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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20509
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): January 6, 1997
SPARTAN MOTORS, INC.
(Exact name of registrant as specified in charter)
MICHIGAN 0-13611 38-2078923
(State or other jurisdic- (Commission (IRS Employer
tion of incorporation) File Number) Identification No.)
1000 REYNOLDS ROAD
CHARLOTTE, MICHIGAN 48813
(Address of principal executive offices) (Zip Code)
(517) 543-6400
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS
Spartan Motors, Inc. (the "Company") entered into an agreement with
Recovery Equity Investors, Inc. and former sole owners of Carpenter
Industries, Inc., Dr. Beurt SerVaas and SerVaas, Inc., pursuant to which
the Company purchased a 33 percent equity interest in Carpenter Industries,
Inc. at a price of $10 million. The closing of the transaction occurred on
January 6, 1997.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Financial statements and pro forma financial information will be
filed by amendment.
DESCRIPTION OF EXHIBITS
EXHIBIT NO.
2 (a) Investment Agreement, dated December 23, 1996 among
Recovery Equity Investors II, L.P., Spartan Motors,
Inc., Carpenter Industries Inc., Carpenter Industries
LLC, The Beurt SerVaas Revocable Trust, and The Curtis
Publishing Company
2 (b) Amendment No. 1 to the Investment Agreement dated
January 6, 1997
10 (a) Carpenter Industries Inc. Stockholders' Agreement
10 (b) Contribution Agreement between Carpenter Industries LLC
and Carpenter Industries Inc.
10 (c) Carpenter Industries Inc. Registration Rights Agreement
99 Press Release dated January 7, 1997
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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 thereunto duly authorized.
Dated: January 21, 1997 SPARTAN MOTORS, INC.
By /S/ ANTHONY G. SOMMER
Anthony G. Sommer
Executive Vice President
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EXHIBIT 2(a) EXECUTION COPY
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INVESTMENT AGREEMENT
DATED AS OF DECEMBER 23, 1996
AMONG
RECOVERY EQUITY INVESTORS II, L.P.,
SPARTAN MOTORS, INC.,
CARPENTER INDUSTRIES INC.,
CARPENTER INDUSTRIES LLC,
THE BEURT SERVAAS REVOCABLE TRUST
AND
THE CURTIS PUBLISHING COMPANY
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This Table of Contents is not part of the Agreement to which it is attached
but is inserted for convenience only.
TABLE OF CONTENTS
ARTICLE I
SALE OF PURCHASED INTERESTS; CLOSING
1.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . .2
1.2 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . .2
1.3 Closing.. . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.4 Obligations of Investors Several and Not Joint. . . . . . . .2
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE OWNERS, CARPENTER AND THE COMPANY
2.1 Organization of Carpenter and the Company . . . . . . . . . .2
2.2 Power and Authority . . . . . . . . . . . . . . . . . . . . .3
2.3 Capital . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.4 No Subsidiaries . . . . . . . . . . . . . . . . . . . . . . .5
2.5 No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . .5
2.6 Governmental Approvals and Filings. . . . . . . . . . . . . .5
2.7 Books and Records . . . . . . . . . . . . . . . . . . . . . .6
2.8 Financial Statements. . . . . . . . . . . . . . . . . . . .6
2.9 Absence of Changes. . . . . . . . . . . . . . . . . . . . . .8
2.10 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . 10
2.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.12 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 12
2.13 Compliance With Laws and Orders . . . . . . . . . . . . . . 12
2.14 Benefit Plans; ERISA. . . . . . . . . . . . . . . . . . . . 12
2.15 Real Property.. . . . . . . . . . . . . . . . . . . . . . . 14
2.16 Tangible Personal Property. . . . . . . . . . . . . . . . . 15
2.17 Intellectual Property Rights. . . . . . . . . . . . . . . . 15
2.18 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.19 Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.21 Affiliate Transactions. . . . . . . . . . . . . . . . . . . 19
2.22 Employees; Labor Relations. . . . . . . . . . . . . . . . . 19
2.23 Environmental Matters.. . . . . . . . . . . . . . . . . . . 20
2.24 Substantial Customers and Suppliers. . . . . . . . . . . . 21
2.25 Other Negotiations; Brokers . . . . . . . . . . . . . . . . 21
2.26 Registration Rights . . . . . . . . . . . . . . . . . . . . 22
2.27 Exemption from Registration; Restrictions on Offer and
Sale of Same or Similar Securities. . . . . . . . . . . . . 22
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2.28 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . 22
2.29 Holding Company Act and Investment Company Act Status . . . 22
2.30 Corporate Governance. . . . . . . . . . . . . . . . . . . . 23
2.31 Projections . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
3.1 Organization; Power and Authority . . . . . . . . . . . . . 23
3.2 No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . 23
3.3 Purchase for Investment . . . . . . . . . . . . . . . . . . 24
3.4 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IV
COVENANTS OF THE OWNERS, CARPENTER AND THE COMPANY
4.1 Regulatory and Other Approvals. . . . . . . . . . . . . . . 25
4.2 Investigation by Investors. . . . . . . . . . . . . . . . . 25
4.3 No Solicitations. . . . . . . . . . . . . . . . . . . . . . 26
4.4 Conduct of Business . . . . . . . . . . . . . . . . . . . . 26
4.5 Financial Statements and Reports; Fiscal Year . . . . . . . 27
4.6 Certain Restrictions. . . . . . . . . . . . . . . . . . . . 28
4.7 Affiliate Transactions. . . . . . . . . . . . . . . . . . . 29
4.8 Notice and Cure . . . . . . . . . . . . . . . . . . . . . . 29
4.9 Restructuring Transactions. . . . . . . . . . . . . . . . . 30
4.10 Fulfillment of Conditions . . . . . . . . . . . . . . . . . 32
4.11 Venture Capital Operating Company Status. . . . . . . . . . 32
4.12 Business Plan . . . . . . . . . . . . . . . . . . . . . . . 32
4.13 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 32
4.14 Change of Name. . . . . . . . . . . . . . . . . . . . . . . 33
4.15 Delivery of Books and Records, etc. . . . . . . . . . . . . 33
4.16 Relocation and Completion of Semi-Finished Buses. . . . . . 33
4.17 Non-competition . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Warehousing of Certain Inventory. . . . . . . . . . . . . . 36
5.2 Debt Restructuring. . . . . . . . . . . . . . . . . . . . . 37
5.3 Extension or Refinancing of Unsecured Newcourt
Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . 37
5.4 Reimbursement of Certain Costs Relating to
Semi-Finished Buses . . . . . . . . . . . . . . . . . . . . 38
5.5 Adjustment of New Curtis Note . . . . . . . . . . . . . . . 39
5.6 Certain Employee Matters. . . . . . . . . . . . . . . . . . 40
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5.7 Spartan Non-competition Covenant. . . . . . . . . . . . . . 42
5.8 Sale of Mitchell Facility . . . . . . . . . . . . . . . . . 42
5.9 New Lines of Company Business . . . . . . . . . . . . . . . 43
5.10 Provision of Parts and Services . . . . . . . . . . . . . . 43
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE INVESTORS
6.1 Representations and Warranties. . . . . . . . . . . . . . . 44
6.2 Performance . . . . . . . . . . . . . . . . . . . . . . . . 44
6.3 Officers' Certificates. . . . . . . . . . . . . . . . . . . 44
6.4 Orders and Laws . . . . . . . . . . . . . . . . . . . . . . 44
6.5 Regulatory Consents and Approvals.. . . . . . . . . . . . . 45
6.6 Third Party Consents. . . . . . . . . . . . . . . . . . . . 45
6.7 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . 46
6.8 Good Standing Certificates. . . . . . . . . . . . . . . . . 46
6.9 Other Agreements. . . . . . . . . . . . . . . . . . . . . . 46
6.10 Delivery of Certificates. . . . . . . . . . . . . . . . . . 46
6.11 Contribution. . . . . . . . . . . . . . . . . . . . . . . . 46
6.12 Contemporaneous Investment by Other Investor. . . . . . . . 46
6.13 Reaffirmation of Guarantees . . . . . . . . . . . . . . . . 47
6.14 Affiliate Transactions. . . . . . . . . . . . . . . . . . . 47
6.15 Business Plan . . . . . . . . . . . . . . . . . . . . . . . 47
6.16 No Adverse Change . . . . . . . . . . . . . . . . . . . . . 47
6.17 Board of Directors. . . . . . . . . . . . . . . . . . . . . 47
6.18 EMC Corbeil Agreement . . . . . . . . . . . . . . . . . . . 47
6.19 Air Emissions . . . . . . . . . . . . . . . . . . . . . . . 47
6.20 Certain of Dr. Ser Vaas . . . . . . . . . . . . . . . . . . 48
6.21 By-laws Amendment . . . . . . . . . . . . . . . . . . . . . 48
6.22 Insurance Certificates. . . . . . . . . . . . . . . . . . . 48
6.23 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
7.1 Representations and Warranties. . . . . . . . . . . . . . . 48
7.2 Performance . . . . . . . . . . . . . . . . . . . . . . . . 48
7.3 Certificates. . . . . . . . . . . . . . . . . . . . . . . . 49
7.4 Orders and Laws . . . . . . . . . . . . . . . . . . . . . . 49
7.5 Regulatory Consents and Approvals.. . . . . . . . . . . . . 49
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ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
8.1 Survival of Representations, Warranties, Covenants
and Agreements. . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . 50
9.2 Method of Asserting Claims. . . . . . . . . . . . . . . . . 51
ARTICLE X
TERMINATION
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 53
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . 53
ARTICLE XI
DEFINITIONS
11.1 Definitions.. . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE XII
MISCELLANEOUS
12.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 66
12.2 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . 68
12.3 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 69
12.4 Public Announcements. . . . . . . . . . . . . . . . . . . . 69
12.5 Confidentiality. . . . . . . . . . . . . . . . . . . . . . 69
12.6 Further Assurances; Post-Closing Cooperation. . . . . . . . 70
12.7 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . 70
12.8 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 70
12.9 Third Party Beneficiaries . . . . . . . . . . . . . . . . . 70
12.10 No Assignment; Binding Effect . . . . . . . . . . . . . . . 70
12.11 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 71
12.12 Invalid Provisions. . . . . . . . . . . . . . . . . . . . . 71
12.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 71
12.14 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 71
12.15 Limited Recourse. . . . . . . . . . . . . . . . . . . . . . 71
12.16 Investors' Obligations Several and Not Joint. . . . . . . . 71
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Exhibit A -- Form of Officer's Certificate
Exhibit B -- Form of Secretary's Certificate
Exhibit C -- Form of Opinion of Leeuw, Plopper & Beeman
Exhibit D -- Form of Contribution Agreement
Exhibit E -- Form of Stockholders' Agreement
Exhibit F -- Form of Management Agreement
Exhibit G -- Form of Registration Rights Agreement
Exhibit H -- Form of REI II Certificate
Exhibit I -- Form of Spartan Officer's Certificate
Exhibit J -- Form of Spartan Secretary's Certificate
Exhibit K -- Form of Certificate of Dr. SerVaas
Schedule 2.8A --Historical Financial Statements as of and for the
fiscal year ended December 31, 1995
Schedule 2.8B --September 30 Financial Statements
Schedule 2.8C --October 31 Financial Statements, Pro Forma Balance
Sheet and Estimated Pro Forma Operating Statements
Schedule 2.8D --Agreed-Upon Procedures Report
Schedule 2.31 --Projections
Disclosure Schedule
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INVESTMENT AGREEMENT dated as of December 23, 1996, among RECOVERY
EQUITY INVESTORS II, L.P., a Delaware limited partnership ("REI II"),
SPARTAN MOTORS, INC., a Michigan corporation ("Spartan" and, together with
REI II, the "Investors"), CARPENTER INDUSTRIES INC., a Delaware corporation
(the "Company"), CARPENTER INDUSTRIES LLC, an Indiana limited liability
company ("Carpenter"), the BEURT SERVAAS REVOCABLE TRUST, a trust organized
under the laws of the State of Indiana (the "Trust"), and THE CURTIS
PUBLISHING COMPANY, an Indiana corporation ("Curtis" and, together with the
Trust, the "Owners").
WHEREAS, in order that the investments by the Investors
contemplated hereby may be made in a newly formed Delaware corporation,
immediately prior to the closing of the transactions contemplated hereby,
Carpenter will contribute certain of its Assets and Properties and certain
of its Liabilities to the Company (and the Company shall assume such
Liabilities) pursuant to the terms of the Contribution Agreement (the
"Contribution"); and
WHEREAS, in exchange for the Contribution and the covenant of the
Owners and Carpenter set forth in Sections 4.9, 4.14, 4.17, 5.3, 5.4 and
5.8, the Company will issue to Carpenter 300 shares of the Company's
Common Stock, no par value per share (the "Common Stock");
WHEREAS, immediately following the Contribution, each of REI II
and Spartan desires to purchase from the Company, and the Company desires
to sell to each Investor, on the terms and subject to the conditions set
forth below, 300 shares of Common Stock, representing 33-1/3% of the total
number of shares of Common Stock outstanding after giving effect to the
Contribution and the other transactions contemplated by this Agreement (the
600 shares of Common Stock to be purchased by the Investors in the
aggregate hereunder being hereinafter referred to as the "Purchased
Stock");
WHEREAS, the parties hereto intend that the above-described
receipt of Common Stock by Carpenter and the purchase of the Purchased
Stock by the Investors qualify as an exchange under Section 351 of the
Code; and
WHEREAS, capitalized terms used above and not otherwise defined
above shall have the respective meanings set forth in Section 11.1.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
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ARTICLE I
SALE OF PURCHASED INTERESTS; CLOSING
1.1 PURCHASE AND SALE. The Company agrees to sell to each
Investor, and each Investor agrees to purchase from the Company, 300 shares
of the Purchased Stock for the Purchase Price at the Closing, in each case
on the terms and subject to the conditions set forth in this Agreement.
1.2 PURCHASE PRICE. The aggregate purchase price to be paid by
each Investor for the Purchased Stock to be purchased by it hereunder is
$10,000,000 (the "Purchase Price"), payable in cash in the manner provided
in Section 1.3.
1.3 CLOSING. The Closing will take place on the Closing Date at
the offices of Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New
York 10178, or at such other place as the Investors and the Company
mutually agree, at 10:00 A.M. local time. At the Closing, each Investor
will pay the Purchase Price by wire transfer of immediately available funds
to such account as the Company may reasonably direct by written notice
delivered to such Investor by the Company at least five Business Days
before the Closing Date. Simultaneously, the Company will issue to each
Investor 300 shares of Purchased Stock, free and clear of all Liens, by
delivering to such Investor one or more certificates, registered in the
name of such Investor or any designee thereof, representing such shares of
Purchased Stock. At the Closing, there shall also be delivered to the
Company and the Investors the opinions, certificates and other Contracts,
documents and instruments to be delivered under Articles VI and VII.
1.4 OBLIGATIONS OF INVESTORS SEVERAL AND NOT JOINT. The
obligations of each Investor under this Agreement are separate from the
obligations of the other Investor under this Agreement, and neither
Investor shall be liable or otherwise responsible in any manner for any
obligation of the other Investor under this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE OWNERS, CARPENTER AND THE COMPANY
Carpenter, the Company and each of the Owners hereby jointly and
severally represent and warrant to each Investor as follows:
2.1 ORGANIZATION OF CARPENTER AND THE COMPANY. (a) Carpenter is
a limited liability company duly organized, validly existing and in good
standing under the Laws of the State of Indiana. During the period from
April 30, 1990 through and including June 28, 1996, CMI owned and conducted
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the business currently owned and conducted by Carpenter. On June 28, 1996,
(i) CMI duly and validly distributed all of its Assets and Properties and
assigned all of its Liabilities to Curtis and the Trust, and (ii) Curtis
and the Trust duly and validly contributed all such Assets and Properties
and assigned all such Liabilities to Carpenter. The Company is a
corporation duly organized, validly existing and in good standing under the
Laws of the State of Delaware. Each of Carpenter and the Company is duly
qualified, licensed or admitted to do business and is in good standing in
the jurisdictions identified in SECTION 2.1 OF THE DISCLOSURE SCHEDULE,
those being in each case the only jurisdictions in which the failure to be
so qualified, licensed or admitted and in good standing could reasonably be
expected to have a material adverse effect on the Business or Condition of
Carpenter or the Company. Carpenter and the Company have, prior to the
execution of this Agreement, made available to Investor true and complete
copies of (i) the certificate of existence of Carpenter, (ii) the articles
of organization of Carpenter, (iii) the operating agreement of Carpenter,
(iv) the certificate of incorporation of the Company, and (v) the by-laws
of the Company, in each case together with all amendments thereto and as in
effect on the date of this Agreement (the foregoing, collectively, the
"Charter Documents"). The name of each member of Carpenter, and each
officer of Carpenter and the position held by each, are listed in SECTION
2.1 OF THE DISCLOSURE SCHEDULE.
(b) The Company has been newly incorporated on October 30, 1996,
and since the date of its incorporation, the Company has not conducted any
business, incurred any Liabilities (whether contingent or otherwise),
entered into any Contract (other than this Agreement, the Operative
Agreements and any Contract that (i) is furnished to and approved by each
Investor before being entered into by the Company and (ii) is entered into
by the Company either as part of the Restructuring Transactions described
in clause (c) of Section 4.9 or in obtaining the written instruments
relating to the Wayne Bank revolving credit facility contemplated by
Section 6.6) or had any Assets and Properties or employees; PROVIDED,
HOWEVER, that on the Closing Date (and after giving effect to the
transactions contemplated hereby) the Company will have the Assets and
Properties, Liabilities and Contracts contributed to it and assumed by it
pursuant to the Contribution Agreement.
2.2 POWER AND AUTHORITY. (a) Each of Carpenter, the Company and
the Owners has the requisite power and authority and legal capacity to
execute and deliver this Agreement and the Operative Agreements to which it
is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby, including (in
the case of Carpenter) the Restructuring Transactions and (in the case of
the Company) the issuance and sale of the Purchased Stock to the Investors.
The execution and delivery by each of Carpenter, the Company and the Owners
of this Agreement and the Operative Agreements to which it is a party, and
such Person's performance of its obligations hereunder and thereunder, have
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been duly and validly authorized by all necessary action on the part of the
members of Carpenter, the trustees and settlors of the Trust, the board of
directors of the Company or the board of directors of Curtis, as the case
may be, which action is the only action necessary to authorize the
execution, delivery and performance by such Person of this Agreement and
the Operative Agreements to which it is a party. This Agreement has been
duly and validly executed and delivered by each of Carpenter, the Company
and the Owners and constitutes, and upon the execution and delivery by each
of Carpenter, the Company and the Owners of the Operative Agreements to
which it is a party, each such Operative Agreement will constitute, a
legal, valid and binding obligation of such Person enforceable against such
Person in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to the enforcement of creditors' rights
generally and by general principles of equity.
(b) Dr. SerVaas has the requisite power and authority and legal
capacity to execute and deliver the Operative Agreements to which he is a
party, to perform his obligations thereunder and to consummate the
transactions contemplated thereby. Upon the execution and delivery by Dr.
SerVaas of the Operative Agreements to which he is a party, each such
Operative Agreement will constitute a legal, valid and binding obligation
of Dr. SerVaas, enforceable against Dr. SerVaas in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
the enforcement of creditors' rights generally and by general principles of
equity.
2.3 CAPITAL. The Trust and Curtis are the only members of
Carpenter and have a 30% and a 70% interest in the capital of Carpenter,
respectively. The authorized capital stock of the Company consists of
1,000 shares of Common Stock. As of the date hereof, no shares of Common
Stock have been issued or are outstanding. Immediately prior to the
Closing (but after giving effect to the Contribution), there will be 300
shares of Common Stock issued and outstanding, all of which will be owned
by Carpenter free and clear of all Liens. At the time of their issuance
and on the Closing Date, all of such issued and outstanding shares of
Common Stock will be validly issued, fully paid and nonassessable, and will
have been issued in compliance with all applicable federal and state
securities laws. Carpenter has not, directly or indirectly, entered into
any agreement, arrangement or understanding with respect to the sale,
transfer or other disposition of any such shares of Common Stock (other
than the Stockholders' Agreement). There are no outstanding Options or
agreements, arrangements or understandings to issue Options with respect to
Carpenter or the Company and there are no preemptive rights or agreements,
arrangements or understandings to issue preemptive rights with respect to
the issuance or sale of shares of capital stock of or other equity
interests in Carpenter or the Company. Upon issuance at the Closing, the
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certificate or certificates representing the Purchased Stock delivered
hereunder to the Investors will transfer to each Investor good and valid
title to the Purchased Stock being purchased by it hereunder, free and
clear of all Liens, and all the Purchased Stock will have been duly
authorized, validly issued, fully paid and nonassessable. Upon the
issuance thereof at the Closing, the Purchased Stock in the aggregate will
represent 66-2/3% of the total voting power of all shares of capital stock
of the Company, and each share of Purchased Stock will represent the same
fraction of such total voting power.
2.4 NO SUBSIDIARIES. Neither Carpenter nor the Company holds any
direct or indirect equity, partnership, limited liability company, joint
venture or other interest in any Person.
2.5 NO CONFLICTS. The execution and delivery by each of
Carpenter, the Company and the Owners of this Agreement do not, and the
execution and delivery by each of Carpenter, the Company, Dr. SerVaas and
the Owners of the Operative Agreements to which it is a party, the
performance by each of Carpenter, the Company and the Owners of its
obligations under this Agreement and the Operative Agreements to which it
is a party, the performance by Dr. SerVaas of his obligations under the
Operative Agreements to which he is a party, and the consummation of the
transactions contemplated by the Agreement and the Operative Agreements
(including, without limitation, the Contribution, the Restructuring
Transactions and the issuance of the Purchased Stock) will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the Charter Documents, the
certificate or articles of incorporation or by-laws of Curtis or the trust
agreement governing the Trust;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in SECTION 2.6 OF THE
DISCLOSURE SCHEDULE, if any, conflict with or result in a violation or
breach of any term or provision of any Law or Order applicable to any of
Carpenter, the Company, Dr. SerVaas or the Owners or any of their
respective Assets and Properties; or
(c) except as disclosed in SECTION 2.5 OF THE DISCLOSURE
SCHEDULE, (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default
under, (iii) require Carpenter, the Company, any Owner or Dr. SerVaas to
obtain any consent, approval or action of, make any filing with or give any
notice to any Person as a result or under the terms of, (iv) result in or
give to any Person any right of termination, cancellation, acceleration or
modification in or with respect to, (v) result in or give to any Person any
additional rights or entitlement to increased, additional, accelerated or
guaranteed payments under, (vi) result in the creation of any new,
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additional or increased liability of Carpenter or the Company under, or
(vii) result in the creation or imposition of any Lien upon Carpenter or
the Company, Dr. SerVaas or any of their respective Assets and Properties
under, any Contract or License to which any of Carpenter, the Company, Dr.
SerVaas or the Owners is a party or by which any of their respective Assets
and Properties is bound.
2.6 GOVERNMENTAL APPROVALS AND FILINGS. Except as disclosed in
SECTION 2.6 OF THE DISCLOSURE SCHEDULE, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on the
part of Carpenter, the Company, any Owner or Dr. SerVaas is required in
connection with (a) the execution, delivery and performance of this
Agreement by Carpenter, the Company or any Owner, (b) the execution,
delivery and performance by Carpenter, the Company, Dr. SerVaas or any
Owner of any of the Operative Agreements to which it is a party or (c) the
consummation of the transactions contemplated by this Agreement or any
Operative Agreement.
2.7 BOOKS AND RECORDS. The minute books and other similar
records of Carpenter and the Company as made available to each Investor
prior to the execution of this Agreement contain a true and complete
record, in all material respects, of all action taken at all meetings and
by all written consents in lieu of meetings of the members, the
stockholders, the management committee and the board of directors and
committees of the board of directors of Carpenter and the Company, as
applicable.
2.8 FINANCIAL STATEMENTS. (a) Schedule 2.8A contains true and
complete copies of the Audited Financial Statements, fiscal year ended
December 31, 1995, which have been audited by Birk Gross Bell & Coulter,
P.C. (the "Accounting Firm"). The Audited Financial Statements (x) have
been prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved and (y) fairly present, in all material
respects, the financial position of CMI as of December 31, 1995 and the
results of operations and cash flows of CMI for the fiscal year ended
December 31, 1995.
(b) Schedule 2.8B contains true and complete copies of the
combined compiled financial statements for CMI and Carpenter as of and for
the nine months ended September 30, 1996, which have been compiled by the
Accounting Firm (collectively, the "September 30 Compiled Financial
Statements"). Schedule 2.8C contains true and complete copies of (i) a
compiled balance sheet for Carpenter as of October 31, 1996, and the
related compiled statements of operations and accumulated deficit for the
four months ended October 31, 1996, which have been compiled by the
Accounting Firm (collectively, the "October 31 Compiled Financial
Statements"), (ii) a pro forma balance sheet for the Company as of October
31, 1996, reflecting the impact of the Restructuring Transactions, the
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Contribution and the other transactions contemplated hereby to occur on the
Closing Date as if the Restructuring Transactions and such other
transactions had occurred on October 31, 1996 (the "Pro Forma Balance
Sheet") and (iii) pro forma statements of income, members' equity and cash
flows for Carpenter for the four months ended October 31, 1996, reflecting
the estimated results of operations and cash flows of Carpenter for such
period after giving effect to the elimination of all non-recurring expenses
associated with (x) the ramp-up in Carpenter's production of buses during
the first three quarters of calendar year 1996 and (y) the production
changes implemented in October 1996 to complete work on Carpenter's
inventory of semi-finished buses (the "Estimated Pro Forma Operating
Statements"). The inventory balances set forth in the October 31 Compiled
Financial Statements and the Pro Forma Balance Sheet are based upon a
physical inventory of raw materials and work in process conducted in
accordance with the Agreed-Upon Procedures.
(c) Schedule 2.8D contains a true and complete copy of the
"Independent Accountant's Report on Applying Agreed-Upon Procedures"
delivered by the Accounting Firm to Carpenter on December 17, 1996 (the
"Agreed-Upon Procedures Report"). The September 30 Compiled Financial
Statements and the October 31 Compiled Financial Statements accurately
reflect the results of the Agreed-Upon Procedures described in the Agreed-
Upon Procedures Report (including the Accounting Firm's observation of the
physical inventory referred to in Section 2.8(b)).
(d) The September 30 Compiled Financial Statements and the
October 31 Compiled Financial Statements accurately present, in all
material respects, the financial condition and results of operations of
Carpenter as of and for the dates and periods indicated (subject in each
case to normal year-end audit adjustments that will not have or reflect a
material adverse effect). Except as otherwise disclosed in the related
compilation report, the September 30 Compiled Financial Statements and the
October 31 Compiled Financial Statements were prepared on a basis
consistent with the Audited Financial Statements (including the methods,
principles, practices and policies applied in preparing the Audited
Financial Statements).
(e) The Pro Forma Balance Sheet accurately reflects (i) the
adjustments specified in the journal entries attached thereto as part of
Schedule 2.8C and (ii) all other adjustments to the balance sheet included
in the October 31 Compiled Financial Statements required to be made to give
effect to the Restructuring Transactions, the Contribution and the other
transactions contemplated hereby to occur on the Closing Date as if the
Restructuring Transactions and such other transactions had occurred on
November 1, 1996.
(f) The Estimated Pro Forma Operating Statements accurately
reflect the effect (as estimated in good faith by Carpenter's management)
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of elimination of the non-recurring expenses identified in clause (iii) of
Section 2.8(b), and otherwise have been prepared in good faith by Carpenter
on the basis of the best information known to Carpenter and the Owners
(after due inquiry) as of the date hereof.
(g) Carpenter and the Owners have, and have caused the Accounting
Firm to, make available to each Investor and its accountants all work
papers and related data used in connection with the preparation and review
of the September 30 Compiled Financial Statements, the October 31 Compiled
Financial Statements, the Pro Forma Balance Sheet and the Estimated Pro
Forma Operating Statements.
(h) The aggregate principal amount of outstanding Indebtedness
under the agreements relating to the Newcourt inventory financing
arrangement in respect of Federalled Buses that have been sold by CMI or
Carpenter and paid for by the purchasers thereof prior to the date hereof
equals $6,132,644.48 (such outstanding Indebtedness, the "Unsecured
Newcourt Indebtedness"). As of the date hereof, the agreements relating to
the Newcourt inventory financing arrangement have been modified to provide
that the Unsecured Newcourt Indebtedness, together with all accrued
interest thereon, is due and payable on December 31, 1996.
(i) The Net Contribution Amount for the period beginning on
September 1, 1996 and ending on the Closing Date will not be less than
$7,500,000.
2.9 ABSENCE OF CHANGES. Since the Audited Financial Statement
Date, except as set forth in SECTION 2.9 OF THE DISCLOSURE SCHEDULE, there
has not been any material adverse change, or any event or development
which, individually or together with other such events and developments,
could reasonably be expected to result in a material adverse change, in the
Business or Condition of Carpenter or the Company (it being understood that
all references to Carpenter in this Section 2.9 shall be deemed to include
CMI). None of the other representations or warranties set forth in this
Agreement shall be deemed to limit the foregoing. In addition, without
limiting the foregoing, except as disclosed in SECTION 2.9 OF THE
DISCLOSURE SCHEDULE and except in connection with the Restructuring
Transactions, the Contribution and (to the extent completed prior to the
Closing) the Debt Restructuring, there has not occurred since the Audited
Financial Statement Date:
(a) other than the distribution to Curtis and the Trust of the
net proceeds of Carpenter's sale of 800 shares of CII's common stock
pursuant to the CII Stock Purchase Agreement, any declaration, setting
aside or payment of any dividend or other distribution in respect of the
capital of Carpenter, or any direct or indirect redemption, purchase or
other acquisition by Carpenter of any such capital of or any Option with
respect to Carpenter;
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(b) except for the execution, delivery and performance by each of
Carpenter, the Company and the Owners of this Agreement and the
Operative Agreements to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, any authorization,
issuance, sale or other disposition by Carpenter, the Company or any
Owner of any shares of capital stock of or other equity interests in or
Option with respect to Carpenter or the Company, or any modification or
amendment of any right of any holder of any outstanding shares of
capital stock of or other equity interests in or Option with respect to
Carpenter or the Company;
(c) other than pursuant to the terms of existing employment
Contracts listed in SECTION 2.18(A)(I) OF THE DISCLOSURE SCHEDULE: (i)
any increase in the salary, wages or other compensation, including any
increase in rate of compensation, of any officer, employee or consultant
of Carpenter whose annual salary is, or after giving effect to such
change would be, $100,000 or more; (ii) any establishment or
modification of (A) targets, goals, pools or similar provisions under
any Benefit Plan, employment Contract or other employee compensation
arrangement or (B) salary ranges, increase guidelines or similar
provisions in respect of any Benefit Plan, employment Contract or other
employee compensation arrangement; or (iii) any adoption, entering into,
amendment, modification or termination (partial or complete) of any
Benefit Plan;
(d) (i) incurrences by Carpenter of Indebtedness, other than (w)
Indebtedness consisting of advances made by Curtis after October 31,
1996 for the purpose of financing ongoing business expenses of
Carpenter, (x) revolving credit Indebtedness incurred in the ordinary
course of Carpenter's business pursuant to the inventory financing
agreement with Newcourt Financial USA, Inc., (y) the incurrence of
$2,500,000 aggregate principal amount of long-term Indebtedness as
consideration for Carpenter's acquisition of the Richmond Facility
pursuant to the Richmond Acquisition Agreement and (z) any other
Indebtedness, but only if the entire outstanding principal amount
thereof is included in the October 31, 1996 balance sheet for Carpenter
included in the October 31 Financial Statements, or (ii) except as part
of the Restructuring Transactions, any voluntary purchase, cancellation,
prepayment or complete or partial discharge in advance of a scheduled
payment date with respect to, or waiver of any right of Carpenter under,
any Indebtedness of or owing to Carpenter;
(e) any physical damage, destruction or other casualty loss
(whether or not covered by insurance) affecting any of the real or
personal property or equipment of Carpenter in an aggregate amount
exceeding $100,000;
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(f) any write-off or write-down of, or any determination to write
off or write-down, any of the Assets and Properties of Carpenter in an
aggregate amount exceeding $100,000;
(g) any acquisition by Carpenter of any Assets and Properties of
any Person or disposition of, or incurrence of a Lien (other than a
Permitted Lien) on, any Assets and Properties of Carpenter, other than
(i) acquisitions or dispositions of inventory in the ordinary course of
business of Carpenter consistent with past practice, (ii) the sale of
800 shares of CII's common stock pursuant to the CII Stock Purchase
Agreement and (iii) the acquisition of the Richmond Facility pursuant to
the Richmond Acquisition Agreement;
(h) any capital expenditure or commitment for additions to
property, plant or equipment of Carpenter constituting capital assets
(or any series of related capital expenditures or commitments) in an
amount exceeding $50,000;
(i) any commencement, termination or change by Carpenter of any
line of business;
(j) any transaction by Carpenter with any officer, director,
member, Affiliate or Associate of Carpenter, other than (i) pursuant to
(x) any Contract in effect on June 28, 1996 and disclosed to Investor
pursuant to Section 2.18(a)(vi) and (y) any employment Contract
disclosed to Investor pursuant to SECTION 2.18(A)(I) OF THE DISCLOSURE
SCHEDULE and (ii) the advances made by Curtis described in SECTION
2.21(A) OF THE DISCLOSURE SCHEDULE;
(k) any entering into of an agreement to do or engage in any of
the foregoing, including with respect to any Business Combination, other
than Carpenter's entering into the CII Stock Purchase Agreement and the
Richmond Acquisition Agreement; or
(l) any change in the accounting methods or procedures of
Carpenter or any other transaction involving or development affecting
Carpenter outside the ordinary course of business consistent with past
practice.
2.10 NO UNDISCLOSED LIABILITIES. Except as reflected or reserved
against in the October 31 Financial Statements or as disclosed in
SECTION 2.10 OF THE DISCLOSURE SCHEDULE, there are no Liabilities of,
relating to or affecting Carpenter, the Company or any of their respective
Assets and Properties, other than (a) Liabilities incurred in the ordinary
course of business consistent with past practice since October 31, 1996 and
in accordance with the provisions of this Agreement, (b) Liabilities
consisting of the $2,500,000 aggregate principal amount of long-term
Indebtedness incurred as consideration for Carpenter's acquisition of the
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Richmond Facility pursuant to the Richmond Acquisition Agreement, together
with interest accrued thereon since November 12, 1996, and (c) other
Liabilities which in the aggregate are not material to the Business or
Condition of Carpenter or the Company, are not for tort or for breach of
contract and are not owed to any Affiliate or Associate of Carpenter.
2.11 TAXES. (a) Except as disclosed in SECTION 2.11 OF THE
DISCLOSURE SCHEDULE, all Tax Returns required to have been filed by or with
respect to CMI, Carpenter or the Company have been duly filed, and each
such Tax Return correctly and completely reflects the income, franchise or
other Tax liability and all other information required to be reported
thereon. All Taxes due and payable by CMI, Carpenter or the Company,
whether or not shown on any Tax Return, have been paid.
(b) Except as disclosed in SECTION 2.11 OF THE DISCLOSURE
SCHEDULE, the provisions for Taxes due by Carpenter in the October 31, 1996
balance sheet for Carpenter contained in the October 31 Financial
Statements are sufficient for all unpaid Taxes, being only current Taxes
not yet due and payable, of Carpenter.
(c) Except as disclosed in SECTION 2.11 OF THE DISCLOSURE
SCHEDULE, none of CMI, Carpenter or the Company is a party to any agreement
extending the time within which to file any Tax Return. During the
preceding five years, no claim has been made and, to the best knowledge of
the Owners, Carpenter and the Company, no claim has ever been made by a
jurisdiction in which CMI, Carpenter or the Company does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction.
(d) Each of CMI, Carpenter and the Company has withheld and paid
all Taxes required to have been withheld and paid by it in connection with
amounts paid or due and payable to any employee, creditor, independent
contractor or other third party.
(e) Except as disclosed in SECTION 2.11 OF THE DISCLOSURE
SCHEDULE, there is no dispute or claim concerning any Tax liability of CMI,
Carpenter or the Company either (i) claimed or raised by any taxing
authority or (ii) otherwise known to any Owner, Carpenter or the Company.
SECTION 2.11 OF THE DISCLOSURE SCHEDULE indicates those Tax Returns, if
any, that have been audited, and indicates those Tax Returns that currently
are the subject of audit. The Owners have made available to each Investor
complete and correct copies of all federal, state, local and foreign income
Tax Returns filed by, and all Tax examination reports and statements of
deficiencies assessed against or agreed to by, CMI, Carpenter or the
Company, in each case since April 30, 1990.
(f) None of CMI, Carpenter or the Company has waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to any Tax assessment or deficiency.
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(g) None of CMI, Carpenter or the Company has received any
written ruling related to Taxes, or entered into any written and legally
binding agreement with a taxing authority relating to Taxes, for which in
either case there is any further Liability.
(h) The Company does not have any Liability in respect of Taxes
of Carpenter Body Works, Inc., CMI, Carpenter or any other Person other
than the Company (i) under Section 1.1502-6 of the Treasury regulations (or
any similar provision of state, local or foreign law), (ii) as a transferee
or successor, (iii) by Contract or (iv) otherwise; PROVIDED, HOWEVER, that
pursuant to the Contribution Agreement the Company will be responsible for
the payment of Indiana property taxes of Carpenter that are not yet due and
payable and either (i) have been properly accrued as a liability on the Pro
Forma Balance Sheet or (ii) are disclosed in SECTION 2.11 OF THE DISCLOSURE
SCHEDULE.
(i) None of CMI, Carpenter or the Company has made any payments,
is obligated to make any payments, or is a party to any agreement that
under certain circumstances could require it to make any payments, that are
not deductible under Section 280G of the Code.
(j) None of CMI, Carpenter or the Company (i) has agreed to, is
required to, or reasonably expects that it might have to, make any
adjustment under Section 481 of the Code (or any comparable provision of
state, local or foreign law) by reason of a change in accounting method or
otherwise, (ii) is a "consenting corporation" within the meaning of Section
341(f)(1) of the Code or comparable provisions of any state statutes, and
none of the Assets and Properties of Carpenter or the Company is subject to
an election under Section 341(f) of the Code or comparable provisions of
any state statutes, (iii) except as set forth in SECTION 2.11 OF THE
DISCLOSURE SCHEDULE, has been a member of an affiliated, combined,
consolidated, unitary or similar group for Tax purposes, or (iv) is a party
to any joint venture, partnership or other arrangement that is (or should
be) treated as a partnership for Tax purposes.
2.12 LEGAL PROCEEDINGS. (a) Except as set forth in SECTION 2.12
OF THE DISCLOSURE SCHEDULE:
(i) there are no Actions or Proceedings pending or, to the best
knowledge of the Owners, Carpenter and the Company, threatened against,
relating to or affecting Carpenter, the Company, Dr. SerVaas any Owner
or any of their respective Assets and Properties which (A) could
reasonably be expected to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement
or any of the Operative Agreements or otherwise result in a material
diminution of the benefits contemplated by this Agreement or any of the
Operative Agreements to any Investor, or (B) if determined adversely to
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Carpenter, the Company or any Owner, could reasonably be expected to
result in (x) any injunction or other equitable relief against
Carpenter, the Company or any Owner that would interfere with
Carpenter's or the Company's business or operations or (y) Losses by
Carpenter or the Company, individually or in the aggregate with Losses
in respect of other such Actions or Proceedings, exceeding $100,000;
(ii) there are no facts or circumstances known to Carpenter, the
Company or any Owner that could reasonably be expected to give rise to
any Action or Proceeding that would be required to be disclosed pursuant
to clause (i) above, except as disclosed in SECTION 2.12 OF THE
DISCLOSURE SCHEDULE; and
(iii) none of the Owners, Carpenter or the Company has received
notice or is aware of any Orders outstanding against CMI, Carpenter or
the Company.
(b) Prior to the date hereof, the Owners have made available to
each Investor all responses of counsel for CMI and Carpenter to auditors'
requests for information for the preceding two years (together with any
updates provided by such counsel) regarding Actions or Proceedings pending
or threatened against, relating to or affecting Carpenter or the Company.
2.13 COMPLIANCE WITH LAWS AND ORDERS. Except as disclosed in
SECTION 2.13 OF THE DISCLOSURE SCHEDULE, none of CMI, Carpenter or the
Company is or at any time since October 31, 1991 has been, or has received
any notice that it is or since such date has been, in violation of or in
default under, any Law or Order applicable to CMI, Carpenter, the Company
or any of their respective Assets and Properties, other than any such
violation or default which individually or together with any other such
violations and defaults would not have a material adverse effect on the
Business or Condition of Carpenter or the Company. In furtherance and not
in limitation of the foregoing, none of CMI, Carpenter or the Company has
violated the Securities Act or any other Federal or state securities law in
connection with the offer, issuance, sale or purchase of any securities.
2.14 BENEFIT PLANS; ERISA. All Benefit Plans are listed in
SECTION 2.14 OF THE DISCLOSURE SCHEDULE, and copies of all documentation
relating to such Benefit Plans have been delivered or made available to
each Investor. Except as disclosed in SECTION 2.14 OF THE DISCLOSURE
SCHEDULE:
(a) each Benefit Plan and the administration thereof complies,
and has at all times complied, in all material respects with the
requirements of all applicable Law, including ERISA and the Code; each
Qualified Plan is in fact qualified under Section 401 of the Code; and
none of the Owners, Carpenter or the Company is aware of any facts or
circumstances which could reasonably be expected to affect the qualified
status under Section 401 of the Code of any Qualified Plan;
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(b) each of CMI, Carpenter, the Company and the ERISA Affiliates
does not presently maintain or contribute to, and at no time has
maintained or contributed to, any single-employer plan (within the
meaning of Section 3(41) of ERISA) or any multiemployer plan (within the
meaning of Section 3(37) of ERISA) subject to Title IV of ERISA, and
none of Carpenter, the Company or the ERISA Affiliates is aware of any
circumstances pursuant to which Carpenter or the Company could have
liability to any party under Title IV of ERISA;
(c) none of CMI, Carpenter, the Company or the ERISA Affiliates
has incurred any liability for any tax imposed under Section 4971
through 4980B of the Code, or any civil liability under Section 502(i)
or (l) of ERISA, which (individually or together with other such
liabilities and civil liabilities) could have a material adverse effect
on the Business or Condition of Carpenter or the Company;
(d) no Benefit Plan provides health or death benefit coverage
beyond the termination of an employee's employment, except as required
by Part 6 of Subtitle B of Title I of ERISA or Section 4980B of the Code
or any state laws requiring continuation of benefits coverage following
termination of employment;
(e) no suits, actions or other litigation (excluding claims for
benefits incurred in the ordinary course of plan activities) have been
brought or, to the best knowledge of the Owners, Carpenter and the
Company, threatened against or with respect to any Benefit Plan and
there are no facts or circumstances known to Carpenter, the Company or
any Owner that could reasonably be expected to give rise to any such
suit, action or other litigation; and
(f) all contributions to Benefit Plans that were required to be
made under such Benefit Plans have been made, and all benefits accrued
under any unfunded Benefit Plan have been paid, accrued or otherwise
adequately reserved in accordance with GAAP, all of which accruals under
unfunded Benefit Plans, if any, are as disclosed in SECTION 2.14(F) OF
THE DISCLOSURE SCHEDULE, and each of CMI and Carpenter has performed all
material obligations currently required to be performed by it under all
Benefit Plans.
2.15 REAL PROPERTY. (a) SECTION 2.15(A) OF THE DISCLOSURE
SCHEDULE contains a true and correct list of (i) each parcel of real
property owned (the "Owned Real Property") by Carpenter, (ii) each parcel
of real property leased by Carpenter (as lessor or lessee) (the "Leased
Real Property") and (iii) all Liens (other than Permitted Liens) relating
to or affecting any parcel of real property referred to in clause (i) or
(ii) above.
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(b) Carpenter has good and marketable title to each parcel of
Owned Real Property (including the improvements thereon), free and clear of
all Liens (other than Permitted Liens and Liens disclosed in SECTION
2.15(B) OF THE DISCLOSURE SCHEDULE). After giving effect to the
Contribution, the Company will have good and marketable title to each
parcel of Owned Real Property (including the improvements thereon)
designated with an asterisk in SECTION 2.15(A) OF THE DISCLOSURE SCHEDULES,
free and clear of all Liens (other than Permitted Liens and Liens DISCLOSED
IN SECTION 2.15(B) OF THE DISCLOSURE SCHEDULE).
(c) Subject to the terms of the related leases, Carpenter has,
and after giving effect to the Contribution the Company will have with
respect to each parcel of Leased Real Property designated with an asterisk
in SECTION 2.15(A) OF THE DISCLOSURE SCHEDULE, a valid and subsisting
leasehold estate in and the right to quiet enjoyment of the real properties
currently leased by Carpenter for the full term of the lease thereof. Each
lease referred to in clause (ii) of paragraph (a) above is a legal, valid
and binding agreement, enforceable in accordance with its terms, of
Carpenter and of each other Person that is a party thereto, and except as
set forth in SECTION 2.15(C) OF THE DISCLOSURE SCHEDULE, there is no, and
none of CMI, Carpenter, the Company or the Owners has received notice of
any, default (or any condition or event which, after notice or lapse of
time or both, would constitute a default) thereunder. None of Carpenter or
the Company owes brokerage commissions or finders fees with respect to any
such leased space, except to the extent that Carpenter or the Company may
renew the term of any such lease, in which case any such commissions and
fees would be in amounts that are reasonable and customary for the spaces
so leased, given their intended use and terms.
(d) Carpenter has made available to each Investor prior to the
execution of this Agreement true and complete copies of (i) title policies,
mortgages, deeds of trust, deeds, certificates of occupancy and similar
documents, and all amendments thereto, concerning the Owned Real Property,
and (ii) all leases (including any amendments thereto and renewal letters
in respect thereof) and, to the extent reasonably available, all other
documents referred to in clause (i) of this paragraph (d) with respect to
the real property listed in SECTION 2.15(A) OF THE DISCLOSURE SCHEDULE
pursuant to clause (ii) of paragraph (a) above.
(e) The improvements on the real property identified in
SECTION 2.15(A) OF THE DISCLOSURE SCHEDULE are in good operating condition
and in a state of good maintenance and repair, ordinary wear and tear
excepted, are adequate and suitable for the purposes for which they are
presently being used and, to the best knowledge of the Owners, Carpenter
and the Company, there are no condemnation or appropriation proceedings
pending or threatened against any of such real property or the improvements
thereon.
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(f) Except as set forth in Section 2.23(c) of the Disclosure
Schedule, none of Carpenter, the Company or any of the Owners has any
knowledge, nor has any of CMI, Carpenter, the Company or the Owners
received any notice, of any claim, action or proceeding, actual or
threatened, against or affecting Carpenter, the Company or any of the real
property identified in SECTION 2.15(A) OF THE DISCLOSURE SCHEDULE which
would materially affect the future use, occupancy or value of such real
property or any part thereof.
2.16 TANGIBLE PERSONAL PROPERTY. Except as disclosed in SECTION
2.16 OF THE DISCLOSURE SCHEDULE, Carpenter is in possession of and has,
and, immediately after giving effect to the Contribution the Company will
be in possession of and have, good and marketable title to, or valid
leasehold interests in or valid rights under Contract to use, all tangible
personal property including (a) all tangible personal property reflected in
the Pro Forma Balance Sheet and (b) all tangible personal property that has
been acquired by Carpenter since October 31, 1996 and is to be so
contributed (in each case other than property disposed of since such date
in the ordinary course of business consistent with past practice and the
terms of this Agreement). All such tangible personal property is free and
clear of all Liens, other than Permitted Liens, and is adequate and
suitable for the conduct by Carpenter or the Company of the business
presently conducted or to be conducted by it (as the case may be), and
(except as disclosed in SECTION 2.16 OF THE DISCLOSURE SCHEDULE) is in good
working order and condition, ordinary wear and tear excepted, and its use
complies in all material respects with all applicable Laws.
2.17 INTELLECTUAL PROPERTY RIGHTS. Carpenter has interests in or
uses, and immediately after giving effect to the Contribution, the Company
will have interests in or use, the Intellectual Property disclosed in
SECTION 2.17 OF THE DISCLOSURE SCHEDULE, each item of which Carpenter has,
and immediately after giving effect to the Contribution, the Company will
have either all right, title and interest in or a valid and binding license
to use. No other Intellectual Property is used or necessary in the conduct
of the business conducted or to be conducted by the Company or in the
conduct of the corresponding business conducted by Carpenter as of the date
hereof. Except as disclosed in SECTION 2.17 OF THE DISCLOSURE SCHEDULE,
(i) Carpenter has, and immediately after giving effect to the Contribution
the Company will have, the right to use the Intellectual Property disclosed
therein, (ii) all registrations with and applications to Governmental or
Regulatory Authorities on behalf of Carpenter or the Company in respect of
such Intellectual Property are valid and in full force and effect and are
not subject to the payment of any Taxes or maintenance fees or the taking
of any other actions by Carpenter or the Company to maintain their validity
or effectiveness, (iii) there are no restrictions on the direct or indirect
transfer of any license, or any interest therein, held by Carpenter or the
Company in respect of such Intellectual Property, (iv) the Owners and
Carpenter have made available to each Investor prior to the execution of
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this Agreement all documentation in their possession with respect to any
invention, process, design, computer program or other know-how or trade
secret included in such Intellectual Property, which documentation is
accurate in all material respects and reasonably sufficient in detail and
content to identify and explain such invention, process, design, computer
program or other know-how or trade secret, (v) Carpenter and its
predecessors have taken reasonable security measures to protect the
secrecy, confidentiality and value of the trade secrets included in such
Intellectual Property, (vi) none of Carpenter or the Company is, and none
of CMI, Carpenter or the Company has received any notice that it is, in
default (or with the giving of notice or lapse of time or both, would be in
default) under any license to use such Intellectual Property and (vii) none
of Carpenter, the Company or the Owners has any knowledge that such
Intellectual Property is being infringed by any other Person. Carpenter is
not infringing, to the best knowledge of Carpenter, the Company and the
Owners, any Intellectual Property of any other Person, and no claim is
pending or, to the best knowledge of Carpenter, the Company and the Owners,
has been threatened to such effect (or with respect to any infringement on
the part of CMI).
2.18 CONTRACTS. (a) SECTION 2.18(A) OF THE DISCLOSURE SCHEDULE
(with paragraph references corresponding to those set forth below) contains
a true and complete list of each of the following Contracts or other
arrangements (true and complete copies or, if none, reasonably complete and
accurate written descriptions of which, together with all amendments and
supplements thereto and all waivers of any terms thereof, have been made
available to each Investor prior to the execution of this Agreement), to
which Carpenter is a party or by which any of its Assets and Properties is
bound:
(i) (A) all Contracts (excluding Benefit Plans) providing for a
commitment of employment or with consultants for a specified or
unspecified term other than any such Contract involving aggregate
payments of not more than $50,000 (whether in cash, securities or other
property) in each calendar year; and (B) any written or unwritten
representations, commitments, promises, communications or courses of
conduct involving an obligation of Carpenter to make payments (with or
without notice, passage of time or both) to any Person in connection
with, or as a consequence of, the transactions contemplated hereby or to
any employee who is disclosed on SECTION 2.22(A) OF THE DISCLOSURE
SCHEDULE, other than with respect to salary or incentive compensation
payments in the ordinary course of business, consistent with past
practice;
(ii) all Contracts with any Person containing any provision or
covenant prohibiting or limiting the ability of Carpenter to engage in
any business activity or compete with any Person or prohibiting or
limiting the ability of any Person to compete with Carpenter;
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(iii) all partnership, limited liability company, joint venture,
shareholders' or other similar Contracts with any Person;
(iv) all Contracts evidencing Indebtedness of Carpenter;
(v) all Contracts (A) with independent contractors, distributors,
dealers, manufacturers' representatives, sales agencies or franchisees,
(B) with aggregators, manufacturers and equipment vendors, and (C) with
respect to the sale of services, products or both to customers, other
than any such Contract pursuant to which neither Carpenter nor any other
Person will, or is or could be required to, make aggregate payments in
excess of $50,000 in any calendar year or aggregate payments in excess
of $250,000 during the term of the Contract (in each case whether in
cash, securities or other property);
(vi) all guarantees by other Persons of any Indebtedness or other
obligations of Carpenter, and all guarantees by Carpenter of any
Indebtedness or other obligations of other Persons;
(vii) all Contracts relating to (A) the future disposition or
acquisition of any Assets and Properties, other than dispositions or
acquisitions in the ordinary course of business consistent with past
practice and the provisions of this Agreement, and (B) any Business
Combination;
(viii) all executory Contracts between or among Carpenter, on the one
hand, and any Owner, any current or former officer, director, Affiliate
or Associate of CMI or Carpenter, or any Associate of any such officer,
director or Affiliate, on the other hand, other than Contracts disclosed
pursuant to Section 2.18(a)(i);
(ix) all collective bargaining or similar labor Contracts;
(x) all Contracts that (A) limit or contain restrictions on the
ability of Carpenter to declare or pay dividends on, to make any other
distribution in respect of or to issue or purchase, redeem or otherwise
acquire its equity interests, to incur Indebtedness, to incur or suffer
to exist any Lien, to purchase or sell any Assets and Properties, to
change the lines of business in which it participates or engages or to
engage in any Business Combination or (B) require Carpenter to maintain
specified financial ratios or levels of net worth or other indicia of
financial condition; and
(xi) all other Contracts not otherwise required to be disclosed in
SECTION 2.18(A) OF THE DISCLOSURE SCHEDULE which are material to the
Business or Condition of Carpenter (including the CII Stock Purchase
Agreement and the Richmond Acquisition Agreement) and all powers of
attorney or comparable delegations of authority.
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(b) Each Contract required to be disclosed in SECTION 2.18(A) OF
THE DISCLOSURE SCHEDULE is in full force and effect and constitutes a
legal, valid and binding agreement, enforceable in accordance with its
terms, of each party thereto, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to the enforcement of creditors' rights generally and
by general principles of equity; and except as disclosed in SECTION 2.18(B)
OF THE DISCLOSURE SCHEDULE, neither Carpenter nor, to the best knowledge of
Carpenter, the Company and the Owners, any other party to any such Contract
is, or has received notice that it is, in violation or breach of or default
under any such Contract (or with notice or lapse of time or both, would be
in violation or breach of or default under any such Contract).
(c) To the knowledge of the Owners, Carpenter and the Company,
Carpenter is not a party to or bound by any Contract that has been or could
reasonably be expected to be, individually or in the aggregate with any
other such Contracts, materially adverse to the Business or Condition of
Carpenter or the Company or which has resulted or could reasonably be
expected to result, individually or in the aggregate with any such other
Contracts, in a loss to Carpenter or the Company (alone or together) in
excess of $100,000.
2.19 LICENSES. SECTION 2.19 OF THE DISCLOSURE SCHEDULE contains a
true and complete list of all Licenses used in and material to the business
or operations of Carpenter or the Company, setting forth the owner, the
function and the expiration and renewal date of each. Prior to the
execution of this Agreement, the Owners have made available to each
Investor true and complete copies of all such Licenses. Except as
disclosed in SECTION 2.19 OF THE DISCLOSURE SCHEDULE:
(a) each of Carpenter and the Company owns or validly holds, and
after giving effect to the Contribution the Company will own or validly
hold, all Licenses that are material to its business or operations;
(b) each License listed in SECTION 2.19 OF THE DISCLOSURE
SCHEDULE is valid, binding and in full force and effect; and
(c) neither Carpenter nor the Company is, or has received any
notice that it is, in default (or with the giving of notice or lapse of
time or both, would be in default) under any such License.
2.20 INSURANCE. SECTION 2.20(A) OF THE DISCLOSURE SCHEDULE
contains a true and complete list (including the names and addresses of the
insurers, the expiration dates thereof, the annual premiums and payment
terms thereof and a brief description of the interests insured thereby) of
all liability, property, workers' compensation, directors' and officers'
liability and other insurance policies currently in effect that insure the
business, operations or employees of Carpenter or the Company or affect or
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relate to the ownership, use or operation of any of the Assets and
Properties of Carpenter or the Company and that (i) have been issued to
Carpenter or the Company or (ii) have been issued to any Person (other than
Carpenter or the Company) for the benefit of Carpenter or the Company. The
insurance coverage provided by the policies described in clauses (i) and
(ii) above with respect to Carpenter will not terminate or lapse by reason
of the transactions contemplated by this Agreement and, from and after the
Closing, the Company will succeed to all of Carpenter's rights and benefits
thereunder. Each policy listed in SECTION 2.20 OF THE DISCLOSURE SCHEDULE
is valid and binding and in full force and effect (and will be in full
force and effect with respect to the Company, after giving effect to the
Contribution), all premiums due thereunder have been paid when due and none
of Carpenter, the Company or the Person to whom such policy has been issued
has received any notice of cancellation or termination in respect of such
policy or is in default thereunder, and none of Carpenter, the Company or
any Owner knows of any reason or state of facts that could lead to the
cancellation of such policy. Except as disclosed in SECTION 2.12 OF THE
DISCLOSURE SCHEDULE, there have not been any claims made during the past
year or which are pending which, individually or in the aggregate with any
such other claims, are in excess of $100,000 under any insurance policies
covering Carpenter or the Company. Neither Carpenter nor the Company has
received notice that any insurer under any policy referred to in this
Section 2.20 is denying liability with respect to a claim thereunder or
defending under a reservation of rights clause.
2.21 AFFILIATE TRANSACTIONS. (a) Except as disclosed in SECTION
2.21(A) OF THE DISCLOSURE SCHEDULE, (i) there are not any and during the
preceding two years there have not been any Liabilities between CMI,
Carpenter or the Company, on the one hand, and any Owner, any current (or,
to the best knowledge of the Owners, Carpenter and the Company, former)
officer, director, member, Affiliate or Associate of CMI, Carpenter or the
Company, or any Associate of any such officer, director, member or
Affiliate, on the other hand, (ii) none of the Owners or any such current
(or, to the best knowledge of the Owners, Carpenter and the Company,
former) officers, directors, members, Affiliates or Associates provides or
causes to be provided or during the preceding two years provided or caused
to be provided any assets, services or facilities to CMI, Carpenter or the
Company, (iii) none of CMI, Carpenter or the Company provides or causes to
be provided or during the preceding two years provided or caused to be
provided any assets, services or facilities to any Owner or any such
current (or, to the best knowledge of the Owners, Carpenter and the
Company, former) officer, director, member, Affiliate or Associate and (iv)
none of CMI, Carpenter or the Company beneficially owns, directly or
indirectly, any Investment Assets of any such current (or, to the best
knowledge of the Owners, Carpenter and the Company, former) Affiliate or
Associate.
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(b) Except as disclosed in SECTION 2.21(B) OF THE DISCLOSURE
SCHEDULE, each of the Liabilities and transactions listed in
SECTION 2.21(A) OF THE DISCLOSURE SCHEDULE was incurred or engaged in, as
the case may be, on an arm's-length basis on competitive terms.
2.22 EMPLOYEES; LABOR RELATIONS. (a) SECTION 2.22(A) OF THE
DISCLOSURE SCHEDULE contains a list of the name of each officer and key
employee, consultant and independent contractor, other than any salesperson
whose total annual compensation package is less than $100,000, of
Carpenter, together with each such person's position or function, annual
base salary or wages and any incentive or bonus arrangement with respect to
such person.
(b) Except as disclosed in SECTION 2.22(B) OF THE DISCLOSURE
SCHEDULE, (i) no employee of Carpenter is presently a member of a
collective bargaining unit and, to the best knowledge of Carpenter, the
Company and the Owners, there are no threatened or contemplated attempts to
organize for collective bargaining purposes any of the employees of
Carpenter and (ii) no unfair labor practice complaint or sex or age
discrimination claim has been brought against CMI or Carpenter before the
National Labor Relations Board or any other Governmental or Regulatory
Authority. There has been no work stoppage, strike or other concerted
action by employees of CMI or Carpenter. Since October 31, 1991, each of
CMI, Carpenter and the Company has complied in all material respects with
all applicable Laws relating to the employment of labor, including those
relating to wages, hours and collective bargaining.
2.23 ENVIRONMENTAL MATTERS. Except as disclosed in Section 2.23 of
the Disclosure Schedule (with paragraph references corresponding to those
set forth below):
(a) Except for the Title V air permit for the Richmond Facility
(the "Title V Permit"), Carpenter has obtained and holds, and after giving
effect to the Contribution the Company will hold, all Environmental Permits
which are required in respect of its business, operations or Assets and
Properties under applicable Environmental Laws, other than those
Environmental Permits so required in respect of the Company (i) which
cannot be obtained or transferred prior to the Closing and that will not
result in a material adverse effect on the Company, (ii) the absence of
which on the Closing Date will not have a material adverse effect on the
Business or Condition of the Company and (iii) which the Owners, Carpenter
and the Company have no reason to believe cannot or will not be obtained
promptly following the Closing in the ordinary course of the Company's
business. Carpenter has duly applied for the Title V Permit on its own
behalf and on behalf of the Company, and the Owners, Carpenter and the
Company have no reason to believe that the Title V Permit cannot or will
not be obtained promptly following the Closing in the ordinary course of
the Company's business.
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(b) Each of Carpenter and the Company is, and after giving effect
to the Contribution the Company will be, in compliance with all terms,
conditions and provisions of all applicable (i) Environmental Permits and
(ii) Environmental Laws.
(c) There are no past, pending or threatened Environmental Claims
against CMI, Carpenter or the Company, and none of Carpenter, the Company
or the Owners is aware of any facts or circumstances which could reasonably
be expected to form the basis for any Environmental Claim against Carpenter
or the Company.
(d) No Releases of Hazardous Materials have occurred at, from,
in, to, on or under any Site and no Hazardous Materials are present in, on
or about or migrating from or (to the knowledge of the Owners, Carpenter
and the Company) to any Site that could give rise to an Environmental Claim
against Carpenter or the Company.
(e) None of Carpenter, the Company, any predecessor of Carpenter
or the Company, or any entity previously owned by CMI, Carpenter or the
Company has transported, or arranged for the treatment, storage, handling,
disposal or transportation of, any Hazardous Material at or to any off-Site
location which could reasonably be expected to result in an Environmental
Claim against Carpenter or the Company.
(f) No Site is a current, or to the knowledge of Carpenter, the
Company and the Owners, a proposed Environmental Clean-up Site.
(g) There are no Liens (other than Permitted Liens) arising under
or pursuant to any Environmental Law on any Site, and none of Carpenter,
the Company or the Owners is aware of any facts, circumstances or
conditions that could reasonably be expected to restrict, encumber or
result in the imposition of special conditions under any Environmental Law
with respect to the ownership, occupancy, development, use or
transferability of any Site.
(h) There are not currently or formerly, (a) underground storage
tanks, active or abandoned, (b) polychlorinated biphenyl containing
equipment or (c) asbestos-containing material at any Site.
(i) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or on behalf of, or
which are in the possession of, Carpenter, the Company, any Owner or their
respective Affiliates with respect to any Site which have not been made
available to each Investor prior to execution of this Agreement.
2.24 SUBSTANTIAL CUSTOMERS AND SUPPLIERS. SECTION 2.24(A) OF THE
DISCLOSURE SCHEDULE lists the 10 largest customers of CMI on the basis of
revenues for goods sold or services provided for its most recent full
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fiscal year. SECTION 2.24(B) OF THE DISCLOSURE SCHEDULE lists the 10
largest suppliers of CMI on the basis of cost of goods or services
purchased for its most recent full fiscal year. Except as disclosed in
SECTION 2.24(C) OF THE DISCLOSURE SCHEDULE, no such customer or supplier
has ceased or materially reduced its purchases from or sales or provision
of services to CMI or Carpenter since the Audited Financial Statement Date,
or to the best knowledge of Carpenter, the Company and the Owners has
threatened to cease or materially reduce such purchases or sales or
provision of services after the date hereof. Except as disclosed in
SECTION 2.24(D) OF THE DISCLOSURE SCHEDULE, to the best knowledge of
Carpenter, the Company and the Owners, no such customer or supplier is
threatened with bankruptcy or insolvency.
2.25 OTHER NEGOTIATIONS; BROKERS. None of the Owners, CMI,
Carpenter, the Company or any of their respective Affiliates (nor any
investment banker, financial advisor, attorney, accountant or other Person
retained by or acting for or on behalf of CMI, Carpenter, the Company, any
Owner or any such Affiliate) (i) has entered into any agreement that
conflicts with any of the transactions contemplated by this Agreement or
any of the Operative Agreements or (ii) has entered into any agreement or
had any discussions with any third party regarding any transaction
involving CMI, Carpenter or the Company which could result in any Investor,
any of its general or limited partners or any officer, director, employee,
agent, Affiliate or Associate of any Investor or any such general or
limited partner being subject to any claim for liability to said third
party in connection with this Agreement or any Operative Agreement or the
consummation of any of the transactions contemplated hereby or thereby.
Except for Robert Mann, whose fees and expenses will be paid by the Company
and will not exceed $200,000 under any circumstances, no agent, broker,
finder, investment banker, financial advisor or other similar Person will
be entitled to any fee, commission or other compensation in connection with
any of the transactions contemplated by this Agreement or any Operative
Agreement on the basis of any act or statement made or alleged to have been
made by any Owner, CMI, Carpenter, the Company, any of their respective
Affiliates or Associates, or any investment banker, financial advisor,
attorney, accountant or other Person retained by or acting for or on behalf
of any Owner, CMI, Carpenter, the Company or any such Affiliate or
Associate.
2.26 REGISTRATION RIGHTS. Except as disclosed in SECTION 2.26 OF
THE DISCLOSURE SCHEDULE and except for the Registration Rights Agreement,
neither Carpenter nor the Company has granted registration rights to any
holder of any of the securities of Carpenter or the Company.
2.27 EXEMPTION FROM REGISTRATION; RESTRICTIONS ON OFFER AND SALE
OF SAME OR SIMILAR SECURITIES. Assuming the representations and warranties
set forth in Section 3.3 are true and correct in all material respects with
respect to each Investor, the offer and sale of the Purchased Stock made
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pursuant to this Agreement is exempt from the registration requirements of
the Securities Act. None of the Owners, Carpenter, the Company or any
Person authorized to act on behalf of any of them has, in connection with
the offering of the Purchased Stock, engaged in (A) any form of general
solicitation or general advertising (as those terms are used within the
meaning of Rule 501(c) under the Securities Act), (B) any action involving
a public offering within the meaning of Section 4(2) of the Securities Act
or (C) any action that would require the registration under the Securities
Act of the offering and sale of Purchased Stock pursuant to this Agreement
or that would violate applicable state securities or "blue sky" laws. None
of the Owners, Carpenter, the Company or any Person authorized to act on
behalf of any of them has made or will prior to the Closing make, directly
or indirectly, any offer or sale of Purchased Stock or of securities of the
same or a similar class as the Purchased Stock if as a result any offer and
sale of Purchased Stock contemplated hereby could fail to be entitled to
exemption from the registration requirements of the Securities Act. As
used herein, the terms "offer" and "sale" have the meanings specified in
Section 2(3) of the Securities Act.
2.28 DISCLOSURE. To the knowledge of the Owners, Carpenter and
the Company after due inquiry, all material facts regarding the Business or
Condition of Carpenter or the Company have been disclosed to each Investor
in or in connection with this Agreement. No representation or warranty on
the part of Carpenter, the Company or any Owner contained in this
Agreement, and no statement contained in the Disclosure Schedule or in any
certificate, list or other writing furnished to any Investor pursuant to
any provision of this Agreement or any Operative Agreement, including
pursuant to Article VI hereof, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements herein or therein, in the light of the circumstances under which
they were made, not misleading.
2.29 HOLDING COMPANY ACT AND INVESTMENT COMPANY ACT STATUS.
Neither Carpenter nor the Company is a "holding company" or a "public
utility company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended. Neither Carpenter nor the Company is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
2.30 CORPORATE GOVERNANCE. The Owners have taken or caused to be
taken all necessary action to cause, as of the Closing, the Company's board
of directors to consist of, and at the Closing the Company's board of
directors will consist of, the following six persons: George Sztykiel,
Anthony G. Sommer, Joseph J. Finn-Egan, Jeffrey A. Lipkin, Dr. SerVaas and
Timothy S. Durham.
2.31 PROJECTIONS. The projections of the Company contained in
SCHEDULE 2.31 are mathematically accurate, are based on reasonable
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assumptions as of the date hereof, have been prepared by Carpenter in good
faith and, except as set forth in SECTION 2.31 OF THE DISCLOSURE SCHEDULE,
represent the good faith estimate of the Owners, Carpenter and the Company
of the most probable course of the business of the Company (after giving
effect, in all material respects, to the Restructuring Transactions, the
Contribution and the Closing).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor, severally and not jointly, represents and warrants
to the Company, with respect to such Investor only, as follows:
3.1 ORGANIZATION; POWER AND AUTHORITY. Such Investor is (a) in
the case of REI II, a limited partnership duly organized, validly existing
and in good standing under the Laws of the State of Delaware or (b) in the
case of Spartan, a corporation duly organized, validly existing and in good
standing under the Laws of the State of Michigan. Such Investor has the
requisite power and authority to execute and deliver this Agreement and the
Operative Agreements to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated
hereby and thereby. The execution and delivery by such Investor of this
Agreement and the Operative Agreements to which it is a party and the
performance by such Investor of its obligations hereunder and thereunder,
have been duly and validly authorized by all necessary action on the part
of (i) in the case of REI II, the general partner of REI II, or (ii) in the
case of Spartan, the board of directors of Spartan, which action is the
only action necessary to authorize the execution, delivery and performance
by such Investor of this Agreement and the Operative Agreements to which it
is a party. This Agreement has been duly and validly executed and
delivered by such Investor and constitutes, and upon the execution and
delivery by such Investor thereof, each Operative Agreement to which such
Investor is a party will constitute the legal, valid and binding obligation
of such Investor enforceable against such Investor in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
the enforcement of creditors' rights generally and by general principles of
equity.
3.2 NO CONFLICTS. The execution, delivery and performance by
such Investor of this Agreement and the Operative Agreements to which it is
a party, and the consummation by such Investor of the transactions
contemplated hereby and thereby, will not conflict with, or constitute a
default under, any agreement, indenture or instrument to which such
Investor is a party, or result in a violation of (a) (i) in the case of REI
II, REI II's agreement of limited partnership, or (ii) in the case of
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Spartan, its articles of incorporation or by-laws, or (b) any Order of any
Governmental or Regulatory Authority having jurisdiction over such Investor
or any of its properties. No consent, approval or action of, or filing or
registration with, any Governmental or Regulatory Authority is required on
the part of such Investor for its execution, delivery and performance of
this Agreement.
3.3 PURCHASE FOR INVESTMENT. The Purchased Stock being purchased
by such Investor hereunder will be purchased by such Investor for its own
account for the purpose of investment and not with a view to the resale or
distribution of all or any part of such Purchased Stock in violation of the
Securities Act, it being understood that the right to dispose of such
Purchased Stock shall be entirely within the discretion of such Investor.
Such Investor represents and warrants that it is an "accredited investor"
as such term is defined in Rule 501 of Regulation D of the Securities Act.
Such Investor understands that the certificates for the shares of Purchased
Stock to be issued to it have not been registered under the Securities Act
in reliance on an exemption therefrom under Section 4(2) of the Securities
Act and Regulation D thereunder and that such certificates shall bear the
following legend:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (ii) AN
APPLICABLE EXEMPTION FROM REGISTRATION THEREUNDER."
The Company shall remove such legend upon receipt of an opinion
from counsel to such Investor, reasonably satisfactory in form and
substance to counsel to the Company, that the requirements for such legend
have terminated.
3.4 BROKERS. Except (in the case of REI II) for Mesirow
Financial Services Inc., whose fees and expenses will be paid by REI II
subject to reimbursement in accordance with Section 12.3, and (in the case
of Spartan) for Roney & Co., whose fees and expenses will be paid by
Spartan subject to reimbursement in accordance with Section 12.3, no agent,
broker, finder, investment banker, financial advisor or other similar
Person will be entitled to any fee, commission or other compensation in
connection with any of the transactions contemplated by this Agreement or
any Operative Agreement on the basis of any act or statement made by such
Investor.
ARTICLE IV
COVENANTS OF THE OWNERS, CARPENTER AND THE COMPANY
Each of the Owners, Carpenter and the Company jointly and
severally covenants and agrees with each Investor that, at all times from
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and after the date hereof and until the Closing and, with respect to any
covenant or agreement by its terms to be performed in whole or in part
after the Closing, for the period specified herein or, if no period is
specified herein, indefinitely, each of the Owners, Carpenter and the
Company will comply with all applicable covenants and provisions of this
Article IV, except to the extent that the Investors may otherwise consent
in writing.
4.1 REGULATORY AND OTHER APPROVALS. Each of the Owners,
Carpenter and the Company will (a) take all necessary or desirable steps
and proceed diligently and in good faith and use its best efforts, as
promptly as practicable, to obtain all consents, approvals or actions of,
to make all filings with and to give all notices to, Governmental or
Regulatory Authorities and other Persons required of such Owner, Carpenter
or the Company (as the case may be) to consummate the transactions
contemplated hereby and by the Operative Agreements, including those
required in connection with the Contribution and the Restructuring
Transactions and those described in SECTIONS 2.5 AND 2.6 OF THE DISCLOSURE
SCHEDULE, (b) provide such other information and communications to such
Governmental or Regulatory Authorities and other Persons as any Investor or
any such Governmental or Regulatory Authority or other Person may
reasonably request and (c) cooperate with each Investor as promptly as
practicable in obtaining all consents, approvals or actions of, making all
filings with and giving all notices to, Governmental or Regulatory
Authorities and other Persons required of such Investor to consummate the
transactions contemplated hereby and by the Operative Agreements.
Carpenter or the Company will provide prompt notification to each Investor
when any such consent, approval, action, filing or notice referred to in
clause (a) above is obtained, taken, made or given, as applicable, and will
advise each Investor of any communications (and, unless precluded by Law,
provide each Investor with copies of any such communications that are in
writing) with any Governmental or Regulatory Authority or other Person
regarding any of the transactions contemplated by this Agreement or any of
the Operative Agreements.
4.2 INVESTIGATION BY INVESTORS. From the date hereof until the
Closing, each of Carpenter and the Company will, and thereafter for so long
as an Investor owns any Purchased Stock or other equity interests in the
Company, the Company will, (a) provide such Investor and its officers,
employees, agents, counsel, accountants, financial advisors, consultants
and other representatives (together "Representatives") with full access,
upon reasonable prior notice and during normal business hours, to its and
its Subsidiaries' respective directors, officers, employees, agents and
accountants, its and its Subsidiaries' Assets and Properties and its and
its Subsidiaries' Books and Records, and (b) furnish such Investor and such
Representatives with all such information and data (including without
limitation copies of Contracts, Benefit Plans and other Books and Records)
concerning, its and its Subsidiaries' business and operations as such
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Investor or any of such other Representatives reasonably may request in
connection with such investigation. Prior to the Closing, all information
and documents reviewed or obtained by an Investor pertaining to Carpenter
or the Company shall be subject to (i) in the case of REI II, the
Confidentiality Agreement dated September 17, 1996, between REI II and
Carpenter, as the same may be amended from time to time, or (ii) in the
case of Spartan, the Confidentiality Agreement dated October 29, 1996,
between Spartan and Carpenter, as the same may be amended from time to
time. Nothing contained in this Section 4.2, and no investigation by or
disclosure to any Investor, shall affect the survival of or modify, limit
or create any exception to the representations, warranties, covenants,
agreements and indemnities of Carpenter, the Company or any Owner hereunder
or the conditions to the obligations of any Investor to close as set forth
in Article VI hereof.
4.3 NO SOLICITATIONS. From the date hereof until the earlier of
(a) the Closing and (b) the termination of this Agreement pursuant to
Article X hereof, none of the Owners, Carpenter or the Company will take,
or will permit any Affiliate or Associate of any of them to take (nor will
any Owner, Carpenter, the Company or any Affiliate or Associate of any of
them authorize or permit any investment banker, financial advisor,
attorney, accountant or other Person retained by or acting for or on behalf
or any Owner, Carpenter, the Company or any such Affiliate or Associate to
take), directly or indirectly, any action to initiate, assist, solicit,
receive, negotiate, encourage or accept any offer or inquiry from any
Person (i) to engage in any Business Combination or other transaction
inconsistent with this Agreement with respect to Carpenter or the Company,
(ii) to reach any agreement or understanding (whether or not such agreement
or understanding is absolute, revocable, contingent or conditional) for, or
otherwise attempt to consummate, any Business Combination or other
transaction inconsistent with this Agreement with respect to Carpenter or
the Company, or (iii) to furnish or cause to be furnished any information
with respect to Carpenter or the Company to any Person (other than as
contemplated by Section 4.2) who any Owner, Carpenter, the Company, or any
Affiliate or Associate of any of them (or any such Person acting for or on
behalf thereof) knows or has reason to believe is in the process of, or may
be, considering any Business Combination with respect to Carpenter or the
Company. If any Owner, Carpenter, the Company or any such Affiliate or
Associate (or any such Person acting for or on behalf thereof) receives
from any Person (other than an Investor or any of its Representatives, in
each case in its capacity as such) any offer, inquiry or informational
request referred to in this Section 4.3, Carpenter or the Company will
promptly advise such Person, by written notice, of the terms of this
Section 4.3 and will promptly, orally and in writing, advise each Investor
of all the terms of such offer, inquiry or request (including the identity
of the Person making such offer, inquiry or request) and deliver a copy of
such notice to each Investor.
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4.4 CONDUCT OF BUSINESS. Except for the Restructuring
Transactions, the Contribution and Carpenter's ongoing effort to complete
work on Semi-Finished Buses (including the effect of such effort on other
production), between the date hereof and the Closing Date, Carpenter and
the Company will conduct business only in the ordinary course consistent
with past practice and the terms of this Agreement. Without limiting the
generality of the foregoing, the Owners, Carpenter and (in the case of
clauses (b) and (d) below) the Company will:
(a) use their commercially reasonable efforts to (i) preserve
intact the present business organization and reputation of Carpenter,
(ii) keep available (subject to dismissals and retirements in the
ordinary course of business consistent with past practice) the services
of the present officers, employees and consultants of Carpenter,
(iii) maintain the Assets and Properties of Carpenter in good working
order and condition, ordinary wear and tear excepted, (iv) maintain the
good will of customers, suppliers, lenders and other Persons with whom
Carpenter otherwise has significant business relationships and (v) other
than with respect to the Shuttle Bus Business, continue all current
sales, marketing and promotional activities relating to the business and
operations of Carpenter;
(b) except to the extent required by applicable Law, cause the
Books and Records to be maintained in the usual, regular and ordinary
manner;
(c) use their commercially reasonable efforts to maintain in full
force and effect substantially the same levels of coverage as the
insurance afforded under the policies listed in SECTION 2.20 OF THE
DISCLOSURE SCHEDULE;
(d) comply in all material respects with all Laws and Orders
applicable to the business and operations of Carpenter and the Company,
and promptly following receipt thereof give Investor copies of any
notice received from any Governmental or Regulatory Authority or other
Person alleging any violation of any such Law or Order;
(e) administer each Benefit Plan, or cause the same to be
administered, in all material respects in accordance with the applicable
provisions of the Code, ERISA and all other applicable Laws; and
(f) promptly notify each Investor in writing of each receipt by
Carpenter or any Owner (and furnish each Investor with copies) of any
notice of investigation or administrative proceeding by the IRS, the
Department of Labor, the Pension Benefit Guaranty Corporation or any
other Person involving any Benefit Plan.
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4.5 FINANCIAL STATEMENTS AND REPORTS; FISCAL YEAR.
(a) From the date hereof until the Closing and thereafter for so
long as an Investor, any partner of such Investor, or any Affiliate or
Associate of such Investor or any such partner owns any Purchased Stock
or other Common Stock (or any other securities issued in respect
thereof), (b) as promptly as practicable, and in no event later than the
presentation of the following materials to Carpenter's or the Company's
management, Carpenter (prior to the Closing) and the Company will
deliver to such Investor true and complete copies of all financial
statements, reports and analyses as may be prepared or received by
Carpenter, the Company or any Subsidiary of the Company relating to the
business or operations of Carpenter, the Company or any such Subsidiary
or as such Investor may otherwise reasonably request and (c) Carpenter
and the Company will not change their respective fiscal years; PROVIDED,
HOWEVER, that this Section 4.5 shall apply to Carpenter (i) in the case
of clause (a) above, during the period from the date hereof until the
Closing only and (ii) in the case of a change in Carpenter's fiscal year
effected after the Closing Date, only if such change would affect any of
the Company's fiscal periods (or portions thereof) ending before or
after the Closing.
(b) Without limiting the generality of paragraph (a) above,
Carpenter shall prepare and deliver to each Investor, at least two
Business Days prior to the Closing Date, true and complete copies of an
unaudited balance sheet for Carpenter as of November 30, 1996, and the
related unaudited statements of operations and accumulated deficit
(collectively, the "November 30 Financial Statements"). The Owners and
Carpenter agree that the November 30 Financial Statements shall be
prepared in good faith to present accurately, in all material respects,
the financial condition of Carpenter as of November 30, 1996 and the
results of operations of Carpenter for the month ended November 30,
1996. Carpenter shall make available to each Investor and its
accountants prior to the Closing all work papers and related data used
in connection with the preparation of the November 30 Financial
Statements.
4.6 CERTAIN RESTRICTIONS. (a) From the date hereof through the
Closing, each of Carpenter and the Company (and, in the case of clause (iv)
below, the Owners) will refrain from:
(i) amending its certificate or articles of organization or
incorporation, operating agreement or by-laws (or other comparable
charter documents), including the Charter Documents, or taking any
action with respect to any such amendment or any reorganization,
liquidation or dissolution of Carpenter or the Company, except that
Carpenter may amend its operating agreement to the extent necessary to
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appoint officers and authorize such officers to execute documents on
behalf of Carpenter in connection with the transactions contemplated
hereby;
(ii) in the case of Carpenter, except as disclosed in SECTION 2.9
OF THE DISCLOSURE SCHEDULE, taking any of the actions listed in Section
2.9;
(iii) violating, breaching, or defaulting under, in any material
respect, or taking or failing to take any action that (with or without
notice or lapse of time or both) would constitute a material violation
or breach of, or default under, any term or provision of any License
held or used by it or any Contract required to be disclosed in SECTION
2.18(A) OF THE DISCLOSURE SCHEDULE;
(iv) (A) taking or agreeing or committing to take, or omitting or
agreeing or committing to omit, any action that would make any
representation or warranty contained in Article IV inaccurate in any
material respect; and (B) taking any action or course of action
inconsistent with compliance with the covenants and agreements of any
Owner, Carpenter or the Company herein or which might adversely affect
the interests of any Investor hereunder; and
(v) entering into any agreement to do or engage in any of the
foregoing.
(b) Prior to the Closing, the Company will not conduct any
business, incur any Liabilities (whether contingent or otherwise), enter
into any Contract (other than this Agreement, the Operative Agreements and
any Contract that (i) is furnished to and approved by each Investor before
being entered into by the Company and (ii) is entered into by the Company
either as part of the Restructuring Transactions described in clause (c) of
Section 4.9 or in obtaining the written instruments relating to the Wayne
Bank revolving credit facility contemplated by Section 6.6), acquire any
Assets and Properties or hire any employees, except for any Assets and
Properties, Liabilities and Contracts contributed to or assumed by it on
the Closing Date pursuant to the Contribution Agreement.
4.7 AFFILIATE TRANSACTIONS. Except for the termination and
cancellation of certain Indebtedness and lease obligations between
Carpenter, on the one hand, and certain of the Owners or their respective
Affiliates, on the other hand, as part of the Restructuring Transactions,
prior to the Closing, neither Carpenter nor the Company will enter into any
Contract or amend or modify any existing Contract with any Owner, any
current or former officer, director, Affiliate or Associate of CMI,
Carpenter or the Company, or any Associate of any such officer, director or
Affiliate, in each case except with the consent of each Investor.
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4.8 NOTICE AND CURE. Carpenter or the Company will notify each
Investor promptly in writing of, and contemporaneously will provide each
Investor with true and complete copies of any and all information or
documents relating to, and the Owners, Carpenter and the Company will use
all commercially reasonable efforts to cure before the Closing, any event,
transaction or circumstance occurring after the date of this Agreement that
causes or will cause any covenant or agreement of any Owner, Carpenter or
the Company under this Agreement to be breached or that renders or will
render untrue any representation or warranty of any Owner, Carpenter or the
Company contained in this Agreement as if the same were made on or as of
the date of such event, transaction or circumstance. Carpenter or the
Company also will notify each Investor promptly in writing of, and the
Owners, Carpenter and the Company will use their best efforts to cure
before the Closing, any violation or breach of any representation,
warranty, covenant or agreement made by any Owner, Carpenter or the Company
contained in this Agreement, whether occurring or arising before, on or
after the date of this Agreement, PROVIDED that any such violation or
breach that is not cured prior to the Closing may be waived prior to the
Closing by means of a written waiver executed by each Investor. No notice
given pursuant to this Section 4.8 shall have any effect on the
representations, warranties, covenants and agreements contained in this
Agreement for purposes of determining satisfaction of any condition
contained herein or shall in any way limit any Investor's right to seek
indemnity under Article IX.
4.9 RESTRUCTURING TRANSACTIONS. Without limiting the Owners',
Carpenter's or the Company's obligations under any other provision of this
Agreement, the Owners, Carpenter and the Company shall adopt all such
resolutions, enter into all such agreements, make all such filings and take
or cause to be taken all such other actions, all in form and substance
satisfactory to each Investor, as are necessary to effectuate as promptly
as practicable (and in any event prior to the Closing):
(a) the cancellation (by contribution to the capital of
Carpenter) of all Indebtedness owed by Carpenter to any of its
Affiliates and the release of Carpenter and the Company from any
Liabilities in respect thereof, other than: (i) subject to clause (A)
below, the aggregate principal amount of all advances made by Curtis
to Carpenter after September 1, 1996; PROVIDED, HOWEVER, that the
Indebtedness referred to in this clause (i) shall be evidenced solely
by a promissory note issued by the Company to Curtis on the Closing
Date on the following terms: (A) the original principal amount of
such note shall equal Carpenter's good faith estimate of the Net
Contribution Amount for the period beginning on September 1, 1996 and
ending on the Closing Date, and shall be adjusted (effective as of the
Closing Date) to reflect the final determination of such Net
Contribution Amount pursuant to Section 5.5; (B) the maturity date of
such note shall be the first Business Day following the date on which
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such Net Contribution Amount is finally determined pursuant to Section
5.5; (C) the principal amount of such note may be prepaid at any time
and from time to time, in whole or in part, without penalty; (D)
interest on the unpaid principal amount of such note shall accrue, at
a rate per annum equal to the prime rate, from and after the last day
of the seven-day period referred to in Section 5.5(c); (E) interest on
overdue amounts shall accrue at a rate per annum equal to the prime
rate plus 3%; (F) such note shall not be transferrable other than to
Carpenter; and (G) such note shall contain such other terms as the
Company's other Lenders reasonably require (such note, the "New Curtis
Note"); (ii) Indebtedness owed by Carpenter to Timothy S. Durham in an
aggregate principal amount not exceeding $36,000, which Indebtedness
(together with any accrued but unpaid interest thereon) shall be
repaid as provided in Section 4.13; and (iii) any Indebtedness under
the leases identified in the parenthetical in subparagraph (b) below;
(b) the cancellation and termination of, and the release of
Carpenter and the Company from any Liabilities in respect of, all
leases between Carpenter (as lessee), on the one hand, and any of its
Affiliates, on the other hand (other than (i) subleases covering
equipment leased to the relevant Affiliate by CIT (as disclosed in
SECTION 2.18(A)(IV)(M) OF THE DISCLOSURE SCHEDULE), (ii) the lease of
office space from SerVaas Management, Inc. (as disclosed in SECTION
2.15(A)(2) OF THE DISCLOSURE SCHEDULE) and (iii) the lease from
SerVaas, Inc. of the building at 145 North 30th Street in Richmond,
Indiana (as disclosed in SECTION 2.15(A)(2) OF THE DISCLOSURE
SCHEDULE); and
(c) the restructuring of the agreements relating the Newcourt
inventory financing arrangement to provide that, from and after the
Closing, (i) the Company shall not have any Liabilities under such
agreements in respect of the period prior to the Closing, other than
(w) Liabilities in respect of borrowings made under such agreements
against Unfinished Buses and Chassis included in the Company's
inventory on the Closing Date after giving effect to the Contribution,
(x) subject to clause (ii) below, Liabilities in respect of the
Unsecured Newcourt Indebtedness, (y) Liabilities in respect of
borrowings made under such agreements against non-approved dealer
buses that have become Federalled Buses prior to the Closing Date and
(z) Liabilities under such agreements in respect of (and equal in
amount to) any receivables for Federalled Buses that have been
invoiced prior to the Closing Date, (ii) all Liabilities in respect of
the Unsecured Newcourt Indebtedness shall be evidenced by a new
instrument or agreement executed by the Company, and shall cease to
constitute Liabilities under such agreements, (iii) Carpenter shall
remain liable for all other Liabilities under such agreements in
respect of the period prior to the Closing, including all Liabilities
in respect of borrowings made under such agreements against Semi-
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Finished Buses included in Carpenter's inventory on the Closing Date,
(iv) Carpenter may assign its obligation to repay borrowings (but not
any interest which has accrued thereon prior to the date of transfer)
in respect of any such Semi-Finished Bus that becomes a Federalled
Bus, PROVIDED that such assignment is made in accordance with Section
4.16, and (v) the Company shall have the right to borrow under such
agreements on substantially the same terms as are in effect on the
date hereof with respect to borrowings thereunder by Carpenter;
(the transactions contemplated by subparagraphs (a) through (c) above being
hereinafter collectively referred to as the "Restructuring Transactions").
Without limiting the generality of the foregoing, except as otherwise
expressly provided in the immediately preceding sentence, the Company shall
not incur or assume as a result of any of the Restructuring Transactions
any Liabilities, whether for Taxes or otherwise, arising or continuing on
or after the Closing (other than Liabilities under Section 5.5 below). The
Owners, Carpenter and the Company shall (i) inform each Investor on a
regular basis as to the status of the Restructuring Transactions and (ii)
provide each Investor promptly, but in any event prior to the adoption,
execution or filing thereof, with true and complete copies of all
resolutions, agreements, filings, certificates and other material documents
prepared in connection with any of the Restructuring Transactions.
4.10 FULFILLMENT OF CONDITIONS. Each of the Owners, Carpenter and
the Company will take all steps necessary or desirable and use its best
efforts to satisfy each condition to the obligations of each Investor
contained in this Agreement and will not take or fail to take any action if
such action or failure to act could reasonably be expected to result in the
nonfulfillment of any such condition.
4.11 VENTURE CAPITAL OPERATING COMPANY STATUS. Without limiting
any other right contained herein, REI II shall have the right to consult
with and advise the management of the Company and to receive all materials
provided to members of the board of directors of the Company so long as may
be required to enable REI II to qualify as a "venture capital operating
company" within the meaning of Section 2510.3-101 of the plan asset
regulations promulgated by the United States Department of Labor (a
"VCOC"). In addition, in the event that (i) at any time REI II is not
entitled to designate at least one member for election to the board of
directors of the Company, or (ii) the United States Department of Labor
through formal or informal rules, regulations or interpretations provides,
or it is otherwise established through governmental or court action, that
such representation does not constitute the exercise of management rights
of the kind necessary to enable REI II to continue to qualify as a VCOC,
then the Company and REI II shall in good faith negotiate (and Spartan
shall, if requested by REI II, consent to) provisions to enable REI II to
exercise the minimum amount of such management rights in order to continue
to qualify as a VCOC.
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4.12 BUSINESS PLAN. Carpenter and the Company shall follow the
operating and strategic plan to be delivered to Investor pursuant to
Section 6.15 and such plan shall not be amended or modified prior to the
Closing without the approval of each of the Owners and the Investors or
after Closing without the approval of the Company's board of directors and
all approvals then required under the Stockholders' Agreement in connection
with such amendment or modification.
4.13 USE OF PROCEEDS. As reflected in the Pro Forma Balance
Sheet, the proceeds realized from the sale of the Purchased Stock to the
Investors (net of any transaction costs paid or reimbursed by the Company
in accordance with Section 12.3) shall be used by the Company as follows:
(a) to repay, within one Business Day after the Closing Date, all
outstanding loans (together with any accrued but unpaid interest thereon)
under the Wayne Bank revolving credit facility; (b) to repay, within one
Business Day after the Closing Date, the entire outstanding principal
amount (together with any accrued but unpaid interest thereon) under the
Harsco inventory note dated June 30, 1995; (c) to repay, within two
Business Days after the Closing Date, $2.4 million (as nearly as possible)
of outstanding accounts payable; (d) to repay, within one Business Day
after the Closing Date, all outstanding loans made by Timothy S. Durham to
Carpenter (together with any accrued but unpaid interest thereon);
PROVIDED, HOWEVER, that the aggregate amount repaid pursuant to this clause
(d) in respect of the principal of such loans shall not in any event exceed
$36,000; and (e) in the case of the portion of such proceeds that remains
after giving effect to the foregoing provisions of this Section 4.13, for
working capital and general corporate purposes and for the payment of
principal of and interest on the New Curtis Note in accordance with the
terms thereof and of Section 5.5.
4.14 CHANGE OF NAME. Not later than the close of business on the
second Business Day following the Closing Date, Carpenter shall make all
filings with Governmental or Regulatory Authorities required to change its
name from "Carpenter Industries LLC" to another dissimilar name and shall
do or cause to be done all other acts, including the payment of any fees
required in connection therewith, to cause such filings to become
effective. After the Closing Date, none of Carpenter, the Owners or any of
their respective Affiliates shall do business as, or use in the conduct of
its businesses or otherwise the name "Carpenter" or any other similar name;
PROVIDED, HOWEVER, that the Semi-Finished Buses retained by Carpenter under
the Contribution Agreement shall display the name "Carpenter" and any
related trademarks in a manner consistent with past practice.
4.15 DELIVERY OF BOOKS AND RECORDS, ETC. On the Closing Date,
Carpenter will deliver to the Company at the Richmond Facility (or such
other location as the Company may reasonably request) (a) all of the Books
and Records relating to the Business or Condition of the Company (after
giving effect to the Contribution) and (b) such other Assets and Properties
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being contributed to the Company in the Contribution as are in the
possession of Carpenter, any Owner or any of their respective Affiliates or
Associates at other locations. If at any time after the Closing Carpenter
or any Owner discovers in its possession or under its control any other
such Books and Records or any other Assets and Properties contributed to
the Company in the Contribution, it will forthwith deliver such Books and
Records or other Assets to the Company.
4.16 RELOCATION AND COMPLETION OF SEMI-FINISHED BUSES. (a)
Carpenter shall use its best efforts to (i) remove from the Richmond
Facility all Semi-Finished Buses and related items of tangible personal
property that are being retained by Carpenter pursuant to the Contribution
Agreement and (ii) transport all such Semi-Finished Buses and tangible
personal property to the Mitchell Facility, in each case prior to the
Closing Date; PROVIDED, HOWEVER, that all such Semi-Finished Buses shall be
so removed and transported within 15 days after the Closing Date. Such
removal and transportation shall be at the sole expense and risk of
Carpenter; PROVIDED, HOWEVER, that the Owners shall reimburse the Company
promptly following the Closing Date for all out-of-pocket expenses
incurred by the Company (or, prior to the Closing Date, by Carpenter) in
connection therewith. None of the Company or the Investors shall have any
liability to Carpenter, any Owner or any other person with respect to such
removal or transportation, and the Owners and Carpenter shall jointly and
severally indemnify and hold harmless the Company and the Investors from
and against any and all Losses resulting from such removal and
transportation.
(b) From and after the Closing Date, Carpenter shall diligently
and promptly perform, at its own cost and expense and in a manner
consistent with Carpenter's and CMI's past practices, all work required to
cause each such Semi-Finished Bus to become a Federalled Bus. The Company
and its representatives shall be entitled to observe and inspect all such
work for the purpose of assuring such Semi-Finished Buses, upon becoming
Federalled Buses, will comply with applicable quality and safety standards.
Upon the request of Carpenter at any time and from time to time, the
Company will lease to Carpenter such equipment as is owned by the Company
and then located at the Mitchell Facility for the purpose of enabling
Carpenter to complete work on such Semi-Finished Buses. Any such lease
shall be on such commercially reasonable terms as are agreed between
Carpenter and the Company.
(c) As soon as practicable after any such Semi-Finished Bus has
become a Federalled Bus, Carpenter shall deliver written notice thereof to
each of the Company and the requisite lenders under the agreements
governing the Newcourt inventory financing arrangement. As promptly as
practicable following the receipt of such notice by the Company and such
lenders, Carpenter and the Company shall execute and deliver such mutually
satisfactory documents as are necessary to contemporaneously (i) transfer
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all of Carpenter's right, title and interest in and to such Federalled Bus
to the Company, free and clear of all Liens other than those granted by the
Company under the Newcourt inventory financing arrangement, (ii) transfer
to the Company all of Carpenter's right, title and interest in, to and
under any account receivable relating to such Federalled Bus, and all other
rights to payment and other rights retained by Carpenter pursuant to the
Contribution Agreement in respect of such Federalled Bus, free and clear of
all Liens other than those granted by the Company under the Newcourt
inventory financing arrangement, and (iii) transfer to the Company all
Liabilities of Carpenter in respect of such Federalled Bus under the
Newcourt inventory financing arrangement (other than any obligation to pay
interest in respect of the period prior to the date of such transfer).
(d) On the 15th day (or the next succeeding Business Day)
following the Closing Date, and at the end of each subsequent 15-day
period, Carpenter and the Company will compare (i) the principal amount of
the Indebtedness transferred to the Company during such period pursuant to
clause (c)(iii) above to (ii) the amount of the receivables and other
payment rights (as adjusted for any related change orders or discounts)
transferred to the Company during such period pursuant to clause (c)(ii)
above. In the event that the amount determined pursuant to clause (i)
above exceeds the amount determined pursuant to clause (ii) above for any
such period, Carpenter will forthwith pay to the Company a cash amount
equal to such excess, and in the event that the amount determined pursuant
to clause (ii) above exceeds the amount determined pursuant to clause (i)
above for any such period, the Company will forthwith pay to Carpenter a
cash amount equal to such excess (it being understood that the provisions
of paragraph (c) above are intended to be "cash neutral" as between
Carpenter and the Company).
(e) In the event that the prospective purchaser of such a
Federalled Bus refuses to accept delivery of such Federalled Bus after the
Company has used commercially reasonable efforts to effect such delivery,
then the Company shall deliver written notice of such refusal to Carpenter
and the requisite lenders under the Newcourt inventory financing
arrangement as soon as practicable after the occurrence thereof. As
promptly as practicable following the receipt of such notice by Carpenter
and such lenders, Carpenter and the Company shall execute and deliver such
mutually satisfactory documents as are necessary to contemporaneously (i)
transfer all of the Company's right, title and interest in and to such
Federalled Bus to Carpenter, free and clear of all Liens other than those
granted by Carpenter under the Newcourt inventory financing arrangement,
(ii) transfer to Carpenter all of the Company's right, title and interest
in, to and under any account receivable relating to such Federalled Bus,
and all other rights to payment in respect of such Federalled Bus, free and
clear of all Liens other than those granted by Carpenter under the Newcourt
inventory financing arrangement, and (iii) transfer to Carpenter all
Liabilities of the Company in respect of such Federalled Bus under the
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Newcourt inventory financing arrangement (other than any obligation to pay
interest in respect of the period beginning on the date on which such bus
was transferred to the Company pursuant to paragraph (c) above and ending
on the date of the transfer pursuant to clause (i) above). As soon as
practicable following the transfer of a Federalled Bus to Carpenter
pursuant to this paragraph (e), Carpenter shall pay all unpaid Indebtedness
under the Newcourt inventory financing arrangement in respect of such
Federalled Bus. Carpenter and the Company shall cooperate with each other
in good faith to effect the disposition by Carpenter, in a mutually
satisfactory manner, of any Federalled Bus that is transferred to Carpenter
pursuant to this paragraph (e).
(f) Within 10 Business Days after the Closing Date, Carpenter
shall pay to the Company a cash amount equal to the product of (i) $250
MULTIPLIED BY (ii) the number of Semi-Finished Buses being retained by
Carpenter pursuant to the Contribution Agreement (it being understood that
such payment will be made in consideration of the Company's assumption
under the Contribution Agreement of warranty claims in respect of such
Semi-Finished Buses).
4.17 NON-COMPETITION. (a) Each of Carpenter, Dr. SerVaas and
the Owners will (and will cause its Affiliates (other than the Company or
any Subsidiary thereof) to), for a period of five years from the Closing
Date, refrain from (either alone or in conjunction with any other Person,
or directly or indirectly):
(i) employing, engaging or seeking to employ or engage any Person
who within the prior twelve months had either been an officer of
Carpenter or the Company or been otherwise employed in a managerial or
administrative position at the Richmond Facility (other than Marc
Kennedy or Tania Gardner), in each case unless the employment of such
manager, officer or other employee is terminated by the Company after
the Closing Date;
(ii) causing or attempting to cause (x) any client, customer or
supplier of the Company following the Closing to terminate or materially
reduce its business with the Company or any of its respective
Subsidiaries or (y) any officer, manager, other employee or consultant
of the Company or any of its Subsidiaries to resign from or sever a
relationship with the Company or any of its Subsidiaries; or
(iii) participating or engaging anywhere in the United States or
Canada in (other than through the ownership of the Company's capital
stock or of 5% or less of any class of securities registered under the
Exchange Act), or otherwise lending assistance (financial or otherwise)
to any Person participating or engaged anywhere in the United States or
Canada in, any of the lines of business which comprised the business of
Carpenter on the date hereof or (before giving effect to the
Contribution) on the Closing Date;
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PROVIDED, HOWEVER, that notwithstanding the foregoing restrictions
contained in subparagraphs (ii)(x) and (iii) above, (x) Carpenter may
complete all remaining work required to cause the Semi-Finished Buses
retained by Carpenter pursuant to the Contribution Agreement to become
Federalled Buses, (y) Carpenter shall be entitled to continue its tool and
die operations at the Mitchell Facility and (z) Dr. SerVaas, the Owners and
their respective Affiliates shall be entitled to participate and engage in
the Shuttle Bus Business.
(b) The parties hereto recognize that the Laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set forth in this
Section 4.17. It is the intention of the parties that the provisions of
this Section 4.17 be enforced to the fullest extent permissible under the
Laws and policies of each jurisdiction in which enforcement may be sought,
and that the unenforceability (or the modification to conform to such Laws
or policies) of any provisions of this Section 4.17 shall not render
unenforceable, or impair, the remainder of the provisions of this Section
4.17. Accordingly, notwithstanding anything in Section 12.12 to the
contrary, if any provision of this Section 4.17 shall be determined to be
invalid or unenforceable, such invalidity or unenforceability shall be
deemed to apply only with respect to the operation of such provision in the
particular jurisdiction in which such determination is made and not with
respect to any other provision or jurisdiction.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 WAREHOUSING OF CERTAIN INVENTORY. Effective as of the
Closing, Carpenter agrees that it shall, upon the request of the Company at
any time and from time to time, (a) store, in warehouse space located at
the Mitchell Facility, inventory and other items of tangible personal
property owned by the Company or used in the Company's business (other than
any such items of tangible personal property leased to Carpenter pursuant
to Section 4.16(b)) and (b) provide all services reasonably requested by
the Company in connection therewith. The provision of such storage space
and services shall in each case be on commercially reasonable terms as
agreed between Carpenter and the Company and approved by each Investor.
The agreements set forth in this Section 5.1 shall terminate on the earlier
of (i) the second anniversary of the Closing Date and (ii) such other date
as Carpenter shall designate on not less than 10 Business Days' prior
written notice to the Company. Prior to the Closing, the Company shall
furnish each Investor with a list setting forth the approximate types and
amounts of inventory and other tangible personal property to be stored at
the Mitchell Facility on the Closing Date pursuant to this Section 5.1.
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5.2 DEBT RESTRUCTURING. The Company agrees that it shall use its
commercially reasonable efforts to complete the Debt Restructuring promptly
following the Closing, and each of the Owners, Carpenter and the Investors
agrees to cooperate with the Company as reasonably requested by the Company
in connection therewith (it being understood that such cooperation shall
not under any circumstances involve guaranteeing any Indebtedness or other
obligations of the Company or otherwise providing any financial or other
undertakings to lenders). Notwithstanding the immediately preceding
sentence, in attempting to complete the Debt Restructuring, the Company
shall not be required to agree to any terms (including with respect to
interest rates and amortization) that, in the aggregate, are materially
more onerous than those under its existing debt agreements or to pay any
commitment or other fee which, in the Company's reasonable judgment, is
above the range of fees normally charged by financial institutions in
similar situations.
5.3 EXTENSION OR REFINANCING OF UNSECURED NEWCOURT INDEBTEDNESS.
In the event that the Company does not for any reason (a) refinance the
Unsecured Newcourt Indebtedness as part of the Debt Restructuring or (b)
extend the maturity date of the Unsecured Newcourt Indebtedness to a date
later than the first anniversary of the Closing Date, then the Company
shall have the right to require Carpenter to (or cause one of its
Affiliates to) lend to the Company, at any time on or after the maturity
date of the Unsecured Newcourt Indebtedness (as the same may be extended
from time to time), all or any portion of the funds required to repay the
entire outstanding principal amount of the Unsecured Newcourt Indebtedness
(together with all accrued but unpaid interest thereon). In order to
exercise such right, the Company shall give Carpenter prior written notice
of such exercise, which notice shall specify (i) the amount to be loaned by
Carpenter (or such Affiliate, as the case may be) and (ii) the date on
which such loan is to be made (which in any event shall not be less than
five Business Days after the giving of such notice).
Following its receipt of such notice, Carpenter shall (or shall
cause one of its Affiliates to) lend to the Company, in immediately
available funds, the amount specified in such notice. In consideration for
such loan, Carpenter (or such Affiliate, as the case may be) shall receive
a promissory note issued by the Company on the following terms: (A) the
maturity date of such note shall be the first anniversary of the date on
which the loan evidenced thereby is made; (B) interest on the unpaid
principal amount of such note shall accrue at a rate per annum equal to the
prime rate as in effect from time to time plus 1%; (C) the principal amount
of such note may be prepaid at any time and from time to time, in whole or
in part, without penalty; (D) the Company's obligations in respect of such
note shall be secured by a second Lien on the Richmond Facility; (E) such
note shall be subordinated in right of payment to all other secured
Indebtedness for borrowed money of the Company outstanding from time to
time; (F) such note shall not be transferable other than to Carpenter and
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its Affiliates; and (G) such note shall contain such other terms as the
Company's other lenders reasonably require.
5.4 REIMBURSEMENT OF CERTAIN COSTS RELATING TO SEMI-FINISHED
BUSES. (a) Commencing on January 2, 1997, Carpenter (or, if the Closing
Date shall theretofore have occurred, the Company) shall conduct a physical
inventory of its raw materials and work in process inventory as of the
close of business on December 31, 1996. Such physical inventory shall be
observed by the Accounting Firm and, at the request of any Investor, by an
accounting firm of nationally recognized standing designated by such
Investor. Within 15 Business Days after the Closing Date, the Company
shall prepare and deliver to Carpenter and each Investor a computation (the
"Inventory Computation") setting forth (i) the aggregate cost of all
materials issued out of raw materials and work in process inventory during
the period beginning on November 1, 1996 and ending on the Closing Date in
respect of Semi-Finished Buses held by Carpenter at any time during such
period (the "Materials Cost") and (ii) to the extent not included in clause
(i) above, the aggregate cost of all raw materials and work in process
inventory retained by Carpenter pursuant to the Contribution Agreement (the
"Retained Inventory Cost"). The Inventory Computation shall be prepared on
the basis of the aforementioned physical inventory and such other
procedures as are mutually acceptable to the Accounting Firm and Price
Waterhouse (or such other firm of independent certified public accountants
of recognized national standing as the Investors may designate) and shall
be accompanied by a certificate to such effect from the Company's
Treasurer.
(b) Within 15 days after the Closing Date, the Company shall
prepare and deliver to Carpenter and each Investor a computation (the
"Labor Computation") setting forth the aggregate direct labor cost incurred
during the period beginning on November 1, 1996 and ending on the Closing
Date in respect of Semi-Finished Buses held by Carpenter at any time during
such period (the "Labor Cost"). The Labor Computation shall be prepared in
accordance with such procedures as are mutually acceptable to the
Accounting Firm and Price Waterhouse (or such other firm of independent
certified public accountants of recognized national standing as the
Investors may designate) and shall be accompanied by a certificate to such
effect from the Company's Treasurer.
(c) The Company shall (and shall cause the Accounting Firm to)
make available to Carpenter and each Investor all work papers and related
data used in the preparation of the Inventory Computation and the Labor
Computation.
(d) Except as otherwise provided in paragraph (e) below, within
20 days after the delivery of the Inventory Computation and the Labor
Computation to the Company and each Investor, Carpenter shall pay to the
Company a cash amount equal to the amount, if any, by which (i) the sum of
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(x) the Materials Cost PLUS (y) the Retained Inventory Cost PLUS (z) the
Labor Cost exceeds (ii) $1,667,494, and shall also pay to the Company all
interest accrued on such amount from and after the last day of such 20-day
period at a rate per annum equal to the prime rate.
(e) If Carpenter or any Investor disagrees with the computation
of Materials Cost or Retained Inventory Cost set forth in the Inventory
Computation or the computation of Labor Cost set forth in the Labor
Computation, such person shall notify the Company of such disagreement
(including the amount in dispute) within 20 days after its receipt of the
Inventory Computation or the Labor Computation, as the case may be. If
none of Carpenter or the Investors so provides notice within such 20-day
period disagreeing with any such computation, then such computation as set
forth in the Inventory Computation or the Labor Computation, as the case
may be, shall, as of the last day of such period, be final and binding on
the parties hereto. If any of Carpenter or the Investors so provides such
notice within such period, but no such notice of disagreement disputes that
the sum referred to in clause (i) of paragraph (d) above exceeds
$1,667,494, then Carpenter shall pay to the Company, in partial
satisfaction of its obligations under paragraph (d) above, an amount equal
to the undisputed portion of such excess (together with any accrued
interest on such amount) within one Business Day after the last day of such
period. If any of Carpenter or the Investors so provides notice within
such period disagreeing with any such computation, then (unless the matters
in disagreement have been resolved by Carpenter, the Company and the
Investors in full) within 20 days after the Company's receipt of such
notice, Carpenter, the Company and the Investors shall engage the
Independent Accounting Firm to review such computation. The Independent
Accounting Firm shall render a written opinion with respect to such
computation as soon as practicable after its engagement, and such opinion
shall, as of the date thereof, be final and binding on the parties hereto.
Carpenter shall pay all amounts required to be paid by it under paragraph
(d) above within three Business Days after its receipt of such opinion.
The fees of the Independent Accounting firm shall be borne by the
disagreeing party if the Company's determination of the amount in question
as set forth in the Inventory Computation or the Labor Computation, as the
case may be, is found by the Independent Accounting Firm to be within
$50,000 of being correct, and otherwise by the Company.
5.5 ADJUSTMENT OF NEW CURTIS NOTE. (a) Within 15 days after the
Closing Date, the Company shall prepare and deliver to Carpenter and each
Investor a report setting forth the Net Contribution Amount for the period
beginning on September 1, 1996 and ending on the Closing Date. Such report
shall be accompanied by a certificate from the Accounting Firm confirming
the accuracy of the Net Contribution Amount. The Company shall (and shall
cause the Accounting Firm to) make available to Carpenter and each Investor
all work papers and related data used in the preparation of such report.
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(b) Subject to paragraph (c) below, on the first Business Day
after such Net Contribution Amount is finally determined pursuant to
paragraph (c) below, (i) the original principal amount of the New Curtis
Note will be adjusted to equal the amount, if any, by which (x) such Net
Contribution Amount EXCEEDS (y) $7,500,000, and (b) the Company shall repay
the entire unpaid principal amount of the New Curtis Note (as so adjusted),
together with all accrued but unpaid interest thereon.
(c) If Carpenter or any Investor disagrees with the computation
of such Net Contribution Amount as set forth in the report delivered
pursuant to paragraph (a) above, such person shall notify the Company of
such disagreement (including the amount in dispute) within seven days after
its receipt of such report. If none of Carpenter or the Investors so
provides notice within such seven-day period, the determination of such Net
Contribution Amount as set forth in such report shall, as of the last day
of such period, be final and binding on the parties hereto. If any of
Carpenter or the Investors so provides such notice within such period, but
no such notice of disagreement disputes that such Net Contribution Amount
exceeds $7,500,000, then the Company shall prepay principal of the New
Curtis Note (together with any accrued but unpaid interest on such prepaid
principal) in an amount equal to the undisputed portion of such excess
within one Business Day after the last day of such period. If any of
Carpenter or the Investors so provides notice within such period, then
(unless the matters in disagreement have been resolved by Carpenter, the
Company and the Investors in full) within 20 days after the Company's
receipt of such notice, Carpenter, the Company and the Investors shall
engage the Independent Accounting Firm to review such computation. The
Independent Accounting Firm shall render a written opinion with respect to
such computation as soon as practicable after its engagement, and such
opinion shall, as of the date thereof, be final and binding on the parties
thereto. The fees of the Independent Accounting Firm shall be borne by the
disagreeing party if the determination of such Net Contribution Amount as
set forth in such report is found by the Independent Accounting Firm to be
within $100,000 of being correct, and otherwise by the Company.
5.6 CERTAIN EMPLOYEE MATTERS. (a) The Company shall offer
employment to employees actively employed at the Richmond Facility as of
the Closing Date on such terms and conditions (including benefit plan
coverages) that are, in the aggregate, no less favorable than those on
which such employees were employed by Carpenter immediately prior to the
Closing. All such employees who accept employment with the Company are
hereinafter referred to as the "TRANSFERRED EMPLOYEES." Periods of service
prior to the Closing shall be credited for purposes of determining
eligibility, vesting and benefit entitlement under all benefit plans,
programs and policies maintained by the Company after the Closing, and
amounts credited prior to the Closing for purposes of determining health
plan deductibles shall be credited after the Closing.
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(b) Effective as of the Closing, Carpenter shall take all such
actions as may be necessary to cause all Transferred Employees to cease to
participate in all Benefit Plans, and the Company shall have no obligations
thereunder or with respect thereto. The Owners and Carpenter shall be
solely responsible for, and the Owners and Carpenter shall indemnify and
hold harmless the Company and the Investors from and against (i) any and
all Liabilities which have arisen or may arise in connection with any
Benefit Plan (including, but not limited to, Liabilities arising from
penalties, income or excise tax assessments, participant benefit claims or
fiduciary misconduct, or under Title IV of ERISA), (ii) any and all
Liabilities which have arisen or may arise in any way from the employment,
compensation or benefits of any employee, agent, contractor or consultant
currently or heretofore engaged by Carpenter or CMI, whether or not
employed by the Company after the Closing, or the termination thereof,
relating to any period of employment with Carpenter or CMI, including any
liability or obligation arising out of or relating to any act or omission
by Carpenter or CMI, any violation of or non-compliance with or obligation
arising under any applicable law respecting employment, compensation or
benefits, and (iii) any and all costs, liabilities and obligations for
severance pay, accrued vacation pay, sick pay and other benefits relating
to any period of employment with Carpenter or CMI, whether arising as a
matter of Contract, Law or otherwise.
(c) (i)The Company shall establish or maintain, effective as of
the Closing Date, a defined contribution profit sharing plan qualified
under Section 401(a) of the Code and exempt under Section 501(a) of the
Code (the "Company Plan") for the benefit of Transferred Employees who
are covered by the Carpenter 401(k) Plan (the "Carpenter Plan") as of
the Closing Date.
(ii) Carpenter shall direct the trustee of the Carpenter Plan to
segregate the portion of each investment fund thereunder attributable to
the aggregate individual account balances of Transferred Employees (whether
or not vested), and to transfer in cash or in kind, as determined by
Company, such segregated portion of each investment fund to the Company
Plan. The transfer shall be effected as soon as is practicable after the
Closing and individual account balances shall be determined as of the date
of such transfer.
(d) (i)The Company shall establish for eligible Transferred
Employees a group health plan or plans which provides coverage
substantially comparable to that in effect with Carpenter immediately
prior to the Closing and, to the extent commercially reasonable, without
exclusion for pre-existing conditions.
(ii) If requested by Company, Carpenter shall cooperate with the
Company in effecting an assignment to the Company of any policies of
insurance for the provision of health or welfare benefits to Transferred
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Employees, and administrative contracts relating thereto, PROVIDED that the
assignment of any such policy shall not be construed as an assumption by
the Company of any plan of Carpenter or any liability thereunder if not
otherwise payable pursuant to the terms of the policy.
(iii) Without limiting the scope of Section 5.6(b), Carpenter
shall be responsible for: (x) providing retiree health or life insurance
coverage with respect to any individual who is not a Transferred Employee,
(y) all claims regarding all injuries or illnesses occurring prior to the
Closing, and (z) providing continuation health coverage as required under
Part 6 of Subtitle B of Title I of ERISA with respect to any individual who
is not a Transferred Employee.
(e) Carpenter and the Investors agree that, following the
Closing, each of them shall direct the board of directors of the Company to
establish, within one year after the Closing Date, a stock option plan for
certain key employees of the Company with respect to the reservation of up
to 7% of the Common Stock (on a fully diluted basis) for issuance pursuant
to such plan.
(f) Nothing in this Section 5.6 express or implied shall be
construed to prevent the Company from modifying the terms and conditions of
employment of any Transferred Employee, or from terminating or modifying to
any extent or in any respect any benefit plan that the Company may
establish or maintain from time to time.
(g) Nothing in this Section 5.6, whether express or implied,
shall confer upon any Transferred Employee or other individual or legal
representative thereof any rights or remedies, including any right to
employment, continued employment for any specified period, or compensation
or benefits of any nature or kind whatsoever under or by reason of this
Agreement.
5.7 SPARTAN NON-COMPETITION COVENANT. (a) Spartan will (and
will cause its Affiliates (other than the Company or any Subsidiary
thereof) to), for a period of five years from the Closing Date, refrain
from (either alone or in conjunction with any other Person, or directly or
indirectly) participating or engaging anywhere in the United States or
Canada (other than through the ownership of the Company's capital stock or
of 5% or less of any class of securities registered under the Exchange Act)
in the design, manufacture or sale of vehicle bodies for any line of
business which comprises part of the business of the Company (after giving
effect to the Contribution); PROVIDED, HOWEVER, that nothing in this
Section 5.7 shall prohibit Spartan from engaging in any of the lines of
business which comprise its business as of the date hereof.
(b) The parties hereto recognize that the Laws and public
policies of the various states of the United States may differ as to the
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validity and enforceability of covenants similar to those set forth in this
Section 5.7. It is the intention of the parties that the provisions of
this Section 5.7 be enforced to the fullest extent permissible under the
Laws and policies of each jurisdiction in which enforcement may be sought,
and that the unenforceability (or the modification to conform to such Laws
or policies) of any provisions of this Section 5.7 shall not render
unenforceable, or impair, the remainder of the provisions of this Section
5.7. Accordingly, notwithstanding anything in Section 12.12 to the
contrary, if any provision of this Section 5.7 shall be determined to be
invalid or unenforceable, such invalidity or unenforceability shall be
deemed to apply only with respect to the operation of such provision in the
particular jurisdiction in which such determination is made and not with
respect to any other provision or jurisdiction.
5.8 SALE OF MITCHELL FACILITY. In the event the Mitchell
Facility shall be sold, either alone or in connection with any sale of the
business of Carpenter or substantially all of the Assets and Properties of
Carpenter or the equity interests in Carpenter to any Person other than the
Company (and whether in one transaction or a series of related
transactions), at any time prior to the fourth anniversary of the Closing
Date, Carpenter shall contribute to the capital of the Company, without
additional consideration to Carpenter, an amount equal to the lesser of (a)
$1,800,000 and (b) either (i) in the event the Mitchell Facility is sold
alone, the net proceeds of such sale after deducting therefrom the direct
selling costs (which shall not include the cost of performing or causing to
be performed, any remediation of a condition of the Mitchell Facility which
is or may be in violation of or not in compliance with any Environmental
Laws or Environmental Permits), or (ii) in the event of the sale of the
Mitchell Facility in connection with the sale of Carpenter's business,
Assets and Properties or equity interests, an amount equal to the
"Applicable Percentage" of the net proceeds of the sale (including, as part
of such net proceeds, all Liabilities of Carpenter being assumed by the
purchaser), after payment of the "Applicable Percentage" of the direct
selling costs of such sale. The "Applicable Percentage" shall be a
fraction, the numerator of which shall be $1,800,000 and the denominator of
which shall be the net proceeds to be paid to Carpenter (or its owners) in
such sale.
5.9 NEW LINES OF COMPANY BUSINESS. (a) In the event that the
Company or any Subsidiary thereof proposes to enter into any line of
business comprised of the manufacture, design or sale of (i) fire trucks,
(ii) recreational vehicles, (iii) shuttle buses, (iv) transit buses (other
than school buses and small school buses which are modified to serve as
transit buses) or (v) cement mixers (collectively, the "Existing Spartan
Businesses"), the Company shall notify Spartan of its (or its Subsidiary's)
intention to enter into such line of business before doing so. In the
event that, within 30 days after the delivery of such notice, Spartan
delivers a written notice to the Company stating that Spartan vetoes the
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entry by the Company or such Subsidiary into such line of business, then
the Company shall not (and shall not permit any of its Subsidiaries to)
enter into such line of business prior to the earlier date specified in
paragraph (c) below.
(b) In the event that Spartan or any subsidiary thereof proposes
to enter into any line of business other than the Existing Spartan
Businesses, Spartan shall notify the Company in writing of its (or its
subsidiary's) intention to enter into such line of business before doing
so. In the event that, within 30 days after its receipt of such notice,
the Company delivers a written notice to Spartan to the effect that the
Company also desires to enter into such line of business, then Spartan and
the Company shall negotiate in good faith to provide for the entry by
Spartan (or such subsidiary) and the Company into such line of business on
mutually satisfactory terms. In the event that the Company does not
deliver such a notice to Spartan within such 30-day period or notifies
Spartan that it does not intend to enter into such line of business, then
the Company shall not (and shall not permit any of its Subsidiaries to)
enter into such line of business prior to the earlier date specified in
paragraph (c) below.
(c) The agreements contained in this Section 5.9 shall terminate
and be of no further force and effect from and after the earlier of (i) the
fifth anniversary of the Closing Date and (ii) the first date as of which
Spartan ceases to own at least 20% of the Common Stock on a fully diluted
basis.
5.10 PROVISION OF PARTS AND SERVICES. Effective as of the
Closing, the Company agrees that it shall, upon the reasonable request of
Carpenter at any time and from time to time, (a) supply Carpenter with
parts required to complete work on the Semi-Finished Buses being retained
by Carpenter pursuant to the Contribution Agreement and (b) provide
administrative and support services to Carpenter, including accounting and
management information services. The provision of such services shall in
each case be on commercially reasonable terms as agreed between Carpenter
and the Company and approved by each Investor. The Company shall furnish
to each Investor, on a weekly basis, a report setting forth in reasonable
detail the amount and terms of such transactions during the preceding week.
The agreements set forth in this Section 5.10 shall terminate on the date
that is six months after the Closing Date.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE INVESTORS
The obligations of each Investor hereunder are subject to the
fulfillment, at or before the Closing, of each of the following conditions
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(all or any of which may be waived in whole or in part (as to such
Investor) by such Investor in its sole discretion):
6.1 REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by the Owners, Carpenter or the Company in this
Agreement shall be true and correct in all material respects (if not
qualified by materiality) or in all respects (if qualified by materiality)
on and as of the Closing Date as though such representation or warranty was
made on and as of the Closing Date, and any representation or warranty made
as of a specified date earlier than the Closing Date shall also have been
true and correct in all material respects (if not qualified by materiality)
or in all respects (if qualified by materiality) on and as of such earlier
date.
6.2 PERFORMANCE. Each of the Owners, Carpenter and the Company
shall have performed and complied with, in all material respects, each
agreement, covenant and obligation required by this Agreement to be
performed or complied with by such Person at or before the Closing.
6.3 OFFICERS' CERTIFICATES. Each of the Company and Carpenter
shall have delivered to the Investors a certificate, dated the Closing Date
and executed by its Chairman of the Board, its President or one of its Vice
Presidents, substantially in the form and to the effect of EXHIBIT A-1 (in
the case of the Company) or A-2 (in the case of Carpenter), and a
certificate, dated the Closing Date and executed by its Secretary or one of
its Assistant Secretaries substantially in the form and to the effect of
EXHIBIT B-1 (in the case of the Company) or B-2 (in the case of Carpenter).
6.4 ORDERS AND LAWS. There shall not be in effect on the Closing
Date any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by
this Agreement or any of the Operative Agreements or which could reasonably
be expected to otherwise result in a material diminution of the benefits of
the transactions contemplated by this Agreement or any of the Operative
Agreements to any Investor, and there shall not be pending or threatened on
the Closing Date any Action or Proceeding or any other action (i) which
could reasonably be expected to result in the issuance of any such Order or
the enactment, promulgation, or deemed applicability to Investor, any
Owner, Carpenter, the Company, or any of the transactions contemplated by
this Agreement or any of the Operative Agreements, of any such Law; or (ii)
wherein an unfavorable judgment, decree or Order would prevent the carrying
out of this Agreement or any of the Operative Agreements or any of the
transactions or events contemplated hereby or thereby, declare unlawful any
of the transactions contemplated by this Agreement or present a risk of
damages to any Investor.
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6.5 REGULATORY CONSENTS AND APPROVALS. All consents, approvals
and actions of, filings with and notices to any Governmental or Regulatory
Authority necessary to permit the Investors, the Owners, Dr. SerVaas,
Carpenter and the Company to perform their respective obligations under
this Agreement and the Operative Agreements and to consummate the
transactions contemplated hereby and thereby (a) shall have been duly
obtained, made or given, (b) shall be in form and substance reasonably
satisfactory to each Investor, (c) shall not impose any limitations or
restrictions on any Investor, any Owner, Dr. SerVaas, Carpenter or the
Company, (d) shall not be subject to the satisfaction of any condition that
has not been satisfied or waived and (e) shall be in full force and effect,
and all terminations or expirations of waiting periods imposed by any
Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement and the Operative Agreements
shall have occurred.
6.6 THIRD PARTY CONSENTS. The consents (or in lieu thereof
waivers) disclosed and designated with an asterisk in SECTIONS 2.5 AND 2.6
OF THE DISCLOSURE SCHEDULE, and all other consents (or in lieu thereof
waivers) to the performance by the Investors, the Owners, Carpenter and
the Company of their respective obligations under this Agreement and the
Operative Agreements or to the consummation of the transactions
contemplated hereby and thereby as are required under any Contract to which
any Investor, any Owner, Carpenter or the Company is a party or by which
any of their respective Assets and Properties are bound and where the
failure to obtain any such consent (or in lieu thereof waiver) could
reasonably be expected, individually or in the aggregate with other such
failures, to materially adversely affect any Investor or the Business or
Condition of Carpenter or the Company or otherwise result in a material
diminution of the benefits of the transactions contemplated by this
Agreement and the Operative Agreements to any Investor in its sole
discretion, (a) shall have been obtained, (b) shall be in form and
substance satisfactory to each Investor in its sole discretion, (c) shall
not be subject to the satisfaction of any condition that has not been
satisfied or waived and (d) shall be in full force and effect. Without
limiting the generality of the foregoing, each Investor shall have received
written instruments from the lenders under the Wayne Bank revolving credit
facility and from Newcourt Financial USA, Inc., in form and substance
satisfactory to such Investor, to the effect that (i) there are no uncured
defaults or events of default under the Wayne Bank revolving credit
facility or (after giving effect to the Restructuring Transactions) the
agreements relating to the Newcourt inventory financing arrangement, or
that any such defaults or events of default are permanently waived, (ii) in
the case of the Wayne Bank revolving credit facility, after giving effect
to the repayment of outstanding amounts under such revolving credit
facility contemplated by Section 4.13, the Company will be eligible to
incur additional borrowings of not less than $7 million in aggregate
principal amount under such revolving credit facility and (iii) the
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maturity date of the Unsecured Newcourt Indebtedness has been extended to a
date not earlier than February 15, 1997. Each Investor shall have received
evidence satisfactory to it that the portion of the loans and commitments
held by People's Bank under the Wayne Bank revolving credit facility shall
be assigned on or prior to February 15, 1997, to a reputable financial
institution (or to SerVaas, Inc., Curtis or any Affiliate thereof
reasonably satisfactory to such Investor) on the basis of the commitment
termination dates contained in such facility on the date hereof. Each
Investor shall have received evidence satisfactory to it that the
Restructuring Transactions have been completed on terms satisfactory to it.
6.7 OPINION OF COUNSEL. Each Investor shall have received the
opinion of Leeuw, Plopper & Beeman, counsel to the Owners, Carpenter and
the Company, dated the Closing Date, substantially in the form and to the
effect of EXHIBIT C, and to such further effect as any Investor may
reasonably request.
6.8 GOOD STANDING CERTIFICATES. The Company shall have delivered
to each Investor (a) certified copies of the Charter Documents as in effect
on the Closing Date, (b) copies of the certificates or articles of
formation or incorporation (or other comparable constitutive documents),
including all amendments thereto, of each Subsidiary (if any), in each case
certified by the Secretary of State or other appropriate official of the
jurisdiction of formation or incorporation, (c) certificates from the
Secretary of State of the State of Delaware to the effect that the Company
is in good standing or subsisting in such State, listing all charter
documents of the Company on file with such Secretary of State and attesting
to the Company's payment of all franchise or similar Taxes imposed by such
State and (d) a certificate from the Secretary of State or other
appropriate official in each jurisdiction in which the Company is
qualified, licensed or admitted to do business to the effect that the
Company is duly qualified or admitted and in good standing in such
jurisdiction.
6.9 OTHER AGREEMENTS. The Operative Agreements shall have been
duly executed and delivered by the respective parties thereto other than
the relevant Investor and shall be in full force and effect.
6.10 DELIVERY OF CERTIFICATES. Duly executed certificates
representing 300 shares of Purchased Stock shall have been delivered to
each Investor.
6.11 CONTRIBUTION. The Contribution shall have been completed
pursuant to the terms of the Contribution Agreement.
6.12 CONTEMPORANEOUS INVESTMENT BY OTHER INVESTOR. Each Investor
shall have received evidence satisfactory to it that, concurrently with its
purchase of the Purchased Stock being purchased by it hereunder, the other
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Investor shall have paid the Purchase Price to the Company in cash in
consideration for the issuance to such other Investor of the Purchased
Stock being purchased by such other Investor hereunder.
6.13 REAFFIRMATION OF GUARANTEES. Each Investor shall have
received evidence satisfactory in form and substance to it that each
guarantee of Indebtedness or other obligations of Carpenter identified in
SECTION 2.18(A)(VI) OF THE DISCLOSURE SCHEDULE shall have been either (i)
confirmed by the guarantor thereunder as continuing in full force and
effect notwithstanding the assumption of the guaranteed Indebtedness or
other obligations by the Company pursuant to the Contribution Agreement or
(ii) except in the case of the Wayne Bank revolving credit facility,
released, on terms satisfactory to such Investor, by the Person to whom the
guaranteed Indebtedness or other obligations are owed.
6.14 AFFILIATE TRANSACTIONS. Each of the Contracts, Liabilities
of Carpenter and other arrangements listed in SECTION 2.18(A)(VIII) OR
SECTION 2.21(A) OF THE DISCLOSURE SCHEDULE and not designated with an
asterisk therein (other than the loans and leases expressly excluded from
the definition of "Restructuring Transactions" in Section 4.9) shall have
been terminated without any further Liability on the part of Carpenter or
the Company, and each Investor shall have received evidence satisfactory to
it of such termination.
6.15 BUSINESS PLAN. The Owners shall have approved, and there
shall have been delivered to each Investor, a written and detailed two year
operating and strategic plan for the Company satisfactory to such Investor
in its sole discretion.
6.16 NO ADVERSE CHANGE. Except as set forth in SECTION 2.9 OF THE
DISCLOSURE SCHEDULE, there shall not have occurred any material adverse
change in the Business or Condition of Carpenter or the Company since the
Audited Financial Statement Date.
6.17 BOARD OF DIRECTORS. The board of directors of the Company
shall consist of the following six persons: George Sztykiel, Anthony G.
Sommer, Joseph J. Finn-Egan, Jeffrey A. Lipkin, Dr. SerVaas and Timothy S.
Durham.
6.18 EMC CORBEIL AGREEMENT. Carpenter shall have obtained either
a verbal or written commitment satisfactory to each Investor from E.M.C.
Enterprises Michel Corbeil, Inc. ("Corbeil") that the Fundamentals of a
Strategic Alliance Agreement between Corbeil and Carpenter Industries, Inc.
dated February 1, 1995 shall be modified promptly following the Closing in
a manner reasonably satisfactory to such Investor to reflect the actual
relationship between Carpenter and Corbeil.
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6.19 AIR EMISSIONS. Each Investor shall have received assurances
from its environmental consultant satisfactory to it in its sole discretion
to the effect that: (a) no material penalties will be assessed against the
Company as a result of any non-compliance with any Environmental Laws or
Environmental Permits relating to air emissions from or at the Richmond
Facility; (b) the Richmond Facility will not be subject to "New Source
Review," "Prevention of Significant Deterioration," or "Reasonably
Available Control Technology" requirements as defined under applicable
Environmental Laws; and (3) no material expenditures will be required under
applicable Environmental Laws or Environmental Permits for the installation
of air emissions control technology at the Richmond Facility.
6.20 CERTIFICATE OF DR. SERVAAS. Dr. SerVaas shall have executed
and delivered to the Investors a certificate, dated the Closing Date,
substantially in the form and to the effect of Exhibit K.
6.21 BY-LAWS AMENDMENT. The by-laws of the Company shall have
been amended, in a manner satisfactory in form and substance to each
Investor, to create the office of "executive vice president--
manufacturing" and to make such other changes as are necessary or
appropriate in connection with the Stockholders' Agreement.
6.22 INSURANCE CERTIFICATES. Each Investor shall have received
satisfactory written assurances from the Company's insurers to the effect
that effective as of the Closing Date, (a) the Company has obtained
(i) directors' and officers' and product liability insurance in amounts and
on terms satisfactory to such Investor and (ii) health and excess health
insurance policies comparable to Carpenter's existing policies and (b) the
insurance policies listed in SECTION 2.20 OF THE DISCLOSURE SCHEDULE have
been properly assigned to the Company.
6.23 PROCEEDINGS. All proceedings to be taken on the part of the
Owners, Carpenter or the Company in connection with the transaction
contemplated by this Agreement and all documents incident thereto shall be
reasonably satisfactory in form and substance to each Investor, and each
Investor shall have received copies of all such documents and other
evidences as such Investor may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company hereunder are subject to the
fulfillment, at or before the Closing, of each of the following conditions
(all or any of which may be waived in whole or in part by the Company in
its sole discretion):
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7.1 REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by any Investor in this Agreement shall be true and
correct in all material respects on and as of the Closing Date as though
such representation or warranty was made on and as of the Closing Date.
7.2 PERFORMANCE. Each Investor shall have performed and complied
with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be performed or complied with by such
Investor at or before the Closing including the payment of the Purchase
Price by such Investor.
7.3 CERTIFICATES. REI II shall have delivered to the Company a
certificate, dated the Closing Date and executed by the general partner of
REI II, substantially in the form and to the effect of EXHIBIT H. Spartan
shall have delivered to the Company a certificate, dated the Closing Date
and executed by the President or any Vice President of Spartan,
substantially in the form and to the effect of EXHIBIT I, and a
certificate, dated the Closing Date and executed by the Secretary or any
Assistant Secretary of Spartan, substantially in the form and to the effect
of EXHIBIT J.
7.4 ORDERS AND LAWS. There shall not be in effect on the Closing
Date any Order or Law that became effective after the date of this
Agreement restraining, enjoining or otherwise prohibiting or making illegal
the consummation of any of the transactions contemplated by this Agreement
or any of the Operative Agreements.
7.5 REGULATORY CONSENTS AND APPROVALS. All consents, approvals
and actions of, filings with and notices to any Governmental or Regulatory
Authority necessary to permit the Owners, Dr. SerVaas, Carpenter, the
Company and the Investors to perform their respective obligations under
this Agreement and the Operative Agreements and to consummate the
transactions contemplated hereby and thereby (a) shall have been duly
obtained, made or given, (b) shall not be subject to the satisfaction of
any condition that has not been satisfied or waived and (c) shall be in
full force and effect, and all terminations or expirations of waiting
periods imposed by any Governmental or Regulatory Authority necessary for
the consummation of the transactions contemplated by this Agreement and the
Operative Agreements shall have occurred.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Notwithstanding any right of any Investor (whether or not
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exercised) to investigate the affairs of Carpenter or the Company or any
right of any party (whether or not exercised) to investigate the accuracy
of the representations and warranties of the other party contained in this
Agreement or the waiver of any condition to Closing, each of the Owners,
Carpenter, the Company and the Investors has the right to rely fully upon
the representations, warranties, covenants and agreements of the others
contained in this Agreement. The representations, warranties, covenants
and agreements of the Owners, Carpenter, the Company and the Investors
contained in this Agreement, the Contribution Agreement, and any
certificate or other document provided hereunder or thereunder will survive
the Closing (a) until the sixth anniversary of the Closing Date with
respect to the representations and warranties contained in Sections 2.1,
2.2, 2.3, 2.4, 2.25, 2.26, 2.27 and (as it relates to the foregoing
Sections) 2.28 and 3.1, (b) until the later of (i) 60 calendar days after
the expiration of all applicable statutes of limitation (including all
periods of extension, whether automatic or permissive) and (ii) the fifth
anniversary of the Closing Date with respect to the representations and
warranties contained in Sections 2.11, 2.14, 2.23 and (as it relates to the
foregoing Sections) 2.28, (c) until the second anniversary of the Closing
Date with respect to all other representations and warranties or (d) with
respect to each covenant or agreement contained in this Agreement, the
Contribution Agreement or any certificate provided hereunder or thereunder,
indefinitely, except that any representation, warranty, covenant or
agreement that would otherwise terminate in accordance with clause (a), (b)
or (c) above will continue to survive if a Claim Notice or Indemnity Notice
(as applicable) shall have been timely given under Article IX on or prior
to such termination date, until the related claim for indemnification has
been satisfied or otherwise resolved as provided in Article IX, but only
with respect to matters described in the Claim Notice or Indemnity Notice.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION.
The Owners and Carpenter shall jointly and severally indemnify
each Investor and its general partner and limited partners and the
officers, directors, employees, agents and Affiliates of such Investor or
any such general or limited partner, in respect of, and hold each of them
harmless from and against, any and all Losses (after giving effect to any
net proceeds from insurance actually received by the Indemnified Parties)
suffered, incurred or sustained by any of them or to which any of them
becomes subject, resulting from, arising out of or relating to: (i) any
misrepresentation or breach of warranty (subject to any applicable survival
period with respect thereto under Section 8.1) or nonfulfillment of or
failure to perform any covenant or agreement on the part of the Owners,
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Carpenter or the Company contained in this Agreement or the Contribution
Agreement (other than any nonfulfillment or failure on the part of the
Company to perform any such covenant or agreement that relates solely to
the period following the Closing); (ii) the issuance of the Letter of
Intent dated September 23, 1996, relating to REI II's proposed investment
in Carpenter; (iii) (A) the presence, Release or threatened Release of any
Hazardous Materials existing as of or prior to the Closing Date at, from,
in, to, on or under the Mitchell Facility or any real property located in
Mitchell, Indiana that was formerly owned, leased or operated by Carpenter,
the Company, any predecessor of Carpenter or the Company, or any entity
previously owned by Carpenter or the Company (collectively, the "Former
Mitchell Properties"), (B) the transportation, treatment, storage, handling
or disposal, or arrangement for transportation, treatment, storage,
handling or disposal, of Hazardous Materials at, to or from the Mitchell
Facility or any Former Mitchell Property by Carpenter or the Company, any
predecessor of Carpenter or the Company, or any entity previously owned by
Carpenter or the Company, (C) any violation of Environmental Law at the
Mitchell Facility or any Former Mitchell Property prior to the Closing or
(D) any and all arrangements with American Print Towel for treatment,
storage, transportation, disposal or handling of Hazardous Materials
(including but not limited to rags containing solvents) generated by
Carpenter, any of its predecessors or any entity previously owned by
Carpenter; (iv) any Liability for Taxes of Carpenter Body Works, Inc., CMI
or Carpenter, including any Lien on the Assets and Properties of the
Company resulting from such a Liability (other than Indiana property taxes
that are not yet due and payable and either (i) have been properly accrued
as a liability on the Pro Forma Balance Sheet or (ii) are disclosed in
SECTION 2.11 OF THE DISCLOSURE SCHEDULE, which taxes shall be Liabilities
of the Company as provided in the Contribution Agreement); or (v) any
Liability of CII (whether for Taxes or otherwise) and any Liability of
Carpenter under or in respect of the CII Stock Purchase Agreement;
PROVIDED, HOWEVER, that the Owners and Carpenter shall not be obligated
pursuant to clause (ii) of this Section 9.1 to the extent that a Loss
claimed thereunder is finally adjudicated by a court of competent
jurisdiction to have resulted primarily from the gross negligence or wilful
misconduct of the Indemnified Party making such claim; and PROVIDED
FURTHER, that if and to the extent that any indemnification hereunder is
finally determined by a court of competent jurisdiction to be
unenforceable, the Owners and Carpenter shall jointly and severally make
the maximum contribution to the payment and satisfaction of the indemnified
Losses as shall be permissible under applicable laws.
9.2 METHOD OF ASSERTING CLAIMS. All claims for indemnification
by any Indemnified Party under Section 9.1 will be asserted and resolved as
follows:
(a) In order for an Indemnified Party to be entitled to any
indemnification provided for under Section 9.1 in respect of, arising out
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of or involving a claim or demand made by any Person not a party to this
Agreement against the Indemnified Party (a "Third Party Claim"), the
Indemnified Party must deliver a Claim Notice to the Indemnifying Party
within 30 Business Days after receipt by such Indemnified Party of written
notice of the Third Party Claim; PROVIDED, HOWEVER, that failure to give
such Claim Notice shall not affect the indemnification provided hereunder
except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure.
(b) If a Third Party Claim is made against an Indemnified Party,
the Indemnifying Party shall be entitled to participate in the defense
thereof and, if it so chooses, to assume the defense thereof with counsel
selected by the Indemnifying Party, which counsel must be reasonably
satisfactory to the Indemnified Party. Should the Indemnifying Party so
elect to assume the defense of a Third Party Claim, the Indemnifying Party
shall not be liable to the Indemnified Party for legal expenses
subsequently incurred by the Indemnified Party in connection with the
defense thereof, but shall continue to pay for any expenses of
investigation or any Loss suffered. If the Indemnifying Party assumes such
defense, the Indemnified Party shall have the right to participate in such
defense and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Party. If (i) the Indemnifying Party
shall not assume the defense of a Third Party Claim with counsel reasonably
satisfactory to the Indemnified Party within five Business Days of any
Claim Notice, or (ii) legal counsel for the Indemnified Party notifies the
Indemnifying Party that there are or may be legal defenses available to the
Indemnified Party or to other Indemnified Parties which are different from
or additional to those available to the Indemnifying Party, which, if the
Indemnified Party and the Indemnifying Party were to be represented by the
same counsel, would constitute a conflict of interest for such counsel or
prejudice prosecution of the defenses available to such Indemnified Party,
or (iii) if the Indemnifying Party shall assume the defense of a Third
Party Claim and fail to diligently prosecute such defense, then in each
such case the Indemnified Party, by notice to the Indemnifying Party, may
employ its own counsel and control the defense of the Third Party Claim and
the Indemnifying Party shall be liable for the reasonable fees, charges and
disbursements of counsel employed by the Indemnified Party; and the
Indemnified Party shall be promptly reimbursed for any such fees, charges
and disbursements, as and when incurred. Whether the Indemnifying Party or
the Indemnified Party controls the defense of any Third Party Claim, the
parties hereto shall cooperate in the defense thereof. Such cooperation
shall include the retention and provision to the counsel of the controlling
party of records and information which are reasonably relevant to such
Third Party Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder. The Indemnifying Party shall have the right to settle,
compromise or discharge a Third Party Claim (other than any such Third
Party Claim in which criminal conduct is alleged) without the Indemnified
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Party's consent if such settlement, compromise or discharge (i) constitutes
a complete and unconditional discharge and release of the Indemnified
Party, and (ii) provides for no relief other than the payment of monetary
damages and such monetary damages are paid in full by the Indemnifying
Party.
(c) In the event any Indemnified Party shall have a claim under
Section 9.1 against any Indemnifying Party that does not involve a Third
Party Claim, the Indemnified Party shall deliver an Indemnity Notice with
reasonable promptness to the Indemnifying Party. The failure by any
Indemnified Party to give the Indemnity Notice shall not impair such
party's rights hereunder except to the extent that an Indemnifying Party
demonstrates that it has been materially prejudiced thereby. If the
Indemnifying Party notifies the Indemnified Party that it does not dispute
the claim described in such Indemnity Notice or fails to notify the
Indemnified Party within the Dispute Period whether the Indemnifying Party
disputes the claim described in such Indemnity Notice, the Loss in the
amount specified in the Indemnity Notice will be conclusively deemed a
liability of the Indemnifying Party under Section 8.1 and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified Party on demand.
If the Indemnifying Party has timely disputed its liability with respect to
such claim, the Indemnifying Party and the Indemnified Party will proceed
in good faith to negotiate a resolution of such dispute, and if not
resolved through negotiations within the Resolution Period, such dispute
shall be resolved by litigation in a court of competent jurisdiction.
(d) The rights accorded to Indemnified Parties hereunder shall be
in addition to any rights that any Indemnified Party may have at law or in
equity, under federal and state securities laws, by separate agreement
(including, without limitation, under the Operative Agreements) or
otherwise.
ARTICLE X
TERMINATION
10.1 TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement
of the Owners, Carpenter, the Company and the Investors;
(b) at any time before the Closing, by the Owners, Carpenter or
the Company on the one hand or any Investor on the other hand, in the
event (i) of a material breach hereof by any non-terminating party if
such non-terminating party fails to cure such breach within five
Business Days following notification thereof by the terminating party or
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(ii) upon notification of the non-terminating parties by the terminating
party that the satisfaction of any condition to the terminating party's
obligations under this Agreement has become impossible or impracticable
with the use of commercially reasonable efforts, so long as the failure
of such condition to be satisfied is not caused by a breach hereof by
the terminating party; or
(c) at any time after January 8, 1997, by the Owners, Carpenter
or the Company, on the one hand, or any Investor, on the other hand,
upon notification of the non-terminating parties by the terminating
party if the Closing shall not have occurred on or before such date and
such failure to consummate is not caused by a material breach of this
Agreement by the terminating party.
10.2 EFFECT OF TERMINATION. If this Agreement is validly
terminated pursuant to Section 10.1, this Agreement will forthwith become
null and void, and there will be no liability or obligation on the part of
any Owner, Carpenter, the Company or any Investor, except as provided in
the next two succeeding sentences and except that the provisions with
respect to expenses in Section 12.3, confidentiality in Section 12.5 and
governing law in Section 12.13 will continue to apply following any such
termination. Notwithstanding any other provision in this Agreement to the
contrary, upon termination of this Agreement pursuant to Section 10.1(b) or
(c) by an Investor, (i) each of the Owners, Carpenter and the Company will
remain liable to the Investors for any misrepresentation or breach of
warranty or nonfulfillment of or failure to perform any covenant or
agreement of the Owners, Carpenter or the Company existing at the time of
such termination, and (ii) each Investor will remain liable to the Owners,
Carpenter and the Company for any misrepresentation or breach of warranty
or nonfulfillment of or failure to perform any covenant or agreement of
such Investor existing at the time of such termination. Each of the
Owners, Carpenter, the Company and the Investors may seek such remedies,
including damages and reimbursement for fees and expenses of attorneys,
against the others with respect to any misrepresentation, breach,
nonfulfillment or failure referred to in clause (i) or (ii) above as are
provided under this Agreement, including its remedies under Article IX with
respect thereto, or as are otherwise available at Law or in equity.
ARTICLE XI
DEFINITIONS
11.1 DEFINITIONS. (a) As used in this Agreement, the following
defined terms shall have the meanings indicated below:
"ACTIONS OR PROCEEDINGS" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
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"AFFILIATE" means, as applied to any Person, (a) any other Person
directly or indirectly controlling, controlled by or under common control
with, that Person, (b) any other Person that owns or controls (i) 5% or
more of any class of equity securities of that Person or any of its
Affiliates or (ii) 5% or more of any class of equity securities (including
any equity securities issuable upon the exercise of any option, warrant,
convertible security or similar right) of that Person or any of its
Affiliates, or (c) any director, partner, officer, agent, employee or
relative of that Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled
by" and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through
ownership of voting securities or by contract or otherwise.
"AGREED-UPON PROCEDURES" means the tests and procedures described
in the Agreed-Upon Procedures Report (including the Accounting Firm's
observation of the physical inventory referred to in Section 2.8(b)).
"AGREED-UPON PROCEDURES REPORT" has the meaning ascribed to it in
Section 2.8(c).
"AGREEMENT" means this Investment Agreement, the Exhibits, the
Schedules and the Disclosure Schedule and the certificates delivered in
connection herewith, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the provisions hereof.
"ASSETS AND PROPERTIES" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute,
accrued, contingent, fixed or otherwise and wherever situated), including
the goodwill related thereto, operated, owned or leased by such Person,
including cash, cash equivalents, Investment Assets, accounts and notes
receivable, chattel paper, documents, instruments, general intangibles,
real estate, equipment, inventory, goods and Intellectual Property.
"ASSOCIATE" means, with respect to any Person, any corporation or
other business organization of which such Person is an officer or partner
or is the beneficial owner, directly or indirectly, of 10% or more of any
class of its equity securities, any trust or estate in which such Person
has a substantial beneficial interest or as to which such Person serves as
a trustee or in a similar capacity and any relative or spouse of such
Person, or any relative of such spouse, who has the same home as such
Person.
"AUDITED FINANCIAL STATEMENT DATE" means December 31, 1995.
"AUDITED FINANCIAL STATEMENTS" means the audited consolidated
balance sheet of CMI as of December 31, 1995 and the related audited
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consolidated statements of income, stockholders' equity and cash flows for
the fiscal year then ended, in each case including the notes thereto.
"BENEFIT PLAN" means any Plan established by Carpenter or the
Company or any predecessor of either of them, existing at the Closing Date
or prior thereto, to which Carpenter or the Company contributes or has
contributed, or under which any employee, former employee, member, manager
or director of Carpenter or the Company or any beneficiary thereof is
covered, is eligible for coverage or has benefit rights.
"BOOKS AND RECORDS" means all files, documents, instruments,
papers, books and records relating to the Business or Condition of
Carpenter or the Company, including without limitation financial
statements, Tax Returns and related work papers and letters from
accountants, budgets, pricing guidelines, ledgers, journals, deeds, title
policies, minute books, stock certificates and books, stock transfer
ledgers, Contracts, Licenses, customer lists, computer files and programs,
retrieval programs, operating data and plans and environmental studies and
plans.
"BUSINESS COMBINATION" means with respect to any Person (i) any
merger, consolidation or other business combination to which such Person is
a party, (ii) any sale, dividend, split or other disposition of any capital
stock of or other equity interests in such Person, (iii) any
recapitalization, refinancing (of indebtedness or equity), liquidation,
dissolution or similar transaction with respect to such Person, (iv) any
sale, dividend or other disposition of all or any material portion of the
Assets and Properties of such Person (other than in connection with the
Contribution) or (v) the entering into of any agreement or understanding,
or the grant of any rights or options with respect to any of the foregoing.
"BUSINESS DAY" means a day other than Saturday, Sunday or any day
on which banks located in the State of Indiana or New York are authorized
or obligated to close.
"BUSINESS OR CONDITION OF CARPENTER OR THE COMPANY" means (a) with
respect to Carpenter, the business, condition (financial or otherwise),
results of operations and Assets and Properties of Carpenter, and (b) with
respect to the Company, the business, condition (financial or otherwise),
results of operations, Assets and Properties and (as set forth in the
projections contained in Schedule 2.31) prospects of the Company.
"CARPENTER" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"CHARTER" means the certificate of incorporation of the Company
following the Conversion, as the same may be amended, modified or restated
from time to time.
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"CHARTER DOCUMENTS" has the meaning ascribed to it in Section
2.1(a).
"CII" means Curtis International, Inc., an Indiana corporation.
"CII STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement
dated September 26, 1996, by and among Dr. SerVaas, Zbigniew Niemczycki,
Carpenter, CII and certain other Persons.
"CLAIM NOTICE" means written notification pursuant to
Section 9.2(a) of a Third Party Claim as to which indemnity under
Section 9.1 is sought by an Indemnified Party, enclosing a copy of all
papers served, if any, on the Indemnified Party and identifying the basis
for the Indemnified Party's claim against the Indemnifying Party under
Section 9.1.
"CLOSING" means the closing of the transactions contemplated by
Section 1.3.
"CLOSING DATE" means the date on which the Closing actually
occurs, which date shall be either (a) the fifth Business Day after the day
on which the last of the consents, approvals, actions, filings, notices or
waiting periods described in or related to the filings described in
Sections 6.5 and 6.6 and Section 7.4 has been obtained, made or given or
has expired, as applicable, or (b) such other date as the Investors, the
Company, Carpenter and the Owners may mutually agree.
"CMI" means Carpenter Manufacturing, Inc., an Indiana corporation
(formerly known as CBW, Inc.) and a predecessor of Carpenter.
"CODE" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"COMMON STOCK" has the meaning ascribed thereto in the recitals
hereto.
"COMPANY" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"CONTRACT" means any agreement, lease, debenture, note, other
evidence of Indebtedness, mortgage, deed of trust, indenture, security
agreement or other contract (whether written or oral).
"CONTRIBUTION" has the meaning ascribed thereto in the recitals
hereto.
"CONTRIBUTION AGREEMENT" means the Contribution Agreement to be
entered into on the Closing Date by Carpenter and the Company,
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substantially in the form of Exhibit D, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof and thereof.
"CURTIS" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"DEBT RESTRUCTURING" means: (i) the restructuring of the Wayne
Bank revolving credit facility to effect the release of all guarantees
provided by Affiliates of Carpenter in respect of Carpenter's or the
Company's obligations under such revolving credit facility, or the
replacement and refinancing of such revolving credit facility with a new
revolving credit facility of at least the same size as to which the
borrower's obligations thereunder are not guaranteed by any Affiliate of
Carpenter or the Company; (ii) the refinancing, with the proceeds of a term
loan secured only by a Lien on all or a portion of the Company's equipment
and real estate, of (A) all outstanding Indebtedness under the equipment
financing arrangements with the City of Richmond, Indiana, the First
National Bank of Mitchell, Newcourt (other than the Newcourt inventory
financing arrangement), Harsco and Wayne Bank Presses and (B) the Out-of-
Trust Indebtedness; and (iii) the termination of the CIT sublease
arrangement through the purchase by the Company in an arm's-length
transaction of the equipment subject to such arrangement, which purchase
will be financed with the proceeds of a term loan obtained by the Company
(which term loan may be combined with the term loan contemplated by clause
(ii) above); all of the foregoing in form and substance satisfactory to
each Investor in its sole discretion.
"DISCLOSURE SCHEDULE" means the schedules delivered to the
Investors by or on behalf of the Owners, Carpenter and the Company,
containing all lists, descriptions, exceptions and other information and
materials as are required to be included therein pursuant to this
Agreement.
"DISPUTE PERIOD" means the period ending 30 calendar days
following receipt by an Indemnifying Party of an Indemnity Notice.
"DR. SERVAAS" means Dr. Beurt R. SerVaas.
"ENVIRONMENT" means all air, surface water, groundwater and land,
including land surface and subsurface, including all fish, wildlife and
other natural resources.
"ENVIRONMENTAL CLAIM" means any and all administrative or judicial
actions, suits, orders, claims, Liens, notices, notices of violations,
investigations, complaints, requests for information, proceedings, or other
communication (written or oral), whether criminal or civil, (collectively,
"CLAIMS") pursuant to or relating to any applicable Environmental Law by
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any Person (including any Governmental or Regulatory Authority, individual
or citizens' group) based upon, alleging, asserting, or claiming any actual
or potential (i) violation of or liability under any Environmental Law,
(ii) violation of any Environmental Permit or (iii) liability for
investigatory costs, cleanup costs, removal costs, remedial costs, response
costs, natural resource damages, property damage, personal injury, fines or
penalties arising out of, based on, resulting from, or related to the
presence, Release, or threatened Release into the Environment of any
Hazardous Materials at any location, including but not limited to any off-
Site location to which Hazardous Materials or materials containing
Hazardous Materials have been sent for handling, storage, treatment, or
disposal.
"ENVIRONMENTAL CLEAN-UP SITE" means any location which is listed
or proposed for listing on the National Priorities List, the Comprehensive
Environmental Response, Compensation and Liability Information System, or
on any similar state list of sites requiring investigation or cleanup, or
which is the subject of any pending or threatened action, suit, proceeding
or investigation related to or arising from any alleged violation of any
Environmental Law, or at which there has been a Release, threatened or
suspected Release of a Hazardous Material.
"ENVIRONMENTAL LAW" means any and all current and future, federal,
state, local and foreign, civil and criminal laws, statutes, ordinances,
orders, codes, rules, regulations, Environmental Permits, policies,
guidance documents, judgments, decrees, injunctions or agreements with any
Governmental or Regulatory Authority relating to the protection of health
and the Environment, or governing the handling, use, generation, treatment,
storage, transportation, disposal, manufacture, distribution, formulation,
packaging, labeling or Release of Hazardous Materials, whether now existing
or subsequently amended or enacted, including: the Clean Air Act, 42 U.S.C.
<Section> 7401 ET SEQ.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. <Section> 9601 ET SEQ.;
the Federal Water Pollution Control Act, 33 U.S.C. <Section> 1251 ET SEQ.;
the Hazardous Material Transportation Act 49 U.S.C. <Section> 1801 ET
SEQ.; the Federal Insecticide, Fungicide and Rodenticide Act 7 U.S.C.
<Section> 136 ET SEQ.; the Resource Conservation and Recovery Act of 1976,
42 U.S.C. <Section> 6901 ET SEQ.; the Toxic Substances Control Act, 15
U.S.C. <Section> 2601 ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C.
<Section> 2701 ET SEQ.; and the state analogies thereto, all as amended or
superseded from time to time; and any common law doctrine, including
negligence, nuisance, trespass, personal injury, or property damage,
relating to the presence or Release of or an exposure to a Hazardous
Material.
"ENVIRONMENTAL PERMIT" means any and all federal, state, local or
foreign permits, licenses, approvals, consents or authorizations required
by any Governmental or Regulatory Authority under or in connection with any
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Environmental Law, including any and all orders, consent orders or binding
agreements issued or entered into by a Governmental or Regulatory Authority
under any applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" means any Person who is or at any time was in
the same controlled group of corporations or who is under common control
with CMI, Carpenter or the Company (within the meaning of Section
412(n)(6)(b) of the Code).
"ESTIMATED PRO FORMA OPERATING STATEMENTS" has the meaning
ascribed to it in Section 2.8(b).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
"FEDERALLED BUS" means, as of any date of determination, any Semi-
Finished Bus retained by Carpenter pursuant to the Contribution Agreement
which, as of such date, has been (a) certified by a duly authorized
Carpenter inspector, in a manner consistent with past practice, as
complying with all applicable federal motor vehicle safety standards and
(b) stickered by such inspector for delivery to the purchaser thereof.
"FORMER MITCHELL PROPERTIES" shall have the meaning ascribed to it
in Section 9.1.
"GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period and the immediately
prior comparable period.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal,
arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic
or foreign state, county, city or other political subdivision, and shall
include, without limitation, any stock exchange, quotation service and the
National Association of Securities Dealers.
"GUARANTEE" means the Guarantee of Dr. Beurt SerVaas attached to
this Agreement, as such Guarantee may be amended, supplemented or otherwise
modified from time to time in accordance with the provisions thereof.
"HAZARDOUS MATERIAL" means (A) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation and transformers or other
equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls (PCBs); (B) any chemicals, materials, substances
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or wastes which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants" or words of similar import, under
any Environmental Law; and (C) any other chemical, material, substance or
waste, exposure to which is now or hereafter prohibited, limited or
regulated by any Governmental or Regulatory Authority.
"INDEBTEDNESS" of any Person means all obligations of such Person
(i) for borrowed money, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) for the deferred purchase price of goods or
services (other than trade payables or accruals incurred in the ordinary
course of business), (iv) under capital leases, (v) as an account party in
respect of letters of credit and (vi) in the nature of guarantees of the
obligations described in clauses (i) through (v) above of any other Person.
"INDEMNIFIED PARTY" means any Person claiming indemnification
under any provision of Article IX.
"INDEMNIFYING PARTY" means any Person against whom a claim for
indemnification is being asserted under any provision of Article IX.
"INDEMNITY NOTICE" means written notification pursuant to Section
9.2(c) of a claim for indemnity under Article IX by an Indemnified Party,
specifying the nature of and basis for such claim, together with the amount
or, if not then reasonably ascertainable, the estimated amount, determined
in good faith, of such claim.
"INDEPENDENT ACCOUNTING FIRM" shall mean Arthur Andersen or, if
Arthur Andersen shall decline or otherwise be unable to perform the
engagement in question, another firm of independent certified public
accountants of nationally recognized standing (other than the Accounting
Firm, Price Waterhouse and Deloitte) mutually acceptable to Carpenter and
the Investors.
"INTELLECTUAL PROPERTY" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service mark rights, service names and service name rights, brand
names, inventions, processes, formulae, copyrights and copyright rights,
trade dress, business and product names, logos, slogans, trade secrets,
industrial models, designs, methodologies, computer programs (including all
source codes) and related documentation, technical information,
manufacturing, engineering and technical drawings, know-how and all pending
applications for and registrations of patents, trademarks, service marks
and copyrights.
"INVENTORY COMPUTATION" has the meaning ascribed to it in Section
5.6(a).
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"INVESTMENT ASSETS" means all debentures, notes and other
evidences of Indebtedness, stocks, securities (including rights to purchase
and securities convertible into or exercisable or exchangeable for other
securities), interests in joint ventures and general and limited
partnerships, mortgage loans and other investment or portfolio assets owned
of record or beneficially by Carpenter or the Company.
"INVESTORS" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"IRS" means the United States Internal Revenue Service.
"LAWS" means all laws, statutes, rules, regulations, ordinances
and other pronouncements having the effect of law of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision or of any Governmental or Regulatory Authority.
"LEASED REAL PROPERTY" has the meaning ascribed to it in Section
2.15(a).
"LIABILITIES" means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, known or
unknown, 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.
"LIEN" means any 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.
"LOSSES" means any and all damages, fines, fees, penalties,
deficiencies, losses and expenses, including interest, reasonable expenses
of investigation, court costs, reasonable fees and expenses of attorneys,
accountants and other experts and other expenses of litigation or other
proceedings or of any claim, default or assessment (such fees and expenses
to include all fees and expenses, including, without limitation fees and
expenses of attorneys, incurred in connection with (i) the investigation or
defense of any Third Party Claims or (ii) asserting or disputing any rights
under this Agreement against any party hereto or otherwise). Also included
within the meaning of Loss, as applied to any Investor, shall be the
diminution in value to such Investor's investment hereunder.
"MANAGEMENT AGREEMENTS" means, collectively, (a) the Management
Agreement to be entered into as of the Closing Date by the Company and
Curtis, (b) the Management Agreement to be entered into as of the Closing
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Date by the Company and REI II, and (c) the Management Agreement to be
entered into as of the Closing Date between the Company and Spartan, each
substantially in the form of Exhibit F, and each as it may be amended,
supplemented or otherwise modified from time to time in accordance with the
provisions thereof.
"MATERIALS COST" has the meaning ascribed to it in Section 5.4(a).
"MITCHELL FACILITY" means the real property located at 1500 West
Main Street, Mitchell, Indiana, that is owned on the date hereof by
Carpenter.
"NASD" means the National Association of Securities Dealers, Inc.
"NET CONTRIBUTION AMOUNT" means, with respect to any period, an
amount equal to (a) the aggregate amount of cash advanced to Carpenter by
the Owners and their respective Affiliates (other than Timothy S. Durham)
during such period, PLUS (b) the aggregate amount of cash contributed to
the capital of Carpenter by the Owners and their respective Affiliates
during such period, MINUS (c) the aggregate amount of such advances and
contributions made for the primary purpose of developing Carpenter's
Shuttle Bus Business, MINUS (d) the aggregate amount of all cash,
securities and other property paid (other than as salary or as
reimbursement of expenses, in either case incurred in the ordinary course
of business including rental expense for the office at Curtis in
Indianapolis (as set forth in SECTION 2.15(A) OF THE DISCLOSURE SCHEDULE)
and equipment lease expenses under that certain Equipment Lease Agreement
between SerVaas, Inc. and Carpenter, dated December 21, 1993 (as set forth
in SECTION 2.18(2)(M) OF THE DISCLOSURE SCHEDULE)) or distributed to the
Owners and their respective Affiliates during such period (other than the
distribution to the Owners of the net proceeds of Carpenter's sale of 800
shares of CII's common stock pursuant to the CII Stock Purchase Agreement).
"NEW CURTIS NOTE" has the meaning ascribed to it in Section 4.9.
"NOVEMBER 30 FINANCIAL STATEMENTS" has the meaning ascribed to it
in Section 4.5(b).
"OCTOBER 31 COMPILED FINANCIAL STATEMENTS" has the meaning
ascribed to it in Section 2.8(b).
"OPERATIVE AGREEMENTS" means the Guarantee, the Contribution
Agreement, the Registration Rights Agreement, the Stockholders' Agreement,
the Management Agreements, the Supply Agreement and any support or other
agreements to be entered into in connection with the transactions
contemplated by this Agreement.
"OPTION" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
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gives the right to (i) purchase or otherwise receive or be issued any
shares of capital stock of such Person or any security of any kind
convertible into or exchangeable or exercisable for any shares of capital
stock of such Person or (ii) receive any benefits or rights similar to any
rights enjoyed by or accruing to the holder of shares of capital stock of
such Person, including any rights to participate in the equity, income or
election of directors or officers of such Person.
"ORDER" means any writ, judgment, decree, injunction or similar
order of any Governmental or Regulatory Authority (in each case whether
preliminary or final).
"OUT-OF-TRUST INDEBTEDNESS" has the meaning ascribed to it in
Section 2.8(h).
"OWNED REAL PROPERTY" has the meaning ascribed to it in Section
2.15(a).
"OWNERS" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"PERMITTED LIEN" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP, (ii)
the Liens set forth in SECTION 11.1 OF THE DISCLOSURE SCHEDULE and (iii)
any minor imperfection of title or similar Lien which, individually or in
the aggregate with other such Liens, does not impair the value or
marketability of the property subject to such Lien or interfere with the
use of such property in the conduct of the business of Carpenter or the
Company and which does not secure obligations for money borrowed.
"PERSON" means any natural person, corporation, general
partnership, limited partnership, limited liability company,
proprietorship, other business organization, trust, union, association or
Governmental or Regulatory Authority.
"PLAN" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock
option, stock ownership, stock appreciation rights, phantom stock, leave of
absence, layoff, vacation, day or dependent care, legal services,
cafeteria, life, health, accident, disability, workmen's compensation or
other insurance, severance, separation or other employee benefit plan,
practice, policy or arrangement of any kind, whether written or oral,
including, but not limited to, any "employee benefit plan" within the
meaning of Section 3(3) of ERISA.
"PRO FORMA BALANCE SHEET" has the meaning ascribed to it in
Section 2.8(b).
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"PURCHASE PRICE" has the meaning ascribed to it in Section 1.2.
"PURCHASED STOCK" has the meaning ascribed to it in the recitals
hereto.
"QUALIFIED PLAN" means each Benefit Plan which is intended to
qualify under Section 401 of the Code.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement to be entered into as of the Closing Date by the Company,
Carpenter and the Investors, substantially in the form of Exhibit G, as the
same may be amended, supplemented or otherwise modified from time to time
in accordance with the provisions thereof.
"REI II" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"REIMBURSABLE EXPENSES" has the meaning ascribed to it in Section
12.3.
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing
of a Hazardous Material into the Environment.
"REPRESENTATIVES" has the meaning ascribed to it in Section 4.2.
"RESOLUTION PERIOD" means the period ending 30 calendar days
following receipt by an Indemnified Party of a Dispute Notice.
"RESTRUCTURING TRANSACTIONS" has the meaning ascribed to it in
Section 4.9.
"RETAINED INVENTORY COST" has the meaning ascribed to it in
Section 5.4(a).
"RICHMOND ACQUISITION AGREEMENT" means the agreement dated
November 12, 1996 between Carpenter and the City of Richmond, Indiana,
pursuant to which Carpenter has acquired ownership of the Richmond Facility
from such City.
"RICHMOND FACILITY" means the real property and improvements
thereon comprising Carpenter's manufacturing facility in Richmond, Indiana.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC thereunder.
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"SEPTEMBER 30 COMPILED FINANCIAL STATEMENTS" has the meaning
ascribed to it in Section 2.8(a).
"SEMI-FINISHED BUSES" means, as of any date of determination,
those buses held by Carpenter as inventory on such date which consist of a
bus body attached to a bus chassis.
"SITE" means any of the real properties currently or previously
owned, leased or operated by Carpenter, the Company, any predecessor of
Carpenter or the Company, or Subsidiaries, or any entity previously owned
by CMI, Carpenter or the Company (other than the Mitchell Facility and the
Former Mitchell Properties), including all soil, subsoil, surface waters
and groundwater thereat.
"SPARTAN" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"STOCKHOLDERS' AGREEMENT" means the Stockholders' Agreement to be
entered into as of the Closing Date by the Company, Carpenter and the
Investors, substantially in the form of Exhibit E, as the same may be
amended, supplemented or otherwise modified from time to time in accordance
with the provisions thereof.
"SUBSIDIARY" means any Person in which Carpenter or the Company,
directly or indirectly through Subsidiaries or otherwise, beneficially owns
more than 50% of either the equity interests in, or the voting control of,
such Person.
"SUPPLY AGREEMENT" means the Supply Agreement to be entered into
as of the Closing Date by Carpenter and the Company with respect to tool
and die products manufactured at the Mitchell Facility, substantially in
the form of Exhibit K, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the provisions
thereof.
"TAX" or "TAXES" means all federal, state, local or foreign net or
gross income, gross receipts, net proceeds, sales, use, AD VALOREM, value
added, franchise, bank shares, withholding, payroll, employment, excise,
property, alternative or add-on minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges of any
nature whatever, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect thereto.
"TAX RETURNS" means any returns, reports or statements (including
any information returns) required to be filed with any Governmental or
Regulatory Authority for purposes of a particular Tax.
"THIRD PARTY CLAIM" has the meaning ascribed to it in Section
8.2(a).
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"TRANSFERRED EMPLOYEES" has the meaning ascribed to it in Section
5.6(a).
"TRUST" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"UNFINISHED BUSES AND CHASSIS" means, as of any date of
determination, those items held by Carpenter or the Company as inventory on
such date which consist of either (a) a bus body which is not attached to a
bus chassis or (b) a bus chassis that has been received at the Richmond
Facility or on behalf of Carpenter or the Company at a Corbeil facility and
that is not attached to a bus body.
"UNSECURED NEWCOURT INDEBTEDNESS" has the meaning ascribed to it
in Section 2.8(h).
(b) 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"
or "Section" refer to the specified Article or Section of this Agreement;
(v) the words "include," "includes" and "including" are deemed to be
followed by the phrase "without limitation"; and (vi) the phrases "ordinary
course of business" and "ordinary course of business consistent with past
practice" refer to the business and practice of CMI and Carpenter. All
accounting terms used herein and not expressly defined herein shall have
the meanings given to them under GAAP.
ARTICLE XII
MISCELLANEOUS
12.1 NOTICES. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given
only if delivered personally against written receipt or by facsimile
transmission or mailed by prepaid first class certified mail, return
receipt requested, or mailed by overnight courier prepaid, to the parties
at the following addresses or facsimile numbers:
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If to REI II, to:
Recovery Equity Investors II, L.P.
901 Mariner's Island Boulevard
Suite 555
San Mateo, CA 94404
Facsimile No.: (415) 578-9842
Attn: Joseph J. Finn-Egan
Jeffrey A. Lipkin
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Facsimile No.: (212) 309-6273
Attn: Philip H. Werner, Esq.
If to Spartan, to:
Spartan Motors, Inc.
1000 Reynolds Road
Charlotte, Michigan 48813
Facsimile No.: (517) 543-7729
Attn: George Sztykiel
with a copy to:
Foster, Swift, Collins & Smith
313 South Washington Square
Lansing, MI 48933
Facsimile No.: (517) 371-8200
Attn: James B. Jensen, Jr., Esq.
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If to Carpenter or the Company, to:
Carpenter Industries LLC
1100 Industries Road
Richmond, IN 47374
Facsimile No.: (317) 965-4100
Attn: Timothy S. Durham
with a copy to:
Leeuw, Plopper & Beeman
135 North Pennsylvania Street
2000 First Indiana Plaza
Indianapolis, IN 46204
Facsimile No.: (317) 264-5420
Attn: Stephen E. Plopper, Esq.
If to Curtis, to:
The Curtis Publishing Company
1000 Waterway Boulevard
Indianapolis, IN 46202
Facsimile No.: (317) 633-8813
Attn: Dr. Beurt SerVaas
with a copy to:
Leeuw, Plopper & Beeman
135 North Pennsylvania Street
2000 First Indiana Plaza
Indianapolis, IN 46204
Facsimile No.: (317) 264-5420
Attn: Stephen E. Plopper, Esq.
If to the Trust, to:
1000 Waterway Boulevard
Indianapolis, IN 46202
Facsimile No.: (317) 633-8813
Attn: Dr. Beurt SerVaas
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with a copy to:
Leeuw, Plopper & Beeman
135 North Pennsylvania Street
2000 First Indiana Plaza
Indianapolis, IN 46204
Facsimile No.: (317) 264-5420
Attn: Stephen E. Plopper, Esq.
All such notices, requests and other communications to any party hereto
will (i) if delivered personally to such party at its address as provided
in this Section 12.1, be deemed given upon delivery, (ii) if delivered by
facsimile transmission to such party at its facsimile number as provided in
this Section 12.1, be deemed given upon receipt, (iii) if delivered by mail
in the manner described above to such party at its address as provided in
this Section 12.1, be deemed given on the earlier of the third Business Day
following mailing or upon receipt and (iv) if delivered by overnight
courier prepaid to such party at its address as provided in this Section
12.1, be deemed given on the earlier of the first Business Day following
the date sent by such overnight courier or 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 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
each other party hereto.
12.2 ENTIRE AGREEMENT. This Agreement and the Operative
Agreements supersede all prior discussions and agreements between the
parties 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.
12.3 EXPENSES. Except as otherwise expressly provided in this
Agreement (including without limitation as provided in Article IX and
Section 10.2), each party hereto will pay its own costs and expenses;
PROVIDED, HOWEVER, that (x) upon the Closing, the Company shall reimburse
each of Carpenter and the Investors for all of the reasonable fees and
expenses (including the fees and expenses of counsel, consultants and
accountants), incurred by Carpenter or such Investor, as the case may be,
prior to the Closing in connection with this Agreement, the Operative
Agreements and the transactions contemplated hereby or thereby, provided
that the approximate amount of any such expense has been previously
disclosed to the Investors and Carpenter prior to the date hereof (the
"Reimbursable Expenses"); (y) in the event any provision of this Agreement
is breached by any of the Owners, Carpenter or the Company and the Closing
does not occur, the Owners, Carpenter and the Company jointly and severally
shall reimburse each Investor for its Reimbursable Expenses and (z) in the
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event this Agreement has been terminated or, prior to June 30, 1997, the
Closing has not occurred and Carpenter, the Company or any Subsidiary of
either of them consummates within 12 months following the earlier of such
termination or June 30, 1997, a Business Combination or enters into an
agreement, arrangement or understanding (including a non-binding letter of
intent) to consummate a Business Combination, the Owners, Carpenter and the
Company jointly and severally shall, promptly upon the earliest of such
event to occur, pay $500,000 in cash to each Investor.
12.4 PUBLIC ANNOUNCEMENTS. At all times at or before the Closing,
none of the Owners, Carpenter, the Company or the Investors will issue or
make any statements or releases to the public with respect to this
Agreement or the transactions contemplated hereby without the consent of
the others, which consent shall not be unreasonably withheld. If any party
hereto is unable to obtain the approval of its public statement or release
from the other parties hereto and such statement or release is, in the
opinion of legal counsel to such party, required by Law in order to
discharge such party's disclosure obligations, then such party may make or
issue the legally required statement or release and promptly furnish the
other parties with a copy thereof. Each of the Owners, Carpenter, the
Company and the Investors will also obtain the other parties' prior
approval of any press release to be issued immediately following the
Closing announcing the consummation of the transactions contemplated by
this Agreement.
12.5 CONFIDENTIALITY. Each party hereto will hold in strict
confidence from any Person (other than any Affiliate or Representative or
partner of such party) unless (i) compelled to disclose by judicial or
administrative process (including without limitation in connection with
obtaining the necessary consents and approvals in respect of this Agreement
and the transactions contemplated hereby of Governmental or Regulatory
Authorities and other third parties) or by other requirements of Law or
(ii) disclosed in an Action or Proceeding brought by a party hereto in
pursuit of its rights or in the exercise of its remedies hereunder, all
documents and information concerning the other parties or any of their
respective Affiliates furnished to it by any such other party or any such
other party's Representatives in connection with this Agreement or the
transactions contemplated hereby, except to the extent that such documents
or information can be shown to have been (a) previously known by the party
receiving such documents or information, (b) in the public domain (either
prior to or after the furnishing of such documents or information
hereunder) through no fault of such receiving party or (c) later acquired
by the receiving party from another source if the receiving party is not
aware that such source is under an obligation to another party hereto to
keep such documents and information confidential. In the event the
transactions contemplated hereby are not consummated, upon the request of
any other party hereto, each party hereto will, and will cause its
Affiliates and their respective Representatives to, promptly redeliver or
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cause to be redelivered all copies of documents and information furnished
by such other party in connection with this Agreement or the transactions
contemplated hereby and destroy or cause to be destroyed all notes,
memoranda, summaries, analyses, compilations and other writings related
thereto or based thereon prepared by the party furnished such documents and
information or its Representatives.
12.6 FURTHER ASSURANCES; POST-CLOSING COOPERATION. At any time
and from time to time after the Closing, the Owners, Carpenter and the
Company shall execute and deliver to each Investor such other documents and
instruments, provide such materials and information and take such other
actions as any Investor may reasonably request more effectively to vest
title in such Investor to the Purchased Stock being purchased by such
Investor hereunder and otherwise to cause the Owners, Carpenter and the
Company and to fulfill their respective obligations under this Agreement
and the Operative Agreements.
12.7 WAIVER. Any term or condition of this Agreement may be
waived at any time by any party hereto 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 (and no such waiver shall in any event be binding on any
other party hereto that is entitled to the benefits of such term or
provision). 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 term or condition of this Agreement on
any future occasion. All remedies, either under this Agreement or by Law
or otherwise afforded, will be cumulative and not alternative.
12.8 AMENDMENT. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
12.9 THIRD PARTY BENEFICIARIES. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and
their respective successors and permitted assigns, and it is not the
intention of the parties to confer third-party beneficiary rights, and this
Agreement does not confer any such rights, upon any other Person other than
any Person entitled to indemnity under Article IX.
12.10 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor
any right, interest or obligation hereunder may be assigned (by operation
of law or otherwise) by any of the Owners, Carpenter or the Company without
the prior written consent of the Investors and any attempt to do so will be
void. No Investor may assign its right hereunder to acquire Purchased
Stock to any other Person without the prior written consent of the other
parties hereto. Subject to the two immediately preceding sentences, this
Agreement is binding upon, inures to the benefit of and is enforceable by
the parties hereto and their respective successors and assigns.
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<PAGE>
12.11 HEADINGS. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
12.12 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 will not be materially and adversely affected thereby, (a) such
provision will be fully severable, (b) this Agreement will 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
will remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom
and (d) in lieu of such illegal, invalid or unenforceable provision, there
will be added automatically as a part of this Agreement a legal, valid and
enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
12.13 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the
State of New York.
12.14 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
12.15 LIMITED RECOURSE. Notwithstanding anything in this
Agreement, any Operative Agreement or any other document, agreement or
instrument contemplated hereby or thereby to the contrary, the obligations
of any Investor hereunder and under any Operative Agreement shall be
without recourse to any partner, Associate or Affiliate of such Investor or
its partners, or any of such Investor's officers, directors, employees or
agents and shall be limited to the assets of such Investor.
12.16 INVESTORS' OBLIGATIONS SEVERAL AND NOT JOINT. The
obligations of each Investor under this Agreement are several and not
joint, and no Investor shall be Liable or otherwise responsible in any
manner for any violation or breach of, or any failure to perform, any
provision of this Agreement on the part of the other Investor.
[Remainder of page intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by each party hereto as of the date first above written.
CARPENTER INDUSTRIES INC.
By: /S/ TIMOTHY DURHAM
Name: Timothy S. Durham
Title: President
CARPENTER INDUSTRIES LLC
By: /S/ TIMOTHY DURHAM
Name: Timothy S. Durham
Title: President
THE CURTIS PUBLISHING COMPANY
By: /S/ BEURT SERVAAS
Name: Dr. Beurt R. SerVaas
Title: President
By: /S/ JOAN S. DURHAM
Name: Joan S. Durham
Title: Assistant Secretary
BEURT SERVAAS REVOCABLE TRUST
By: /S/ BEURT SERVAAS
Name: Dr. Beurt R. SerVaas
Title: in his capacity as Trustee and
not in his individual capacity
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<PAGE>
SPARTAN MOTORS, INC.
By: /S/ GEORGE W. SZTYKIEL C.E.O.
Name: George Sztykiel
Title: Chief Executive Officer
RECOVERY EQUITY INVESTORS, II, L.P.,
By: Recovery Equity Partners II, L.P.,
its general partner
By: /S/ JOSEPH J. FINN-EGAN
Name: Joseph J. Finn-Egan
Title: General Partner
By: /S/ JEFFREY A. LIPKIN
Name: Jeffrey A. Lipkin
Title: General Partner
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<PAGE>
GUARANTEE OF DR. BEURT R. SERVAAS
1. Dr. Beurt R. SerVaas (the "Guarantor") does hereby personally
guarantee full, prompt and complete performance by The Curtis
Publishing Company, an Indiana corporation, Carpenter Industries LLC,
an Indiana limited liability company, and the Beurt R. SerVaas
Revocable Trust (collectively, the "SerVaas Entities"), of their
respective obligations under Sections 4.16, 4.17, 5.1, 5.3, 5.4 and 5.8
of the Investment Agreement dated as of December 23, 1996 (as the same
may be amended, supplemented or otherwise modified from time to time,
the "Agreement"), including, without limitation, the payment of all
sums that may become due to Carpenter Industries Inc., a Delaware
corporation, from the SerVaas Entities thereunder.
2. This Guarantee shall continue in full force and effect until
all the obligations of the SerVaas Entities under the Sections of the
Agreement specified in paragraph 1 above have been fully discharged by
the SerVaas Entities.
3. The obligations of the Guarantor under this Guarantee shall not
be discharged, impaired or otherwise affected by any alteration,
modification or extension of the obligations of the SerVaas Entities
under the Agreement.
4. The Guarantor hereby waives notice of acceptance of this
Guarantee.
5. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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<PAGE>
IN WITNESS WHEREOF, the undersigned hereby sets his hand as of
the day and year set forth below.
/S/ BEURT R. SERVAAS
DR. BEURT R. SERVAAS
Dated as of December 23, 1996.
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<PAGE>
EXHIBIT 2(b)
AMENDMENT NO. 1 dated as of January 6, 1997, to the Investment
Agreement dated as of December 23, 1996 (the "Investment Agreement"), among
Recovery Equity Investors II, L.P., a Delaware limited partnership ("REI
II"), Spartan Motors, Inc., a Michigan corporation ("Spartan"), Carpenter
Industries, Inc., a Delaware corporation (the "Company"), Carpenter
Industries LLC, an Indiana limited liability company ("Carpenter"), the
Beurt SerVaas Revocable Trust, a trust organized under the laws of the
State of Indiana (the "Trust"), and The Curtis Publishing Company, an
Indiana corporation ("Curtis").
WHEREAS, REI II, Spartan, the Company, Carpenter, the Trust and Curtis
are parties to the Investment Agreement; and
WHEREAS, the parties hereto desire to amend the Investment Agreement
by amending the definition of "Net Contribution Amount" as set forth below.
NOW, THEREFORE, in consideration of the mutual agreements set forth in
this Amendment, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. AMENDMENT TO INVESTMENT AGREEMENT. The Investment Agreement is
hereby amended as of the date hereof by amending the definition of "Net
Contribution Amount" in Section 11.1 thereof to read in its entirety as
follows:
"'NET CONTRIBUTION AMOUNT' means, with respect to any period, an
amount equal to (a) the aggregate amount of cash advanced to Carpenter by
the Owners and their respective Affiliates (other than Timothy S. Durham)
during such period, PLUS (b) the aggregate amount of cash contributed to
the capital of Carpenter by the Owners and their respective Affiliates
during such period, MINUS (c) the aggregate amount of such advances and
contributions made for the primary purpose of developing Carpenter's
Shuttle Bus Business, MINUS (d) the aggregate amount of all cash,
securities and other property paid (other than as salary or as
reimbursement of expenses, in either case incurred in the ordinary course
of business, including rental expense for the office at Curtis in
Indianapolis (as set forth in SECTION 2.15(A) OF THE DISCLOSURE SCHEDULE)
and equipment lease expenses under that certain Equipment Lease Agreement
between SerVaas, Inc. and Carpenter, dated December 21, 1993 (as set forth
in SECTION 2.18(2)(M) OF THE DISCLOSURE SCHEDULE)) or distributed to the
Owners and their respective Affiliates during such period (other than the
distribution to the Owners of the net proceeds of Carpenter's sale of
800 shares of CII's common stock pursuant to the CII Stock Purchase
Agreement), MINUS (e) the amount, if any, by which (i) Carpenter's net
accounts receivables as set forth in the Pro Forma Balance Sheet EXCEEDS
(ii) the actual amount of Carpenter's net accounts receivables as of
October 31, 1996."
<PAGE>
2. EFFECTIVENESS. This Amendment shall be effective upon the
execution of a counterpart hereof by each of the parties hereto. From and
after the effectiveness of this Amendment, all references to the Investment
Agreement in the Operative Agreements and the New Curtis Note shall
constitute references to the Investment Agreement as amended hereby.
3. NO OTHER MODIFICATIONS. Except as expressly amended by this
Amendment, the Investment Agreement shall continue in full force and effect
in accordance with the provisions thereof on the date hereof.
4. AMENDMENT. This Amendment may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
5. BINDING EFFECT. This Amendment is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their respective
successors and permitted assigns under the Investment Agreement.
6. HEADINGS. The headings used in this Amendment have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
7. GOVERNING LAW. This Amendment shall be governed by and construed
in accordance with the domestic laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State
of New York.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by each party hereto as of the date first above written.
CARPENTER INDUSTRIES INC.
By /S/ TIMOTHY DURHAM
Name: Tim Durham
Title: Pres
CARPENTER INDUSTRIES LLC
By /S/ TIMOTHY DURHAM
Name: Tim Durham
Title: Pres
THE CURTIS PUBLISHING COMPANY
By /S/ BEURT R. SERVAAS
Name: Beurt R. SerVaas
Title: President
By /S/ JOAN S. DURHAM
Name: Joan S. Durham
Title: Secretary
BEURT SERVAAS REVOCABLE TRUST
By /S/ BEURT R. SERVAAS
Name: Beurt R. SerVaas
Title: Trustee
<PAGE>
SPARTAN MOTORS, INC.
By /S/ GEORGE W. SZTYKIEL
Name: George W. Sztykiel
Title: C.E.O. & C.O.O.
RECOVERY EQUITY INVESTORS, II, L.P.,
By: Recovery Equity Partners II, L.P.,
its general partner
By ___________________________________
Name: Joseph J. Finn-Egan
Title: General Partner
By ___________________________________
Name: Jeffrey A. Lipkin
Title: General Partner
<PAGE>
EXHIBIT 10(a)
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CARPENTER INDUSTRIES INC.
STOCKHOLDERS' AGREEMENT
JANUARY ___, 1997
- ---------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I
CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . .2
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II
RESTRICTIONS ON TRANSFERS . . . . . . . . . . . . . . . . . . . . . 14
2.1 Restrictions Generally; Securities Act . . . . . . . . . . . . 14
2.2 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.3 Limitations on Repurchases, Dividends, Etc.. . . . . . . . . . 15
2.4 Transfer Restrictions. . . . . . . . . . . . . . . . . . . . . 15
2.5 Right of First Refusal . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III
RIGHTS OF INCLUSION . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1 Rights of Inclusion. . . . . . . . . . . . . . . . . . . . . . 18
3.2 Article III Sales. . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV
REPURCHASE OF SECURITIES; LOOK-BACK . . . . . . . . . . . . . . . . 20
4.1 Put Right. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.2 Look-Back. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 Selection of Independent Investment Bank . . . . . . . . . . . 22
ARTICLE V
CORPORATE GOVERNANCE. . . . . . . . . . . . . . . . . . . . . . . . 22
5.1 Board of Directors . . . . . . . . . . . . . . . . . . . . . . 22
5.2 Removal. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3 Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.4 Board Voting . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.5 Special Approval Rights. . . . . . . . . . . . . . . . . . . . 24
5.6 Committees of the Board; Subsidiary Boards . . . . . . . . . . 25
5.7 Action by Written Consent of Stockholders. . . . . . . . . . . 25
ARTICLE VI
CERTAIN COVENANTS OF THE PARTIES. . . . . . . . . . . . . . . . . . 26
6.1 Registration . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2 Additional Stockholders. . . . . . . . . . . . . . . . . . . . 26
6.3 Stockholder List; Certain Notices. . . . . . . . . . . . . . . 26
6.4 Rights Offering. . . . . . . . . . . . . . . . . . . . . . . . 27
6.5 Spartan Chassis. . . . . . . . . . . . . . . . . . . . . . . . 28
6.6 Certain Financial Information. . . . . . . . . . . . . . . . . 28
<PAGE>
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.1 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Entire Agreement; Amendments . . . . . . . . . . . . . . . . . 28
7.3 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 Certain Actions. . . . . . . . . . . . . . . . . . . . . . . . 29
7.5 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.6 Compliance with Regulations. . . . . . . . . . . . . . . . . . 30
7.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.8 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 30
7.9 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.10 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . 32
7.11 Headings; Certain Conditions . . . . . . . . . . . . . . . . . 32
7.12 Further Assurances; Subsidiaries . . . . . . . . . . . . . . . 32
7.13 Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.15 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.16 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.17 Consent to Jurisdiction and Service of Process . . . . . . . . 36
7.18 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . 37
Exhibit A-1 Form of Joinder Agreement for Permitted Transferees
Exhibit A-2 Form of Joinder Agreement for Additional Stockholders
Exhibit A-3 Form of Joinder Agreement for Transferees of Restricted
Securities pursuant to Section 2.5
Exhibit B Legends
Exhibit C Initial Members of Board of Directors
Schedule 2.5(e) List of Certain Competitors to whom Offered Securities
may not be Sold
<PAGE>
STOCKHOLDERS' AGREEMENT dated as of January ___, 1997, among
CARPENTER INDUSTRIES INC., a Delaware corporation (the "COMPANY"), SPARTAN
MOTORS, INC., a Michigan corporation ("SPARTAN"), RECOVERY EQUITY
INVESTORS II, L.P., a Delaware limited partnership ("REI II"), and
CARPENTER INDUSTRIES LLC, an Indiana limited liability company.
Capitalized terms are used as defined in Article I hereto.
RECITALS
WHEREAS, the Company, Spartan, REI II, SerVaas, the Beurt SerVaas
Revocable Trust and The Curtis Publishing Company have entered into that
certain Investment Agreement dated as of December 23, 1996 (as the same may
be amended, supplemented or otherwise modified from time to time, the
"INVESTMENT AGREEMENT"), pursuant to which, among other things, each of
Spartan and REI II is acquiring 300 newly issued shares of the Company's
common stock, no par value per share (the "Common Stock");
WHEREAS, immediately following the consummation of the
transactions contemplated by the Investment Agreement, SerVaas shall own,
beneficially and of record, 300 shares of Common Stock; accordingly, at
such time, Spartan will own 33- % of the outstanding Common Stock, REI II
will own 33- % of the outstanding Common Stock and SerVaas will own 33- %
of the outstanding Common Stock;
WHEREAS, each of Spartan, REI II, SerVaas and the Company
desires to enter into this Agreement to regulate certain aspects of their
relationship and to provide for, among other things, restrictions on the
transfer or other disposition of certain securities of the Company and
matters relating to the corporate governance of the Company; and
WHEREAS, the Investment Agreement, among other things, provides
that the execution and delivery of a stockholders' agreement in
substantially the form hereof is a condition to the consummation of the
other transactions contemplated by the Investment Agreement.
NOW, THEREFORE, in connection with the Investment Agreement and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
<PAGE>
ARTICLE I
CERTAIN DEFINITIONS
1.1 DEFINED TERMS.
(a) The following defined terms, when used in this Agreement,
shall have the respective meanings set forth below (such definitions to be
equally applicable to both singular and plural forms of the terms defined):
"ACCEPTANCE DATE" has the meaning ascribed to it in Section
6.4(b).
"ADDITIONAL STOCKHOLDER" means any Person (other than the
Stockholders) to whom the Company issues Restricted Securities after
the date hereof other than pursuant to a public offering registered
under the Securities Act, in each case who has executed a Joinder
Agreement as an Additional Stockholder pursuant to Section 6.2, and
its direct and indirect Permitted Transferees, so long as any such
Person shall hold Restricted Securities.
"AFFILIATE" means, with respect to any Person, (a) any other
Person directly or indirectly controlling, controlled by or under
common control with, that Person, (b) any other Person that owns or
controls (i) 5% or more of any class of equity securities of that
Person or any of its Affiliates or (ii) 5% or more of any class of
equity securities (including any equity securities issuable upon the
exercise of any option, warrant, convertible security or similar
right) of that Person or any of its Affiliates, or (c) any director,
partner, officer, agent, employee or relative of that Person. For the
purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of that Person, whether through
ownership of voting securities or by contract or otherwise.
"APPRAISED VALUE" means, as of any date of determination, the
aggregate fair market value of the Common Stock as of such date
without any discount for illiquidity of the market for Common Stock
or minority status, as determined by an Independent Investment Bank.
"ARTICLE III OFFER" has the meaning ascribed to it in Section
3.1(a).
"ASSOCIATE" means, with respect to any Person, any corporation or
other business organization of which such Person is an officer or
partner or is the beneficial owner, directly or indirectly, of 10% or
more of any class of its equity securities, any trust or estate in
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<PAGE>
which such Person has a substantial beneficial interest or as to which
such Person serves as a trustee or in a similar capacity and any
relative or spouse of such Person, or any relative of such spouse, who
has the same home as such Person.
"BOARD" means the Board of Directors of the Company.
"BUYER" has the meaning ascribed to it in Section 3.1(a).
"CERTIFICATE OF INCORPORATION" means the Certificate of
Incorporation of the Company, as the same may be amended or restated
from time to time.
"CHANGE OF CONTROL" means the occurrence in one or more
transactions or events or series of transactions or events of any of
the following: (i) the sale or transfer of all or substantially all
of the assets of the Company; (ii) any merger, consolidation,
recapitalization, reorganization or similar event to which the Company
is a party, other than any such transaction immediately after which
(A) the Spartan Stockholders, the SerVaas Stockholders and their
respective direct and indirect Permitted Transferees shall continue to
beneficially own, and have the economic interest in, securities
representing in the aggregate the same percentage of the Total Voting
Power of the Company and the same percentage of the equity interest in
the Company, in each case calculated on a Fully Diluted Basis, as was
owned by them in the aggregate immediately prior to such transaction,
and (B) each of the Spartan Stockholders, the SerVaas Stockholders and
its Permitted Transferees continues to have beneficial ownership and
economic interest in the Company's securities in the same proportion
in relation to the other Stockholders as a group as immediately before
such transaction; (iii) the dissolution or liquidation of the Company;
(iv) the Spartan Stockholders, the SerVaas Stockholders and their
respective Permitted Transferees cease to beneficially own, and have
the economic interest in, more than 40% of the Common Stock calculated
on a Fully Diluted Basis; (v) the Spartan Stockholders, the SerVaas
Stockholders and their respective Permitted Transferees shall cease to
have more than 40% of the Total Voting Power of the Company,
calculated on a Fully Diluted Basis; or (vi) any Person or "group" (as
defined in Rule 13D under the Exchange Act) other than the Spartan
Stockholders, the SerVaas Stockholders and their respective Permitted
Transferees shall own, beneficially or of record, more than 40% of the
Common Stock, calculated on a Fully Diluted Basis, or shall have more
than 40% of the Total Voting Power, calculated on a Fully Diluted
Basis.
"CLOSING" has the meaning ascribed to it in the Investment
Agreement.
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<PAGE>
"CLOSING DATE" has the meaning ascribed to it in the Investment
Agreement.
"COMMISSION" means the Securities and Exchange Commission and any
other similar or successor agency of the federal government
administering the Securities Act or the Exchange Act.
"COMMON STOCK" has the meaning ascribed to it in the recitals
hereto.
"COMPANY" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"COMPANY DESIGNEE" has the meaning assigned to it in Section
4.1(a).
"COMPANY NOTICE" has the meaning ascribed to it in Section
2.5(b).
"CONTRACT" has the meaning ascribed to it in the Investment
Agreement.
"DEFAULT RATE" means the lesser of (i) the Prime Rate plus 5% per
annum and (ii) the maximum permitted interest rate under applicable
law. Each change in the Prime Rate shall result in a corresponding
change in the Default Rate effective at the time of such change in the
Prime Rate.
"DR. SERVAAS" means Dr. Beurt R. SerVaas.
"EBT" means for the Company for any fiscal period, the
consolidated net income (loss) of the Company and its consolidated
Subsidiaries for such fiscal period, determined in accordance with
generally accepted accounting principles and in a manner consistent
with that used in the preparation of the Company's consolidated
financial statements for periods commencing after the Closing Date,
PLUS (a) the sum of the following amounts of the Company and its
consolidated Subsidiaries for such fiscal year, in each case
determined on a consolidated basis in accordance with generally
accepted accounting principles and used in the manner described above,
to the extent included in the determination of such net income (loss):
(i) federal, state and local income tax expense, (ii) extraordinary
losses and (iii) expenses attributable to any management stock bonus,
cash bonus, stock option or similar incentive plan, including any
bonuses payable pursuant to employment agreements; LESS (b) the
extraordinary gains of the Company and its consolidated Subsidiaries
for such fiscal period, determined on a consolidated basis in
accordance with generally accepted accounting principles used in the
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<PAGE>
manner described above, to the extent included in the determination of
such net income (loss); PROVIDED, HOWEVER, that the determination of
EBT shall exclude the effects of any adjustments resulting from the
application of Accounting Principles Board Opinion Numbers 16 and 17
in connection with transactions or events occurring after the Closing.
"EBT VALUE" means, as of any date of determination, an amount
equal to the product of (i)10 MULTIPLIED BY (ii) the Company's EBT
for the twelve-fiscal month period ending on the last day of the last
full fiscal month immediately preceding the date of determination.
"EQUITY EQUIVALENTS" means securities which, by their terms, are
or may be exercisable, convertible or exchangeable for or into Common
Stock at the election of the holder thereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the
Commission thereunder.
"FREELY TRADEABLE" means, with respect to any securities, that
there exists an active public trading market for such securities, that
such securities are either listed on the New York Stock Exchange or
the American Stock Exchange or quoted on the NASDAQ National Market
System and that no restrictions on trading such securities exist,
including any restrictions of the kind contemplated under Rule 144
under the Securities Act with respect to "restricted securities" (as
such term is defined in such Rule) except to the extent such
restrictions under Rule 144 would not have a reasonable likelihood of
restricting the public resale of such securities by the holder thereof
for a period in excess of six months.
"FULLY-DILUTED BASIS" means, with respect to the calculation of
the number of shares of Common Stock, (i) all shares of Common Stock
outstanding at the time of determination and (ii) all shares of Common
Stock issuable upon the exercise, conversion or exchange of any Equity
Equivalents outstanding at the time of determination.
"INCLUSION NOTICE" shall have the meaning ascribed to it in
Section 3.1(a).
"INCLUSION RIGHT" shall have the meaning ascribed to it in
Section 3.1(b).
"INDEPENDENT INVESTMENT BANK" means any nationally recognized
investment bank or valuation firm chosen by the Company and consented
to by the holders of a majority of the Restricted Securities then held
by each of the Spartan Stockholders, the REI Stockholders and the
SerVaas Stockholders, which consent in each case shall not be
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unreasonably withheld or delayed; PROVIDED, HOWEVER, that if any such
consent is withheld or delayed, the Independent Investment Bank shall
be selected as provided in Section 4.3.
"INVESTMENT AGREEMENT" shall have the meaning ascribed to it in
the recitals hereto.
"JOINDER AGREEMENT" means a Joinder Agreement substantially in
the form attached hereto as Exhibit A-1, A-2 or A-3.
"LIEN" means any lien, claim, option, charge, encumbrance,
security interest or other adverse claim of any kind.
"LOOK-BACK CONSIDERATION" means, with respect to any Look-Back
Event, (i) the aggregate consideration directly or indirectly received
or to be received by the Company, its stockholders and their
respective Subsidiaries and Affiliates in connection with such Look-
Back Event, including all cash, securities, obligations, notes,
bonuses, consulting, non-competition and similar payments and other
property received or receivable by any of the Company, its
stockholders and their respective Subsidiaries and Affiliates, PLUS
(ii) the aggregate amount of all indebtedness of the Company, its
stockholders and their respective Subsidiaries and Affiliates assumed
in connection with such Look-Back Event by the counterparty or
counterparties thereto PLUS (iii) without duplication of amounts
included in clauses (i) and (ii) above, any dividends or other
distributions declared or paid by the any of Company, its Subsidiaries
and their respective Affiliates in contemplation of, immediately prior
to or contemporaneously with, such Look-Back Event the consummation
thereof. For the purposes of this definition, the value of any
consideration other than cash shall be determined as follows: (x) if
the consideration consists of securities that are traded on a national
securities exchange, the value thereof (on a per share basis) shall
equal the last closing price per share prior to the consummation of
such Look-Back Event, (y) if the consideration consists of securities
that are traded on an over-the-counter market, the value thereof (on a
per share basis) shall equal the mean of the last closing bid and ask
prices per share prior to the consummation of the Look-Back Event and
(z) if the consideration is of any other type, the value thereof shall
equal its fair market value (without any discount for illiquidity of
the market therefor or minority status, in the case of securities) as
determined by an Independent Investment Bank.
"LOOK-BACK EVENT" means the occurrence of any of the following
events (or any series of events giving rise to any of the following
events) during the period beginning on the date of the Put Notice and
ending on the first anniversary of the date of the purchase and sale
of the Put Option Securities: (i) a Change of Control; (ii) a public
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offering of Common Stock; or (iii) the entering into of any agreement,
arrangement or understanding (whether written or oral) by any of the
Company, its Subsidiaries, the Stockholders and their respective
Affiliates with respect to any event specified in clause (i) or (ii)
above.
"LOOK-BACK PAYMENT" has the meaning ascribed to it in Section
4.2(a).
"MATERIAL CONTRACT" means, as applied to any Contract to which
the Company or any of its Subsidiaries is a party or by which any of
them is bound:
(i) any Contract containing any provision or covenant
prohibiting or limiting the ability of the Company or any Subsidiary
thereof to engage in any business activity or compete with any Person;
(ii) any partnership, limited liability company, joint venture,
stockholders' or other similar Contract;
(iii) any Contract (A) with one or more of its independent
contractors, distributors, dealers, manufacturers' representatives,
sales agencies or franchisees, (B) with one or more of its
aggregators, manufacturers or equipment vendors, or (C) with respect
to the sale of services, products or both to customers; in each case
involving payments to or from the Company or any Subsidiary of the
Company in excess of $100,000 in any fiscal year;
(iv) any Contract between or among the Company or any Subsidiary
thereof, on the one hand, and any current or former officer, director,
Stockholder, Affiliate or Associate of the Company or any Subsidiary
thereof or any Associate of any such officer, director, Stockholder,
Affiliate or Associate (other than the Company or any Subsidiary
thereof), on the other hand, including any such Contract entered into
pursuant to Section 6.5;
(v) any collective bargaining or similar labor Contract;
(vi) any Contract that (A) limits or contains restrictions on the
ability of the Company or any Subsidiary thereof (x) to declare or
pay dividends on, to make any other distribution in respect of, or to
issue or purchase, redeem or otherwise acquire, its equity capital or
capital stock, as the case may be, or (y) to change the lines of
business in which it participates or engages or (B) requires the
Company or any Subsidiary thereof to maintain specified financial
ratios or levels of net worth or other indicia of financial condition;
and
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(vii) any other Contract involving payments to or from the
Company or any Subsidiary of the Company in excess of $100,000, in any
fiscal year.
"NEW COMMON STOCK" means any Common Stock or Equity Equivalent,
other than any:
(i) Common Stock and Equity Equivalents issued in
connection with any stock split, stock dividend or
reclassification of any Restricted Securities or Equity
Equivalents;
(ii) Common Stock and Equity Equivalents issuable in a
public offering registered under the Securities Act;
(iii) Common Stock and Equity Equivalents issued to
financial institution(s) on arm's-length terms in connection with
(and ancillary to) an extension of credit by such financial
institution(s); and
(iv) Common Stock and Equity Equivalents issued to an
unaffiliated seller or sellers of another company or business in
connection with an arm's-length acquisition by the Company or one
or more of its Subsidiaries of such company or business.
"NEW COMMON STOCK NOTICE" has the meaning ascribed to it in
Section 6.4.
"NEW COMMON STOCK OFFER" has the meaning ascribed to it in
Section 6.4.
"NOTICE OF INTENTION" has the meaning ascribed to it in Section
2.5(a).
"OFFERED SECURITIES" has the meaning ascribed to it in Section
2.5(a).
"OFFEREES" has the meaning ascribed to it in Section 3.1(a).
"OFFER PRICE" has the meaning ascribed to it in Section 2.5(a).
"ORIGINAL OWNERSHIP LEVEL" means, with respect to any
Stockholder, the number of shares of Common Stock, on a Fully Diluted
Basis, as adjusted for any stock splits, stock dividends or
reclassifications or other similar events, held by such Stockholder on
the Closing Date immediately after the Closing.
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"PERMITTED TRANSFEREE" means:
(i) with respect to any Stockholder who is a natural
person, the spouse or any lineal descendant (including by
adoption and stepchildren) of such Stockholder, any son-in-law or
daughter-in-law of such Stockholder, or any trust of which such
Stockholder is the trustee and which is established solely for
the benefit of any of the foregoing individuals and whose terms
are not inconsistent with the terms of this Agreement;
(ii) with respect to any Stockholder who is not a natural
person, (A) any Affiliate of such Stockholder and any trustee,
officer, director or employee of such Stockholder or any such
Affiliate, (B) any spouse, lineal descendant (including by
adoption and stepchildren), son-in-law or daughter-in-law of the
trustees, officers, directors and employees referred to in clause
(A) above, and any trust where a majority in interest of the
beneficiaries thereof are one or more of the persons described in
this clause (B) and the trustees, officers, directors and
employees described in clause (A) above and whose terms are not
inconsistent with the terms of this Agreement;
(iii) as to any REI Stockholder, (w) any other REI
Stockholders, (x) any general partner or limited partner of REI
II, (y) any partner, officer or employee of any such general
partner or limited partner, (z) any Affiliate of any such general
partner or limited partner, (ww) any director, officer, employee,
investment advisor or partner of any such Affiliate or general
partner or limited partner (and any subsequent transferee of such
partner), and (xx) any liquidating trust or similar entity
established by REI II or any of the foregoing entities for the
benefit of its partners or interest holders and their Permitted
Transferees for the purpose of holding Restricted Securities; and
(iv) as to any SerVaas Stockholder, (w) any other SerVaas
Stockholder, and (x) any liquidating trust or similar entity
established by or on behalf of a SerVaas Stockholder and its
Permitted Transferees for the purpose of holding Restricted
Securities;
PROVIDED, HOWEVER, that notwithstanding anything in paragraphs (i) through
(iv) above to the contrary, (x) the "Permitted Transferees" of the Spartan
Stockholders at any time of determination shall not include any person who
is then an REI Stockholder, a SerVaas Stockholder or a Permitted Transferee
of an REI Stockholder or a SerVaas Stockholder, (y) the "Permitted
Transferees" of the REI Stockholders at any time of determination shall not
include any person who is then a Spartan Stockholder, a SerVaas Stockholder
or a Permitted Transferee of a Spartan Stockholder or a SerVaas Stockholder
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and (z) the "Permitted Transferees" of the SerVaas Stockholders at any time
of determination shall not include any person who is then an REI
Stockholder, a Spartan Stockholder or a Permitted Transferee of an REI
Stockholder or a Spartan Stockholder.
"PERSON" or "PERSON" means an individual, partnership,
corporation, trust, unincorporated organization, limited liability
company, joint venture, government (or any agency or political
subdivision thereof) or any other entity of any kind.
"PRIME RATE" means, for any applicable day, the rate of interest
publicly announced by Wells Fargo Bank N.A. at its principal office
located in San Francisco, California as its prime commercial lending
rate for such day.
"PRO RATA" means, with respect to one or more Stockholders, in
proportion to the number of shares of Common Stock on a Fully-Diluted
Basis owned by such Stockholder or Stockholders or which may be
acquired by any such Stockholder or Stockholders upon exercising any
rights under any Equity Equivalent owned by such Stockholder or
Stockholders.
"PROSPECTIVE BUYER" has the meaning ascribed to it in Section
2.5(a).
"PROSPECTIVE BUYER NOTICE" has the meaning ascribed to it in
Section 2.5(c).
"PUT NOTICE" has the meaning ascribed to it in Section 4.1(a).
"PUT OBLIGATION" has the meaning ascribed to it in Section
4.1(a).
"PUT OPTION SECURITIES" has the meaning ascribed to it in Section
4.1(a).
"PUT PRICE" has the meaning ascribed to it in Section 4.1(a).
"QUALIFYING OFFERING" means a widespread underwritten primary or
secondary public offering of Common Stock pursuant to an effective
registration statement under the Securities Act covering the offer and
sale of Common Stock (i) that raises at least $30,000,000 of gross
proceeds to the Company, (ii) as a result of which at least 33-1/3%
(on a Fully-Diluted Basis) of the Common Stock is publicly held upon
the consummation of such offering and (iii) that results in the shares
of Common Stock so offered and sold being either (A) listed on the New
York Stock Exchange or (B) quoted on the NASDAQ National Market
System.
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"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date hereof, among the Company, Spartan,
REI II and SerVaas, as the same may be amended, supplemented or
otherwise modified from time to time.
"REI DIRECTOR" has the meaning ascribed to it in Section 5.1(a).
"REI II" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"REI STOCKHOLDERS" means REI II and its direct and indirect
Permitted Transferees, so long as any such Person shall hold
Restricted Securities.
"RESTRICTED SECURITIES" means the Common Stock, any Equity
Equivalents and any securities issued with respect thereto as a result
of any stock dividend, stock split, reclassification,
recapitalization, reorganization, merger, consolidation or similar
event or upon the conversion, exchange or exercise thereof.
"RULE 144 TRANSACTION" means a transfer of Common Stock (A)
complying with Rule 144 under the Securities Act as such Rule is in
effect on the date of such transfer (but not including a sale other
than pursuant to a "brokers transaction" as defined in clauses (1) and
(2) of paragraph (g) of such Rule as in effect on the date hereof) and
(B) occurring at a time when shares of Common Stock are registered
pursuant to Section 12 of the Exchange Act (or any successor to such
Section).
"SALE OF THE COMPANY" means the sale of the Company (whether by
merger, consolidation, recapitalization, reorganization, sale of
securities of the Company or sale of all or substantially all the
assets of the Company), for consideration consisting exclusively of
cash and Freely Tradeable Securities, to one or more Persons (other
than the Spartan Stockholders, the REI Stockholders and the SerVaas
Stockholders) who acquire (i) securities representing 50% or more of
the Total Voting Power of and equity interest in the Company, in each
case on a Fully Diluted Basis, or (ii) all or substantially all of the
assets of the Company.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations of the Commission
thereunder.
"SELLING STOCKHOLDER" has the meaning ascribed to it in Section
2.5(a).
"SERVAAS" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
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<PAGE>
"SERVAAS DIRECTOR" has the meaning ascribed to it in Section
5.1(a).
"SERVAAS STOCKHOLDERS" means SerVaas and its direct and indirect
Permitted Transferees, so long as any such Person shall hold
Restricted Securities.
"SIGNIFICANT TRANSACTION" means:
(i) any merger, consolidation or other business combination
with respect to the Company or any Subsidiary thereof, or any
sale or other disposition of all or substantially all of the
Company's or any such Subsidiary's assets, or any acquisition by
the Company or any such Subsidiary of any material business or
assets, or the liquidation or dissolution of the Company or any
Subsidiary or the adoption of any plan with respect to any such
liquidation or dissolution;
(ii) any conveyance, sale, lease, transfer or other
disposition of any significant amount of assets of the Company or
any Subsidiary thereof, other than the sale of inventory in the
ordinary course of business;
(iii) the incurrence of any Lien on any assets of the
Company or any Subsidiary thereof, other than purchase money
liens on items the purchase of which is not otherwise subject to
Board approval under Section 5.5;
(iv) any issuance by the Company or any Subsidiary of any
Common Stock, equity securities or Equity Equivalents;
(v) the incurrence, issuance, assumption or guaranty by the
Company or any Subsidiary thereof of any indebtedness for
borrowed money or any note, bond, debenture or similar
instrument;
(vi) the entering into or termination of any Material
Contract or any amendment to, or waiver or termination of, any
material provision of any Material Contract;
(vii) the adoption or amendment of the Company's (or any of
its Subsidiaries') business or financial plan or operating and
capital expenditure budget;
(viii) any capital expenditure during any fiscal year in
excess of the capital budget approved by the Board for such year;
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(ix) the commencement of any lawsuit, proceeding or other
action by or on behalf of the Company or any Subsidiary thereof
(other than (A) collection actions commenced by the Company in
the ordinary course of its business and (B) cross-claims and
counterclaims the commencement and resolution of which would not
reasonably be expected to have a material effect on the business
or financial condition of the Company and its Subsidiaries, taken
as a whole);
(x) the payment, or undertaking of any obligation to pay,
compensation to any employees or officers in excess of amounts
authorized by the Board from time to time;
(xi) the adoption of any pension plans, profit sharing plans
or other benefit plans for any employees or officers of the
Company or any Subsidiary thereof;
(xii) the selection or change of the Company's or any of its
Subsidiaries; independent accountants or legal counsel;
(xiii) the hiring or discharge of senior management
personnel of the Company or any Subsidiary thereof;
(xiv) the entry by the Company or any Subsidiary thereof
into any line of business not included in the Board-approved
business plan (including any such entry into a new line of
business pursuant to the provisions of Section 5.9(b) of the
Investment Agreement), or the exit by the Company or any such
Subsidiary from any line of business included in such plan; or
(xv) any amendment to or modification or repeal of any
provision of the certificate or articles of incorporation, by-
laws or other constitutive documents of the Company or any
Subsidiary thereof.
"SPARTAN" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"SPARTAN DIRECTOR" has the meaning ascribed to it in Section
5.1(a).
"SPARTAN STOCKHOLDERS" means Spartan and its direct and indirect
Permitted Transferees, so long as any such Person shall hold
Restricted Securities.
"STOCKHOLDERS" means each of the Spartan Stockholders, each of
the REI Stockholders, each of the SerVaas Stockholders and any other
Person who executes a Joinder Agreement and thereby becomes a party to
this Agreement.
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"SUBSIDIARY" means, with respect to any Person at any time of
determination, any corporation, partnership, limited liability
company, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is at such
time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination
thereof, or (ii) if a partnership, limited liability company,
association or other business entity, a majority of the partnership or
other similar ownership interests therein are at such time owned or
controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes
hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, association, limited liability
company, or other business entity if such Person or Persons shall be
allocated a majority of partnership, limited liability company,
association or other business entity gains or losses or shall be or
control the managing director, general partner or manager of such
partnership, limited liability company, association or other business
entity.
"THIRD PARTY" has the meaning ascribed to it in Section 2.5(e).
"TOTAL VOTING POWER" means, with respect to any Person, (i) the
total number of votes which holders of securities having the ordinary
power to vote, without regard to the occurrence of any contingency,
are entitled to cast in the election of directors of such Person and
(ii) in the event holders of one or more classes or series of
securities are entitled to vote separately as a class or series,
without regard to the occurrence of any contingency, in such election,
the total number of votes which the holders of such class or series
are entitled to cast in such election.
"TRANSFER" means any direct or indirect sale, transfer,
assignment, grant of a participation in, gift, hypothecation, pledge
or other disposition of any securities or any interests therein or, as
the context may require, to sell, transfer, assign, grant a
participation in, give as a gift, hypothecate, pledge or otherwise
dispose of, directly or indirectly, any securities or any interests
therein; PROVIDED, HOWEVER, that the exercise of any conversion or
exchangeability right provided for in the terms of any Equity
Equivalent shall not be deemed a "Transfer."
"TRANSFEROR" has the meaning ascribed to it in Section 3.1(a).
"TRANSFEROR SHARES" has the meaning ascribed to it in Section
3.1(a).
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(b) Unless otherwise provided herein, all accounting terms used
in this Agreement shall be interpreted in accordance with generally
accepted accounting principles as in effect from time to time, applied on a
consistent basis.
ARTICLE II
RESTRICTIONS ON TRANSFERS
2.1 RESTRICTIONS GENERALLY; SECURITIES ACT.
(a) Each Stockholder agrees that it will not, directly or
indirectly, Transfer any Restricted Securities except in accordance with
the terms of this Agreement. Any attempt to Transfer or any purported
Transfer of any Restricted Securities not in accordance with the terms of
this Agreement shall be null and void and neither the Company nor any
transfer agent of such securities shall give any effect to such attempted
Transfer in its stock records.
(b) Each Stockholder agrees that, in addition to the other
requirements set forth herein and in the Investment Agreement and the
Registration Rights Agreement, it will not Transfer any Restricted
Securities except (i) pursuant to an effective registration statement under
the Securities Act, or (ii) unless such requirement is waived by the
Company, upon receipt by the Company of (A) an opinion of counsel to such
Stockholder (which opinion and counsel are reasonably satisfactory to the
Company) or in connection with such Transfer an opinion of counsel to the
Company, or a no-action letter from the Commission addressed to the Company
or such Stockholder, in each case to the effect that no registration
statement is required in connection with such Transfer because of the
availability of an exemption from registration under the Securities Act.
2.2 LEGEND.
(a) Each certificate representing Restricted Securities shall be
endorsed with the legends set forth in Exhibit B hereto and such other
legends as may be required by applicable state securities laws.
(b) Any certificate issued at any time in exchange or
substitution for any certificate bearing such legends (except a new
certificate issued upon the completion of a Transfer pursuant to a
registered public offering under the Securities Act and made in accordance
with the Securities Act) shall also bear such legends, unless the
Restricted Securities represented thereby are no longer subject to the
provisions of this Agreement or, in the opinion of the Company (with advice
from counsel to the Company, as the Company may deem appropriate), the
restrictions imposed under the Securities Act or any state securities law,
in which case the applicable legend (or legends) may be removed.
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2.3 LIMITATIONS ON REPURCHASES, DIVIDENDS, ETC.
Each Stockholder acknowledges that the Company will enter into or
has entered into certain financing agreements that will or do contain
prohibitions of and restrictions and limitations on, among other things,
the ability of the Company to purchase any Restricted Securities (whether
pursuant to this Agreement or otherwise), to pay dividends and to waive,
modify or discharge any rights or obligations under this Agreement.
2.4 TRANSFER RESTRICTIONS.
Each of the Stockholders agrees that it will not Transfer any
Restricted Securities, other than (i) to a Permitted Transferee who shall
have executed a Joinder Agreement substantially in the form of Exhibit A-1,
and thereby become a party to this Agreement; (ii) pursuant to Section 2.5
(Right of First Refusal); (iii) in accordance with Article III (Rights of
Inclusion); (iv) pursuant to Article IV (Repurchase of Securities); (v) in
a Qualifying Public Offering or (vi) in a Demand Registration or a
Piggyback Registration (as such terms are defined in the Registration
Rights Agreement). For purposes of this Section 2.4, each of the following
events shall be deemed to constitute a Transfer by any SerVaas Stockholder
that is not a natural person of all the Restricted Securities then held by
such SerVaas Stockholder: (a) any merger, consolidation or similar
business combination between such SerVaas Stockholder and any other person,
other than any such transaction that is solely between such SerVaas
Stockholder and a Permitted Transferee thereof; (b) any other event as a
result of which Dr. SerVaas and his Permitted Transferees (determined after
giving effect to such event) cease to own at least 75% of the equity
interests in such SerVaas Stockholder; (c) any other event as a result of
which Dr. SerVaas and his Permitted Transferees (determined after giving
effect to such event) cease to own and vote securities representing at
least 75% of the voting power of such SerVaas Stockholder or otherwise
cease to exercise exclusive control over such SerVaas Stockholder with
respect to any matter involving this Agreement.
2.5 RIGHT OF FIRST REFUSAL.
(a) Except for any Transfer of Restricted Securities permitted
pursuant to clause (i), (iii), (iv), (v) or (vi) of Section 2.4, if
pursuant to a bona fide third party offer a Stockholder desires to Transfer
any Restricted Securities (such Transferring Stockholder, a "SELLING
STOCKHOLDER" and the Restricted Securities proposed to be Transferred, the
"OFFERED SECURITIES"), prior to any Transfer thereof it shall give written
notice of the proposed Transfer (the "NOTICE OF INTENTION") to the Company
and the other Stockholders (such parties other than the Company to whom
such Notice of Intention is given, but excluding the Selling Stockholder,
the "PROSPECTIVE BUYERS"), specifying the type and number of Offered
Securities which such Selling Stockholder wishes to Transfer, the proposed
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purchase price (the "OFFER PRICE") therefor and all other material terms
and conditions of the proposed Transfer, including the identity of the
third party offeror.
(b) For a period of 30 days following its receipt of the Notice
of Intention, the Company shall have the right to purchase all or any
portion of the Offered Securities at the Offer Price and on the other terms
specified in the Notice of Intention, exercisable by delivery of an
irrevocable notice (the "COMPANY NOTICE") to the Selling Stockholder, with
a copy to each of the Prospective Buyers, specifying the number of Offered
Securities with respect to which the Company is exercising such right to
purchase.
(c) For a period of 30 days following its receipt of the Company
Notice or, if no Company Notice is so received, for a period of 60 days
following its receipt of the Notice of Intention, each of the Prospective
Buyers shall have the right to purchase, at the Offer Price and on the
other terms specified in the Notice of Intention, all or any portion of the
Offered Securities which the Company has elected not to purchase up to such
Prospective Buyer's Pro Rata portion thereof as determined by reference to
all Prospective Buyers; PROVIDED, HOWEVER, that in the event that any
Prospective Buyer does not purchase any or all of its Pro Rata portion of
the Offered Securities, the other Prospective Buyers shall have the right
to purchase such portion, on a Pro Rata basis as among themselves, until
all of such Offered Securities are purchased or until such other
Prospective Buyers do not desire to purchase any more Offered Securities.
The right of the Prospective Buyers pursuant to this Section 2.5(c) shall
be exercisable by delivery of a notice (the "PROSPECTIVE BUYER NOTICE"),
setting forth the maximum number of Offered Securities that such
Prospective Buyer wishes to purchase, to the Selling Stockholder, the
Company and the other Prospective Buyers and shall expire if unexercised
within such 30-day or 60-day period, as applicable.
(d) Notwithstanding the foregoing provisions of this Section
2.5, unless the Selling Stockholder shall have consented to the purchase of
less than all of the Offered Securities, neither the Company nor any
Prospective Buyer may purchase any Offered Securities pursuant to such
foregoing provisions unless all of the Offered Securities are to be so
purchased (whether by the Company, the Prospective Buyers, or any
combination thereof).
(e) If all notices required to be given pursuant to the
foregoing provisions of this Section 2.5 have been duly given, and the
Company and the Prospective Buyers determine not to exercise their
respective rights to purchase the Offered Securities at the Offer Price and
on the other terms specified in the Notice of Intention or determine, with
the consent of the Selling Stockholder, to exercise such rights to purchase
less than all of the Offered Securities, then the Selling Stockholder shall
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have the right, for a period of 180 days from the earlier of (i) the
expiration of the last applicable exercise period pursuant to Section
2.5(c) with respect to the proposed Transfer or (ii) the date on which such
Selling Stockholder receives notice from the Company and the Prospective
Buyers that none of them will exercise in whole or in part the purchase
rights granted pursuant to this Section 2.5, to sell to a third party (a
"THIRD PARTY"), other than the persons identified in Schedule 2.5(e), the
Offered Securities remaining unsold under this Section 2.5 at a price not
less than the Offer Price and on other terms which shall not be materially
more favorable to the Third Party in the aggregate than those terms set
forth in the Notice of Intention; PROVIDED, HOWEVER, that prior to any such
Transfer to a Third Party, such Third Party shall have executed and
delivered to the Company a Joinder Agreement substantially in the form of
Exhibit A-3, and thereby become a party to this Agreement.
(f) The closing of any purchase by and sale to the Company or
any Prospective Buyer pursuant to this Section 2.5 shall take place on such
date, not later than 15 business days after the delivery to the Selling
Stockholder of the Company Notice or, if the Company elects to purchase
less than all of the Offered Securities, the Prospective Buyer Notice, as
the parties to such purchase and sale shall select; PROVIDED, HOWEVER, that
if no Prospective Buyer Notice is delivered, such closing shall take place
not later than 15 days after the earlier of (i) the 60th day after the
Company's receipt of the Notice of Intention with respect to the proposed
Transfer and (ii) the date on which the Selling Stockholder receives notice
from the Prospective Buyers that none of them will exercise in whole or in
part the purchase rights granted pursuant to this Section 2.5. At the
closing of such purchase and sale, the Selling Stockholder shall deliver
certificates evidencing the Offered Securities being sold duly endorsed, or
accompanied by written instruments of Transfer in form satisfactory to the
purchaser thereof, duly executed by the Selling Stockholder, free and clear
of any Liens, against delivery of the Offer Price therefor.
(g) Any Transfer by a Selling Stockholder which is subject to
the requirements of this Section 2.5 (whether such Transfer is made to the
Company, to a Prospective Buyer or to a Third Party) shall also be subject
to each other Stockholder's rights of inclusion (if any) under Article III.
Prior to any such Transfer, the Selling Stockholder shall deliver to the
other Stockholders in accordance with Section 3.1(a) any Inclusion Notice
required to be delivered under Section 3.1(a) in connection with such
Transfer.
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ARTICLE III
RIGHTS OF INCLUSION
3.1 RIGHTS OF INCLUSION.
(a) Except for any Transfer of Restricted Securities pursuant to
clause (i), (iv), (v) or (vi) of Section 2.4, if:
(i) the Spartan Stockholders propose to transfer, in one
transaction or a series of related transactions, Restricted Securities
representing more than 5% of the Restricted Securities on a Fully-
Diluted Basis;
(ii) the REI Stockholders propose to Transfer, in one
transaction or a series of related transactions, Restricted
Securities representing more than 5% of the Restricted Securities on a
Fully-Diluted Basis; or
(iii) the SerVaas Stockholders propose to Transfer, in one
transaction or a series of related transactions, Restricted Securities
representing more than 5% of the Restricted Securities on a Fully-
Diluted Basis;
in each case to any Person (the "BUYER") (the transferor under clause (i),
(ii) or (iii) the "TRANSFEROR" and the securities proposed to be so
Transferred, the "TRANSFEROR SHARES"), then, as a condition to such
Transfer, the Transferor shall cause the Buyer to include an offer (the
"ARTICLE III OFFER") to each of the Stockholders holding shares of the same
class (and series) as the Transferor Shares who are not Transferors
(collectively, the "OFFEREES"), to sell to the Buyer, at the option of each
Offeree, that number of shares of the same class (and series) of Restricted
Securities as the Transferor, determined in accordance with Section 3.1(b),
on the same terms and conditions as are applicable to the Transferor
Shares. The Transferor shall provide a written notice (the "INCLUSION
NOTICE") of the Article III Offer to each Offeree, which may accept the
Article III Offer by providing a written notice of acceptance of the
Article III Offer to the Transferor within 30 days of delivery of the
Inclusion Notice.
(b) Each Offeree shall have the right (an "INCLUSION RIGHT") to
sell pursuant to the Article III Offer a Pro Rata number of its shares of
Restricted Securities, determined by reference to the number of shares of
Restricted Securities being sold by the Transferor to the Buyer. Any
Offeree who owns Equity Equivalents may sell pursuant to the Article III
Offer, in lieu of shares of Common Stock, Equity Equivalents representing
that number of shares of Common Stock which it could sell pursuant to its
Inclusion Right, and the purchase price for such Equity Equivalents shall
equal the aggregate price that would be paid for the shares of Common Stock
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issuable upon the exercise, exchange or conversion thereof minus the
aggregate exercise, exchange or conversion price under such Equity
Equivalents for such shares of Common Stock.
3.2 ARTICLE III SALES.
(a) Upon its exercise of an Inclusion Right, each Offeree
shall, within a reasonable period prior to the closing of the purchase and
sale of the Restricted Securities covered by the Article III Offer, deliver
to the Transferor a certificate or certificates representing the Restricted
Securities to be Transferred pursuant to the Article III Offer by such
Offeree, free and clear of all Liens, and a limited power-of-attorney
authorizing the Transferor to sell or otherwise dispose of such Restricted
Securities pursuant to the terms of the Article III Offer; PROVIDED,
HOWEVER, that in the event that the purchase and sale of Restricted
Securities contemplated by the Article III Offer is not completed, such
certificate(s) shall be returned to the Offeree in accordance with Section
3.2(b).
The Transferor shall have 120 days, commencing on the
expiration of the 30-day period referred to in Section 3.1(a), in which to
Transfer to the Buyer, on behalf of itself and the Offerees, up to that
number of shares of Restricted Securities equal to the sum of (i) the
number of Restricted Securities covered by the Article III Offer PLUS (ii)
(and the number of Transferor Shares). If all such shares are not sold to
the Buyer, the Transferor, at its option, may elect to sell on behalf of
itself and the Offerees such number of shares as the Buyer will purchase,
allocated Pro Rata (as nearly as practicable) among the Transferor and the
Offerees. The material terms of any Transfer referred to in the two
immediately preceding sentences, including price and form of consideration,
shall be as set forth in the Inclusion Notice. If at the end of such 120-
day period the Transferor has not completed Transfer of all the Transferor
Shares and all the Offerees' Restricted Securities (if any) proposed to be
sold, the Transferor shall return to each of the Offerees its respective
certificates, if any, representing the Restricted Securities which such
Offeree delivered for Transfer pursuant to this Article III and which were
not sold pursuant to the Article III Offer, and the provisions of this
Article III shall continue to be in effect.
(b) Promptly after the Transfer of the Transferor Shares and
Restricted Securities (if any) of the Offerees to the Buyer pursuant to
this Article III, the Transferor shall notify the Offerees thereof, and the
Buyer shall pay to the Transferor and each of the Offerees their respective
portions of the sales price of the Restricted Securities so Transferred and
shall furnish such other evidence of the completion of such Transfer and
the terms thereof as may be reasonably requested by any Offeree.
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(c) Notwithstanding anything to the contrary contained in this
Article III, (i) except for the Transferor's obligation to return to each
Offeree any certificates representing the Offerees' Restricted Securities,
there shall be no liability on the part of the Transferor to any
Stockholder in the event that any proposed Transfer pursuant to this
Article III is not consummated for any reason, and (ii) whether or not any
sale of Restricted Securities is effected pursuant to this Article III
shall be in the sole and absolute discretion of the Transferor.
ARTICLE IV
REPURCHASE OF SECURITIES; LOOK-BACK
4.1 PUT RIGHT.
(a) In the event that there shall not have previously occurred
(i) a Qualifying Offering or (ii) a Sale of the Company, commencing on the
fifth anniversary of the Closing Date the REI Stockholders shall have the
right (the "PUT RIGHT") to sell to the Company, in one transaction, all
Restricted Securities (the "PUT OPTION SECURITIES") then owned by the REI
Stockholders, and the Company shall be obligated to purchase (the "PUT
OBLIGATION") from the REI Stockholders all of the Put Option Securities.
The price per share to be paid by the Company for the Put Option Securities
pursuant to this Article IV (the "PUT PRICE") shall equal (x) the greater
of (A) the Appraised Value and (B) the EBT Value, in each case determined
as of the date on which the Put Right is exercised, DIVIDED by (y) the
aggregate number of shares of Common Stock then outstanding. In order to
exercise the Put Right, the REI Stockholders shall notify the Company in
writing (a "PUT NOTICE") of their exercise thereof at any time at which the
Put right may be exercised hereunder; PROVIDED, HOWEVER, that the Put Right
may not be exercised following the tenth anniversary of the Closing Date.
Once delivered, the Put Notice shall be irrevocable, except in the case of
a breach by the Company of any of its obligations under paragraph (b)
below. After the exercise of the Put Right, the Company or, at the option
of the Company, any designee of the Company (a "COMPANY DESIGNEE") shall
purchase all, but not less than all, of the Put Option Securities by paying
the aggregate Put Price of all Put Option Securities to the REI
Stockholders in cash within 30 days after the determination of the Put
Price.
(b) The closing of the purchase and sale of the Put Option
Securities shall take place on such date within the 45-day period specified
in Section 4.1(a), and at such place, as the Company and the REI
Stockholders shall agree. At such closing, the REI Stockholders shall
Transfer full right, title and interest in and to the Put Option Securities
to the Company, free and clear of all Liens, and shall deliver to the
Company a certificate or certificates representing the Put Option
Securities, in each case duly endorsed for transfer or accompanied by
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appropriate transfer powers duly endorsed for transfer. At such closing,
the Company shall pay to the REI Stockholders, by wire transfer of
immediately available funds, an amount equal to the aggregate Put Price of
all Put Option Securities.
(c) In the event that the Company shall not fully satisfy its
obligation to pay the aggregate Put Price of all Put Option Securities in
accordance with the terms hereof, such unsatisfied Put Obligation shall
thereafter accrue interest at the Default Rate until the date that such Put
Obligation and any accrued interest thereon have been satisfied in full.
All amounts paid by the Company with respect to any outstanding Put
Obligation shall be applied first to any accrued but unpaid interest
thereon.
4.2 LOOK-BACK.
(a) Upon the occurrence of any Look-Back Event, the REI
Stockholders shall be entitled to receive from the Company and the other
Stockholders, and the Company (or, to the extent that the Company for any
reason fails to pay any portion of the Look-Back Payment when due, the
other Stockholders) shall pay to the REI Stockholders, an amount in
immediately available funds (the "Look-Back Payment") equal to the excess,
if any, of (i) the fair market value (as determined by an Independent
Investment Bank) of the REI Stockholders' aggregate Pro Rata share of the
Look-Back Consideration, determined as if the REI Stockholders had not sold
their Restricted Securities pursuant to Section 4.1, over (ii) the
aggregate Put Price of all Put Option Securities paid or payable to the REI
Stockholders pursuant to Section 4.1. Such Look-Back Payment shall be made
in the same manner and at the same time as the payment of the Look-Back
Consideration which gives rise to such Look-Back Payment.
(b) In the event that the Company shall not fully satisfy its
obligation to make any Look-Back Payment in accordance with the terms
hereof, such unsatisfied Look-Back Payment shall thereafter accrue interest
at the Default Rate until such Look-Back Payment and any accrued interest
thereon have been paid in full. All amounts paid by the Company with
respect to any unsatisfied Look-Back Payment shall be applied first to any
accrued but unpaid interest thereon.
4.3 SELECTION OF INDEPENDENT INVESTMENT BANK.
In the event that an investment bank or valuation firm chosen by
the Company to act as the Independent Investment Bank for the purpose of
making any determination contemplated by this Article IV has not been
consented to by the requisite Spartan Stockholders, REI Stockholders and
SerVaas Stockholders within 15 days after the Company notifies the
Stockholders of its choice, then the Independent Investment Bank shall be
selected as follows: Within 15 days after the expiration of such 15-day
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period, (a) the REI Stockholders shall select a nationally recognized
investment bank or valuation firm and (b) the holders of a majority of the
Restricted Securities then held in the aggregate by the Spartan
Stockholders and the SerVaas Stockholders shall select a nationally
recognized investment bank or valuation firm. Thereafter, the two
investment banks or valuation firms so selected shall, within 10 days
following their selection, select a third nationally recognized investment
bank or valuation firm, which third investment bank or valuation firm shall
be the Independent Investment Bank for the purpose of making such
determination.
ARTICLE V
CORPORATE GOVERNANCE
5.1 BOARD OF DIRECTORS.
(a) From and after the date hereof, each of the Stockholders
shall vote or cause to be voted all of its shares of Common Stock, at any
regular or special meeting of stockholders called for the purpose of
filling positions on the Board, or to execute a written consent in lieu of
such a meeting of stockholders for the purpose of filling positions on the
Board, and shall take all other actions necessary, to ensure that the Board
and the boards of directors of all Subsidiaries of the Company each
consists of six members as follows:
(i) the REI Stockholders and the SerVaas Stockholders shall
vote all of their shares of Common Stock so as to elect two
individuals (individually, a "SPARTAN DIRECTOR" and, collectively, the
"SPARTAN DIRECTORS") to be designated by the Spartan Stockholders
until the time that the Spartan Stockholders shall have Transferred,
in one or more transactions, other than to Permitted Transferees, 50%
of the shares of Common Stock comprising the Spartan Stockholders'
Original Ownership Level;
(ii) the Spartan Stockholders and the SerVaas Stockholders
shall vote all of their shares of Common Stock so as to elect two
individuals (individually, an "REI DIRECTOR" and, collectively, the
"REI DIRECTORS") to be designated by the REI Stockholders until the
time that the REI Stockholders shall have Transferred, in one or more
transactions, other than to Permitted Transferees, 50% of the shares
of Common Stock comprising the REI Stockholders' Original Ownership
Level;
(iii) the Spartan Stockholders and the REI Stockholders
shall vote all of their shares of Common Stock so as to elect two
individuals (individually, a "SERVAAS DIRECTOR" and, collectively, the
"SERVAAS DIRECTORS") to be designated by the SerVaas Stockholders,
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until the time that the SerVaas Stockholders shall have Transferred,
in one or more transactions, other than to Permitted Transferees, 50%
of the shares of Common Stock comprising the SerVaas Stockholders'
Original Ownership Level;
PROVIDED, HOWEVER, that (x) effective at the Closing, the Board shall
consist of the six individuals identified in Exhibit C and (y) the
Stockholders shall cause the Spartan Directors, the REI Directors and the
SerVaas Directors identified in Exhibit C to be designated and elected as
directors effective at the Closing.
(b) If, prior to his election to the Board pursuant to Section
5.1(a), any person shall be unable or unwilling to serve as a director of
the Company, the group of Stockholders who designated such person shall be
entitled to designate his replacement.
(c) If at any time any Person designated as a Spartan Director,
an REI Director or a SerVaas Director is not then serving as a director of
the Company, upon the written request of the Spartan Stockholders, the REI
Stockholders or the SerVaas Stockholders, as the case may be, the
Stockholders shall promptly take all action necessary or appropriate to
elect an individual designated by the Spartan Stockholders (in the case of
any Spartan Director), by the REI Stockholders (in the case of any REI
Director) or by the SerVaas Stockholders (in the case of any SerVaas
Director) to serve as a director in lieu of such Person from and after the
time of such request.
5.2 REMOVAL.
If: (i) the Spartan Stockholders request that a Spartan Director
elected as a director be removed (with or without cause), by written notice
to the other Stockholders; (ii) the REI Stockholders request that an REI
Director elected as a director be removed (with or without cause), by
written notice to the other Stockholders; or (iii) the SerVaas Stockholders
request that a SerVaas Director elected as a director be removed (with or
without cause) by written notice to the Stockholders; then, in each such
case, such director shall be removed and each Stockholder agrees, upon such
request, to vote all shares of Common Stock owned by such Stockholder and
other securities over which such Stockholder has voting control to effect
such removal or to consent in writing to effect such removal.
5.3 VACANCIES.
In the event that a vacancy is created on the Board at any time
by the death, disability, retirement, resignation or removal (with or
without cause) of a director, each Stockholder agrees to vote, in the
manner specified in Section 5.1, all shares of Common Stock owned by such
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Stockholder and other securities over which such Stockholder has voting
control for the individual designated to fill such vacancy by the group of
Stockholders who designated the director whose death, disability,
retirement, resignation or removal created such vacancy on the Board;
PROVIDED, HOWEVER, that such other individual so designated may not
previously have been a director of the Company who was removed for cause
from the Board.
5.4 BOARD VOTING.
Subject to Section 5.5 hereof, all actions taken by the Board
shall require the affirmative vote of not less than four of the members of
the Board.
5.5 SPECIAL APPROVAL RIGHTS.
In addition to any other action requiring Board approval, so long
as the Spartan Stockholders, the REI Stockholders or the SerVaas
Stockholders have the right to designate directors under Section 5.1(a),
the entering into (or agreeing or committing to enter into) by Company or
any of its Subsidiaries of any Significant Transaction shall require the
affirmative vote of not less than four of the members of the Board;
PROVIDED, HOWEVER, that the affirmative vote of at least five members of
the Board shall be required in connection with any Significant Transaction
referred to in clause (i), (ii), (iv) or (xv) of the definition thereof.
Notwithstanding anything in this Section 5.5 or in Section 5.4 to the
contrary, (i) the affirmative vote requirement with respect to any
Significant Transaction constituting the entry into a new line of business
pursuant to Section 5.9(b) of the Investment Agreement shall be satisfied
only by the affirmative vote of not less than three of the SerVaas
Directors and the REI Directors and (ii) the affirmative vote requirement
with respect to any Significant Transaction referred to in clause (vi) or
(ix) of the definition thereof involving a Material Contract to which any
Spartan Stockholder, any REI Stockholder or any SerVaas Stockholder (or, in
each case, any of its Affiliates) is a party shall be satisfied only by the
affirmative vote of not less than three of the Board members designated by
the other Stockholder groups pursuant to Section 5.1(a).
5.6 COMMITTEES OF THE BOARD; SUBSIDIARY BOARDS.
So long as the Spartan Stockholders, the REI Stockholders and the
SerVaas Stockholders, respectively, shall have the right to designate any
directors under Section 5.1(a), unless otherwise agreed to in writing by
the Spartan Stockholders, the REI Stockholders and the SerVaas
Stockholders, the Stockholders shall take all action necessary or
appropriate to cause the Company to have an audit committee and a
compensation committee of the Board, each consisting of one Spartan
Director, one REI Director and one SerVaas Director. The Stockholders
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shall take all action necessary or appropriate to cause each additional
committee of the Board to have the same number of directors and the same
composition as such audit committee and compensation committee. For so
long as the Spartan Stockholders, the REI Stockholders and the SerVaas
Stockholders, respectively, shall have the right to designate any directors
under Section 5.1(a), the Stockholders shall take all action necessary or
appropriate to cause one director designated by each of the Spartan
Stockholders, the REI Stockholders and the SerVaas Stockholders,
respectively, to be elected to the board of directors of each Subsidiary of
the Company. The Stockholders agree that they shall take all actions
necessary or appropriate to cause (i) such persons so designated to be
directors on each such Subsidiary's board of directors and (ii) at the
direction of the parties so designating each such director, the removal or
replacement of such director from any such board. The composition of the
boards of directors of Subsidiaries of the Company shall otherwise be as
determined by the Board.
5.7 ACTION BY WRITTEN CONSENT OF STOCKHOLDERS.
The parties hereto agree that whenever any action is proposed to
be taken by Stockholders without a meeting, the Stockholders proposing to
act by such consent shall, or shall cause the Company to, give the Spartan
Stockholders, the REI Stockholders and the SerVaas Stockholders at least
seven days' prior written notice (or such shorter notice period as is
agreed to in writing) of such proposed action specifying the action to be
taken and the purpose thereof (it being understood that such notice
requirement shall be deemed satisfied by execution of such consent (i) in
the case of the Spartan Stockholders, by Spartan Stockholders which then
hold in the aggregate more than 50% of the aggregate shares of Common Stock
on a Fully-Diluted Basis then held by all Spartan Stockholders, (ii) in the
case of the REI Stockholders by REI Stockholders which then hold in the
aggregate more than 50% of the aggregate shares of Common Stock on a
Fully-Diluted Basis then held by all REI Stockholders and (iii) in the case of
the SerVaas Stockholders, by SerVaas Stockholders which then hold in the
aggregate more than 50% of the aggregate shares of Common Stock on a
Fully-Diluted Basis then held by all SerVaas Stockholders).
ARTICLE VI
CERTAIN COVENANTS OF THE PARTIES
6.1 REGISTRATION.
In the event of, and in order to facilitate, a registration by
the Company of Common Stock under the Securities Act which will constitute
a Qualifying Offering, each Stockholder shall, at a meeting convened for
the purpose of amending the Certificate of Incorporation and the By-laws of
the Company, vote (in each case as recommended by the Board):
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(i) to increase the number of authorized shares of the
Common Stock and if necessary or desirable, to change the par value of
the Common Stock or to change the number of issued and outstanding
shares of Common Stock whether by stock split, stock dividend,
reclassification, combination or the like; and
(ii) to amend, modify or repeal provisions of the
Certificate of Incorporation and By-laws of the Company to the extent
such amendments, modifications or repeals are customary and reasonably
necessary in order to facilitate a Qualifying Offering and would be
effective upon the closing of such Qualifying Offering.
6.2 ADDITIONAL STOCKHOLDERS.
The parties hereto agree that as a condition precedent to the
issuance by the Company of shares of Common Stock or of securities
convertible, exchangeable or exercisable for or into shares of Common Stock
(i) to any employee of the Company or its Subsidiaries or (ii) to any
Person other than any such employee, any Spartan Stockholder, any REI
Stockholder or any SerVaas Stockholder, the Company shall require such
employee or other Person to execute a Joinder Agreement substantially in
the form of Exhibit A-2, and thereby enter into and become a party to this
Agreement. From and after such time, the term "Additional Stockholder"
shall be deemed to include such employee or other Person.
6.3 STOCKHOLDER LIST; CERTAIN NOTICES.
Upon the request of any Spartan Stockholder, REI Stockholder or
SerVaas Stockholder, the Company shall deliver promptly to such Spartan
Stockholder, REI Stockholder or SerVaas Stockholder a list setting forth
the names of all Stockholders and the number of shares of Common Stock and
Equity Equivalents owned by each Stockholder. In addition, the Company
shall give each of the Spartan Stockholders, the REI Stockholders and the
SerVaas Stockholders prior written notice of (a) the proposed conversion of
any shares of Common Stock or Equity Equivalents and (b) any proposed
record transfer of Restricted Securities setting forth the name of the
transferee and the number and type of Restricted Securities being so
transferred.
6.4 RIGHTS OFFERING.
(a) Prior to issuing any New Common Stock after the Closing (x)
before the occurrence of an underwritten public offering of Common Stock
registered under the Securities Act, to any Person or (y) after the
occurrence of such an offering, to any Stockholder, the Company shall offer
(the "NEW COMMON STOCK OFFER") each of the Spartan Stockholders, the REI
Stockholders and the SerVaas Stockholders an opportunity to purchase in
cash any or all of its Pro Rata portion (determined as among all
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Stockholders of the Company before giving effect to the issuance of such
New Common Stock) of such New Common Stock on the same terms and conditions
as the New Common Stock being offered and, if such New Common Stock is to
be issued as a part of a unit of securities, the Company shall offer each
of the Spartan Stockholders, the REI Stockholders and the SerVaas
Stockholders an opportunity to purchase any or all of its Pro Rata portion
(determined as provided above) of such unit of securities (together with
the New Common Stock, the "NEW COMMON STOCK UNITS") on the same terms and
conditions as the New Common Stock Units being offered. The Company shall
make such New Common Stock Offer by providing each of the Spartan
Stockholders, the REI Stockholders and the SerVaas Stockholders with a
notice (the "NEW COMMON STOCK NOTICE") setting forth (i) each of the
Spartan Stockholders', the REI Stockholders' and the SerVaas Stockholders'
Pro Rata portion of such New Common Stock or such New Common Stock Units,
as the case may be, (ii) the cash consideration to be paid for each share
of New Common Stock or each New Common Stock Unit, as the case may be, and
(iii) all other material terms of such New Common Stock Offer.
(b) In order for any of the Spartan Stockholders, REI
Stockholders or SerVaas Stockholders to accept the New Common Stock Offer,
such Spartan Stockholder, REI Stockholder or SerVaas Stockholder shall give
a notice of acceptance to the Company not later than 20 days after its
receipt of the New Common Stock Notice (the last day of such 20-day period
being referred to herein as the "ACCEPTANCE DATE").
(c) Within 120 days following the Acceptance Date, the Company
(i) shall issue, upon its receipt of the requisite consideration therefor,
New Common Stock or New Common Stock Units, as the case may be, to each
Spartan Stockholder, REI Stockholder, or SerVaas Stockholder who timely
accepted such New Common Stock Offer upon the terms specified in such New
Common Stock Offer and (ii) may issue New Common Stock or New Common Stock
Units, as the case may be, to any other Person or Persons in an amount not
to exceed the aggregate amount thereof offered pursuant to the New Common
Stock Offer (less the aggregate amount of shares of New Common Stock or New
Common Stock Units, as the case may be, issued to the Spartan Stockholders,
the REI Stockholders and the SerVaas Stockholders pursuant to the foregoing
clause (i)) and for a price which equals or exceeds the price per share of
New Common Stock or per unit of New Common Stock Units, as the case may be,
specified in the New Common Stock Offer.
6.5 SPARTAN CHASSIS. For so long as Spartan owns at least 20% of the
Common Stock on a Fully-Diluted Basis:
(a) the Company shall use all commercially reasonable efforts to
purchase on a priority basis from Spartan the Company's inventory
requirements for chassis applicable to and compatible with any vehicle
produced by the Company; PROVIDED HOWEVER, that the foregoing obligation
shall apply only if (i) Spartan shall be competitive with other chassis
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suppliers in terms of price, quality, timeliness of delivery and other
factors deemed relevant by the Company, in its sole discretion, and (ii)
the Company's customer shall not have specified or directed that the
Company utilize chassis manufactured by a Person other than Spartan; and
(b) To the extent the Company shall so request, Spartan shall
supply to the Company all of the Company's requirements for chassis
applicable to and compatible with any vehicle produced by the Company, in
each case at Spartan's usual and customary terms.
6.6 CERTAIN FINANCIAL INFORMATION. Not later than the first business
day of each month commencing prior to the second anniversary of the Closing
Date, the Company shall furnish to each Stockholder reasonably detailed
projections setting forth management's estimate of the Company's cash flows
for such month. Not later than the first business day of each week
commencing prior to the first anniversary of the Closing Date, the Company
will furnish to each Stockholder a reasonably detailed statement of the
Company's cash flows for the immediately preceding week.
ARTICLE VII
MISCELLANEOUS
7.1 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION
OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK, EXCEPT TO
THE EXTENT THAT THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
APPLIES AS A RESULT OF THE COMPANY BEING INCORPORATED IN THE STATE OF
DELAWARE, IN WHICH CASE SUCH GENERAL CORPORATION LAW SHALL APPLY.
7.2 ENTIRE AGREEMENT; AMENDMENTS.
This Agreement constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof and this Agreement may be
amended, modified or supplemented only by a written instrument duly
executed by (a) the Company, (b) Spartan Stockholders which then hold in
the aggregate more than 50% of the aggregate shares of Common Stock on a
Fully-Diluted Basis then held by all Spartan Stockholders, (c) REI
Stockholders which then hold in the aggregate more than 50% of the
aggregate shares of Common Stock on a Fully-Diluted Basis then held by all
REI Stockholders and (d) SerVaas Stockholders which then hold in the
aggregate more than 50% of the aggregate shares of Common Stock then held
by all SerVaas Stockholders. In the event of an amendment, modification or
supplement of this Agreement in accordance with its terms, the Stockholders
shall take all action necessary or appropriate, within 30 calendar days
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following such amendment, modification or supplement, or as soon thereafter
as is practicable, to cause the adoption of any amendment to the
Certificate of Incorporation or By-Laws of the Company that may be required
as a result of such amendment, modification or supplement to this
Agreement. The Stockholders hereby agree to vote their shares of
Restricted Securities to approve each such amendment to the Certificate of
Incorporation or By-Laws of the Company.
7.3 TERM.
Except for the provisions of Article IV and this Article VII,
this Agreement shall automatically and without further action terminate
upon the earliest to occur of (i) a Qualifying Offering, (ii) a Sale of the
Company and (iii) the written agreement of (x) Spartan Stockholders which
then hold in the aggregate more than 50% of the aggregate shares of Common
Stock on a Fully-Diluted Basis then held by all Spartan Stockholders, (y)
REI Stockholders which then hold in the aggregate more than 50% of the
aggregate shares of Common Stock on a Fully-Diluted Basis then held by all
REI Stockholders and (z) SerVaas Stockholders which then hold in the
aggregate more than 50% of the aggregate shares of Common Stock on a
Fully-Diluted Basis then held by all the SerVaas Stockholders.
7.4 CERTAIN ACTIONS.
Unless otherwise expressly provided herein, whenever any action
is required under this Agreement by:
(a) the Spartan Stockholders (as a group, as opposed to the
exercise by a Spartan Stockholder of its individual rights
hereunder), it shall be by the affirmative vote of the holders of
Common Stock representing more than 50% of the Common Stock on a
Fully-Diluted Basis then held by the Spartan Stockholders as a group,
or as otherwise agreed in writing by the Spartan Stockholders as a
group (a copy of such writing to be supplied to the REI Stockholders
and the SerVaas Stockholders by the Company or the Spartan
Stockholders);
(b) the REI Stockholders (as a group, as opposed to the exercise
by an REI Stockholder of its individual rights hereunder), it shall be
by the affirmative vote of the holders of Common Stock representing
more than 50% of the Common Stock on a Fully-Diluted Basis then held
by the REI Stockholders as a group, or as otherwise agreed in writing
by the REI Stockholders as a group (a copy of such writing to be
supplied to the Spartan Stockholders and the SerVaas Stockholders by
the Company or the REI Stockholders); or
(c) the SerVaas Stockholders (as a group, as opposed to the
exercise by a SerVaas Stockholder of its individual rights hereunder),
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it shall be by the affirmative vote of the holders of Common Stock
representing more than 50% of the Common Stock on a Fully-Diluted
Basis then held by the SerVaas Stockholders as a group (a copy of such
writing to be supplied to the Spartan Stockholders and the REI
Stockholders by the Company or the SerVaas Stockholders).
7.5 INSPECTION.
For so long as this Agreement shall remain in effect, this
Agreement shall be made available for inspection by any Stockholder at the
principal executive offices of the Company.
7.6 COMPLIANCE WITH REGULATIONS.
Whenever a Stockholder is entitled to purchase Restricted
Securities pursuant to the provisions of this Agreement, any closing time
period specified in such provision shall be tolled until any necessary
governmental approval is received, including without limitation approval
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
provided that such tolling period shall not exceed 60 days.
7.7 WAIVER.
No waiver by any party hereto of any term or condition of this
Agreement, in one or more instances, shall be valid unless in writing, and
no such waiver shall be deemed to be construed as a waiver of any
subsequent breach or default of the same or any other term or condition
hereof.
7.8 SUCCESSORS AND ASSIGNS.
Except as otherwise expressly provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns (including without
limitation transferees of Restricted Securities); PROVIDED, HOWEVER, that:
(a) nothing contained herein shall be construed as granting any
Stockholder the right to Transfer any of its Restricted Securities
except in accordance with this Agreement;
(b) unless otherwise provided in the terms of the Transfer, none
of the provisions of this Agreement, other than those set forth in
Sections 2.1 and 2.2 to the extent those Sections require compliance
with the Securities Act, delivery of opinions of counsel and placement
of Securities Act (or state securities laws) legends, shall apply to
any Transfer of Restricted Securities (or to the transferee thereof)
subsequent to a Transfer of those securities pursuant to Article III;
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(c) notwithstanding any Transfer of Restricted Securities by any
Spartan Stockholder to an REI Stockholder or a SerVaas Stockholder,
only the provisions of this Agreement which are expressly applicable
to REI Stockholders or SerVaas Stockholders (as the case may be) shall
be applicable to such Restricted Securities in the hands of such REI
Stockholder or SerVaas Stockholder (as the case may be) and to such
Restricted Securities in the hands of such REI Stockholder or SerVaas
Stockholder (as the case may be);
(d) notwithstanding any Transfer of Restricted Securities by any
SerVaas Stockholder to a Spartan Stockholder or an REI Stockholder,
only the provisions of this Agreement which are expressly applicable
to Spartan Stockholders or REI Stockholders (as the case may be) shall
be applicable to such Spartan Stockholder or REI Stockholder (as the
case may be) and to such Restricted Securities in the hands of such
Spartan Stockholder or REI Stockholder (as the case may be); and
(e) notwithstanding any Transfer of Restricted Securities by any
REI Stockholder to a Spartan Stockholder or a SerVaas Stockholder,
only the provisions of this Agreement which are expressly applicable
to Spartan Stockholders or SerVaas Stockholders (as the case may be)
shall be applicable to such Spartan Stockholder or SerVaas Stockholder
(as the case may be) and to such Restricted Securities in the hands of
such SerVaas Stockholder (as the case may be).
7.9 REMEDIES.
In the event of a breach by any party to this Agreement of its
obligations under this Agreement, any party hereto injured by such breach,
in addition to being entitled to exercise all rights granted by law,
including recovery of damages and costs (including reasonable attorneys'
fees), will be entitled to specific performance of its rights under this
Agreement. The parties hereto agree that the provisions of this Agreement
shall be specifically enforceable, it being agreed by the parties hereto
that the remedy at law, including monetary damages, for breach of any such
provision will be inadequate compensation for any loss and that any defense
in any action for specific performance that a remedy at law would be
adequate is waived. Such equitable remedies and all other remedies are
cumulative and not exclusive and shall be in addition to any remedies which
any party hereto may have under this Agreement or otherwise.
7.10 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 will not be materially
and adversely affected thereby, (a) such provision will be fully severable,
(b) this Agreement will be construed and enforced as if such illegal,
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invalid or unenforceable provision had never comprised a part hereof, (c)
the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as a
part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be
possible.
7.11 HEADINGS; CERTAIN CONDITIONS.
The headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not define, limit
or otherwise affect any of the terms or provisions hereof. Unless the
context otherwise expressly requires, all references herein to Articles,
Sections and Exhibits, are to Article and Sections of, and Exhibits to,
this Agreement. The words "herein," "hereunder" and "hereof" and words of
similar import refer to this Agreement as a whole and not to any particular
Section or provision. The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation".
7.12 FURTHER ASSURANCES; SUBSIDIARIES.
Each party hereto shall cooperate and shall take such further
action and shall execute and deliver such further documents as may be
reasonably requested by any other party hereto in order to carry out the
provisions and purposes of this Agreement. Any provision hereof that by
its terms requires a Subsidiary of the Company to take any action or
refrain from taking any action shall be interpreted to require the Company
to cause such Subsidiary to take such action or to refrain from taking such
action, respectively, to the fullest extent permitted by law.
7.13 GENDER.
Whenever the pronouns "he" or "his" are used herein they shall
also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in
the plural and words in the plural shall be construed as though in the
singular in all cases where they would so apply.
7.14 COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
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<PAGE>
7.15 PAYMENT.
All payments hereunder shall be made in cash or by wire transfer
of immediately available funds.
7.16 NOTICES.
(a) All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission or mailed
(by registered or certified mail, postage prepaid, return receipt
requested) or delivered by reputable overnight courier, fee prepaid, to the
parties hereto at the following addresses or facsimile numbers:
If to any Spartan Stockholder, to:
Spartan Motors, Inc.
1000 Reynolds Road
Charlotte, Michigan 48813
Facsimile No.: (517) 543-7729
Attn: George Sztykiel
with a copy to:
Foster, Swift, Collins & Smith
313 South Washington Square
Lansing, MI 48933
Facsimile No.: (517) 371-8200
Attn: James B. Jensen, Jr., Esq.
If to any REI Stockholder, to:
Recovery Equity Investors II, L.P.
901 Mariner's Island Boulevard
Suite 465
San Mateo, CA 94404
Facsimile No.: (415) 578-9842
Attn: Joseph J. Finn-Egan
Jeffrey A. Lipkin
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Facsimile No.: 212-309-6273
Attn: Philip H. Werner, Esq.
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<PAGE>
If to any SerVaas Stockholder, to:
The Curtis Publishing Company
1000 Waterway Boulevard
Indianapolis, IN 46202
Facsimile No.: (317) 633-8813
Attn: Dr. Beurt SerVaas
with a copy to:
Leeuw, Plopper & Beeman
135 North Pennsylvania Street
2000 First Indiana Plaza
Indianapolis, IN 46204
Facsimile No.: (317) 264-5420
Attn: Stephen E. Plopper, Esq.
If to the Company, to:
Carpenter Industries Inc.
1100 Industries Road
Richmond, IN 47374
Facsimile No.: (317) 965-4100
Attn: Timothy S. Durham
with a copy to:
Leeuw, Plopper & Beeman
135 North Pennsylvania Street
2000 First Indiana Plaza
Indianapolis, IN 46204
Facsimile No.: (317) 264-5420
Attn: Stephen E. Plopper, Esq.
(b) All such notices, requests and other communications will be
deemed delivered upon receipt. Any party hereto may from time to time
change its address, facsimile number or other information for the purpose
of notices to such party by giving notice specifying such change to the
other parties hereto in accordance with Section 7.16(a).
7.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
EACH OF THE PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW
YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO
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<PAGE>
THIS AGREEMENT MAY BE LITIGATED IN SUCH COURTS. EACH OF THE PARTIES HERETO
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
EACH OF THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO THE PARTY AT THE ADDRESS SPECIFIED IN THIS
AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 15 DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY PARTY
HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER
OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY OF THE OTHER PARTIES
HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED
BY ANY APPLICABLE LAW.
7.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT. EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY
OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF
SUCH PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF
ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH OF THE PARTIES HERETO FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND
THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT
IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
CARPENTER INDUSTRIES INC.
By: ____________________________________
Name:
Title:
SPARTAN MOTORS, INC.
By: ____________________________________
Name:
Title:
RECOVERY EQUITY INVESTORS II, L.P.,
By Recovery Equity Partners II, L.P.,
its general partner
By: ____________________________________
Name: Joseph J. Finn-Egan
Title: General Partner
By: ____________________________________
Name: Jeffrey A. Lipkin
Title: General Partner
CARPENTER INDUSTRIES LLC
By: ____________________________________
Name:
Title:
[Signature page to Stockholders' Agreement]
<PAGE>
Exhibit A-1
FORM OF JOINDER AGREEMENT
FOR PERMITTED TRANSFEREES
CARPENTER INDUSTRIES INC.
SPARTAN MOTORS, INC.
RECOVERY EQUITY INVESTORS II, L.P.
[SERVAAS ENTITY]
Ladies & Gentlemen:
In consideration of the transfer to the undersigned of [DESCRIBE
SECURITY BEING TRANSFERRED] of CARPENTER INDUSTRIES INC., a Delaware
corporation (the "COMPANY"), the undersigned represents that [HE] [SHE]
[IT] is a Permitted Transferee of [INSERT NAME OF TRANSFEROR] and agrees
that, as of the date written below, [HE] [SHE] [IT] shall become a party to
and a Permitted Transferee as defined in that certain Stockholders'
Agreement, dated as of __________, 199_, as such agreement may have been
amended, supplemented or modified from time to time, the "AGREEMENT"),
among the Company and the persons named therein, and as a Permitted
Transferee shall be fully bound by, and subject to, all of the covenants,
terms and conditions of the Agreement that are applicable to the
undersigned's transferor, as though an original party thereto and shall be
deemed a [SPARTAN STOCKHOLDER] [REI STOCKHOLDER] [SERVAAS STOCKHOLDER] for
all purposes thereof.
Executed as of the day of , .
SIGNATORY:
Address: ______________________________
______________________________
ACKNOWLEDGED AND ACCEPTED:
CARPENTER INDUSTRIES INC.
By:__________________________________________
Name:
Title:
<PAGE>
SPARTAN MOTORS, INC.
By:_____________________________________
Name:
Title:
RECOVERY EQUITY INVESTORS II, L.P.
By Recovery Equity Partners II, L.P.,
its general partner
By:_____________________________________
Name: Joseph J. Finn-Egan
Title: General Partner
By:_____________________________________
Name: Jeffrey A. Lipkin
Title: General Partner
CARPENTER INDUSTRIES LLC
By:_____________________________________
Name:
Title:
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<PAGE>
Exhibit A-2
FORM OF JOINDER AGREEMENT
FOR ADDITIONAL STOCKHOLDERS
CARPENTER INDUSTRIES INC.
SPARTAN MOTORS, INC.
RECOVERY EQUITY INVESTORS II, L.P.
[SERVAAS ENTITY]
Ladies & Gentlemen:
In consideration of the issuance to the undersigned of [DESCRIBE
SECURITY BEING ISSUED] of CARPENTER INDUSTRIES INC., a Delaware corporation
(the "COMPANY), the undersigned agrees that, as of the date written below,
[HE] [SHE] [IT] shall become a party to that certain Stockholders'
Agreement, dated as of __________, 199_ (as such agreement may have been
amended, supplemented or modified from time to time, the "AGREEMENT"),
among the Company and the persons named therein, and shall be fully bound
by and subject to, all of the covenants, terms and conditions of the
Agreement, as though an original party thereto.
Executed as of the Day of , .
SIGNATORY:___________________________________
Address: ___________________________________
___________________________________
ACKNOWLEDGED AND ACCEPTED:
CARPENTER INDUSTRIES INC.
By:__________________________________________
Name:
Title:
SPARTAN MOTORS, INC.
By:__________________________________________
Name:
Title:
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<PAGE>
RECOVERY EQUITY INVESTORS II, L.P.
By Recovery Equity Partners II, L.P.,
its general partner
By:__________________________________________
Name: Joseph J. Finn-Egan
Title: General Partner
By:__________________________________________
Name: Jeffrey A. Lipkin
Title: General Partner
CARPENTER INDUSTRIES, LLC
By:__________________________________________
Name:
Title:
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<PAGE>
Exhibit A-3
FORM OF JOINDER AGREEMENT
FOR TRANSFEREES OF RESTRICTED SECURITIES PURSUANT TO SECTION 2.5
CARPENTER INDUSTRIES INC.
SPARTAN MOTORS, INC.
RECOVERY EQUITY INVESTORS II, L.P.
[SERVAAS ENTITY]
Ladies & Gentlemen:
In consideration of the transfer to the undersigned of [DESCRIBE
SECURITY BEING ISSUED] of CARPENTER INDUSTRIES INC., a Delaware corporation
(the "COMPANY), the undersigned agrees that, as of the date written below,
[HE] [SHE] [IT] shall become a party to that certain Stockholders'
Agreement, dated as of __________, 199_ (as such agreement may have been
amended, supplemented or modified from time to time, the "AGREEMENT"),
among the Company and the persons named therein, and shall be fully bound
by and subject to all of the covenants, terms and conditions of the
Agreement, as provided under Section 7.8 of the Agreement as though an
original party thereto, and to the extent [HE] [SHE] [IT] is bound by the
Agreement [HE] [SHE] [IT] shall be deemed a [SPARTAN STOCKHOLDER] [REI
STOCKHOLDER] [SERVAAS STOCKHOLDER] for all purposes thereof.
Executed as of the Day of , .
SIGNATORY:___________________________________
Address: ___________________________________
___________________________________
ACKNOWLEDGED AND ACCEPTED:
CARPENTER INDUSTRIES INC.
By:__________________________________________
Name:
Title:
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<PAGE>
SPARTAN MOTORS, INC.
By:__________________________________________
Name:
Title:
RECOVERY EQUITY INVESTORS II, L.P.
By Recovery Equity Partners II, L.P.,
its general partner
By:__________________________________________
Name: Joseph J. Finn-Egan
Title: General Partner
By:__________________________________________
Name: Jeffrey A. Lipkin
Title: General Partner
CARPENTER INDUSTRIES LLC
By:__________________________________________
Name:
Title:
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<PAGE>
Exhibit B
LEGENDS
Shares of Restricted Securities shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
STOCKHOLDERS' AGREEMENT DATED AS OF __________ __, 1997 AMONG CARPENTER
INDUSTRIES INC. (THE "COMPANY") AND ITS STOCKHOLDERS AS MAY BE AMENDED FROM
TIME TO TIME, AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF (A "TRANSFER") EXCEPT IN ACCORDANCE
WITH THE PROVISIONS THEREOF AND ANY TRANSFEREE OF THESE SECURITIES SHALL BE
SUBJECT TO THE TERMS OF SUCH AGREEMENT. COPIES OF THE STOCKHOLDERS'
AGREEMENT, AS AMENDED, ARE MAINTAINED WITH THE CORPORATE RECORDS OF THE
COMPANY AND ARE AVAILABLE FOR INSPECTION AT THE PRINCIPAL EXECUTIVE OFFICES
OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
STATE SECURITIES LAWS, AND NO TRANSFER OF THESE SECURITIES MAY BE MADE
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
(B) PURSUANT TO AN EXEMPTION THEREFROM WITH RESPECT TO WHICH THE COMPANY
MAY REQUIRE AN OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER IS
EXEMPT FROM THE REQUIREMENTS OF THE ACT, AS PROVIDED BY THE TERMS OF THE
STOCKHOLDERS' AGREEMENT DESCRIBED ABOVE.
THE POWERS, DESIGNATIONS, PREFERENCES, AND RELATIVE PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS, OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS OF EACH CLASS OR SERIES OF
CAPITAL STOCK OF THE COMPANY ARE SET FORTH IN THE CERTIFICATE OF
INCORPORATION. THE CORPORATION WILL FURNISH A COPY OF THE CERTIFICATE OF
INCORPORATION TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON
REQUEST.
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EXHIBIT C
Initial Members of Board of Directors
SPARTAN DIRECTORS
George Sztykiel
Anthony G. Sommer
REI DIRECTORS
Joseph J. Finn-Egan
Jeffrey A. Lipkin
SERVAAS DIRECTORS
Dr. Beurt R. SerVaas
Timothy S. Durham
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Schedule 2.5(a)
LIST OF CERTAIN COMPETITORS TO WHOM
OFFERED SECURITIES MAY NOT BE SOLD
1. Bluebird
2. Thomas
3. American Transportation
4. Navistar
5. Utilimaster
6. Union City Body
7. Grumman's Olson business
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<PAGE>
EXHIBIT 10(b)
===========================================================================
CONTRIBUTION AGREEMENT
between
CARPENTER INDUSTRIES LLC
and
CARPENTER INDUSTRIES INC.
Dated: January __, 1997
===========================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
CONTRIBUTION OF ASSETS; ASSUMPTION OF LIABILITIES
1.01 Contribution of Assets
(a) Contributed Assets
(b) Excluded Assets
1.02 Liabilities
(a) Assumed Liabilities
(b) Retained Liabilities
1.03 Recordation of Deeds and Further Assurances; Post-Closing
Cooperation
(a) Recordation of Deeds and Further Assurances
(b) Power of Attorney
(c) Books and Records
(d) Tax Returns, etc.
(e) Third-Party Consents
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
ISSUANCE OF COMMON STOCK IN CONSIDERATION FOR CONTRIBUTION
2.01. Issuance of Common Stock
2.02. Tax Treatment
ARTICLE III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
EFFECTIVENESS OF AGREEMENT
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
INDEMNIFICATION
4.01 Other Indemnification
4.02 Method of Asserting Claims
ARTICLE V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
DEFINITIONS
5.01 Definitions
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
MISCELLANEOUS
6.01 Notices
6.02 Bulk Sales Act
6.03 Entire Agreement
6.04 Waiver
6.05 Amendment
6.06 No Third Party Beneficiary
6.07 No Assignment; Binding Effect
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<PAGE>
6.08 Headings
6.09 Governing Law
6.10 Counterparts
Schedule A -- Semi-Finished Buses List
Exhibit A -- Wayne County Corporate Warranty Deed
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<PAGE>
CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT (this "Agreement"), dated as of
January ___, 1997, between CARPENTER INDUSTRIES LLC, an Indiana limited
liability company ("Carpenter"), and CARPENTER INDUSTRIES INC., a Delaware
corporation (the "Company");
WITNESSETH:
WHEREAS, Carpenter is engaged in the business of designing,
manufacturing and selling school buses for use by public school districts
and private schools and other vehicles known as step-vans (the "Business"),
and is also engaged in the Shuttle Bus Business;
WHEREAS, the parties hereto are also parties to that certain
Investment Agreement dated as of December 23, 1996 among Recovery Investors
II, L.P. ("REI II"), Spartan Motors, Inc., a Michigan corporation
("Spartan"; REI II and Spartan being collectively referred to herein as the
"Investors"), Carpenter, the Trust, Curtis and the Company (as in effect on
the date hereof, the "Investment Agreement"), which Investment Agreement
contemplates that, immediately following (i) the contribution by Carpenter
to the Company of the Contributed Assets (as defined in Section 1.01(a)
hereof) in exchange for 33-1/3% of the total number of shares of Common
Stock to be outstanding upon consummation of the transactions contemplated
by the Investment Agreement and (ii) the assignment by Carpenter to the
Company and the assumption by the Company of the Assumed Liabilities (as
defined in Section 1.02(a) hereof), each of the Investors will purchase
from the Company Common Stock representing 33-1/3% of the total number of
shares of Common Stock to be outstanding upon consummation of the
transactions contemplated by the Investment Agreement;
WHEREAS, Carpenter desires to contribute, transfer, sell and
assign the Contributed Assets and the Assumed Liabilities to the Company
and the Company desires to accept all of the Contributed Assets and to
assume all of the Assumed Liabilities, all upon the terms and conditions
set forth herein; and
WHEREAS, capitalized terms used but not otherwise defined herein
have the respective meanings set forth in the Investment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
<PAGE>
ARTICLE I
CONTRIBUTION OF ASSETS; ASSUMPTION OF LIABILITIES
1.01 CONTRIBUTION OF ASSETS.
(a) CONTRIBUTED ASSETS. Effective as of the Effective Time,
Carpenter hereby sells, transfers, conveys and assigns to the Company all
of Carpenter's right, title and interest in, to and under the Contributed
Assets. The term "Contributed Assets" means, collectively, all the
business, properties, assets, Contracts, vendor and warranty recovery
rights and other rights of Carpenter of whatever kind or nature, real or
personal, tangible or intangible, owned by Carpenter at the Effective Time,
other than the Excluded Assets.
(b) EXCLUDED ASSETS. Notwithstanding anything in this Agreement
to the contrary, the following assets, properties, Contracts and rights of
Carpenter (the "Excluded Assets") shall be excluded from and shall not
constitute Contributed Assets:
(i) MITCHELL FACILITY. Except as and to the extent otherwise
provided in this Section 1.01(b), (1) the Mitchell Facility, (2)
Carpenter's lease of the real property located at 9405 South Pointe,
La Salles 41, Bloomington, Indiana (the "Bloomington Lease") and (3)
all Intellectual Property, prototypes and related items of tangible
personal property used or held by Carpenter for use in connection with
the Shuttle Bus Business.
(ii) SEMI-FINISHED BUSES. The buses listed in Schedule A hereto
which, as of the Closing Date, are included in Carpenter's inventory
as Semi-Finished Buses (the "Retained Buses"), all accounts receivable
attributable to or due in connection with any such Retained Bus, and
all items of raw material and work in process inventory in or on any
such Retained Bus or necessary to complete the production of such
Retained Bus and located at the Mitchell Facility, and any and all
warranty claims against parts suppliers arising prior to such Retained
Bus having become a Federallled Bus and in connection with any such
Retained Bus and the items of raw material and work in process
inventory ascribed to it.
(iii) BENEFIT PLANS. All Benefit Plans, Plans and similar plans
and arrangements between Carpenter and its employees employed at the
Mitchell Facility.
(iv) COLLECTIVE BARGAINING AGREEMENTS. All collective bargaining
agreements and similar labor Contracts pertaining exclusively to the
Mitchell Facility (collectively, the "Labor Contracts").
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(v) CORPORATE RECORDS. The minute books, stock transfer or
similar books, company seals and financial records of Carpenter.
(vi) PERMITS, LICENSES AND INTELLECTUAL PROPERTY. All
Environmental Permits, Licenses and Intellectual Property that are
necessary solely in connection with the ownership, use and operation
of the Excluded Assets, PROVIDED that the name "Carpenter" shall not
constitute an Excluded Asset. The Company hereby authorizes Carpenter
to use the name "Carpenter" and any related Intellectual Property as
and to the extent necessary to allow Carpenter to comply with Sections
4.14 and 4.16 of the Investment Agreement as it pertains to the
Retained Buses.
(vii) TAX REFUNDS. All refunds or credits, if any, of Taxes due
to Carpenter with respect to periods prior to the Closing, other than
any such refund or credit attributable to the Indiana property taxes
described in the parenthetical clause in Section 9.1(iv) of the
Investment Agreement.
(viii) THIS AGREEMENT. Carpenter's rights under this Agreement
or in connection with this Agreement, the Investment Agreement or any
other Operative Agreement, or the consummation of any of the
transactions contemplated hereby or thereby.
(ix) LITIGATION CLAIMS. Any rights (including indemnification)
and claims and recoveries under litigation of Carpenter relating
exclusively to the Excluded Assets described in clauses (i) through
(viii) of this paragraph (b).
1.02 LIABILITIES.
(a) ASSUMED LIABILITIES. In connection with the sale, transfer,
conveyance and assignment of the Contributed Assets pursuant to this
Agreement, the Company hereby assumes and agrees to pay, perform and
discharge when due all of the Liabilities of Carpenter arising in
connection with the operation of the Business, as the same shall exist on
the Closing Date (the "Assumed Liabilities"), other than the Retained
Liabilities.
(b) RETAINED LIABILITIES. Notwithstanding anything in this
Agreement to the contrary, the following Liabilities of Carpenter (the
"Retained Liabilities") shall be retained by Carpenter and shall not
constitute Assumed Liabilities:
(i) THIS AGREEMENT. Any and all Liabilities of Carpenter under
or in connection with this Agreement, the Investment Agreement or any
other Operative Agreement, or the consummation of any of the
transactions contemplated hereby or thereby.
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(ii) MITCHELL FACILITY; SHUTTLE BUS BUSINESS. Any and all
Liabilities relating to the ownership, operation or use of the
Mitchell Facility, including, without limitation, all Liabilities in
respect of Environmental Claims relating to the ownership, operation
or use of the Mitchell Facility and all Liabilities in respect of the
Shuttle Bus Business.
(iii) TAXES. Any and all Liabilities for Taxes of Carpenter and
its predecessors and affiliates (other than the Company), including
any Lien on the Assets and Properties of Carpenter resulting from such
a Liability, PROVIDED that the Liability for Indiana property taxes
described in the parenthetical clause in Section 9.1(iv) of the
Investment Agreement shall not constitute a Retained Liability.
(iv) CII LIABILITIES. Any and all Liabilities of CII (whether
for Taxes or otherwise) and any Liability of Carpenter under or in
respect of the CII Stock Purchase Agreement and the transactions
consummated thereunder.
(v) NEWCOURT INVENTORY FINANCING ARRANGEMENT. (a) Any and all
Liabilities of Carpenter under the Newcourt inventory financing
arrangement in respect of the period prior to the Closing , other than
any such Liabilities specified in clauses (c)(i)(w), (c)(i)(x),
(c)(i)(y) and (c)(i)(z) of Section 4.9 of the Investment Agreement,
and (b) any and all Liabilities of Carpenter under the Operating
Agreement with Newcourt dated September 30, 1994, other than those
expressly assumed by the Company in the Assignment and Assumption
Agreement relating thereto.
(vi) PRODUCT WARRANTY AND PRODUCT LIABILITY CLAIMS. Any and all
Liabilities of Carpenter resulting from warranty claims, and any and
all product liability claims or other Actions or Proceedings commenced
or threatened, in connection with each Retained Bus, PROVIDED that
upon the transfer of any such Retained Bus from Carpenter to the
Company in accordance with Section 4.16(c) of the Investment
Agreement, any and all of such product warranty and product liability
claims shall cease to be Retained Liabilities and shall constitute
Assumed Liabilities, and PROVIDED FURTHER that upon the transfer of
any Retained Bus back from the Company to Carpenter in accordance with
Section 4.16(e) of the Investment Agreement, any and all of such
product warranty and product liability claims shall cease to
constitute Assumed Liabilities and shall constitute Retained
Liabilities unless and until such Retained Bus is resold in accordance
with Section 4.16(e).
(vii) OBLIGATIONS UNDER CONTRACTS AND LICENSES. Any and all
Liabilities of Carpenter under Contracts or Licenses not constituting
Contributed Assets and arising and to be performed on or after the
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Closing Date, and any and all Liabilities of Carpenter under the
Bloomington Lease and the Labor Contracts.
(viii) AMERICAN PRINT TOWEL LIABILITIES. Any and all Liabilities
in connection with Carpenter's arrangements with American Print Towel
as described in Section 9.1(iii)(D) of the Investment Agreement.
(ix) BENEFIT PLANS. Any and all Liabilities in connection with
all Benefit Plans, Plans and similar plans and arrangements between
Carpenter and its employees employed at the Mitchell Facility.
The Company shall have no liability for the Retained Liabilities.
Carpenter shall discharge in a timely manner or shall make adequate
provision for all of its Retained Liabilities, PROVIDED that Carpenter
shall have the ability to contest, in good faith, any claim of liability
asserted in respect thereof by any Person.
1.03 RECORDATION OF DEEDS AND FURTHER ASSURANCES; POST-CLOSING
COOPERATION.
(a) RECORDATION OF DEEDS AND FURTHER ASSURANCES. On the Closing
Date, Carpenter shall execute, deliver and arrange for the immediate
recordation (which in any event shall take place within 1 Business Day of
the Closing), in the appropriate jurisdictions, of the Wayne County
Corporate Warranty Deed with respect to the Richmond Facility.
At any time or from time to time after the Closing, at the
Company's request and without further consideration, Carpenter shall, or
shall cause its Affiliates to, execute and deliver to the Company such
proper instruments of sale, transfer, conveyance, assignment and
confirmation, provide such materials and information and take such other
actions as the Company may reasonably deem necessary or desirable in order
more effectively to transfer, convey and assign to the Company and to
confirm the Company's title to, all of the Contributed Assets, and, to the
full extent permitted by Law, to put the Company in actual possession and
operating control of the Business and the Contributed Assets and to assist
the Company in exercising all rights with respect thereto, and otherwise to
cause Carpenter to fulfill its obligations under this Agreement.
(b) POWER OF ATTORNEY. Effective on the Closing Date, Carpenter
constitutes and appoints, and may cause its Affiliates to constitute and
appoint, the Company the true and lawful attorney of Carpenter, with full
power of substitution, in the name of Carpenter, but on behalf of and for
the benefit of the Company: (i) to demand and receive from time to time all
or any of the Contributed Assets and to make endorsements and give receipts
and releases for and in respect of the same or any part thereof; (ii) to
institute, prosecute, compromise and settle any and all Actions or
Proceedings that the Company may deem proper in order to collect, assert or
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enforce any claim, right or title of any kind in or to the Contributed
Assets, (iii) to defend, compromise and settle any and all Actions or
Proceedings in respect of any of the Contributed Assets; and (iv) to do all
such acts and things in relation to the matters set forth in the preceding
clauses (i) through (iii) as the Company shall deem desirable. Carpenter
acknowledges that the appointment hereby made or caused to be made and the
powers hereby granted are coupled with an interest and are not and shall
not be revocable by it in any manner or for any reason. Carpenter shall,
or shall cause its Affiliates to, deliver to the Company at the Closing an
acknowledged power of attorney to the foregoing effect, limited to the
Contributed Assets, executed by Carpenter or any such Person. The Company
shall indemnify and hold harmless Carpenter or such Person from any and all
Losses caused by or arising out of any breach of Law by the Company in its
exercise of such power of attorney.
(c) BOOKS AND RECORDS. Following the Closing, Carpenter and the
Company will afford each other and their respective counsel and accountants
reasonable access to the books, records and other data relating to the
Business (the "Business Records") in the possession of each thereof with
respect to periods prior to the Closing and the right to make copies and
extracts therefrom, to the extent that such access may be reasonably
required by the requesting party in connection with (i) the preparation of
tax returns, (ii) the determination or enforcement of rights and
obligations under this Agreement, (iii) compliance with the requirements of
any Governmental or Regulatory Authority, (iv) the determination or
enforcement of the rights and obligations of any Indemnifying or
Indemnified Party or (v) in connection with any actual or threatened Action
or Proceeding. Each of Carpenter and the Company further agree that, for a
period extending six years after the Closing Date, it shall not destroy or
otherwise dispose of any Business Records unless (x) it shall first offer
in writing to surrender such Business Records data to the other party
hereto and (y) the other party hereto shall not agree in writing to take
possession thereof during the 10-Business-Day period after such offer is
made.
(d) TAX RETURNS, ETC. If, in order properly to prepare its tax
returns, other documents or reports required to be filed with Governmental
Authorities or its financial statements, to respond to information demands
or requests from Governmental Authorities or from third parties involving
obligations arising under this Agreement, or to fulfill its obligations
hereunder, it is necessary that the Company be furnished with additional
information, documents or records relating to the Business not referred to
in paragraph (c) above, and such information, documents or records are in
the possession or control of Carpenter, the Company or its respective
Representatives, Carpenter, the Company or such Representative, as the case
may be, shall use its best efforts to furnish or make available such
information, documents or records (or copies thereof) at the recipient's
request, cost and expense.
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(e) THIRD-PARTY CONSENTS. To the extent that any Business
Contract or Business License is not assignable without the consent of
another party, this Agreement shall not constitute an assignment or an
attempted assignment thereof if such assignment or attempted assignment
would constitute a breach thereof. Carpenter shall use its reasonable
commercial efforts to obtain the consent of such other party to the
assignment of any such Business Contract or Business License to the Company
in all cases in which such consent is or may be required for such
assignment. If any such consent shall not be obtained, Carpenter shall
cooperate with the Company in any reasonable arrangement designed to
provide the Company with the benefits intended to be assigned to it under
the relevant Business Contract or Business License. If and to the extent
that such an arrangement cannot be made, the Company shall have no
obligation pursuant to Section 1.02 or otherwise with respect to any such
Business Contract or Business License. The provisions of this
Section 1.03(e) shall not affect the right of the Investors not to
consummate the transactions contemplated by the Investment Agreement if the
condition contained in Section 6.6 thereof has not been satisfied.
ARTICLE II
ISSUANCE OF COMMON STOCK IN CONSIDERATION FOR CONTRIBUTION
2.01. ISSUANCE OF COMMON STOCK.
For and in consideration of the sale, transfer, conveyance,
assignment and delivery to the Company all of Carpenter's right, title and
interest in, to and under the Contributed Assets as set forth in Article I,
and in addition to the assumption by the Company of the Assumed Liabilities
as set forth in Article I, the Company will, on the Closing Date (but in
any event not prior to the Effective Time), issue and deliver to Carpenter,
certificates representing 300 shares of Common Stock, which shares shall
represent 33-1/3% of the total number of shares of Common Stock outstanding
after giving effect to the transactions contemplated by the Investment
Agreement. All of such shares of Common Stock, when so issued and
delivered, shall be duly issued, fully paid and non-assessable.
2.02. TAX TREATMENT.
The parties hereto intend that the above-described issuance of
Common Stock for and in consideration of the above-described sale,
transfer, conveyance, assignment and delivery to the Company all of
Carpenter's right, title and interest in, to and under the Contributed
Assets qualify as an exchange under Section 351 of the Code.
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ARTICLE III
EFFECTIVENESS OF AGREEMENT
On the Closing Date, as of the time immediately prior to the
consummation of the Closing (the "Effective Time"), subject only to (1) the
due execution and delivery of the Investment Agreement and (2) the prior or
contemporaneous satisfaction (or waiver by the appropriate Person) of all
of the conditions set forth in Article VI and Article VII of the Investment
Agreement, this Agreement shall be deemed to be effective and consummated
and shall be binding on and enforceable against the parties hereto,
PROVIDED that if the Closing shall for any reason not occur on the date
hereof, this Agreement shall be deemed to be rescinded and shall be void
and of no force or effect.
ARTICLE IV
INDEMNIFICATION
4.01 OTHER INDEMNIFICATION.
(a) In addition to the indemnification provided for in the
Investment Agreement, Carpenter (the "Indemnifying Party" for purposes of
this Section 4.01(a) and of Article 9 of the Investment Agreement) shall
indemnify the Company and its officers, directors, employees, agents,
shareholders and Affiliates (the Company and each such Person, an
"Indemnified Party" for purposes of this Section 4.01(a) and of Article 9
of the Investment Agreement) in respect of, and hold each of them harmless
from and against, any Retained Liability.
(b) The Company (the "Indemnifying Party" for purposes of this
Section 4.01(b) and of Article 9 of the Investment Agreement) shall
indemnify Carpenter and its officers, directors, employees, agents,
shareholders and Affiliates (Carpenter and each such Person, an
"Indemnified Party" for purposes of this Section 4.01(b) and of Article 9
of the Investment Agreement) in respect of, and hold each of them harmless
from and against, any Assumed Liability; PROVIDED, HOWEVER, that this
paragraph (b) shall not apply to any Assumed Liability which arises out of
or relates to any matter with respect to which the Owners and Carpenter
would be required to indemnify any Indemnified Person under Section 9.1 of
the Investment Agreement (assuming, for purposes of this proviso, that all
representations and warranties made in the Investment Agreement survive
indefinitely notwithstanding the provisions of Article VIII of the
Investment Agreement).
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4.02 METHOD OF ASSERTING CLAIMS.
Section 9.2 of the Investment Agreement is incorporated herein in
its entirety MUTATIS MUTANDIS.
ARTICLE V
DEFINITIONS
5.01 DEFINITIONS.
(a) As used in this Agreement, the following defined terms shall
have the meanings indicated below:
"AGREEMENT" means this Contribution Agreement and the Exhibits,
the Disclosure Schedule and the Schedules hereto, as the same shall be
amended from time to time.
"ASSUMED LIABILITIES" has the meaning ascribed to it in Section
1.02(a).
"BUSINESS" has the meaning ascribed to it in the first whereas
clause of this Agreement.
"BUSINESS RECORDS" has the meaning ascribed to it in Section
1.03(c).
"CLAIMS" means any administrative or judicial actions, suits,
orders, claims, proceedings, liens or notices of violations, whether civil
or criminal.
"CONTRIBUTED ASSETS" has the meaning set forth in Section
1.01(a).
"EFFECTIVE TIME" has the meaning ascribed thereto in Article III.
"EXCLUDED ASSETS" has the meaning ascribed to it in Section
1.01(b).
"LABOR CONTRACTS" has the meaning ascribed thereto in Section
1.01(b)(iv).
"RETAINED LIABILITIES" has the meaning ascribed to it in Section
1.02(b).
"WAYNE COUNTY CORPORATE WARRANTY DEED" means the warranty deed
regarding real estate in Wayne County, Indiana, in the form of Exhibit A
hereto.
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(b) 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; and (iv) the terms
"Article" or "Section" refer to the specified Article or Section of this
Agreement. All accounting terms used herein and not expressly defined
herein shall have the meanings given to them under GAAP.
ARTICLE VI
MISCELLANEOUS
6.01 NOTICES.
All notices, requests and other communications hereunder must be
in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission or mailed
by prepaid first class certified mail, return receipt requested, or mailed
by overnight courier prepaid, to the parties at the following addresses or
facsimile numbers:
If to Carpenter or the Company, to:
Carpenter Industries LLC
1100 Industries Road
Richmond, IN 47374
Facsimile No.: (317) 965-4100
Attn: Timothy S. Durham
with a copy to:
Leeuw, Plopper & Beeman
135 North Pennsylvania Street
2000 First Indiana Plaza
Indianapolis, IN 46204
Facsimile No.: (317) 264-5420
Attn: Stephen E. Plopper, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 6.01, be deemed given
upon delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided in this Section 6.01, be deemed given upon receipt,
(iii) if delivered by mail in the manner described above to the address as
provided in this Section 6.01, be deemed given on the earlier of the third
Business Day following mailing or upon receipt and (iv) if delivered by
overnight courier to the address as provided in this Section 6.01, be
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deemed given on the earlier of the first Business Day following the date
sent by such overnight courier or 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 is to be delivered pursuant to
this Section 6.01). 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 each other party
hereto.
6.02 BULK SALES ACT.
The parties hereby waive compliance with the bulk sales act or
comparable statutory provisions of each applicable jurisdiction in
connection with the sale of Contributed Assets hereunder. Carpenter shall
indemnify the Company and its respective officers, directors, employees,
agents and Affiliates in respect of, and hold each of them harmless from
and against, any and all Losses suffered, incurred or sustained by any of
them or to which any of them becomes subject, resulting from, arising out
of or relating to the failure of Carpenter to comply with the terms of any
such provisions applicable to the sale of the Contributed Assets hereunder.
6.03 ENTIRE AGREEMENT.
This Agreement supersedes all prior discussions and agreements
between the parties 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 .
6.04 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 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 term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by Law or otherwise afforded, will
be cumulative and not alternative.
6.05 AMENDMENT.
This Agreement may be amended, supplemented or modified only by a
written instrument duly executed by or on behalf of each party hereto.
6.06 NO THIRD PARTY BENEFICIARY.
The terms and provisions of this Agreement are intended solely
for the benefit of each party hereto and their respective successors and
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assigns, and it is not the intention of the parties to confer third-party
beneficiary rights, and this Agreement does not confer any such rights,
upon any other Person other than any Person entitled to indemnity under
Article IV.
6.07 NO ASSIGNMENT; BINDING EFFECT.
Neither this Agreement nor any right, interest or obligation
hereunder may be assigned (by operation of law or otherwise) by Carpenter
without the prior written consent of the Company and any attempt to do so
will be void. Subject to the immediately 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.
6.08 HEADINGS.
The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions
hereof.
6.09 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of New York, without giving effect to
any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New
York.
6.10 COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
[The remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties hereto by a duly authorized officer of each other
party as of the date first above written.
CARPENTER INDUSTRIES INC.
By:__________________________________
Name:
Title:
CARPENTER INDUSTRIES LLC
By:__________________________________
Name:
Title:
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EXHIBIT 10(c)
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CARPENTER INDUSTRIES INC.
REGISTRATION RIGHTS AGREEMENT
JANUARY ___, 1997
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<PAGE>
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Defined Terms in Stockholders' Agreement . . . . . . . . . . . .1
1.2 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II
DEMAND REGISTRATIONS. . . . . . . . . . . . . . . . . . . . . . . . .5
2.1 Requests for Registration. . . . . . . . . . . . . . . . . . . .5
2.2 Long-Form Registrations. . . . . . . . . . . . . . . . . . . . .6
2.3 Short-Form Registrations . . . . . . . . . . . . . . . . . . . .6
2.4 Effective Registration Statement . . . . . . . . . . . . . . . .7
2.5 Priority on Demand Registrations . . . . . . . . . . . . . . . .8
2.6 Selection of Underwriters. . . . . . . . . . . . . . . . . . . .9
2.7 Black-Out Rights and Postponement. . . . . . . . . . . . . . . .9
ARTICLE III
PIGGYBACK REGISTRATIONS . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Right to Piggyback . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Piggyback Expenses . . . . . . . . . . . . . . . . . . . . . . 10
3.3 Priority on Primary Registrations. . . . . . . . . . . . . . . 10
3.4 Priority on Secondary Registrations. . . . . . . . . . . . . . 11
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
HOLDBACK AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1 Holdback . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Company Holdback . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
REGISTRATION PROCEDURES . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
REGISTRATION EXPENSES . . . . . . . . . . . . . . . . . . . . . . . 17
6.1 Fees Generally . . . . . . . . . . . . . . . . . . . . . . . . 17
6.2 Counsel Fees . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
UNDERWRITTEN OFFERINGS. . . . . . . . . . . . . . . . . . . . . . . 18
7.1 Demand Underwritten Offerings. . . . . . . . . . . . . . . . . 18
7.2 Incidental Underwritten Offerings. . . . . . . . . . . . . . . 18
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ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.1 Indemnification by the Company . . . . . . . . . . . . . . . . 19
8.2 Indemnification by a Selling Stockholder . . . . . . . . . . . 20
8.3 Indemnification Procedure. . . . . . . . . . . . . . . . . . . 21
8.4 Underwriting Agreement . . . . . . . . . . . . . . . . . . . . 22
8.5 Contribution . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.6 Periodic Payments. . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
RULE 144. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE X. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS . . . . . . . . . . . . 24
ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.1 No Inconsistent Agreements . . . . . . . . . . . . . . . . . . 24
11.2 Adjustments Affecting Registrable Securities . . . . . . . . . 25
11.3 Specific Performance . . . . . . . . . . . . . . . . . . . . . 25
11.4 Actions Taken; Amendments and Waivers. . . . . . . . . . . . . 25
11.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 26
11.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.7 Headings; Certain Conventions. . . . . . . . . . . . . . . . . 28
11.8 Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.9 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . 29
11.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 29
11.11 Consent to Jurisdiction and Service of Process. . . . . . . . 29
11.12 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . 30
11.13 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 30
Exhibit A-1 -- Form of Registration Rights Joinder Agreement for
Permitted Transferees
Exhibit A-2 -- Form of Registration Rights Joinder Agreement for
Additional Stockholders
Exhibit A-3 -- Form of Registration Rights Joinder Agreement for
Transferees under Section 2.5 of the Stockholders'
Agreement
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REGISTRATION RIGHTS AGREEMENT dated as of January __, 1997, among
CARPENTER INDUSTRIES INC., a Delaware corporation (the "COMPANY"), SPARTAN
MOTORS, INC., a Michigan corporation ("Spartan"), RECOVERY EQUITY
INVESTORS II, L.P., a Delaware limited partnership ("REI II"), and
CARPENTER INDUSTRIES LLC, an Indiana limited liability company ("SerVaas").
Capitalized terms are used as defined in Article I hereto.
RECITALS
WHEREAS, the Company, Spartan, REI II, SerVaas, the Beurt SerVaas
Revocable Trust and The Curtis Publishing Company have entered into that
certain Investment Agreement dated as of December 23, 1996 (as the same
may be amended, supplemented or otherwise modified from time to time, the
"INVESTMENT AGREEMENT"), pursuant to which, among other things, each of
Spartan and REI II is acquiring 300 newly issued shares of common stock, no
par value per share (the "COMMON STOCK");
WHEREAS, immediately following the consummation of the
transactions contemplated by the Investment Agreement, SerVaas shall own,
beneficially and of record, 300 shares of Common Stock;
WHEREAS, the Investment Agreement, among other things, provides
that the execution and delivery of a stockholders' agreement and a
registration rights agreement in substantially the form hereof is a
condition to the consummation of the other transactions contemplated by the
Investment Agreement; and
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, the parties hereto are executing and delivering a
Stockholders' Agreement among the parties hereto and dated the date hereof
(as the same may be amended, supplemented or otherwise modified from time
to time, the "STOCKHOLDERS' AGREEMENT").
NOW THEREFORE, in connection with the Investment Agreement and
the Stockholders' Agreement and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS IN STOCKHOLDERS' AGREEMENT.
Unless otherwise defined herein, capitalized terms used in this
Agreement shall have the respective meanings assigned to them in the
Stockholders' Agreement.
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REGISTRATION RIGHTS AGREEMENT
1.2 DEFINITIONS.
The following defined terms, when used in this Agreement, shall
have the respective meanings set forth below (such definitions to be
equally applicable to both singular and plural forms of the terms defined):
"ADDITIONAL STOCKHOLDER" means any person who has executed a
Joinder Agreement as an Additional Stockholder pursuant to Section 6.2 of
the Stockholders' Agreement, and its direct and indirect Permitted
Transferees, so long as any such Person shall hold Registrable Securities,
and only to the extent that (i) the Company has granted such Person
registration rights as a Stockholder hereunder and (ii) such Person has
executed a Registration Rights Joinder Agreement.
"BLACK-OUT NOTICE" has the meaning ascribed to it in Section
2.7(b).
"COMMON STOCK" has the meaning ascribed to it in the recitals
hereto.
"COMPANY" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"DEMAND REGISTRATION" means (i) any Qualifying Offering requested
in accordance with Section 2.1(a), or (ii) any Long-Form Registration or
Short-Form Registration requested in accordance with Section 2.1(b).
"INITIAL PUBLIC OFFERING" means the first time a registration
statement filed under the Securities Act with the Commission respecting an
offering, whether primary or secondary, of Common Stock (or securities
convertible, exercisable or exchangeable for or into Common Stock or rights
to acquire Common Stock or such securities), which is underwritten on a
firmly committed basis, is declared effective and the securities so
registered are issued and sold.
"INVESTMENT AGREEMENT" has the meaning ascribed to it in the
recitals hereto.
"LONG-FORM REGISTRATION" has the meaning ascribed to it in
Section 2.1(b).
"PERMITTED TRANSFEREE" means:
(i) with respect to any Stockholder who is a natural person, the
spouse or any lineal descendant (including by adoption and
stepchildren) of such Stockholder, any son-in-law or daughter-in-
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REGISTRATION RIGHTS AGREEMENT
law of such Stockholder, or any trust of which such Stockholder
is the trustee and which is established solely for the benefit of
any of the foregoing individuals and whose terms are not
inconsistent with the terms of the Stockholders' Agreement; and
(ii) with respect to any Stockholder who is not a natural
person, (A) any Affiliate of such Stockholder and any trustee,
officer, director or employee of such Stockholder or any such
Affiliate, (B) any spouse, lineal descendant (including by
adoption and stepchildren), son-in-law or daughter-in-law of the
trustees, officers, directors and employees referred to in clause
(A) above, and any trust where a majority in interest of the
beneficiaries thereof are one or more of the persons described in
this clause (B) and the trustees, officers, directors and
employees described in clause (A) above and whose terms are not
inconsistent with the terms of this Agreement or the
Stockholders' Agreement; and
(iii) as to any REI Stockholder, (w) any other REI Stockholders,
(x) any general partner or limited partner of REI II, (y) any
partner, officer or employee of any such general partner or
limited partner, (z) any Affiliate of any such general partner or
limited partner, (ww) any director, officer, employee, investment
advisor or partner of any such Affiliate or general partner or
limited partner (and any subsequent transferee of such partner),
and (xx) any liquidating trust or similar entity established by
REI II or any of the foregoing entities for the benefit of its
partners or interest holders and their Permitted Transferees for
the purpose of holding Registrable Securities; and
(iv) as to any SerVaas Stockholder, (w) any other SerVaas
Stockholder, and (x) any liquidating trust or similar entity
established by or on behalf of a SerVaas Stockholder and its
Permitted Transferees for the purpose of holding Registrable
Securities.
"PIGGYBACK HOLDERS" has the meaning ascribed to it in Section
3.1.
"PIGGYBACK REGISTRATION" has the meaning ascribed to it in
Section 3.l.
"REGISTRATION EXPENSES" has the meaning ascribed to it in Section
6.l.
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REGISTRATION RIGHTS AGREEMENT
"REGISTRABLE SECURITIES" means, at any time, (i) the shares of
Common Stock then issued and outstanding or which are issuable upon the
conversion, exercise or exchange of Equity Equivalents, (ii) any then
outstanding securities into which shares of Common Stock shall have been
changed and (iii) any then outstanding securities resulting from any
reclassification or recapitalization of Common Stock; PROVIDED, HOWEVER,
that "Registrable Securities" shall not include any shares of Common Stock
or other securities obtained or transferred pursuant to an effective
registration statement under the Securities Act or in a Rule 144
Transaction; and PROVIDED FURTHER, HOWEVER, that "REGISTRABLE SECURITIES"
shall not include any shares of Common Stock or other securities which are
held by a Person who is not a Stockholder.
"REGISTRATION RIGHTS JOINDER AGREEMENT" means a Registration
Rights Joinder Agreement in the form attached hereto as Exhibit A.
"REI II" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
"REI STOCKHOLDERS" means REI II and its direct and indirect
Permitted Transferees, so long as any such Person shall hold Registrable
Securities.
"REQUESTING INVESTORS" means, with respect to any Demand
Registration, the Required Spartan Stockholders Required REI Stockholders
or Required SerVaas Stockholders (as the case may be) that have requested
such Demand Registration in accordance with Section 2.1(a) or (b).
"REQUIRED REI STOCKHOLDERS" means, as of the date of any
determination thereof, REI Stockholders which then hold Registrable
Securities representing at least a majority (by number of shares) of the
Registrable Securities, on a fully diluted basis, then held by all REI
Stockholders.
"REQUIRED SERVAAS STOCKHOLDERS" means, as of the date of any
determination thereof, SerVaas Stockholders which then hold Registrable
Securities representing at least a majority (by number of shares) of the
Registrable Securities, on a fully diluted basis, then held by all SerVaas
Stockholders.
"REQUIRED SPARTAN STOCKHOLDERS" means, as of the date of any
determination thereof, Spartan Stockholders which then hold Registrable
Securities representing at least a majority (by number of shares) of the
Registrable Securities, on a fully diluted basis, then held by all Spartan
Stockholders.
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REGISTRATION RIGHTS AGREEMENT
"REQUISITE REQUESTING INVESTORS" means, as of the date of any
determination thereof with respect to any Demand Registration, Requesting
Investors of such Demand Registration which then hold at least 66-2/3% (by
number of shares) of the Registrable Securities, on a fully diluted basis,
then held by all Requesting Investors of such Demand Registration.
"SERVAAS STOCKHOLDERS" means SerVaas and its direct and indirect
Permitted Transferees, so long as any such Person shall hold Registrable
Securities.
"SHORT-FORM REGISTRATION" has the meaning ascribed to it in
Section 2.1(b).
"SPARTAN STOCKHOLDERS" means Spartan and its direct and indirect
Permitted Transferees, so long as any such Person shall hold Registrable
Securities.
"STOCKHOLDERS" means the Spartan Stockholders, the REI
Stockholders, the SerVaas Stockholders and any Additional Stockholder or
transferee of any of the foregoing persons who has acquired Registrable
Securities in accordance with the Stockholders' Agreement and who has
executed a Registration Rights Joinder Agreement.
"STOCKHOLDERS' AGREEMENT" has the meaning ascribed to it in the
recitals hereto.
"TRUST" has the meaning ascribed to it in the introductory
paragraph of this Agreement.
ARTICLE II
DEMAND REGISTRATIONS
2.1 REQUESTS FOR REGISTRATION.
(a) If the Company has not theretofore effected a public
offering, then, at any time from and after the third anniversary of the
date hereof, any of the Required Spartan Stockholders, the Required REI
Stockholders or the Required SerVaas Stockholders may request that the
Company effect a Qualifying Offering, and the Company shall use all
reasonable efforts to effect the Qualifying Offering within 120 days after
its receipt of such request. Within 10 days after its receipt of such
request, the Company will give written notice of such request to all other
holders of Registrable Securities. The Company will use all reasonable
efforts to include in the Qualifying Offering (i) all Registrable
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REGISTRATION RIGHTS AGREEMENT
Securities which the Requesting Investors have requested to be included
therein and (ii) all other Registrable Securities with respect to which the
Company has received written requests for inclusion therein by the
Stockholders within 30 days after their receipt of the Company's notice,
subject in each case to the provisions of Section 2.5. The Company will
pay all Registration Expenses in connection with a Qualifying Offering
requested in accordance with this Section 2.1(a).
(b) Subject to Sections 2.2, 2.3 and 2.7, at any time from and
after the date which is 91 days after the closing of an Initial Public
Offering, any or all of the Required Spartan Stockholders, the Required REI
Stockholders and the Required SerVaas Stockholders may request registration
under the Securities Act of all or part of their Registrable Securities (i)
on Form S-1 or S-2 or any similar long-form registration statement (any
such registration, a "LONG-FORM REGISTRATION"), or (ii) on Form S-3 or any
similar short-form registration statement (any such registration, a
"SHORT-FORM REGISTRATION"), if the Company qualifies to use such short
form. Within 10 days after its receipt of any such request, the Company
will give written notice of such request to all other holders of
Registrable Securities. Thereafter, the Company will use all reasonable
efforts to effect the registration under the Securities Act on the form
requested by the Requesting Investors, and to include in such registration,
(i) all Registrable Securities which the Requesting Investors have so
requested to be included therein and (ii) all other Registrable Securities
with respect to which the Company has received written requests for
inclusion therein by the Stockholders within 30 days after their receipt of
the Company's notice, subject in each case to the provisions of Section
2.5.
(c) Any Requesting Investors which request a Demand Registration
pursuant to Section 2.1 (b) may, at any time prior to the effective date of
the registration statement relating to such Demand Registration, revoke
such request by providing written notice to the Company; PROVIDED, HOWEVER,
that notwithstanding such revocation, such Demand Registration shall be
deemed a request for purposes of Section 2.2 unless, after consultation
with the Company and any proposed underwriter, the Requesting Investors in
good faith determine that the Registrable Securities which they have
requested to be registered would not be sold pursuant to such Demand
Registration within a reasonable amount of time or at a price acceptable to
such Requesting Investors.
(d) Any request for a Demand Registration pursuant to this
Article II shall specify the number of Registrable Securities proposed to
be sold by the Requesting Investors and, in the case of a Demand
Registration requested pursuant to Section 2.1(b), the intended method of
disposition thereof.
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REGISTRATION RIGHTS AGREEMENT
2.2 LONG-FORM REGISTRATIONS.
In addition to their right to request a Qualifying Offering
pursuant to Section 2.1(a), the Required Spartan Stockholders, the Required
REI Stockholders and the Required SerVaas Stockholders will each be
entitled to request pursuant to Section 2.1(b) up to two Long-Form
Registrations. The Company will pay all Registration Expenses in
connection with any such Long-Form Registration. All Long-Form
Registrations (unless otherwise requested by the relevant Requesting
Investor) shall be underwritten registrations.
2.3 SHORT-FORM REGISTRATIONS.
In addition to the Long-Form Registrations contemplated by
Section 2.2, the Required Spartan Stockholders, the Required REI
Stockholders and the Required SerVaas Stockholders will each be entitled to
request an unlimited number of Short-Form Registrations in which the
Company will pay all Registration Expenses. Demand Registrations will be
Short-Form Registrations whenever the Company is qualified to use Form S-3
or any similar short form registration statement. Once the Company has
become subject to the reporting requirements of the Exchange Act, the
Company will use its reasonable best efforts to make Short-Form
Registrations available for the sale of Registrable Securities.
2.4 EFFECTIVE REGISTRATION STATEMENT.
No Demand Registration shall be deemed to have been requested or
effected for purposes of Section 2.1 (a) or 2.2:
(i) unless a registration statement with respect
thereto has become effective (other than in
connection with a revocation notice delivered
pursuant to Section 2.1(c));
(ii) if, after it has become effective, any stop order,
injunction or other order or requirement of the
Commission or any other governmental agency or
court for any reason, affecting any of the
Registrable Securities covered by such
registration statement, is threatened in writing
or issued by the Commission or other governmental
agency or court;
(iii) if the Company declines to effect such Demand
Registration pursuant to Section 2.7(a) or
delivers a Black-Out Notice with respect to such
Demand Registration;
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REGISTRATION RIGHTS AGREEMENT
(iv) if the conditions to closing specified in the
purchase agreement or underwriting agreement
entered into in connection with such Demand
Registration are not satisfied by reason of a
failure by or inability of the Company to satisfy
any of such conditions, or the occurrence of an
event outside the reasonable control of the
relevant Requesting Investors;
(v) other than in the case of a Qualifying Offering,
if the Requesting Investors have made the
determination contemplated by the PROVISO to
Section 2.1(c) with respect to such Demand
Registration and have notified the Company of such
determination in a revocation notice delivered in
accordance with Section 3.1(b); or
(vi) other than in the case of a Qualifying Offering,
if the Requesting Investors are not able to
register and sell at least 80% of the amount of
Registrable Securities which they requested to be
included in such registration;
PROVIDED that the Company will pay all Registration Expenses in connection
with any Demand Registration if pursuant to this Section 2.4 the
registration is deemed not to have been requested or effected.
2.5 PRIORITY ON DEMAND REGISTRATIONS.
(a) The Company will not include in any Demand Registration
(other than a Qualifying Offering requested pursuant to Section 2.1(a)) any
securities which are not Registrable Securities without the written consent
of the Requisite Requesting Investors. The Company will not include in any
Qualifying Offering requested pursuant to Section 2.1(a) any securities,
other than Registrable Securities or shares of Common Stock to be sold by
the Company, without the written consent of the Requisite Requesting
Investors.
(b) If the Requesting Investors and other holders of Registrable
Securities request Registrable Securities to be included in a Demand
Registration which is an underwritten offering and the managing
underwriters advise the Company in writing that in their opinion the number
of Registrable Securities requested to be included exceeds the number of
Registrable Securities which can be sold in such offering within a price
range acceptable to the Requisite Requesting Investors, the Company will
include any securities to be sold in such Demand Registration in the
following order:
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REGISTRATION RIGHTS AGREEMENT
(i) in the case of a Demand Registration (other than a
Qualifying Offering requested pursuant to Section 2.1(a)), (w)
FIRST, the Registrable Securities requested to be included in
such registration by the Requesting Investors; (x) SECOND, the
Registrable Securities requested to be included in such
registration by other Stockholders in accordance with Section
2.1(b), PROVIDED that if the managing underwriters determine in
good faith that a lower number of Registrable Securities should
be included, then only that lower number of Registrable
Securities requested to be included by other Stockholders shall
be included in such registration, and the other Stockholders
shall participate in the registration on a pro rata basis in
accordance with the number of Registrable Securities requested to
be included in such registration by each such Stockholder, (y)
THIRD, subject to Section 2.5(a), the securities which the
Company proposes to sell and (z) FOURTH, any securities other
than Registrable Securities to be sold by persons other than the
Company included pursuant to Section 2.5(a); and
(ii) in the case of a Qualifying Offering requested pursuant to
Section 2.1(a), (w) FIRST, the shares of Common Stock which the
Company proposes to sell, (x) SECOND, the Registrable Securities
requested to be included in the Qualifying Offering by the
Stockholders in accordance with Section 2.1(a), PROVIDED that if
the managing underwriters determine in good faith that a lower
number of Registrable Securities should be included, then only
that lower number of Registrable Securities requested to be
included by the Stockholders shall be included in the Qualifying
Offering, and the Stockholders shall participate in the
Qualifying Offering on a pro rata basis in accordance with the
number of Registrable Securities requested to be included in the
Qualifying Offering by each Stockholder; (y) THIRD, subject to
Section 2.5(a), any other securities the Company proposes to
sell; and (z) FOURTH, any securities other than Registrable
Securities to be sold by persons other than the Company included
pursuant to Section 2.5(a).
(c) Any Person (other than Stockholders) including any
securities in a Demand Registration must pay its share of the Registration
Expenses as provided in Article VI.
2.6 SELECTION OF UNDERWRITERS.
The Requesting Investors will have the right to select the
underwriters and the managing underwriter to administer any Demand
Registration (which underwriters and managing underwriter shall be
reasonably acceptable to the Company).
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REGISTRATION RIGHTS AGREEMENT
2.7 BLACK-OUT RIGHTS AND POSTPONEMENT.
(a) The Company shall not be required to effect a Demand
Registration if the Company, within the 120-day period preceding the date
of a request for a Demand Registration, has effected a registration of
securities in which the Requesting Investors were entitled to participate
to the fullest extent pursuant to Demand Registration rights under Article
II or Piggyback Registration rights under Article III.
(b) The Company may, upon written notice (a "BLACK-OUT NOTICE")
to the Requesting Investors requesting a Demand Registration, require such
Requesting Investors to withdraw such Demand Registration upon the good
faith determination by the Company that such postponement is necessary (i)
to avoid disclosure of material non-public information or (ii) as a result
of a pending material financing or acquisition transaction, and in each
case, each of the Spartan Stockholders, the REI Stockholders and the
SerVaas Stockholders may not request another Demand Registration for a
period of up to 120 days, as specified by the Company in such Black-Out
Notice. The Company may only give a Black-Out Notice where the giving of
such notice has been specifically approved by the Board. Upon receipt of a
Black-Out Notice, the related Demand Registration shall be deemed to be
rescinded and retracted and shall not be counted as a Demand Registration
for any purpose. The Company may not deliver more than three Black-Out
Notices in any 12-month period; PROVIDED, HOWEVER, that the aggregate
number of days covered by Black-Out Notices in any 12-month period shall
not under any circumstances exceed 120.
ARTICLE III
PIGGYBACK REGISTRATIONS
3.1 RIGHT TO PIGGYBACK.
Whenever the Company proposes (other than pursuant to a Demand
Registration or an Initial Public Offering (unless otherwise agreed by the
Company)) to register any of its equity securities under the Securities Act
(whether for the Company's own account (other than on Forms S-4 or S-8 or
any successor forms) or for the account of any other Person) (a "PIGGYBACK
REGISTRATION"), the Company will give prompt written notice to all Spartan
Stockholders, REI Stockholders and SerVaas Stockholders (the "PIGGYBACK
HOLDERS") of its intention to effect such a registration, and such notice
shall offer each Piggyback Holder the opportunity to register on the same
terms and conditions such number of such Piggyback Holder's Registrable
Securities as such Piggyback Holder may request. The Company will include
in such registration all Registrable Securities with respect to which the
Company has received written requests for inclusion therein by the
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REGISTRATION RIGHTS AGREEMENT
Piggyback Holders within 30 days after their receipt of the Company's
notice, subject to the provisions of Sections 3.3 and 3.4.
3.2 PIGGYBACK EXPENSES.
The Registration Expenses of the holders of Registrable
Securities will be paid by the Company in all Piggyback Registrations.
3.3 PRIORITY ON PRIMARY REGISTRATIONS.
If a Piggyback Registration is an underwritten primary
registration on behalf of the Company, and the managing underwriters advise
the Company in writing that in their opinion the number of securities
requested to be included in such registration are such that the success of
the offering would be materially and adversely affected, the Company will
include any securities to be sold in such Piggyback Registration in the
following order: (i) FIRST, the securities which the Company proposes to
sell, (ii) SECOND, the Registrable Securities requested to be included in
such registration by the Piggyback Holders in accordance with Section 3.1,
PROVIDED that if the managing underwriters determine in good faith that a
lower number of Registrable Securities should be included, then the Company
shall be required to include in such registration only that lower number of
Registrable Securities, and the Piggyback Holders shall participate in such
registration on a pro rata basis in accordance with the number of
Registrable Securities requested to be included in such registration by
each Piggyback Holder, and (iii) THIRD, any other securities proposed to be
included in such registration.
3.4 PRIORITY ON SECONDARY REGISTRATIONS.
If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's securities, and the
managing underwriters advise the Company in writing that in their opinion
the number of securities requested to be included in such registration is
such that the success of the offering would be materially and adversely
affected, the Company will include any securities to be sold in such
registration in the following order: (i) FIRST, the securities which such
holders propose to sell, (ii) SECOND, the Registrable Securities requested
to be included in such registration by the Piggyback Holders in accordance
with Section 3.1, PROVIDED that if the managing underwriters determine in
good faith that a lower number of Registrable Securities should be
included, then the Company shall be required to include in such
registration only that lower number of Registrable Securities, and the
Piggyback Holders shall participate in such registration on a pro rata
basis in accordance with the number of Registrable Securities requested to
be included in such registration by each Piggyback Holder, and (iii) THIRD,
any other securities proposed to be included in such registration.
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REGISTRATION RIGHTS AGREEMENT
ARTICLE IV
HOLDBACK AGREEMENTS
4.1 HOLDBACK.
Each holder of Registrable Securities agrees not to effect any
public sale or distribution of Registrable Securities, or any securities
convertible, exchangeable or exercisable for or into Registrable
Securities, during the seven days prior to, and the 90-day period beginning
on, the effective date of (a) an Initial Public Offering or (b) any
underwritten Demand Registration or any underwritten Piggyback Registration
in which such holder had an opportunity to participate without cutback
under Article III hereof (in each case except as part of such Initial
Public Offering or underwritten registration), unless the managing
underwriters of such Initial Public Offering or underwritten registration
otherwise agree.
4.2 COMPANY HOLDBACK.
The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible,
exchangeable or exercisable for or into such securities, during the 14 days
prior to, and during the 90-day period beginning on, the effective date of
any underwritten Demand Registration or any underwritten Piggyback
Registration in which holders of Registrable Securities are selling
stockholders (except as part of such underwritten registration or pursuant
to registration on Form S-4 or S-8 or any similar successor form), unless
the managing underwriters of such underwritten Demand Registration or
underwritten Piggyback Registration otherwise agree, and (ii) to use all
reasonable efforts to cause each holder of at least 5% (on a fully-diluted
basis) of its equity securities to agree not to effect any public sale or
distribution of any such equity securities or any securities convertible,
exchangeable or exercisable for or into such equity securities during such
period (except as part of such underwritten registration, if otherwise
permitted), unless the managing underwriters of such underwritten Demand
Registration or underwritten Piggyback Registration otherwise agree.
ARTICLE V
REGISTRATION PROCEDURES
Whenever the Stockholders have requested that a Qualifying
Offering be effected in accordance with Section 2.1(a) or that any
Registrable Securities be registered in accordance with Article II or III,
the Company will use all reasonable efforts to effect the Qualifying
Offering or the registration and the sale of such Registrable Securities in
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REGISTRATION RIGHTS AGREEMENT
accordance with the intended method of disposition thereof, as the case may
be, and pursuant thereto the Company will as expeditiously as possible (or,
in the case of clause (p) below, will not):
(a) prepare and file with the Commission a registration
statement with respect to such Qualifying Offering or such Registrable
Securities, as the case may be (such registration statement to include in
each case all information which the holders of the Registrable Securities
to be registered thereby, if any, shall reasonably request) and use all
reasonable efforts to cause such registration statement to become
effective, PROVIDED that as promptly as practicable before filing a
registration statement or prospectus or any amendments or supplements
thereto, the Company will (i) furnish copies of all such documents proposed
to be filed to (x) one counsel selected by the Required Spartan
Stockholders, one counsel selected by the Required REI Stockholders and one
counsel selected by the Required SerVaas Stockholders, in the case of a
Qualifying Offering requested pursuant to Section 2.1(a), or (y) in all
other cases, to one counsel selected by the Requesting Investors, and in
each case the Company shall not file any such documents to which any such
relevant counsel shall have reasonably objected on the grounds that such
document does not comply in all material respects with the requirements of
the Securities Act, and (ii) notify each Spartan Stockholder, each REI
Stockholder and each SerVaas Stockholder, in the case of a Qualifying
Offering requested pursuant to Section 2.1(a), and each holder of
Registrable Securities covered by such registration statement, in all other
cases, of (x) any request by the Commission to amend such registration
statement or amend or supplement any prospectus, or (y) any stop order
issued or threatened by the Commission, and take all reasonable actions
required to prevent the entry of such stop order or to remove it if
entered;
(b) (i) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective at all times during the period commencing on the
effective date of such registration statement and ending on the first date
as of which all Registrable Securities (and all shares of Common Stock to
be sold by the Company, in the case of a Qualifying Offering requested
pursuant to Section 2.1(a)) covered by such registration statement are sold
in accordance with the intended plan of distribution set forth in such
registration statement and (ii) comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement;
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REGISTRATION RIGHTS AGREEMENT
(c) furnish, without charge, (i) in the case of a Qualifying
Offering requested pursuant to Section 2.1(a), to each Spartan Stockholder,
each REI Stockholder and each SerVaas Stockholder, five conformed copies of
such registration statement, each amendment and supplement thereto and the
prospectus included in such registration statement (including each
preliminary prospectus and, in the case of two of such copies, including
all exhibits thereto and documents incorporated by reference therein), and
(ii) in all other cases, to each seller of Registrable Securities covered
by such registration statement, such number of conformed copies of such
registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each
preliminary prospectus and, in each case, including all exhibits thereto
and documents incorporated by reference therein) and such other documents
as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify the Registrable
Securities, if any, covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as any seller thereof
shall reasonably request, to keep such registration or qualification in
effect for so long as such registration statement remains in effect and to
do any and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of any such Registrable Securities owned by such seller;
PROVIDED, HOWEVER, that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise
be required to qualify but for this clause (d), (ii) subject itself to
taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction;
(e) furnish to each seller of the Registrable Securities, if
any, covered by such registration statement a signed copy, addressed to
such seller (and the underwriters, if any) of an opinion of counsel for the
Company or special counsel to the selling stockholders, dated the effective
date of such registration statement (and, if such registration statement
includes an underwritten public offering, dated the date of the closing
under the underwriting agreement), reasonably satisfactory in form and
substance to such seller, covering substantially the same matters with
respect to such registration statement (and the prospectus included
therein) as are customarily covered in opinions of issuer's counsel
delivered to the underwriters in underwritten public offerings, and such
other legal matters as the seller (or the underwriters, if any) may
reasonably request;
(f) notify each Spartan Stockholder, each REI Stockholder and
each SerVaas Stockholder (in the case of a Qualifying Offering requested
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pursuant to Section 2.1(a)) and each seller of Registrable Securities
covered by such registration statement (in all other cases), at a time when
a prospectus relating to such Qualifying Offering or Registrable Securities
(as the case may be) is required to be delivered under the Securities Act,
of the occurrence of any event known to the Company as a result of which
the prospectus included in such registration statement, as then in effect,
contains an untrue statement of a material fact or omits to state any fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances under which they were made;
and, at the request of any seller of Registrable Securities covered by such
registration statement, (i) the Company will prepare and furnish such
seller a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they
were made and (ii) the Company shall extend the period during which such
registration statement shall be maintained effective by the number of days
during the period from and including the date of the giving of such notice
to such seller to the date when the Company made available to such seller
an appropriately amended or supplemented prospectus;
(g) cause the Registrable Securities, if any, covered by such
registration statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed and to enter into
such customary agreements as may be required in furtherance thereof,
including without limitation listing applications and indemnification
agreements in customary form;
(h) provide a transfer agent and registrar for the Registrable
Securities, if any, covered by such registration statement not later than
the effective date of such registration statement;
(i) enter into such customary arrangements and take all such
other actions as the holders of a majority (by number of shares) of the
Registrable Securities, if any, covered by such registration statement or
the underwriters, if any, reasonably request in order to expedite or
facilitate the Qualifying Offering or the disposition of such Registrable
Securities (including using its best efforts to effect a stock split or a
combination of shares);
(j) make available for inspection by any seller of Registrable
Securities covered by such registration statement, any underwriter
participating in any disposition of securities pursuant to such
registration statement and any attorney, accountant or other agent retained
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by any such seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent accountants to
supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such
registration statement;
(k) subject to other provisions hereof, use all reasonable
efforts to cause the Registrable Securities, if any, covered by such
registration statement to be registered with or approved by such
governmental agencies or authorities or self-regulatory organizations as
may be necessary to enable the sellers thereof to consummate the
disposition of such Registrable Securities;
(l) use all reasonable efforts to obtain a "comfort" letter,
dated the effective date of such registration statement (and, if such
registration includes an underwritten offering, dated the date of the
closing under the underwriting agreement), signed by the independent public
accountants who have certified the Company's financial statements included
in such registration statement, addressed to the Company, to each seller of
the Registrable Securities (if any) covered by such registration statement,
and to the underwriters, if any, covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and with respect to events subsequent to the date of such
financial statements, as are customarily covered in accountants' letters
delivered to the underwriters in underwritten public offerings of
securities and such other financial matters as any such seller or the
underwriters, if any, may reasonably request;
(m) otherwise use all reasonable efforts to comply with all
applicable rules and regulations of the Commission and make available to
its security holders, in each case as soon as practicable, an earnings
statement covering a period of at least twelve months, beginning with the
first month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act;
(n) permit any holder of Registrable Securities covered by such
registration statement, which holder, in the sole judgment, exercised in
good faith, of such holder might be deemed to be a controlling person of
the Company (within the meaning of the Securities Act or the Exchange Act)
to participate in the preparation of such registration statement and to
include therein material, furnished to the Company in writing, which in the
reasonable judgment of such holder should be included and which is
reasonably acceptable to the Company;
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(o) use all reasonable efforts to obtain the lifting at the
earliest possible time of any stop order suspending the effectiveness of
such registration statement or of any order preventing or suspending the
use of any preliminary prospectus included therein;
(p) at any time file or make any amendment to such registration
statement, or any amendment of or supplement to the prospectus included
therein (including amendments of the documents incorporated by reference
into the prospectus), (i) of which each Spartan Stockholder, each REI
Stockholder and each SerVaas Stockholder and the managing underwriters (in
the case of a Qualifying Offering requested pursuant to Section 2.1(a)) or
each seller of Registrable Securities covered by such registration
statement or the managing underwriters, if any (in all other cases), shall
not have previously been advised and furnished a copy or (ii) to which the
Required Spartan Stockholders, the Required REI Stockholders, the Required
SerVaas Stockholders, the managing underwriters or counsel for the Required
Spartan Stockholders, the Required REI Stockholders, the Required SerVaas
Stockholders or the managing underwriters (in the case of a Qualifying
Offering requested pursuant to Section 2.1(a)), or the sellers of a
majority (by number of shares) of the Registrable Securities covered by
such registration statement, the managing underwriters (if any) or counsel
for such sellers or any such managing underwriters (in all other cases),
shall reasonably object;
(q) make such representations and warranties (subject to
appropriate disclosure schedule exceptions) to the sellers of the
Registrable Securities, if any, covered by such registration statement and
the underwriters, if any, in form, substance and scope as are customarily
made by issuers to underwriters and selling holders, as the case may be, in
underwritten public offerings of substantially the same type; and
(r) if such registration statement refers to any seller of
Registrable Securities covered thereby by name or otherwise as the holder
of any securities of the Company then (whether or not such seller is or
might be deemed to be a controlling person of the Company), (i) at the
request of such seller, insert therein language, in form and substance
reasonably satisfactory to such seller, the Company and the managing
underwriters, if any, to the effect that the holding by such seller of such
securities is not to be construed as a recommendation by such seller of the
investment quality of the Registrable Securities or the Company's other
securities covered thereby and that such holding does not imply that such
seller will assist in meeting any future financial requirements of the
Company, or (ii) in the event that such reference to such seller by name or
otherwise is not required by the Securities Act, any similar Federal or
state statute, or any rule or regulation of any regulatory body having
jurisdiction over the offering, at the request of such seller, delete the
reference to such seller.
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REGISTRATION RIGHTS AGREEMENT
ARTICLE VI
REGISTRATION EXPENSES
6.1 FEES GENERALLY.
All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation internal
expenses (including without limitation all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense
of any annual audit or quarterly review, the expense of any liability
insurance, the expenses and fees for listing securities on one or more
securities exchanges in connection with a Qualifying Offering or pursuant
to clause (g) of Article V, all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), printing expenses, messenger
and delivery expenses, and fees and disbursements of counsel for the
Company and all independent certified public accountants, underwriters
(excluding underwriting fees, discounts and commissions) and other Persons
retained by the Company (all such expenses being herein called
"REGISTRATION EXPENSES") shall be borne by the Company, except that each
Stockholder shall pay any underwriting fees, discounts or commissions
attributable to the sale of its Registrable Securities.
6.2 COUNSEL FEES.
In connection with a Qualifying Offering requested pursuant to
Section 2.1(a), the Company will (a) reimburse the Spartan Stockholders for
the reasonable fees and disbursements of one counsel selected by the
Required Spartan Stockholders, (b) reimburse the REI Stockholders for the
reasonable fees and disbursements of one counsel selected by the Required
REI Stockholders and (c) reimburse the SerVaas Stockholders for the
reasonable fees and disbursements of one counsel selected by the Required
SerVaas Stockholders. In connection with each other Demand Registration,
the Company will reimburse the Requesting Investors for the reasonable fees
and disbursements of one counsel selected by the Requesting Investors.
ARTICLE VII
UNDERWRITTEN OFFERINGS
7.1 DEMAND UNDERWRITTEN OFFERINGS.
If requested by the underwriters for any underwritten offering of
Registrable Securities pursuant to a Demand Registration, the Company will
enter into an underwriting agreement with such underwriters for such
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offering, such agreement to be satisfactory in substance and form to the
Requesting Investor requesting such Demand Registration (or, in the case of
a Qualifying Offering requested pursuant to Section 2.1(a), the holders of
a majority (by number of shares) of the Registrable Securities included in
such Demand Registration) and the underwriters, to contain such
representations and warranties by the Company and such other terms as are
generally included in agreements of this type, including indemnities
customarily included in such agreements, and to be otherwise reasonably
satisfactory in form and substance to the Company. The holders of the
Registrable Securities to be distributed by such underwriters will
cooperate in good faith with the Company in the negotiation of the
underwriting agreement. The holders of the Registrable Securities to be
distributed by such underwriters shall be parties to such underwriting
agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such holders of Registrable Securities and that
any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement also be conditions precedent
to the obligations of such holders of Registrable Securities. The Company
shall cooperate with any such holder of Registrable Securities in order to
limit any representations or warranties to, or agreements with, the Company
or the underwriters to be made by such holder only to representations,
warranties or agreements regarding such holder, such holder's Registrable
Securities, such holder's intended method of distribution and any other
representation required by applicable law.
7.2 INCIDENTAL UNDERWRITTEN OFFERINGS.
If the Company at any time proposes to register any of its equity
securities under the Securities Act as contemplated by Article III and such
equity securities are to be distributed by or through one or more
underwriters, the Company will, if requested by any Piggyback Holder as
provided in Article III, arrange for such underwriters to include all the
Registrable Securities to be offered and sold by such Piggyback Holder,
subject to the limitations set forth in Article III, among the securities
to be distributed by such underwriters. The holders of the Registrable
Securities to be distributed by such underwriters shall be parties to the
underwriting agreement between the Company and such underwriters, and may,
at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and
for the benefit of such underwriters shall also be made to and for the
benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement also be conditions precedent to the obligations of
such holders of Registrable Securities. The Company shall cooperate with
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any such holder of Registrable Securities in order to limit any
representations or warranties to, or agreements with, the Company or the
underwriters to be made by such holder only to representations, warranties
or agreements regarding such holder, such holder's Registrable Securities,
such holder's intended method of distribution and any other representation
required by applicable law.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY.
The Company agrees to indemnify and hold harmless, to the fullest
extent permitted by law, each of the holders of any Registrable Securities
covered by a registration statement that has been filed with the Commission
pursuant to this Agreement, each other Person, if any, who controls such
holder within the meaning of the Securities Act or the Exchange Act, and
each of their respective directors, general partners and officers, as
follows:
(i) against any and all loss, liability, claim, damage
or expense (other than amounts paid in settlement)
incurred by such Person arising out of or based
upon an untrue statement or alleged untrue
statement of a material fact contained in such
registration statement (or any amendment or
supplement thereto), including all documents
incorporated therein by reference, or in any
preliminary prospectus or prospectus included
therein (or any amendment or supplement thereto)
or the omission or alleged omission therefrom of a
material fact required to be stated therein or
necessary to make the statements therein, in light
of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage
and expense incurred by such Person to the extent
of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by
any governmental agency or body, in each case
whether commenced or threatened, or of any claim
whatsoever, that is based upon any such untrue
statement or omission or any such alleged untrue
statement or omission, if such settlement is
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effected with the written consent of the Company
(which consent shall not be unreasonably withheld
or delayed); and
(iii) against any and all expense incurred by such
Person in connection with investigating, preparing
or defending against any litigation or any
investigation or proceeding by any governmental
agency or body, in each case whether commenced or
threatened in writing, or against any claim
whatsoever, that is based upon any such untrue
statement or omission or any such alleged untrue
statement or omission, to the extent that any such
expense is not paid under clause (i) or (ii)
above;
PROVIDED, HOWEVER, that this indemnity does not apply to any loss,
liability, claim, damage or expense to the extent arising out of or based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such holder expressly for use
in the preparation of any registration statement (or any amendment or
supplement thereto), including all documents incorporated therein by
reference, or in any preliminary prospectus or prospectus included therein
(or any amendment or supplement thereto); and PROVIDED FURTHER, HOWEVER,
that the Company will not be liable to any holder of Registrable Securities
(or any other indemnified Person) under the indemnity agreement in this
Section 8.1, with respect to any preliminary prospectus or the final
prospectus or the final prospectus as amended or supplemented, as the case
may be, to the extent that any such loss, liability, claim, damage or
expense of such holder (or other indemnified Person) results from the fact
that such holder sold Registrable Securities to a Person to whom there was
not sent or given, at or prior to the written confirmation of such sale, a
copy of the final prospectus or of the final prospectus as then amended or
supplemented, whichever is most recent, if the Company has previously and
timely furnished copies thereof to such holder. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of such holder or any other Person eligible for indemnification
under this Section 8.1, and shall survive the transfer of such securities
by such seller.
8.2 INDEMNIFICATION BY A SELLING STOCKHOLDER.
In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder agrees to
indemnify and hold harmless (in the same manner and to the same extent as
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set forth in Section 8.1 of this Agreement), to the extent permitted by
law, the Company and its directors, officers and controlling Persons, and
their respective directors, officers and general partners, with respect to
any statement or alleged statement in or omission or alleged omission from
such registration statement, any preliminary, final or summary prospectus
included therein, or any amendment or supplement thereto, or to any such
prospectus, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written
information that relates only to such holder or the plan of distribution
that is expressly furnished to the Company by or on behalf of such holder
for use in the preparation of such registration statement, preliminary,
final or summary prospectus or amendment or supplement. Such indemnity
shall remain in full force and effect regardless of any investigation made
by or on behalf of the Company, or such holder, as the case may be, or any
of their respective directors, officers, controlling Persons or general
partners and shall survive the transfer of Registrable Securities by such
holder. With respect to each claim pursuant to this Section 8.2, each
holder's maximum liability under this Section 8.2 shall be limited to an
amount equal to the net proceeds actually received by such holder (after
deducting any underwriting fees, discount and expenses) from the sale of
Registrable Securities being sold pursuant to such registration statement
or prospectus by such holder.
8.3 INDEMNIFICATION PROCEDURE.
Within 10 days after receipt by an indemnified party hereunder of
written notice of the commencement of any action or proceeding involving a
claim referred to in Section 8.1 or Section 8.2, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such
action; PROVIDED, HOWEVER, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of
its obligations under Section 8.1 or Section 8.2 except to the extent that
the indemnifying party is actually prejudiced by such failure to give
notice. In case any such action or proceeding is brought against an
indemnified party, the indemnifying party will be entitled to participate
in and to assume the defense thereof, jointly with any other indemnifying
party similarly notified, to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to
such indemnified party for any legal fees and expenses subsequently
incurred by the latter in connection with the defense thereof, unless in
such indemnified party's reasonable judgment an actual or potential
conflict of interest between such indemnified and indemnifying parties may
exist in respect of such claim, in which case the indemnifying party shall
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not be liable for the fees and expenses of (i) in the case of a claim
referred to in Section 8.1, more than one counsel (in addition to any local
counsel) for all indemnified parties selected by the holders of a majority
(by number of shares) of the Registrable Securities held by such
indemnified parties, or (ii) in the case of a claim referred to in Section
8.2, more than one counsel (in addition to any local counsel) for the
Company, in each case in connection with any one action or separate but
similar or related actions or proceedings. An indemnifying party who is
not entitled to (pursuant to the immediately preceding sentence), or elects
not to, assume the defense of a claim will not be obligated to pay the fees
and expenses of more than one counsel (in addition to any local counsel)
for all parties indemnified by such indemnifying party with respect to such
claim, unless in the reasonable judgment of any indemnified party an actual
or potential conflict of interest may exist between such indemnified party
and any other of such indemnified parties with respect to such claim, in
which event the indemnifying party shall be obligated to pay the fees and
expenses of such additional counsel or counsels as may be reasonable in
light of such conflict. The indemnifying party will not, without the prior
written consent of each indemnified party, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action,
suit, investigation or proceeding in respect of which indemnification may
be sought hereunder (whether or not such indemnified party or any Person
who controls such indemnified party is a party to such claim, action, suit,
investigation or proceeding), unless such settlement, compromise or consent
includes an unconditional release of such indemnified party from all
liability arising out of such claim, action, suit, investigation or
proceeding. Notwithstanding anything to the contrary set forth herein, and
without limiting any of the rights set forth above, in any event any
indemnified party will have the right to retain, at its own expense,
counsel with respect to the defense of a claim.
8.4 UNDERWRITING AGREEMENT.
The Company, and each holder of Registrable Securities requesting
registration of all or any part of such holder's Registrable Securities
pursuant to Article II or Article III, shall provide for the foregoing
indemnity (with appropriate modifications) in any underwriting agreement
entered into in connection with a Demand Registration or a Piggyback
Registration with respect to any required registration or other
qualification of Registrable Securities under any Federal or state law or
regulation of any governmental authority.
8.5 CONTRIBUTION.
If the indemnification provided for in Section 8.1 or 8.2 is
unavailable to hold harmless an indemnified party under such Section, then
each indemnifying party shall contribute to the amount paid or payable by
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such indemnified party as a result of the losses, claims, damages,
liabilities and expenses referred to in Section 8.1 or Section 8.2, as the
case may be, in such proportion as is appropriate to reflect the relative
fault of such indemnifying party, on the one hand, and such indemnified
party, on the other hand, in connection with statements or omissions which
resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations, including the relative
benefits received by each party from the offering of the securities covered
by the relevant registration statement, the parties' relative knowledge and
access to information concerning the matter with respect to which the
relevant claim was asserted and the parties' relative opportunities to
correct and prevent any relevant statement or omission. Without limiting
the generality of the foregoing, the parties' relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or the indemnified party and the parties' relative
intent, knowledge, access to relevant information and opportunity to
correct or prevent any such untrue statements or omission. The parties
hereto agree that it would not be just and equitable if contributions
pursuant to this Section 8.5 were to be determined by pro rata or per
capita allocation (even if the underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the first and second
sentences of this Section 8.5. The amount paid by an indemnified party as
a result of the losses, claims, damages, liabilities or expenses referred
to in the first sentence of this Section 8.5 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending the relevant action or
proceeding and shall be limited as provided in Section 8.3 if the
indemnifying party has assumed the defense of the relevant action or
proceeding in accordance with the provisions of Section 8.3. Promptly
after receipt by an indemnified party under this Section 8.5 of notice of
the commencement of any action or proceeding against such party in respect
of which a claim for contribution may be made against an indemnifying party
under this Section 8.5, such indemnified party shall notify the
indemnifying party in writing of the commencement thereof if the notice
specified in Section 8.3 has not been given with respect to such action or
proceeding; PROVIDED, HOWEVER, that the omission to so notify the
indemnifying party shall not relieve the indemnifying party from any
liability which it may otherwise have to any indemnified party under this
Section 8.5, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. The Company and each holder of
Registrable Securities agrees with each other and the underwriters of the
Registrable Securities, if requested by such underwriters, that (i) the
underwriters' portion of the contribution paid to such holders pursuant to
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this Section 8.5 shall not exceed the total underwriting fees, discounts
and commissions in connection with the relevant offering and (ii) that the
total amount of any such holder's contributions under this Section 8.5
shall not exceed an amount equal to the net proceeds actually received by
such holder from the sale of Registrable Securities in the offering to
which the losses, liabilities, claims, damages or expenses of the
indemnified parties relate. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation.
8.6 PERIODIC PAYMENTS.
The indemnification required by this Article VIII shall be made
by periodic payments of the amount thereof during the course of the
relevant investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
ARTICLE IX
RULE 144
If the Company shall have filed a registration statement pursuant
to the requirements of Section 12 of the Exchange Act or a registration
statement pursuant to the requirements of the Securities Act, the Company
covenants that it will file the reports required to be filed by it under
the Securities Act and the Exchange Act (or, if the Company is not required
to file such reports, it will, upon the request of any holder of
Registrable Securities, make publicly available other information), and it
will take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable
such holder to sell shares of Registrable Securities without registration
under the Securities Act in compliance with (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the Commission. Upon the
request of any holder of Registrable Securities, the Company will deliver
to such holder a written statement as to whether it has complied with such
requirements.
ARTICLE X
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No holder of Registrable Securities may participate in any
underwritten registration hereunder unless such holder (i) agrees to sell
such holder's Registrable Securities on the basis provided in any
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underwriting arrangements approved by the Person or Persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements,
escrow agreements and other documents reasonably required under the terms
of such underwriting arrangements and consistent with the provisions of
this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 NO INCONSISTENT AGREEMENTS.
The Company represents and warrants that it does not currently
have, and covenants that it will not hereafter enter into, any agreement
which is inconsistent with, or would otherwise restrict the performance by
the Company of, its obligations hereunder.
11.2 ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES.
The Company will use all reasonable efforts not to take any
action, and not to fail to take any action which it may properly take, with
respect to its securities if such action or failure to act would adversely
affect (a) the ability of the holders of Registrable Securities to include
Registrable Securities in a registration undertaken pursuant to this
Agreement or (b) to the extent within the Company's control, would
adversely affect the marketability of such Registrable Securities in any
such registration (it being understood that the actions referred to in this
Section 11.2 include effecting a stock split or a combination of shares).
11.3 SPECIFIC PERFORMANCE.
The parties hereto agree that irreparable damage would occur in
the event any provision of this Agreement was not performed in accordance
with the terms hereof and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy that may
be available to any of them at law or equity; PROVIDED, HOWEVER, that each
of the parties hereto agrees to provide the other parties with written
notice at least two business days prior to filing any motion or other
pleading seeking a temporary restraining order, a temporary or permanent
injunction, specific performance, or any other equitable remedy and to give
the other parties and their counsel a reasonable opportunity to attend and
participate in any judicial or administrative hearing or other proceeding
held to adjudicate or rule upon any such motion or pleading.
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<PAGE>
REGISTRATION RIGHTS AGREEMENT
11.4 ACTIONS TAKEN; AMENDMENTS AND WAIVERS.
Except as otherwise provided herein, no modification, amendment
or waiver of any provision of this Agreement will be effective against the
Company or any holder of Registrable Securities, unless such modification,
amendment or waiver is approved in writing by the Company, the Required
Spartan Stockholders, the Required REI Stockholders and the Required
SerVaas Stockholders. Each of the Stockholders and the Company shall be
bound by each modification, amendment or waiver authorized in accordance
with this Section 11.4, regardless of whether the certificates evidencing
the Registrable Securities shall have been marked to indicate such
modification, amendment or waiver. The failure of any party hereto to
enforce any of the provisions of this Agreement will in no way be construed
as a waiver of such provisions and will not affect the right of such party
thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
11.5 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors
and assigns. In addition, and whether or not any express assignment has
been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit
of, and enforceable by, any subsequent holder of Registrable Securities,
except to the extent reserved to or by the transferor in connection with
any such transfer; PROVIDED, HOWEVER, that the benefits of this Agreement
shall inure to and be enforceable by any transferee of Registrable
Securities only if such transferee shall have acquired such Registrable
Securities in accordance with the terms of the Stockholders' Agreement and
shall have executed a Registration Rights Joinder Agreement.
11.6 NOTICES.
(a) All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission
or mailed (by registered or certified mail, postage prepaid, return receipt
requested) or delivered by reputable overnight courier, fee prepaid, to the
parties at the following addresses or facsimile numbers:
-27-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
If to any Spartan Stockholder, to:
Spartan Motors, Inc.
1000 Reynolds Road
Charlotte, Michigan 48813
Facsimile No.: (517) 543-7729
Attn: George Sztykiel
with a copy to:
Foster, Swift, Collins & Smith
313 South Washington Square
Lansing, MI 48933
Facsimile No.: (571) 371-8200
Attn: James B. Jensen, Jr., Esq.
If to any REI Stockholder, to:
Recovery Equity Investors II, L.P.
901 Mariner's Island Boulevard
Suite 465
San Mateo, CA 94404
Facsimile No.: (415) 578-9842
Attn: Joseph J. Finn-Egan
Jeffrey A. Lipkin
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Facsimile No.: 212-309-6273
Attn: Philip H. Werner, Esq.
If to any SerVaas Stockholder, to:
The Curtis Publishing Company
1000 Waterway Boulevard
Indianapolis, IN 46202
Facsimile No.: (317) 633-8813
Attn: Dr. Beurt SerVaas
-28-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
with a copy to:
Leeuw, Plopper & Beeman
135 North Pennsylvania Street
2000 First Indiana Plaza
Indianapolis, IN 46204
Facsimile No.: (317) 264-5420
Attn: Stephen E. Plopper, Esq.
If to the Company, to:
Carpenter Industries Inc.
1100 Industries Road
Richmond, IN 47374
Facsimile No.: (317) 965-4100
Attn: Timothy S. Durham
with a copy to:
Leeuw, Plopper & Beeman
135 North Pennsylvania Street
2000 First Indiana Plaza
Indianapolis, IN 46204
Facsimile No.: (317) 264-5420
Attn: Stephen E. Plopper, Esq.
(b) All such notices, requests and other communications will be
deemed delivered upon receipt. Any party hereto may from time to time
change its address, facsimile number or other information for the purpose
of notices to such party by giving notice specifying such change to the
other parties hereto in accordance with Section 11.6(a).
11.7 HEADINGS; CERTAIN CONVENTIONS.
The headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not define, limit
or otherwise affect any of the terms or provisions hereof. Unless the
context otherwise expressly requires, all references herein to Articles,
Sections and Exhibits are to Articles and Sections of, and Exhibits to,
this Agreement. The words "herein," "hereunder" and "hereof" and words of
similar import refer to this Agreement as a whole and not to any particular
Section or provision. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation".
-29-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
11.8 GENDER.
Whenever the pronouns "he" or "his" are used herein they shall
also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in
the plural and words in the plural shall be construed as though in the
singular in all cases where they would so apply.
11.9 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 will not be materially
and adversely affected thereby, (i) such provision will be fully severable,
(ii) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (iii)
the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as a
part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be
possible.
11.10 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF
NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
11.11 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
EACH OF THE PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW
YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO
THIS AGREEMENT MAY BE LITIGATED IN SUCH COURTS. EACH OF THE PARTIES HERETO
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
EACH OF THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO THE PARTY AT THE ADDRESS SPECIFIED IN THIS
-30-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 15 DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY PARTY
HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER
OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY OF THE OTHER PARTIES
HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED
BY ANY APPLICABLE LAW.
11.12 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT. EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY
OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF
SUCH PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF
ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH OF THE PARTIES HERETO FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND
THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT
IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
11.13 COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
CARPENTER INDUSTRIES INC.
By:___________________________
Name:
Title:
SPARTAN MOTORS, INC.
By:___________________________
Name:
Title:
RECOVERY EQUITY INVESTORS II, L.P.
By Recovery Equity Partners II, L.P.,
its general partner
By:____________________________
Name: Joseph J. Finn-Egan
Title: General Partner
By:____________________________
Name: Jeffrey A. Lipkin
Title: General Partner
CARPENTER INDUSTRIES LLC
By:___________________________
Name:
Title:
[Signature Page to Registration Rights Agreement]
<PAGE>
REGISTRATION RIGHTS AGREEMENT
Exhibit A-1
Form of Registration Rights Joinder Agreement
For Permitted Transferees
CARPENTER INDUSTRIES INC.
1100 Industries Road
Richmond, IN 47374
Attention: Chief Executive Officer
Ladies & Gentlemen:
In consideration of the transfer to the undersigned of [DESCRIBE
SECURITY BEING TRANSFERRED] of CARPENTER INDUSTRIES INC., a Delaware
corporation (the "COMPANY"), the undersigned represents that it is a
Permitted Transferee of [INSERT NAME OF TRANSFEROR] and agrees that, as of
the date written below, [HE][SHE][IT] shall become a party to, and a
Permitted Transferee as defined in, that certain Registration Rights
Agreement dated as of __________, 199_, as such agreement may have been
amended from time to time (the "AGREEMENT"), among the Company and the
persons named therein, and as a Permitted Transferee shall be fully bound
by, and subject to, all of the covenants, terms and conditions of the
Agreement that were applicable to the undersigned's transferor, as though
an original party thereto and shall be deemed a [SPARTAN STOCKHOLDER]
[SERVAAS STOCKHOLDER] [REI STOCKHOLDER] [ADDITIONAL STOCKHOLDER] for all
purposes thereof.
Executed as of the day of , .
SIGNATORY:__________________________
Address: __________________________
__________________________
ACKNOWLEDGED AND ACCEPTED:
CARPENTER INDUSTRIES INC.
By ________________________________
Name:
Title:
<PAGE>
REGISTRATION RIGHTS AGREEMENT
Exhibit A-2
Form of Registration Rights Joinder Agreement
For Additional Stockholders
CARPENTER INDUSTRIES INC.
1100 Industries Road
Richmond, IN 47374
Attention: Chief Executive Officer
Ladies & Gentlemen:
In consideration of the issuance to the undersigned of [DESCRIBE
SECURITY BEING ISSUED] of CARPENTER INDUSTRIES INC., a Delaware corporation
(the "COMPANY"), the undersigned agrees that, as of the date written below,
[HE][SHE][IT] shall become a party to that certain Registration Rights
Agreement dated as of ________ __, 199_, as such agreement may have been
amended from time to time (the "AGREEMENT"), among the Company and the
persons named therein, and shall be fully bound by, and subject to, the
covenants, terms and conditions of the Agreement as provided under Section
11.5 of the Agreement as though an original party thereto.
Executed as of the day of , .
SIGNATORY:__________________________
Address: __________________________
__________________________
ACKNOWLEDGED AND ACCEPTED:
CARPENTER INDUSTRIES INC.
By ________________________________
Name:
Title:
<PAGE>
REGISTRATION RIGHTS AGREEMENT
Exhibit A-3
Form of Registration Rights Joinder Agreement
For Transferees under Section 2.5 of the Stockholders' Agreement
CARPENTER INDUSTRIES INC.
1100 Industries Road
Richmond, IN 47374
Attention: Chief Executive Officer
Ladies & Gentlemen:
In consideration of the transfer to the undersigned of [DESCRIBE
SECURITY BEING TRANSFERRED] of CARPENTER INDUSTRIES INC. a Delaware
corporation (the "COMPANY"), the undersigned agrees that, as of the date
written below, [HE][SHE][IT] shall become a party to that certain
Registration Rights Agreement dated as of ________ __, 199_, as such
agreement may have been amended from time to time (the "AGREEMENT"), among
the Company and the persons named therein, and shall be fully bound by, and
subject to, the covenants, terms and conditions of the Agreement as
provided under Section 11.5 of the Agreement as though an original party
thereto.
Executed as of the day of , .
SIGNATORY:__________________________
Address: __________________________
__________________________
ACKNOWLEDGED AND ACCEPTED:
CARPENTER INDUSTRIES INC.
By ________________________________
Name:
Title:
<PAGE>
EXHIBIT 99
[SPARTAN MOTORS' LOGO]
FOR IMMEDIATE RELEASE CONTACT: Jeffrey Lambert
Spartan Motors, Inc.
517-543-6400 ext. 285
SPARTAN MOTORS ACQUIRES EQUITY STAKE IN
SCHOOL BUS BUILDER CARPENTER INDUSTRIES
CHARLOTTE, Michigan, January 7, 1997 -- Custom chassis manufacturer
Spartan Motors, Inc. (NASDAQ:SPAR) today announced an agreement to purchase
a 33 percent equity interest in school bus body maker Carpenter Industries,
Inc.
Charlotte, Mich.-based Spartan Motors said it is investing $10 million
in privately-held Carpenter Industries in equal partnership with San Mateo,
Calif.-based investment firm Recovery Equity Investors, Inc. (REI) and
former sole owners Dr. Beurt SerVaas and SerVaas, Inc. The deal closed
January 6, 1997.
"Acquiring a portion of Carpenter is both a sound investment and a
strategic move to ensure Spartan's continued growth in the school bus
market and successful entry into step van chassis," said John Sztykiel,
Spartan Motors President and Chief Operating Officer. "The school bus
market is unique as all of the major players either manufacture their own
chassis or are aligned with a single chassis builder. By partnering with
Carpenter and integrating the chassis and body design, we are making an
-- more --
SPARTAN MOTORS, INC. - P.O. BOX 440 - 1000 REYNOLDS RD -
CHARLOTTE, MI 48813 - USA
(517) 543-6400 - FAX (517) 543-7727
<PAGE>
SPARTAN MOTORS -- PAGE 2
investment in market share that will have an immediate and profitable
impact on our chassis business."
Sztykiel added that the alliance with Carpenter increases Spartan's
overall market potential by more then 130 percent, as the combined 70,000
unit school bus and step van markets easily surpass Spartan's total market
share opportunities in motorhome, fire truck, transit bus and concrete
mixer chassis.
"Spartan Motors and the board of directors have been acquisition
minded for some time, but we have been patient, and this patience has paid
off," said Spartan Motors Chairman and Chief Executive Officer George
Sztykiel. "Our alliance with Carpenter presents an exciting challenge for
Spartan as we use our management experience and abilities to improve
efficiencies, increase profitability and grow the businesses of both
companies."
Terms of the acquisition agreement call for each ownership party to
hold two of the six seats on the board of directors of Carpenter
Industries. Spartan also expects to be involved in the day-to-day
operations of Carpenter.
Spartan said its 33 percent stake in Richmond, Ind.-based Carpenter
will be reflected as equity income on its income statement. Spartan
expects Carpenter will be profitable in 1997, but will likely post a modest
loss in the first half of 1997 as it completes a restructuring and
production ramp-up.
-- more --
<PAGE>
SPARTAN MOTORS -- PAGE 3
"Spartan and REI bring the necessary resources to ensure Carpenter can
grow and build on its long history as a leader in the school bus business,"
said Carpenter President Timothy Durham. "Spartan's manufacturing and
engineering expertise will also be invaluable as we ramp up our new
Richmond facility to full production, work to increase our share of the
school bus market, and seek out new growth such as the step van market."
Spartan emphasized that the acquisition agreement expressly restricts
Carpenter from entering the mass transit or shuttle bus market and thus
does not detract from Spartan's existing customers and business.
"We are not limiting Carpenter's growth. Instead, we recognize the
opportunities in the combined 70,000 unit school bus and step van markets
which should not be compromised to go after a piece of the smaller transit
bus market," said John Sztykiel.
Sztykiel emphasized that step vans, which include parcel delivery
trucks, snack food delivery vehicles, tool trucks and others, represent a
new market segment for both Carpenter and Spartan. Carpenter is launching
its first step van product in January 1997, and expects to begin building
its signature Crown Step Van on a Spartan chassis in the second half of
1997.
"The step van market offers a great deal of potential for Carpenter as
we adapt the safety and driver comfort innovations pioneered by our school
bus line into this new and dynamic market," said Robert Otto, Carpenter
Executive Vice President and head of the Company's Step Van Division.
-- more --
<PAGE>
SPARTAN MOTORS -- PAGE 4
"Integrating Spartan into the design, engineering and manufacturing stages
will also be a big competitive advantage in terms of product innovations,
cost efficiencies and ease of serviceability."
On the school bus side, Carpenter sold around 4,000 buses in 1996, of
which only three percent were transit style or Type D school buses.
Carpenter's Type D buses are the only models for which Spartan Motors
currently builds chassis. However, the overall industry average for Type D
buses as a percentage of manufacturers' total volume is 27 percent (of a
total 36,000 unit market) and growing, offering Spartan a realistic growth
opportunity for its chassis sales.
"Our investment in Carpenter ensures we have the necessary management
and operations input to grow both Carpenter's share of the market and
Spartan's chassis business," John Sztykiel said. "We are in a unique
position to simultaneously grow our profits and sales, and strengthen the
return on our investment through one strategic alliance."
Carpenter Industries, which sells its products through a nationwide
network of 40 dealers, has historically captured 14 percent of the overall
school bus market.
In December 1995, Carpenter moved its headquarters and manufacturing
from Mitchell, Indiana to the former Wayne Corp. bus facility in Richmond.
The new 565,000-square-foot plant accommodates more modern operations,
while offering three times the capacity of the former Mitchell facility,
both of which support a more cost effective production process.
-- more --
<PAGE>
SPARTAN MOTORS -- PAGE 5
Spartan Motors, Inc. is a leading manufacturer of custom chassis for
motorhomes, fire trucks, transit buses, school buses, concrete mixers and
other specialty vehicles. The Company entered the school bus chassis
market with Carpenter in the second quarter 1995 with its Merqury Series
front and rear engine transit style or Type D chassis.
The statements contained in this news release include certain
predictions and projections that may be considered forward-looking
statements by the securities laws. These statements involve a number of
risks and uncertainties, including but not limited to economic,
competitive, governmental and technological factors affecting the Company's
operations, markets, products, services and prices, and actual results may
differ materially.
####
