balance sheet
-----------
of the Seller as of November 1, 1997 (the "Financial Statement"). The Financial
Statement has been prepared in accordance with Seller's regularly employed
accounting practices (which may differ from GAAP) and fairly presents the
Seller's financial position on that date in accordance therewith.
2.8.2 The Audited Closing Financial Statements, when
delivered, will comply with Section 1.4(b) hereof.
------
2.9. Contracts and Commitments. Schedule 1.2(a)(v) hereto contains
-------------------------- -------------------
true, complete and correct lists of all of the Contracts and Commitments, other
than purchase orders, quotations, bids or requests for proposals placed by or
-11-
<PAGE>
Page 21 of 44 Pages
with the Seller covering the payment or receipt by the Seller each in the amount
of Ten Thousand Dollars ($10,000) or less and other than leases of real and
personal property wherein the annual rental payable with regard to any such
lease is Ten Thousand Dollars ($10,000) or less. To the Knowledge of Seller, all
the Contracts and Commitments, including leases of the Real Property, are in
full force and effect, have not been amended or modified except as set forth in
Schedule 1.2(a)(v), have no defaults thereunder nor does there exist any event
- -------------------
or condition which, with the giving of notice or the passage of time or both,
would constitute a default thereunder. True and correct copies of each of the
Contracts and Commitments have been delivered to the Purchaser.
2.10. Real Property. Schedule 1.2(a)(vi) hereto contains a true and
------------- --------------------
complete list of all real property (including the Real Property) that is owned,
leased or subleased by the Seller or as to which the Seller has any interest of
any kind including, without limitation, all office, manufacturing and warehouse
facilities.
2.11. Litigation. Except as disclosed on Schedule 2.11 hereto, Seller
---------- -------------
has no knowledge of any legal actions, suits, arbitrations, or other legal or
administrative proceedings or investigations before any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, pending or threatened against or otherwise affecting the Seller
or involving any respective properties, assets or business of the Seller
(including the Purchased Assets). To the Knowledge of Seller, there is no fact
or facts existing which might result in, nor is there any basis for, any such
action, suit, arbitration, or other proceeding or investigation. Seller is not a
party to or subject to any order, writ, injunction, decree, judgment or other
restriction of any federal, state, municipal or other governmental department,
commission, board, bureau, agency, or instrumentality which has or could have an
adverse effect on the Business, the Purchased Assets or the Assumed Liabilities
or on the Seller's ability to enter into this Agreement or consummate the
transactions contemplated hereby.
2.12. Compliance with Laws. To the Knowledge of Seller, except as
---------------------
disclosed in this Agreement or in any Schedule or Exhibit hereto, and except as
to Environmental Laws, the Seller, in all material respects, has complied with
and is in compliance with, and has not received notice from any governmental
authority, including the National Highway Traffic Safety Administration, of any
violation of, any and all material applicable laws, rules, regulations and
ordinances regulating or relating to the Business, the Purchased Assets or the
Assumed Liabilities in effect from time to time. To the Knowledge of Seller, all
of the Seller's products are and have been, at the time of sale, in material
compliance with all material construction, safety and other standards imposed on
the Business by statute, rule or regulation of any governmental authority
(federal, state or local) or industry association.
2.13. Inventory. The valuation at which the Inventory is carried
---------
reflects and will reflect the normal inventory valuation policy of the Seller of
stating inventory at the lower of cost (first- in-first-out-method) or market
(except as provided in Section 1.4(b)(i)(a) and (b)) and its regular costing
practices with respect to work in process and finished goods inventory.
2.14. Employees. None of the Seller's employees is covered by a
---------
collective bargaining agreement and, to the knowledge of Seller, there is no
union or other organization seeking or claiming to represent any such employees.
-12-
<PAGE>
Page 22 of 44 Pages
(a) Attached hereto as Schedule 2.14(a) is a true and complete
-----------------
list of the names and current salary rates of all present employees of the
Business whose current annual salary is more than $50,000.
(b) Schedule 2.14(b) contains a true and complete list of all
-----------------
Employee Benefit Plans (as defined) for the employees of the Seller, salaried
and nonsalaried, including any formal or informal plans, and the funding
arrangements with regard thereto. Except as disclosed on Schedule 2.14(b), the
----------------
Seller has no Plan currently in existence which is subject to the requirements
of ERISA. Except as disclosed on Schedule 2.14(b), (A) neither the Seller, its
----------------
parent, any subsidiary of the Seller, or any "ERISA Affiliate" (any business or
entity which is (i) a member of a "controlled group of corporations," under
"common control" or an "affiliated service group" with the Seller within the
meaning of Code sections 414(b), (c) or (m), or (ii) required to be aggregated
with the Seller under Code section 414(o), or (iii) under "common control" with
the Seller) presently sponsors, maintains, contributes to, (B) nor is the
Seller, its parent, any subsidiary of the Seller, or any ERISA Affiliate
required to contribute to, (C) nor has the Seller, its parent, any subsidiary of
the Seller, or any ERISA Affiliate ever sponsored, maintained, contributed to,
or been required to contribute to, a pension plan subject to Title IV of ERISA.
The transactions contemplated under this Agreement will not trigger any
liability with respect to any pension plan sponsored by Seller, its parent, any
subsidiary of Seller, or any ERISA Affiliate. With respect to all employees and
former employees of the Seller, neither the Seller nor any of its subsidiaries
or affiliates presently maintains, contributes to or has any liability under any
funded or unfunded medical, health or life insurance plan or arrangement for
present or future retirees or present or future terminated employees. Neither
the Seller nor any of its subsidiaries or affiliates presently maintains,
contributes to or has any liability (including current or potential withdrawal
liability) with respect to any "multiemployer plan" as such term is defined in
Section 3(37) of ERISA.
(c) Except as set forth on Schedule 2.14(c), the Seller is not a
----------------
party to or bound by (i) any contract with any present employee or former
employee of the Seller, (ii) any employment, termination or severance agreement,
(iii) any agreement with any officer or other employee of the Seller (A) the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving the Seller of the nature of any
of the transactions contemplated by this Agreement, (B) providing any term of
employment or compensation guarantee extending for a period of one year or
longer or (C) providing severance benefits or other benefits after the
termination of employment of such officer or employee not comparable to benefits
available to employees generally, or (iv) any agreement or plan, including any
stock option plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting or other realization of the benefits of which will be
accelerated, by the occurrence of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of the transactions contemplated by this Agreement.
2.15. Product Liability. To the Knowledge of Seller, the Seller has
------------------
insurance against loss or damage arising out of product liability, copies of
which have been delivered to the Purchaser. Such insurance covers all incidents
of loss which have occurred prior to the date hereof or which may occur
resulting from the Seller's Products sold prior to the Closing. To the Knowledge
of Seller, incidents of damage claims paid by the Seller or by its insurance
carrier within the preceding 24 month period are described in Schedule 2.15.
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<PAGE>
Page 23 of 44 Pages
2.16. Warranties and Service Practices. To the Knowledge of Seller,
----------------------------------
there are no oral or written warranties or service practices or policies on the
products sold by the Seller, whether express or implied, other than as set forth
in Schedule 2.16 hereto and any implied warranties that may be imposed by
--------------
operation of law.
2.17. Accounts Receivable. The Accounts Receivable which will be shown
-------------------
on the Audited Closing Balance Sheet will have resulted from bona fide sales
made by the Seller in the ordinary course of business and will be collectible in
the ordinary course (including the exhaustion of all reasonable efforts to
collect) after provision for doubtful accounts as shown on such balance sheet.
The amounts due, or to become due, in respect of such Accounts Receivable shall
not be in dispute and there shall not be any valid setoffs or counterclaims
asserted against any of the Accounts Receivable.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
3.1. Corporate Existence. Purchaser is a corporation duly incorporated,
-------------------
validly existing and in good standing under the laws of its jurisdiction of
incorporation. Purchaser has full corporate and other power and authority to
enter into this Agreement and the Related Agreements to which it is a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby.
3.2. Authority. The execution and delivery by Purchaser of this
---------
Agreement and the Related Agreements to which it is a party, and the performance
by Purchaser of its obligations hereunder and thereunder, have been duly and
validly authorized by all necessary corporate action on the part of Purchaser,
no other corporate action on the part of Purchaser or its stockholders or
constituent entities being necessary therefor. All corporate and other acts or
proceedings required to be taken by Purchaser to authorize the execution,
delivery and performance of this Agreement, the Related Agreements, and all
transactions contemplated hereby and thereby have been duly and properly taken.
This Agreement is and the Related Agreements will be duly executed and delivered
by the Purchaser and is and will be the legal, valid and binding obligation of
the Purchaser, enforceable against the Purchaser in accordance with their terms.
3.3. No Conflicts. The execution and delivery by Purchaser of this
-------------
Agreement and the Related Agreements to which it is a party, the performance by
Purchaser of its obligations under this Agreement and such Related Agreements,
and the consummation of the transactions contemplated hereby and thereby will
not conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the certificate (or articles) of incorporation or
by-laws (or other comparable corporate charter document) of Purchaser.
3.4. Legal Proceeding. There are no Orders outstanding against
-----------------
Purchaser which, individually or in the aggregate, have had or could be
-14-
<PAGE>
Page 24 of 44 Pages
reasonably expected to have a material adverse effect on the ability of
Purchaser to consummate the transactions contemplated by this Agreement.
3.5. Brokers. All negotiations relative to this Agreement and the
-------
transactions contemplated hereby and thereby have been carried out by Purchaser
directly with Seller without the intervention of any Person on behalf of
Purchaser in such manner as to give rise to any valid claim by any Person
against Seller for a finder's fee, brokerage commission or similar payment.
3.6. Due Diligence. Purchaser acknowledges and agrees that it has
--------------
obtained a commitment for title insurance, a survey and a phase I environmental
report with regard to the Real Property and is satisfied with all matters
relating to the condition and status of title of the Real Property as reflected
therein; provided, however, nothing herein shall be deemed to release Seller
from the sole responsibility for all Environmental Liabilities. Purchaser
further acknowledges and agrees that it has conducted its own due diligence
review of the Business and the Purchased Assets and is satisfied in all respects
with the results thereof.
ARTICLE 4.
COVENANTS OF SELLER
4.1. HSR Act. Seller shall take all commercially reasonable steps
-------
necessary to cooperate with Purchaser in the filing of the premerger
notification under the HSR Act and shall provide any supplemental information
which may be reasonably requested in connection therewith pursuant to the HSR
Act. Such notification filings shall be accompanied by a request for early
termination of the applicable waiting periods under the HSR Act and Seller shall
cooperate and use reasonable efforts to have such waiting periods terminated on
the earliest practicable date.
4.2. Fulfillment of Conditions. Seller shall take all commercially
---------------------------
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each condition within its reasonable control to the obligations of
the parties hereto contained herein and shall not take or fail to take any
action that could reasonably be expected to result in the nonfulfillment of any
such condition. Seller will use its reasonable efforts to assist Purchaser in
obtaining the consents of any third parties which may be required in connection
with the transfer and assignment of the Contracts and Commitments, but the
failure to obtain such consents shall in no way limit Purchaser's obligations as
provided in Section 1.3(a)(ii) hereof.
4.3. Conduct of Business. From the date hereof until the Closing,
--------------------
Seller shall conduct the business and operations of the Seller in accordance
with past practice and in the ordinary course of business, shall use its best
efforts to maintain the Seller's current business organization and goodwill,
shall use its best efforts to continue to retain the services of the Seller's
present employees and consultants, and shall use its best efforts to preserve
the Seller's relationships with dealers, customers, suppliers and others having
business dealings with the Seller, and shall not enter into any transaction or
perform any act which would constitute a breach of the representations,
warranties, covenants and agreements contained herein. Seller will, consistent
with this Section 4.3, continue to conduct the business of the Seller only in
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Page 25 of 44 Pages
the ordinary course in accordance with past practice and will take no action
which could reasonably be expected to result in the Purchased Assets not fully
reflecting the earnings of the Seller for such period.
4.4. Non-Competition Agreements. At the Closing the Seller shall enter
---------------
into a non-competition agreement with Purchaser for a term of five (5) years
with regard to the Business in the geographic area covering North America, which
agreement will be in the form attached hereto as Exhibit 4.4 (the
"Non-Competition Agreement").
4.5. License Agreement. At the Closing the Seller shall enter into a
------------------
license agreement with Purchaser, which agreement shall be in the form attached
hereto as Exhibit 4.5 (the "License Agreement"), providing Purchaser, without
any separate or additional cost, with the exclusive right and license to use the
names "Champion Motor Coach" and "Champion Bus" for a perpetual term and
otherwise in the manner provided in the License Agreement.
4.6. Access to Information. Between the date hereof and the Closing
----------------------
Date, the Seller shall afford the Purchaser and its representatives access,
during normal business hours, to all of the business operations, properties,
books, files and records relating to the Business, to cooperate in the
examination thereof, and to furnish the Purchaser all information with respect
to the business and affairs of the Business as the Purchaser may reasonably
request, provided that the Purchaser shall not unduly disrupt the ordinary
operation of the Business. The Purchaser and its representatives shall have the
right to discuss the affairs of the Business with the directors, officers,
employees, consultants, advisors and agents of the Seller.
ARTICLE 5.
COVENANTS OF PURCHASER
5.1. HSR Act. Not later than the next Business Day following the date
-------
of this Agreement, Purchaser shall file the premerger notification under the HSR
Act and any supplemental information which may be reasonably requested in
connection therewith pursuant to the HSR Act, and such notification filings
shall be accompanied by a request for early termination of the applicable
waiting periods under the HSR Act. Purchaser shall cooperate and use reasonable
efforts to have such waiting periods terminated on the earliest practicable
date. Purchaser and Seller shall each be responsible for and pay one-half of the
required HSR filing fee of $45,000.
5.2. Fulfillment of Conditions. Purchaser shall take all commercially
-------------------------
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each condition within its reasonable control to the obligations of
the parties hereto contained herein and shall not take or fail to take any
action that could reasonably be expected to result in the nonfulfillment of any
such condition.
5.3. Payment and Performance Bonds; Third Party Releases. Within thirty
---------------------------------------------------
(30) days subsequent to Closing, Purchaser shall provide acceptable
substitutions for all payment and/or performance bonds, as set forth in Schedule
5.3 attached hereto, delivered by Seller to third parties pursuant to Contracts
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and Commitments assigned to Purchaser as to which the conditions of Section
1.2(c) have been met. Further, Purchaser shall use its best efforts to obtain
releases from each other party as set forth in Schedule 5.3. In any event,
Purchaser shall indemnify Seller from any liability and/or recourse with regard
to the foregoing.
ARTICLE 6.
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the Purchased
Assets and to assume and agree to pay, perform and discharge the Assumed
Liabilities, are subject to the fulfillment, at the Closing, of each of the
following conditions (all or any of which may be waived in whole or in part by
Purchaser in its sole discretion):
6.1. Representations and Warranties. The representations and warranties
------------------------------
made by Seller shall be true and correct, in all material respects on the
Closing Date.
6.2. Performance. Seller shall have performed and complied with, in all
-----------
material respects, the agreements, covenants and obligations required by this
Agreement to be so performed or complied with by Seller at the Closing.
6.3. Officers' Certificate. Seller shall have delivered to Purchaser
----------------------
certificates, dated the Closing Date and executed on its behalf by appropriate
officers of Seller, substantially in the form and to the effect of Exhibit 6.3
hereto.
6.4. HSR Act. The waiting period imposed under the HSR Act shall have
-------
expired or been terminated.
6.5. MESC Contribution Liability. Seller shall have provided to
-----------------------------
Purchaser a statement from the Commissioner of the Michigan Employment Security
Commission certifying the status of Seller's contribution liability under
Section 15(g) of the Michigan Employment Security Act, MCLA 421.15(g).
6.6. Deliveries. Seller shall have delivered to Purchaser the General
----------
Assignment, the Warranty Deed, the other Assignment Instruments, the
Non-Competition Agreement, the License Agreement and the Limited Guaranty.
6.7. Title Insurance. Purchaser shall have received a final or
----------------
"marked-up" policy of title insurance, insuring Purchaser's interest in the
owned Real Property in the condition required hereunder.
6.8. No Material Adverse Effect. Between the date of this Agreement and
--------------------------
the Closing Date there shall not have occurred any damage to, or destruction of,
any Purchased Asset including the Real Property, whether or not covered by
insurance, which, in the aggregate, would have a material adverse effect on the
Business or the Purchased Assets, nor shall there have occurred any event or
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condition which has had or may reasonably be expected to have a material adverse
effect on the Business or the Purchased Assets. The failure to be awarded a
contract pursuant to any bid submitted by the Seller shall not be deemed to be
material.
6.9. Consent. Consent shall have been obtained to the transfer and
-------
assignment of those Contracts and Commitments which are contracts for the
manufacture and sale of buses as described in Schedule 6.9, unless, as to any
------------
such Contract and Commitment, Purchaser and Seller shall otherwise have made
satisfactory arrangements for Purchaser to receive the benefits, rights,
obligations and duties under such Contracts and Commitments in accordance with
Section 1.2(c)(i) hereof.
ARTICLE 7.
CONDITIONS TO OBLIGATIONS OF SELLER
-----------------------------------
The obligations of Seller hereunder to sell the Purchased Assets are
subject to the fulfillment, at the Closing, of each of the following conditions
(all or any of which may be waived in whole or in part by Seller in its sole
discretion):
7.1. Representations and Warranties. The representations and warranties
------------------------------
made by Purchaser in this Agreement shall be true and correct in all material
respects on the Closing Date.
7.2. Performance. Purchaser shall have performed and complied with, in
-----------
all material respects, the agreements, covenants and obligations required by
this Agreement to be so performed or complied with by Purchaser at the Closing.
7.3. Officers' Certificate. Purchaser shall have delivered to Seller a
---------------------
certificate, dated the Closing Date and executed on its behalf by appropriate
officers of the Purchaser, substantially in the form and to the effect of
Exhibit 7.3 hereto.
7.4. HSR Act. The waiting period imposed under the HSR Act shall have
-------
expired or been terminated.
7.5. Deliveries. Purchaser shall have paid to Seller the Purchase Price
----------
and delivered to Seller the Assumption Agreement.
7.6. Consent. Consent shall have been obtained to the transfer and
-------
assignment of those Contracts and Commitments which are contracts for the
manufacture and sale of buses as described in Schedule 6.9, unless, as to any
------------
such Contract and Commitment, Purchaser and Seller shall otherwise have made
satisfactory arrangements for Purchaser to receive the benefits, rights,
obligations and duties under such Contracts and Commitments in accordance with
Section 1.2(c)(i) hereof.
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ARTICLE 8.
EMPLOYEE MATTERS
------------------
8.1. Employees of the Business; Termination. All of the employees of
---------------------------------------
the Business, including but not limited to for this purpose, employees of the
Business who are not in active employment status but who on the Closing Date
have rights to return to employment under Seller's policies (such as employees
on an approved medical or disability leave of absence, approved personal leave
of absence or employees having recall rights pursuant to a written layoff
policy, etc.), shall cease their employment with Seller as of the Closing Date.
Purchaser shall have the right, but not the obligation, to offer employment with
Purchaser to any one or more of such terminated employees of the Business on
terms and conditions acceptable to Purchaser.
8.2. Employment Claims.
-----------------
(a) Claims Filed For Seller's Actions Prior to Closing Date.
---------------------------------------------------------
Seller shall be responsible and liable for any claim, complaint, charge or
lawsuit which is filed before or after the Closing Date by (i) an individual who
was employed by Seller prior to the Closing Date and (ii) alleges a violation of
a federal, state, county, local or other governmental law, decree, ordinance or
regulation which pertains to an act or event that occurred prior to the Closing
Date and relates to employment or employment practices, including but not
limited to any claim, complaint, charge or lawsuit relating to discrimination,
harassment, unequal pay, handicap access, and whether brought pursuant to
statute, in tort, contract or otherwise. Seller and Purchaser shall cooperate in
good faith to develop strategies to deal with any such claims, complaints,
charges or lawsuits which will minimize each party's potential exposure.
Purchaser shall not consent to any settlement of nor concede any issue regarding
such claims, complaints, charges or lawsuits which affects Seller without the
prior written consent of Seller, which consent shall not be unreasonably
withheld. In the event that any matters contemplated by Section 8.2(a) occur,
Purchaser will provide Seller with any information, material or documents which
Seller shall request as part of its defense.
(b) Claims Filed For Purchaser's Actions After the Closing
----------------------------------------------------------
Date. Purchaser shall be responsible and liable for any claim, complaint, charge
- ----
or lawsuit which is filed after the Closing Date and alleges a violation of a
federal, state, county, local or other governmental law, decree, ordinance or
regulation which pertains to an act or event that occurred on or following the
Closing Date and relates to employment or employment practices, including but
not limited to claims of failure to hire from Seller. Seller and Purchaser shall
cooperate in good faith to develop strategies to deal with any such claims,
complaints, charges or lawsuits which will minimize each party's potential
exposure. Seller shall not consent to any settlement of nor concede any issue
regarding such claims, complaints, charges or lawsuits which affects Purchaser
without the prior written consent of Purchaser, which consent shall not be
unreasonably withheld. Seller shall not be liable to Purchaser for any
employment actions taken or omitted to be taken by Purchaser, even if Purchaser
is merely continuing in practices previously engaged in by Seller. In the event
that any matters contemplated by Section 8.2(b) occur, Seller will provide
Purchaser with any information, material or documents which Purchaser shall
request as part of its defense.
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8.3. Worker's Compensation Claims and Worker's Occupational Diseases
------------------------------------------------------------------
Claim. Seller shall be responsible when it is adjudicated or administratively
- -----
determined liable for any claim which may be asserted by employees of the
Business which arose under the worker's compensation or other applicable
occupational disease and disablement statutes (or any similar statutes) and
regulations thereof of the State of Michigan and is based on a reported injury
sustained while employed by Seller. Purchaser shall be responsible when it is
adjudicated or administratively determined liable for any claim which may be
asserted by employees of the Business which arose under the worker's
compensation or other applicable occupational disease and disablement statutes
(or any similar statutes) and regulations thereof of the State of Michigan and
is based on a reported injury sustained while employed by Purchaser.
8.4. Severance. Purchaser shall not be responsible for severance pay to
---------
any employee of the Business who declines any offer of employment, upon
comparable terms, job description and compensation as currently provided to such
employee by Seller, that may be made by Purchaser. Purchaser shall be
responsible for severance pay to any employee (other than the employees listed
on Schedule 8.4 hereto) of the Business who declines any offer of employment,
------------
which is upon terms, job description and/or compensation less favorable than as
currently provided to such employee by Seller, that may be made by Purchaser or
who is not offered employment by Purchaser.
8.5. Other Agreements, Plans, Understandings and Practice. Subject to
------------------------------------------------------
the provisions of Article 9, unless reflected on the Audited Closing Balance
Sheet or otherwise specifically assumed by Purchaser in Section 1.3(a) hereof or
in the above provisions of Article 8, Seller shall retain any and all
obligations or liabilities with respect to any agreement, plan, understanding or
practice of Seller which provided or promised a payment, benefit, contribution,
prerequisite or service to any employee of the Business ("Employee Benefit
Plans") while an employee of Seller and shall indemnify and hold Purchaser
harmless from and against all claims related thereto with respect to any former
employee of Seller who becomes an employee of Purchaser; and Purchaser shall
indemnify and hold Seller harmless from and against any and all claims of
employees, whether or not hired by Purchaser, related in any way to any matter
specifically assumed by Purchaser in Article 8 hereof.
8.6. Termination or Layoffs.
----------------------
(a) With respect to the termination or layoff of any employee
of the Business hired by Purchaser after the Closing Date, Purchaser will comply
fully with the Worker Adjustment and Retraining Notification Act of 1988
("WARN").
(b) Prior to the date hereof, Seller has terminated 30
employees, and Seller currently employs as of the date hereof 322 employees.
Purchaser hereby represents and warrants that it shall hire a sufficient number
of Seller's employees such that Seller shall not incur any WARN liability. In
the event these representations are or become untrue or inaccurate, whether due
to misrepresentation, change of circumstances or otherwise, Purchaser hereby
assumes and agrees to pay any WARN liability caused by such inaccuracy and holds
Seller harmless from all liability in connection therewith.
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ARTICLE 9.
TERMINATION OF AGREEMENT
9.1. Events of Termination. This Agreement may be terminated, and the
---------------------
transactions contemplated hereby may be abandoned, at any time prior to the
Closing Date:
(a) by the mutual consent of the Seller and Purchaser;
(b) by Purchaser, if Seller breaches in any material respect
any of its representations, warranties, covenants or agreements contained in
this Agreement;
(c) by Seller, if Purchaser breaches in any material respect
any of its representations, warranties, covenants or agreements contained in
this Agreement or if Seller elects to exercise its right of termination pursuant
to Section 1.3(a)(ii) hereof;
(d) by either Purchaser or Seller, if any of the conditions to
Closing is not fulfilled (or waived by the party for whose benefit the
conditions exist) on or prior to the Closing Date; provided that a party may not
terminate this Agreement pursuant to this provision if such party is in material
breach of any of its covenants or agreements contained in this Agreement; or
(e) by either Purchaser or Seller if the Closing has not
occurred by February 16, 1998.
9.2. Effect of Termination. In the event that either party shall elect
---------------------
to terminate this Agreement pursuant to any provision contained herein expressly
giving such party the right to terminate this Agreement, this Agreement shall
forthwith terminate and have no further effect, and neither party shall have any
further obligation or liability (except with respect to those provisions hereof
which expressly survive any termination of this Agreement). Notwithstanding the
foregoing, the termination of this Agreement pursuant to any provision hereof
shall not relieve any party of any liability for a breach of any representation
or warranty, or nonperformance of any covenant or obligation hereunder, and any
such termination shall not be deemed to be a waiver of any available remedy,
including specific performance, for any such breach or nonperformance.
ARTICLE 10.
SURVIVAL; NO OTHER REPRESENTATIONS; INDEMNIFICATION
10.1. Survival. All representations, warranties, covenants and
--------
agreements contained in this Agreement or in any document delivered pursuant
hereto shall survive the Closing, and, as to all such representations,
warranties, covenants and agreements contained in this Agreement, shall continue
in full force and effect for a period of 18 months following the Closing Date
(the "Survival Period"); provided that the Survival Period shall be extended
automatically to include any time period necessary to resolve a specific claim
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for indemnification which was made before the expiration of the Survival Period
but not resolved prior to its expiration; and provided further than any such
extension shall apply only as to claims asserted and not so resolved within the
Survival Period. Notwithstanding anything contained herein to the contrary,
including the foregoing, the Survival Period shall not apply to Seller's
obligations to indemnify Purchaser from any liability with regard to Excluded
Liabilities or Purchaser's obligations to indemnify Seller from any liability
with regard to Assumed Liabilities, and the indemnifications set forth in this
Article to the extent they pertain thereto, which shall survive without temporal
limitation.
10.2. Indemnification.
---------------
(a) Seller shall indemnify and hold harmless Purchaser, and
its officers, directors, owners, employees, agents, representatives and
Affiliates, from and against any and all Damages related to, caused by or
arising from any misrepresentation, breach of warranty or failure to fulfill any
covenant or agreement by Seller, including any failure of Seller to fully pay or
satisfy any of the Excluded Liabilities of Seller.
(b) Purchaser shall indemnify and hold harmless Seller, and
its officers, directors, owners, employees, agents, representatives and
Affiliates, from and against any and all Damages related to, caused by or
arising from any misrepresentation, breach of warranty or failure to fulfill any
covenant or agreement by Purchaser and contained herein for which notice is
given as provided in Section 10.4 hereof.
10.3. Limitations on Seller's Indemnification. Seller shall not be
-----------------------------------------
liable and Purchaser agrees not to enforce any claim for indemnification under
this Agreement until the aggregate amount of all such claims exceeds 2-1/2% of
the cash portion of the Purchase Price (the "Threshold Amount"), and then
Purchaser shall be entitled to recover only the amount of such claims in excess
of the Threshold Amount. Purchaser shall provide Seller with written notice of
all claims included in the Threshold Amount. The maximum aggregate liability of
Seller for Damages of every kind and character arising under or in connection
with this Agreement and the transactions contemplated hereby, including
indemnification, shall be equal to the amount of the 50% of the cash portion of
the Purchase Price. In determining the amount subject to any claim, if any, for
indemnification against Seller hereunder, the amount of any insurance proceeds
received by Purchaser shall be deducted from the amount of the required
indemnification payments.
10.4. Notice of Indemnification Claim. Following the assertion of any
--------------------------------
claim by a third party or the occurrence of any event or the discovery of any
facts or conditions which could reasonably be expected to give rise to a claim
for indemnification from an indemnifying party (the "Indemnitor") under this
Article 10, an indemnified party (the "Indemnitee") shall within thirty days
notify the Indemnitor in writing of such claim, setting forth in reasonable
detail the specific facts and circumstances relating to such claim and the
amount of Damages claimed (or an estimate thereof if the actual amount is not
known or not capable of reasonable calculation) (an "Indemnification Notice"). A
delay in giving notice shall only relieve the recipient of liability to the
extent the recipient suffers actual prejudice because of the delay.
10.5. Third Party Claims. If the facts or conditions giving rise to the
------------------
right of indemnification under this Article 10 involve any actual or threatened
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claim or demand by a third party against Seller or Purchaser (a "Third Party
Claim"), the Indemnitor shall have thirty (30) days following receipt of the
Indemnification Notice in respect of such Third Party Claim to advise the
Indemnitee whether the Indemnitor disputes or accepts, in whole or in part, its
liability to the Indemnitee and/or whether the Indemnitor desires to defend the
Indemnitee against such Third Party Claim. Assuming the Indemnitor is liable for
any properly notified Third Party Claim, the Indemnitor shall have no obligation
to the Indemnitee for legal fees incurred by the Indemnitee prior to or during
such thirty day period in connection with such Third Party Claim other then
minimum legal costs incurred to avoid a default judgment and/or to maintain the
status quo. In the event the Indemnitor determines to accept the defense of any
such Third Party Claim, the Indemnitee shall have the right to be represented by
its own counsel, its participation to be subject to the reasonable direction of
the Indemnitor, and the Indemnitee shall provide all requested waivers and
authorities to permit the Indemnitor to defend such Third Party Claim. Where
Indemnitee has accepted defense of a claim, Counsel selected by the Indemnitee
to act on its behalf in the defense of a Third Party Claim shall be at the
Indemnitee's sole cost and expense. If the Indemnitor fails to undertake the
defense of or settle or pay any Third Party Claim within thirty (30) days
following receipt of the Indemnification Notice in respect of such Third Party
Claim, or if the Indemnitor, after having given notification to the Indemnitee
that it intends to assume the defense, fails within thirty (30) days from its
receipt of the Indemnification Notice to defend, settle or pay such Third Party
Claim, then the Indemnitee may take any and all necessary actions to dispose of
the Third Party Claim including the settlement or full payment thereof upon such
terms as it shall deem appropriate, in its sole discretion. Notwithstanding the
foregoing, the Indemnitee shall have the right to employ separate counsel in any
such claim or proceeding and the fees and expenses of such counsel shall be at
the expense of such Indemnitor if: (i) the Indemnitor has failed to promptly
assume the defense and employ counsel or (ii) the named parties to any such
claim or proceeding (including any impleaded parties) include such Indemnitee
and any of the Indemnitors, and such Indemnitee shall have been advised by its
counsel that there may be one or more legal defenses available to it which are
different from or in addition to those available to any of the Indemnitors;
provided, however that the Indemnitors shall not in such event be responsible
hereunder for the fees and expenses of more than one firm of separate counsel in
connection with any claim or proceeding.
10.6. Other Indemnification Claims. Except for Third Party Claims, the
-----------------------------
Indemnitor shall have twenty (20) days to advise the Indemnitee of whether it
disputes or accepts liability to the indemnitee for all other indemnification
claims that are the subject of an Indemnification Notice delivered to the
Indemnitor as provided in Section 10.4 above.
10.7. Reimbursement. At the time the amount of Damages suffered,
-------------
incurred or sustained by the Indemnitee is determined (which in the case of
payment of any judgment shall be the earlier of (i) the date of such payment or
(ii) the date that a court of competent jurisdiction shall enter a final
judgment, order or decree (after exhaustion of appeal rights) establishing such
Damages), the Indemnitor shall, within thirty (30) days from receipt of written
notice from the Indemnitee, pay to the Indemnitee the amount of the Damages
associated with such indemnification claim. The obligation of the Indemnitor to
pay for reasonable legal fees and costs associated with a Third Party Claim for
which Indemnitor admits liability and which the Indemnitee is defending shall be
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satisfied within thirty (30) days of the Indemnitor's receipt of an invoice
therefor accompanied by documents from the third party submitting the expense or
proof of payment by the Indemnitee.
10.8. No Other Representations; Limitations on Breach of
---------------------------------------------------------------
Representations and Warranties.
- ------------------------------
(a) Notwithstanding anything to the contrary contained in
this Agreement, Purchaser acknowledges and agrees that Seller is making no
representations or warranties whatsoever, express or implied, with respect to
the Purchased Assets or the Business, the transactions contemplated hereby or
under the Related Agreements or any matter related thereto, except that Seller
has made the representations and warranties contained in Article 2 and Article 8
hereof. Subject to such representations and warranties, it is understood that
Purchaser takes the Business and the Purchased Assets on an "as is" and "where
is" basis.
(b) Notwithstanding anything to the contrary contained
herein, it is the explicit intent of each party hereto that Purchaser shall have
no indemnification claim under this Agreement and the Related Agreements, and no
other remedy shall be had in contract, tort or otherwise, for any individual
claim, or any series or group of related claims, insofar as a Purchaser had
actual knowledge of facts or conditions on or prior to the Closing Date that
would or could be reasonably likely to cause or constitute a breach of Seller's
representations, warranties or covenants contained herein and would give rise to
an indemnification claim under this Article 10 in respect of any such breach (an
"Excluded Indemnification Claim"). Purchaser hereby agrees and expressly waives
any right or entitlement to indemnification under this Article 10 and any other
remedy in contract, tort or otherwise, in respect of any Excluded
Indemnification Claim.
10.9. Limited Guaranty. Seller shall cause its corporate parent,
-----------------
Champion Enterprises, Inc., to execute and deliver at the time of Closing, a
guaranty of payment ("Limited Guaranty") of the Seller's indemnification
obligations arising under Article 10 hereunder, limited in all events to maximum
aggregate amount of 50% of the cash portion of the Purchase Price. The Limited
Guaranty shall be in the form of Exhibit 10.9 attached hereto.
ARTICLE 11.
DEFINITIONS
11.1. Definitions.
(a) Defined Terms. As used in this Agreement, the following
-------------
defined terms have the meanings indicated below:
"Accounts Receivable" has the meaning ascribed to it in Section
--------------------
1.2(a)(i).
"Actions or Proceedings" means any action, suit, proceeding,
-------------------------
arbitration or Governmental or Regulatory Authority investigation.
-24-
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"Affiliate," of a given Person, means any Person that directly, or
---------
indirectly through one of more intermediaries, controls or is controlled by or
is under common control with such given Person. For purposes of this definition,
"control" of a Person means the power, direct or indirect, to direct or cause
the direction of the management and policies of such Person, whether by Contract
or otherwise.
"Agreement" means this Asset Purchase Agreement, together with the
---------
Schedules and Exhibits hereto.
"Assignment Instruments" has the meaning ascribed to it in Section 1.5.
----------------------
"Assumed Liabilities" has the meaning ascribed to it in Section 1.3(a).
-------------------
"Assumption Agreement" has the meaning ascribed to it in Section 1.5.
--------------------
"Assumption Instruments" has the meaning ascribed to it in Section 1.5.
----------------------
"Business" has the meaning ascribed to it in the forepart of this
--------
Agreement.
"Books and Records" has the meaning ascribed to it in Section
-------------------
1.2(b)(vii).
"Business Day" means a day other than Saturday, Sunday or any day on
-------------
which banks located in the State of Michigan are authorized or obligated to
close.
"Closing" means the closing of the transactions contemplated by Section
-------
1.5.
"Closing Adjustment" has the meaning ascribed to it in Section 1.4(b).
------------------
"Closing Date" has the meaning ascribed to it in Section 1.5.
------------
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
-----
1986.
"Code" means the Internal Revenue Code of 1986, as amended, and the
----
rules and regulations promulgated thereunder.
"Condition of the Business" means the overall business and the
----------------------------
financial condition and results of operations of the Business, taken as a whole.
"Contract" means any oral or written agreement, lease, license,
--------
evidence of Indebtedness, mortgage, indenture, security agreement, or other
contract, instrument or arrangement to which a Seller is a party and which is
utilized solely in the conduct of the Business.
"Contracts and Commitments" has the meaning ascribed to it in Section
--------------------------
1.2(a)(v).
"Damages" means the net amount, after taking into account all
-------
recoveries and all tax benefit effects, of all liabilities, damages, losses,
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penalties, fines, assessments, claims, costs and expenses including interest,
amounts paid in settlement, court costs, reasonable attorneys' fees, and
consultants' and experts' fees.
"Employee Benefit Plans" has the meaning ascribed to it in Section 8.5.
----------------------
"Encumbrance" has the meaning ascribed to it in Section 2.6.
-----------
"Environmental Laws" has the meaning ascribed to it in Section 1.3(b).
------------------
"Environmental Liabilities" has the meaning ascribed to it in Section
--------------------------
1.3(b).
"Equipment Leases" has the meaning ascribed to it in Section
------------------
1.3(a)(iv).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and the rules and regulations promulgated thereunder.
"Excluded Assets" has the meaning ascribed to it in Section 1.2(b).
---------------
"Excluded Indemnification Claim" has the meaning ascribed to it in
--------------------------------
Section 10.9(b).
"Excluded Inventory" has the meaning ascribed to it in Section
-------------------
1.2(b)(ii).
"Excluded Intellectual Property" has the meaning ascribed to it in
--------------------------------
Section 1.2(b)(iii).
"Excluded Liabilities" has the meaning ascribed to it in Section
---------------------
1.3(b).
"GAAP" means generally accepted accounting principles.
----
"General Assignment" has the meaning ascribed to it in Section 1.5.
------------------
"Governmental or Regulatory Authority" means any court, tribunal,
---------------------------------------
arbitrator, authority, agency, commission, official or other instrumentality of
any country or multinational organization, or any state, county, city or other
political subdivision.
"HSR Act" has the meaning ascribed to it in Section 2.3.
-------
"Hold Back Amount" has the meaning ascribed to it in Section 1.4(a).
----------------
"Indebtedness" means all obligations of a given Person (a) for borrowed
------------
money or (b) in the nature of the guarantees of the obligations described in
clause (a) of any other Person.
"Indemnification Notice" has the meaning ascribed to it in Section
-----------------------
10.4.
"Indemnitee" means any Person claiming indemnification under any
----------
provision of Article 10.
-26-
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"Indemnitor" means, with respect to a given claim of a given
----------
Indemnitee, the Person against which such claim for indemnification is being
asserted.
"Intellectual Property" means all trademarks and trademark rights,
----------------------
trade names and trade name rights, service marks and service mark rights,
copyrights and copyright rights, trade dress, patents, trade secrets, and all
pending applications for and registrations of copyrights, all product designs,
licenses, franchises, memberships, permits, trade secrets, inventions, "know
how," common law rights, privileges and general intangibles and all goodwill
relating to any of the foregoing held or used by the Seller solely in the
conduct of the Business.
"Inventory" has the meaning ascribed to it in Section 1.2(a)(ii).
---------
"Knowledge of Seller" means the actual knowledge of the Persons listed
-------------------
on Schedule 11.1(a)-1 annexed hereto.
"Knowledge of Purchaser" means the actual knowledge of the Persons
------------------------
listed on Schedule 11.1(a)-2 annexed hereto.
"Laws" means all material laws, statutes, rules, regulations,
----
ordinances and other pronouncements having the effect of law in any jurisdiction
or multinational organization or any state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
"Liability" or "Liabilities" means any or all Indebtedness, obligations
--------- -----------
and other liabilities of a Person (whether known or unknown, whether absolute,
accrued, contingent, fixed or otherwise, and whether due or to become due).
"Licenses" means all licenses, permits, certificates of authority,
--------
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Liens" means any debt, mortgage, pledge, assessment, security
-----
interest, lease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.
"Order" means any writ, judgment, decree, injunction or similar order
-----
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Permitted Encumbrances" has the meaning ascribed to it in Section 2.7.
----------------------
"Person" means any natural person, corporation, general partnership,
------
limited partnership, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.
"Pre-Closing Tax Period" means any Tax period ending on or before the
-----------------------
close of business on the Closing Date and, with respect to any Tax period that
commences before but ends after the Closing Date, the portion of such period up
to the close of business on the Closing Date.
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Page 37 of 44 Pages
"Purchase Price" has the meaning ascribed to it in Section 1.4(a).
--------------
"Purchase Price Estimate" has the meaning ascribed to it in Section
-------------------------
1.4(a).
"Purchased Assets" has the meaning ascribed to it in Section 1.2(a).
----------------
"Purchaser" has the meaning ascribed to it in the forepart of this
---------
Agreement.
"Real Property" means all real property listed on Schedule 1.2(a)(vi)
-------------
annexed hereto owned in fee simple by Seller and all plants, offices,
manufacturing or remanufacturing facilities, warehouses, buildings, structures
and improvements located thereon, and all mineral rights, oil wells, leases and
rentals with respect thereto.
"Related Agreement" means all agreements, contracts, certificates,
------------------
instruments or other documents required to executed and/or delivered pursuant to
or in connection with this Agreement by any Person.
"RV Business" has the meaning ascribed to it in Section 1.3(b).
-----------
"RV Liabilities" has the meaning ascribed to it in Section 1.3(b).
--------------
"Seller" has the meaning ascribed to it in the forepart of this
------
Agreement.
"Seller Savings Plan" has the meaning ascribed to it in Section 8.1(b).
-------------------
"Seller Welfare Benefit Plans" has the meaning ascribed to it in
-------------------------------
Section 8.1(c).
"Survival Period" has the meaning ascribed to it in Section 10.1.
---------------
"Tangible Personal Property" has the meaning ascribed to it in Section
---------------------------
1.2(a)(iv).
"Tax Returns" means a report, return or other information (including
-----------
any amendments) required to be supplied to any Governmental Authority with
respect to Taxes including, where permitted or required, combined or
consolidated returns for any group of entities.
"Taxes" means any federal, state, county, local or foreign income,
-----
gross receipts, franchise, sales, use, excise, gains, value added, withholding,
employment, payroll, social security, property and all other taxes of any
nature, fees, levies, duties, assessments, deficiencies or charges imposed by
any governmental entity, and includes any interest and penalties (civil or
criminal) on or additions to any such taxes and any expenses incurred in
connection with the determination, settlement or litigation of any Taxes.
"Third Party Claim" has the meaning ascribed to it in Section 10.5.
-----------------
"Threshold Amount" has the meaning ascribed to it in Section 10.3.
----------------
"WARN" has the meaning ascribed to it in Section 8.6(a).
----
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<PAGE>
Page 38 of 44 Pages
"Warranty Deed" has the meaning ascribed to it in Section 1.5.
-------------
(b) Construction of Certain Terms and Phrases. Unless the
--------------------------------------------
context of this Agreement otherwise requires, (i) words of any gender include
each other gender; (ii) words using the singular or plural number also include
the plural or singular number, respectively; (iii) the terms "hereof," "herein,"
"hereby" and derivative or similar words refer to this entire Agreement; (iv)
the terms "Article," "Section," "clause" or "subclause" refer to the specified
Article, Section, clause or subclause of this Agreement; and (v) the phrase
"ordinary course of business" of a Person refers to the business of such Person.
Whenever this Agreement refers to a number of days, such number shall refer to
calendar days unless Business Days are specified. All accounting terms used
herein and not expressly defined herein shall have the meanings given to them
under GAAP. Any representation or warranty contained herein as to the
enforceability of a Contract shall be subject to the effect of any bankruptcy,
insolvency, reorganization, moratorium or other similar law affecting the
enforcement of creditors' rights generally and to general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at Law).
ARTICLE 12.
MISCELLANEOUS
12.1. Notices. All notices, consents, requests and other communications
-------
hereunder must be in writing and shall be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
If to Purchaser, to:
Thor Industries, Inc.
419 W. Pike Street
Jackson Center, Ohio 45334
Facsimile No.: (937) 596-6539
Attn: President and Chief Executive Officer
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Facsimile No.: (212) 872-1002
Attn: Alan Siegel, Esq.
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<PAGE>
Page 39 of 44 Pages
If to Seller, to:
Champion Motor Coach, Inc.
c/o Champion Enterprises, Inc.
2701 University Drive, Suite 320
Auburn Hills, Michigan 48326-2566
Facsimile No.: (248) 340-9345
Attn: President and Chief Executive Officer
with a copy to:
Miller, Canfield, Paddock and Stone, P.L.C.
1400 North Woodward, Suite 100
Bloomfield Hills, Michigan 48304
Facsimile No.: (248) 258-3036
Attn: Ronald H. Riback, Esq.
All such notices, requests and other communications shall (a) if delivered
personally to the address as provided in this Section 12.1, be deemed given upon
delivery, (b) if delivered by facsimile transmission to the facsimile number as
provided in this Section 12.1, be deemed given upon receipt, and (c) if
delivered by mail in the manner described above to the address as provided in
this Section 12.1 be deemed given upon receipt (in each case regardless of
whether such notice, request or other communication is received by any other
Person to whom a copy of such notice, request or other communication is to be
delivered pursuant to this Section 12.1). Any party hereto from time to time may
change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other party
hereto.
12.2. Bulk Sales Act. Purchaser hereby waives any requirement to comply
--------------
with the bulk sales act or comparable statutory provisions of each applicable
jurisdiction and indemnifies Seller from any claims upon Assumed Liabilities
arising on account of such noncompliance.
12.3. Entire Agreement. This Agreement and the Related Agreements
-----------------
supersede all prior discussions and agreements between or among the parties
hereto with respect to the subject matter hereof and thereof and contain the
sole and entire agreement between the parties hereto with respect to the subject
matter hereof and thereof.
12.4. Expenses. Except as otherwise expressly provided in this
--------
Agreement, whether or not the transactions contemplated hereby are consummated,
each party hereto shall pay its own costs and expenses incurred in connection
with the negotiation, execution and closing of this Agreement and the Related
Agreements and the transactions contemplated hereby and thereby.
12.5. Waiver. Any term or condition of this Agreement may be waived at
------
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party hereto of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other
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<PAGE>
Page 40 of 44 Pages
term or condition of this Agreement on any future occasion. All remedies, either
under this Agreement or by Law or otherwise afforded, shall be cumulative and
not alternative.
12.6. Amendment. This Agreement may be amended, supplemented or
---------
modified only by a written instrument duly executed by or on behalf of each
party hereto.
12.7. No Third Party Beneficiary. The terms and provisions of this
---------------------------
Agreement are intended solely for the benefit of the parties hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties hereto to confer third party beneficiary rights upon any other Person.
12.8. No Assignment Binding Effect. Neither this Agreement nor any
------------------------------
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto, and any attempt
to do so shall be void. Subject to the preceding sentence, this Agreement is
binding upon, inures to the benefit of and is enforceable by the parties hereto
and their respective successors and assigns. Notwithstanding the foregoing, the
Purchaser shall have the right to assign its rights and obligations under this
Agreement to any wholly-owned subsidiary of Purchaser, provided that such
assignment shall not relieve Purchaser of any obligations hereunder and
provided, further, that with respect to any obligations of Purchaser hereunder
to be performed on or after the Closing Date (including execution and delivery
of the Assumption Agreement), such obligations shall be performed by such
subsidiary and Purchaser shall provide a guaranty of such subsidiary's
obligations.
12.9. Heading. The headings used in this Agreement have been inserted
-------
for convenience of reference only and do not define or limit the provisions
hereof.
12.10. Invalid Provisions. If any provision of this Agreement is held
------------------
to be illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any party hereto under this Agreement shall not be
materially and adversely affected thereby, (a) such provision shall be fully
severable, (b) this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.
12.11. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the Laws of the State of Michigan to a contract executed and
performed in such State, without giving effect to the conflicts of laws
principles thereof.
12.12. Schedules and Exhibits. Disclosure of any fact or item in any
-----------------------
Schedule or Exhibit hereto referenced by a particular Section shall, should the
existence of the fact or item or its contents be relevant to any other Section,
be deemed to be disclosed with respect to such other Section whether or not an
explicit cross-reference appears. All schedules shall be updated as of the
Closing. The Schedules hereto shall, for all purposes be deemed to mean and
refer to the Schedules hereto, as amended and supplemented by such updated
Schedules.
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<PAGE>
Page 41 of 44 Pages
12.13. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.14. Public Announcements: Confidentiality. Except as required by law
-------------------------------------
or governmental regulation, or the rules of the New York Stock Exchange, all
announcements relating to this Agreement or the negotiations relating to it or
transactions contemplated in it, including announcements to employees, will be
made only as may be agreed upon jointly by representatives designated by the
parties. Until the Closing Purchaser agree to keep, and to cause their
respective representatives, lenders and others to keep, all information
pertaining to Seller and Seller's Business strictly confidential, except as
required by law.
12.15. Name of Seller. Immediately after the Closing, the Seller shall
--------------
change its name to another name not confusingly similar to its present name, and
discontinue any assumed name certificates, and shall take all other action as
may be required to permit Buyer, subject to the terms of the License Agreement,
to file an assumed name certificate as to the name "Champion Motor Coach" or
"Champion Bus".
(Remainder of page intentionally left blank)
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<PAGE>
Page 42 of 44 Pages
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officer of each party as of the date first above written.
CHAMPION MOTOR COACH, INC.
By: /S/ JACQUELINE DOUT
---------------------------------------
Name: JACQUELINE DOUT
Title: VICE PRESIDENT OF FINANCE
THOR INDUSTRIES, INC.
By: /S/ PETER B. ORTHWEIN
---------------------------------------
Name: PETER B. ORTHWEIN
Title: VICE PRESIDENT, TREASURER
AND DIRECTOR
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Page 43 of 44 Pages
EXHIBIT 2.2
ASSIGNMENT OF PURCHASER'S INTEREST
IN ASSET PURCHASE AGREEMENT
----------------------------
THOR INDUSTRIES, INC., a Delaware corporation ("Assignor"), in
consideration of Ten Dollars ($10) and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, hereby assigns,
transfers, conveys and sets over to CHAMPION BUS, INC., a Delaware corporation
and a wholly-owned subsidiary of Assignor ("Assignee"), all of Assignor's right,
title and interest as the purchaser under that certain Asset Purchase Agreement
dated December 23, 1997, as amended December 31, 1997 (the "Agreement") among
Champion Motor Coach, Inc., a Michigan corporation, as seller, and the Assignor,
as purchaser (the "Agreement").
TO HAVE AND TO HOLD, unto the Assignee, its successors and
assigns, forever.
AND THE ASSIGNEE hereby agrees to assume and perform all of the
Assignor's obligations under the Agreement.
IN WITNESS WHEREOF, the Assignor and the Assignee have executed
and delivered this Assignment as of the 29th day of January, 1998.
ASSIGNOR:
THOR INDUSTRIES, INC.,
a Delaware corporation
By: /s/ Walter L. Bennett
---------------------------------------
Name: Walter L. Bennett
Title: Senior Vice President
(Finance) and Secretary
ASSIGNEE:
CHAMPION BUS, INC.
a Delaware corporation
By: /s/ Walter L. Bennett
---------------------------------------
Name: Walter L. Bennett
Title: Secretary
Page 44 of 44 Pages
EXHIBIT 99.1
THOR
----------------------------
I N D U S T R I E S I N C.
419 WEST PIKE ST*JACKSON CTR,OH 45334-0629*PHONE 937/596-6849*FAX 937/596-6539
P R E S S R E L E A S E
-------------------------
February 10, 1998
Contact Wade F. B. Thompson or Peter B. Orthwein
THOR ACQUIRES BUS MANUFACTURER;
----------------------------------
ACQUISITION EXPECTED TO ADD TO EARNINGS
----------------------------------------
Thor Industries, Inc. (NYSE:THO) announced today that it has completed the
acquisition of Champion Motor Coach, Inc., Imlay City MI, a subsidiary of
Champion Enterprises Inc. (NYSE:CHB) for about $11 million cash.
Champion Motor Coach, Inc., which is profitable, is the third largest
manufacturer of mid-size buses and has sales of approximately $60 million. Its
acquisition is expected to add to Thor earnings this fiscal year and gives Thor
over $200 million annually in Bus sales.
Thor is the second largest manufacturer of recreational vehicles and the largest
builder of mid size buses.
