<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
May 31, 1996
-----------------------------------------------------------------------
Date of Report (Date of earliest event reported)
MASCOTECH, INC
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(Exact name of registrant as specified in its charter)
Delaware 1-12068 38-2513957
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
21001 Van Born Road, Taylor, Michigan 48180
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(address of principal executive offices) (Zip Code)
(313) 274-7405
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(Registrant's telephone number, including area code)
<PAGE> 2
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to the Stock Purchase Agreement dated May 31, 1996
among the Registrant, Tower Automotive, Inc., a Delaware corporation
("TAI"), and R.J. Tower Corporation, a Michigan corporation ("Tower") and
a wholly-owned subsidiary of TAI, the Registrant sold to Tower all of
the issued and outstanding capital stock of MascoTech Stamping
Technologies, Inc., a Delaware corporation ("MSTI") and a wholly-owned
subsidiary of the Registrant. MSTI's assets are located in Rochester Hills,
Michigan, Kendallville, Indiana, Upper Sandusky, Ohio and Bluffton, Ohio.
The aggregate purchase price for all of the issued and outstanding
capital stock of MSTI was approximately $76 million in cash, stock and
warrants. In addition, the Registrant received a promissory note, in the
principal amount of $5 million, which bears interest at the rate of 7%
per annum and is payable approximately May 31, 1997 provided, however,
such note is subject to reduction based on the operating profits of the
MSTI facilities for the 12 month period ending May 31, 1997. Contingent
consideration of up to an additional $25 million is payable during the
three year period ending May 31, 1999 if the MSTI facilities achieve
certain operating results over that period. The aggregate purchase
price was arrived at through arm's length negotiations between the
parties.
The Pro Forma Financial Information included in Item 7 also includes
the operations of another stamping facility previously operated by MSTI
which was not part of the disposition reported herein, the business of
which is being wound down by the Registrant with the assistance of Tower.
Tower has agreed to share any wind down costs with the Registrant, and the
business currently conducted at such facility is being moved in an orderly
manner to other Tower facilities so as not to cause any disruption to the
customers of such facility. Tower has agreed to purchase from the
Registrant certain assets related to such business.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(a) Unaudited Pro Forma Financial Information. The following
unaudited pro forma financial information is included herein.
Introduction
Unaudited Pro Forma Consolidated Condensed Income Statement for
the year ended December 31, 1995
Unaudited Pro Forma Consolidated Condensed Income Statement for
the three months ended March 31, 1996
<PAGE> 3
Unaudited Pro Forma Consolidated Condensed Balance Sheet as of
March 31, 1996
(c) Exhibits. The following exhibit is filed herewith:
2 Stock Purchase Agreement dated as of May 31, 1996, among
Tower Automotive, Inc., R.J. Tower Corporation and
MascoTech, Inc. Omitted schedules will be furnished
supplementally to the Commission upon request.
<PAGE> 4
MascoTech, Inc.
Unaudited Pro Forma Consolidated Condensed Financial Statements
The following unaudited pro forma consolidated condensed balance sheet and
income statements give effect to the following transactions which have occurred
or which are assumed to have occurred:
- the assumed disposition for cash, except for known non-cash transactions,
of the net assets of the remaining businesses held for disposition,
resulting from the Company's decision in 1994 to dispose of certain non
core operations, with the cash proceeds utilized to retire debt.
- the assumed disposition of MascoTech Stamping Technologies, Inc. for cash,
a note receivable, common stock and warrants with the cash proceeds
utilized to retire debt. In addition any contingent consideration will
be recorded when earned.
The pro forma consolidated condensed financial statements reflect these
transactions as if they had been completed with all proceeds (including related
tax benefits) received at the beginning of the period presented for the
consolidated condensed income statements and as of March 31, 1996 for the
consolidated condensed balance sheet.
The pro forma data does not purport to be indicative of the results which
would actually have been reported if the transactions had occurred on such
dates or which may be reported in the future. The pro forma data should be
read in conjunction with the historical financial statements of the Company and
the related notes to such financial statements.
Primary earnings per common share for the twelve months ended December 31,
1995 is based on 57.1 million weighted average shares of common stock and
common stock equivalents outstanding. Fully diluted earnings per share is only
presented when the assumed conversion of convertible securities is dilutive.
Convertible securities did not have a dilutive effect on earnings per common
share in 1995.
Pro forma earnings per common share for the twelve months ended December 31,
1995 is based on the modified treasury stock method. Primary earnings per
common share after adjustments is based on 58.6 million shares outstanding
including approximately 2.4 million of common stock equivalents. Fully diluted
earnings per common share after adjustments is based on 68.6 million shares
outstanding including the assumed conversion of convertible securities into
10.0 million shares.
Primary earnings per common share for the three months ended March 31, 1996
is calculated based on 68.2 million weighted average common and common
equivalent shares outstanding.
Fully diluted earnings per common share is only presented when the assumed
conversion of convertible securities is dilutive. Since dilution occurs for
the three months ended March 31, 1996, earnings per share attributable to
common stock is presented on a fully diluted basis, however, earnings per share
on income before the cumulative effect of an accounting change is anti-dilutive.
Fully diluted earnings per common share for the three months ended March 31,
1996 is calculated based on 78.2 million weighted average common shares
outstanding.
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, hereunto duly authorized.
MASCOTECH, INC.
By: /s/ Timothy Wadhams
---------------------------
Timothy Wadhams
Vice President-Controller
and Treasurer
Date: June 17, 1996
<PAGE> 6
MascoTech, Inc.
Proforma Consolidated Condensed Income Statement
for the year ended December 31, 1995
(unaudited)
(amounts are in thousands except per share amounts)
<TABLE>
<CAPTION>
Assumed
Company Assumed Disposition of
Historical Disposition MascoTech Pro Forma Pro Forma
12/31/95 of Operations Stamping Technologies, Inc. Adjustments Adjusted
----------- ------------- --------------------------- ----------- ----------
(A) (B) (C)
<S> <C> <C> <C> <C> <C>
Net sales $ 1,678,210 $ 468,280 $ 193,790 $1,016,140
Cost of sales (1,397,880) (422,690) (175,070) (800,120)
Selling, general and administrative
expenses (176,810) (57,020) (11,650) (108,140)
Gains on disposition of businesses, net 5,290 5,290 ---
----------- --------- --------- --------- ----------
Operating profit (loss) 108,810 (6,140) 7,070 107,880
Other income (expense), net:
Interest expense (49,900) (10) --- $ 26,140 (23,750)
Equity and interest income from
affiliates 31,420 (280) --- 31,700
Gain from change in investment of
an equity affiliate 5,100 --- --- 5,100
Other, net 4,850 (880) (280) 350 6,360
----------- --------- --------- --------- ----------
Other income (expense), net (8,530) (1,170) (280) 26,490 19,410
----------- --------- --------- --------- ----------
Income (loss) before income taxes
(credit) 100,280 (7,310) 6,790 26,490 127,290
Income taxes (credit) 41,090 (2,190) 2,640 10,600 51,240
----------- --------- --------- --------- ----------
Net income $ 59,190 $ (5,120) $ 4,150 $ 15,890 $ 76,050
=========== ========= ========= ========= ==========
Preferred stock dividends $ 12,960 $ 12,960
=========== ==========
Earnings attributable to common stock $ 46,230 $ 63,090
=========== ==========
Per common share data:
Primary $ .81 $ 1.10
====== =======
Fully diluted $ .81 $ 1.08
====== =======
Primary shares outstanding 57,050 58,600
====== =======
Fully diluted shares outstanding 57,050 68,600
====== =======
</TABLE>
<PAGE> 7
MascoTech, Inc.
Footnotes to Pro Forma Consolidated Condensed Income Statement
for the year ended December 31, 1995
(A) To reflect the following:
- elimination of the sales and directly allocable expenses related to the
Company's businesses held for disposition;
- the related tax credit at appropriate U.S. federal statutory tax rate
including state and local taxes, net of federal tax benefit.
(B) To reflect the following:
- elimination of the sales and directly allocable expenses related to
MascoTech Stamping Technologies, Inc.;
- the related tax provision at appropriate U.S. federal statutory tax rate
including state and local taxes, net of federal tax benefit.
(C) To reflect the following:
- interest savings from the use of assumed proceeds not received as of the
beginning of the period, excluding common equity and notes received, of
$357 million from the disposition of businesses (including related cash
tax benefits ($74 million) on the loss) to retire outstanding bank debt;
- the related tax provision on the pro forma adjustments at appropriate
U.S. federal statutory rate including state and local taxes, net of
federal tax benefit.
<PAGE> 8
MascoTech, Inc.
Proforma Consolidated Condensed Income Statement
for the three months ended March 31, 1996
(unaudited)
(amounts are in thousands except per share amounts)
<TABLE>
<CAPTION>
Assumed
Company Assumed Disposition of
Historical Disposition MascoTech Pro Forma Pro Forma
03/31/96 of Operations Stamping Technologies, Inc. Adjustments Adjusted
----------- ------------- --------------------------- ----------- ----------
(A) (B) (C)
<S> <C> <C> <C> <C> <C>
Net sales $ 373,920 $ 43,250 $ 53,130 $ 277,540
Cost of sales (312,480) (42,940) (55,690) (213,850)
Selling, general and administrative
expenses (37,530) (5,070) (3,800) (28,660)
Charge on disposition of businesses, net (2,000) (2,000) ---
----------- --------- --------- --------- ----------
Operating profit (loss) 21,910 (6,760) (6,360) 35,030
Other income (expense), net:
Interest expense (7,930) --- --- $ 3,370 (4,560)
Equity and interest income from
affiliates 6,650 --- --- 6,650
Other, net (2,740) 150 150 90 (2,950)
----------- --------- --------- --------- ----------
Other income (expense), net (4,020) 150 150 3,460 (860)
----------- --------- --------- --------- ----------
Income (loss) before income taxes
(credit) and cumulative effect of
accounting change, net 17,890 (6,610) (6,210) 3,460 34,170
Income taxes (credit) 7,150 (2,290) (2,080) 1,380 12,900
----------- --------- --------- --------- ----------
Income (loss) before cumulative effect of
accounting change, net $ 10,740 $ (4,320) $ (4,130) $ 2,080 $ 21,270
=========== ========= ========= ========= ==========
Preferred stock dividends $ 3,240 $ 3,240
=========== ==========
Income attributable to common stock
before cumulative effect of
accounting change $ 7,500 $ 18,030
=========== ==========
Per common share data:
Primary $ .16 $ .32
====== =======
Fully diluted $ .30
=======
Primary shares outstanding 68,170 68,170
====== ======
Fully diluted shares outstanding 78,170 78,170
====== ======
</TABLE>
<PAGE> 9
MascoTech, Inc.
Footnotes to Pro Forma Consolidated Condensed Income Statement
for the three months ended March 31, 1996
(A) To reflect the following:
- elimination of the sales and directly allocable expenses related to the
Company's businesses held for disposition;
- the related tax credit at appropriate U.S. federal statutory tax rate
including state and local taxes, net of federal tax benefit;
(B) To reflect the following:
- elimination of the sales and directly allocable expenses related to
MascoTech Stamping Technologies, Inc.;
- the related tax credit at appropriate U.S. federal statutory tax rate
including state and local taxes, net of federal tax benefit.
(C) To reflect the following:
- interest savings from the use of assumed proceeds not received as of the
beginning of the period, excluding common equity and notes received, of
$253 million from the disposition of businesses (including related cash
tax benefits ($74 million) on the loss) to retire outstanding bank debt;
- the related tax provision on the pro forma adjustments at appropriate
U.S. federal statutory rate including state and local taxes, net of
federal tax benefit.
<PAGE> 10
MascoTech, Inc.
Pro Forma Consolidated Condensed Balance Sheet
as of March 31, 1996
(unaudited)
(amounts are in thousands)
<TABLE>
<CAPTION> Assumed
Disposition of
Company Assumed MascoTech
Historical Disposition Stamping Pro Forma Pro Forma
3/31/96 of Businesses Technologies, Inc. Adjustments Adjusted
---------- ------------- ------------------ ----------- ----------
ASSETS (A) (B) (C)
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash investments $ 6,280 $ (420) $ 5,860
Marketable Securities 4,120 4,120
Receivables 215,880 (36,010) 179,870
Inventories 97,900 (14,050) 83,850
Deferred and refundable income taxes 50,110 $ (38,000) (180) 11,930
Prepaid expenses and deferred taxes 18,600 7,540 (9,120) 17,020
Net current assets of businesses held
for disposition 24,850 (24,850)
---------- ----------- --------- --------- ----------
Total current assets 417,740 (55,310) (59,780) 302,650
Equity and other investments in affiliates 240,820 240,820
Property and equipment, net 466,980 (51,430) 415,550
Excess of cost over net assets of acquired
companies 117,790 (47,290) 70,500
Notes receivable and other assets 48,650 (1,760) $ 20,500 67,390
Net non-current assets of businesses held
for disposition 21,290 (21,290)
---------- ----------- --------- --------- ----------
Total assets $1,313,270 $ (76,600) $(160,260) $ 20,500 $1,096,910
========== =========== ========= ========= ==========
LIABILITIES
Current Liabilities:
Accounts Payable $ 91,410 $ (32,760) $ 58,650
Accrued liabilities 94,280 $ 43,120 (2,620) 134,780
Current portion of long-term debt 5,360 5,360
---------- ----------- --------- --------- ----------
Total current liabilities 191,050 43,120 (35,380) 198,790
Long-term debt 557,790 (122,500) $ (67,000) 368,290
Deferred income taxes and other long-term
liabilities 138,400 2,780 (4,000) (6,000) 131,180
---------- ----------- --------- --------- ----------
Total liabilities 887,240 (76,600) (39,380) (73,000) 698,260
SHAREHOLDERS' EQUITY
Preferred Stock 10,800 10,800
Common Stock 55,390 55,390
Paid-In Capital 304,850 304,850
Retained Earnings 49,560 (27,380) 22,180
Cumulative Translation Adjustments 5,430 5,430
---------- ----------- --------- --------- ----------
Total shareholders' equity 426,030 (27,380) 398,650
---------- ----------- --------- --------- ----------
Total liabilities and shareholders'
equity $1,313,270 $ (76,600) $ (39,380) $(100,380) $1,096,910
========== =========== ========= ========= ==========
</TABLE>
<PAGE> 11
MascoTech, Inc.
Footnote to Pro Forma Consolidated Condensed Balance Sheet
as of March 31, 1996
(A) To reflect the following:
- the disposition of net current and non-current assets of businesses held
for disposition other than assets and liabilities retained;
- the reduction of debt with the estimated cash proceeds (including related
tax benefits) from the disposition of businesses.
(B) To reflect the following:
- the disposition of MascoTech Stamping Technologies, Inc.
(C) To reflect the following:
- non-cash consideration of approximately $20 million, which consists
principally of Tower common stock;
- the reduction of debt with the cash proceeds from the sale of MascoTech
Stamping Technologies, Inc.;
- an after-tax loss of approximately $27 million related to the sale of
MascoTech Stamping Technologies, Inc.
<PAGE> 12
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2 Stock Purchase Agreement dated as of May 31, 1996, among
Tower Automotive, Inc., R.J. Tower Corporation and MascoTech,
Inc.
<PAGE> 1
EXHIBIT 2
STOCK PURCHASE AGREEMENT
BY AND AMONG
MASCOTECH, INC. (SELLER),
TOWER AUTOMOTIVE, INC. (PARENT)
AND
R.J. TOWER CORPORATION (BUYER)
DATED AS OF MAY 31, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
PURCHASE AND SALE OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Adjustments to Cash Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Determination of Earnout Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Closing Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Organization and Corporate Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Authorization of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Subsidiaries; Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.7 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.8 Absence of Certain Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.9 Real and Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.10 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.11 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.13 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.14 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.15 Litigation; Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.16 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.17 Governmental Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.18 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.20 Officers and Directors; Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.21 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.22 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.23 Environmental and Safety Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.24 Product Warranty and Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.25 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
2.26 Powers of Attorney; Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.27 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.28 Ford LTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE III
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.1 Authorization of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.2 Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.3 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.5 Investment Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.1 Corporate Organization and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.3 Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.4 Investment Intent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.6 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.7 Brokers' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V
INDEMNIFICATION AND RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.3 Arbitration Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VI
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.1 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.2 Employee Benefit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.3 Intercompany Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.4 Press Releases and Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.5 Further Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.6 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.7 Transition Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.8 Investigation; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.10 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.11 Non-Competition, Non-Solicitation and Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
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<TABLE>
<S> <C>
6.12 Operating Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.13 Securities Laws Legend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.14 Rohde Settlement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.15 License and Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.16 Account Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.17 Litigation Matter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.18 Plant Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.19 The MascoTech Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.20 Kendallville Facility Environmental Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.1 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.3 Binding Agreement; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.5 No Strict Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.6 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.10 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.11 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
LIST OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
LIST OF SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
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<PAGE> 5
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made as of May 31,
1996 by and among MascoTech, Inc., a Delaware corporation ("Seller"), Tower
Automotive, Inc., a Delaware corporation ("Parent") and R.J. Tower Corporation,
a Michigan corporation and a wholly owned subsidiary of Parent ("Buyer").
The authorized capital stock of MascoTech Stamping Technologies, Inc., a
Delaware corporation (the "Company"), consists of 1,000 shares of common stock,
par value $1.00 per share, of which 1,000 shares are issued and outstanding
(collectively, the "Company Stock"). Seller owns beneficially and of record
100% of the outstanding Company Stock.
Buyer desires to acquire from Seller, and Seller desires to sell to Buyer,
all of the shares of Company Stock owned by Seller.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree
as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 PURCHASE AND SALE. On and subject to the terms and conditions
set forth in this Agreement, on the Closing Date (as defined), Buyer will
purchase from Seller, and Seller will sell and transfer to Buyer, all of
the shares of Company Stock owned by the Seller, free and clear of all liens,
charges, security interests and other encumbrances.
1.2 PURCHASE PRICE. The aggregate purchase price to be paid to
Seller for the Company Stock (the "Purchase Price") will consist of the Cash
Purchase Price, the Shares, the Note, the Warrant (as each of such terms is
defined below), and the Earnout Amount (as defined in Section 1.4).
(a) Cash Purchase Price. Buyer shall pay to Seller $55 million in
immediately available funds, as adjusted pursuant to Section 1.3 (a) below (the
"Cash Purchase Price").
(b) Shares. Parent shall transfer to Seller 785,000 shares of
Parent's Common Stock, par value $.01 per share ("Parent's Common") (the
"Shares").
(c) Note. Buyer shall issue to Seller a promissory note bearing
interest at 7% per annum (the "Note") in the form of Exhibit A attached hereto,
in the principal amount of $5 million, as may be adjusted pursuant to the terms
thereof (such principal (as adjusted) plus interest, the "Note Amount").
(d) Warrant. Parent shall issue to Seller a four year warrant (the
"Warrant") in the form of Exhibit B attached hereto, for 200,000 shares of
Parent's Common (the "Warrant Shares") at an exercise price of $18 per share.
<PAGE> 6
1.3 ADJUSTMENTS TO CASH PURCHASE PRICE.
(a) As promptly as practicable after the Closing Date, Buyer and
Seller shall in good faith jointly prepare a statement of working capital of
the Company as of the close of business on the Closing Date (the "Closing
Statement of Working Capital") for the purpose of establishing the Actual
Closing Working Capital. For purposes hereof, "Actual Closing Working Capital"
means the book value of the Company's total current assets relating to the
Company's operations at Rochester Hills, Michigan (including the GEI tooling
operations), Kendallville, Indiana, Bluffton, Ohio and Upper Sandusky, Ohio
(the "Company Operations") (excluding cash to the extent retained by Seller
through the Closing Date, prepaid launch costs, and those accounts receivable
and tooling in process items as set forth or described on Schedule 1.3(a)
attached hereto (the "Carved-Out Assets Schedule")) less the Company's total
current liabilities relating to the Company Operations (excluding any current
liability which is retained or discharged by Seller after the Closing
including, without limitation, federal and state income taxes, workers'
compensation obligations and intercompany accounts and excluding those reserves
established in respect of those assets which are set forth or described on the
Carved-Out Asset Schedule) (which amount may be a negative number), determined
from the Closing Statement of Working Capital as of 11:59 p.m. on the Closing
Date. The Closing Statement of Working Capital shall (i) be prepared in
accordance with generally accepted accounting principles, consistently applied
("GAAP") regardless of whether GAAP was applied in prior periods (other than
(A) with respect to vacation accruals for salaried employees for which no
accruals shall be made, and (B) with respect to the current portion of deferred
taxes for which no accruals shall be made), (ii) reflect all items and
adjustments regardless of materiality, and (iii) reflect reserves determined in
accordance with GAAP (other than those reserves described in the parenthetical
set forth in clause (i) above).
(b) If Buyer and Seller are unable to come to a mutual agreement
with respect to any item on the Closing Statement of Working Capital within 60
business days after the Closing Date, Buyer and Seller shall jointly retain the
independent accounting firm of Price Waterhouse, LLP (the "Auditor") to resolve
any such disagreements in accordance with subsection (c) below; provided,
however, that Seller or Buyer, as the case may be, shall within 3 business days
following the retention of the Auditor pay to Buyer or Seller, as the case may
be, any amount determined pursuant to subsection (d) below which is not subject
to dispute.
(c) Buyer and Seller shall direct the Auditor to render a
determination within 25 days of its retention and Buyer and Seller shall use
their best efforts to cause the Auditor to resolve all disagreements over
individual line items as soon as possible. The Auditor shall consider only
those items and amounts in the Closing Statement of Working Capital which Buyer
and Seller are unable to resolve. The determination of the Auditor shall be
conclusive and binding upon Buyer and Seller. The fees and expenses of the
Auditor shall be borne one-half by Buyer and one-half by Seller.
(d) If Actual Closing Working Capital exceeds $12.6 million, Buyer
shall within 3 business days pay to Seller the amount of such excess in
immediately available funds. If Actual Closing Working Capital is less than
$12.6 million, Seller shall within 3 business days pay to Buyer in immediately
available funds the amount of such shortfall. All amounts owed pursuant to
this
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<PAGE> 7
subsection (d) shall include interest, from the Closing Date to the date of
payment, at the Prime Rate (as defined) calculated on the basis of a 365-day
year.
1.4 DETERMINATION OF EARNOUT AMOUNT.
(a) In accordance with this Section 1.4, Buyer shall pay the Earnout
Amount (as defined below) achieved in each of the 12-month periods ending on
May 31, 1997, 1998 and 1999 (each such 12-month period, an "Anniversary
Period") to Seller. The "Earnout Amount" for each Anniversary Period means an
amount equal to (i) two (2) multiplied by (ii) the excess (but not the
shortfall), if any, of (A) Plant Profits (as defined below) for such
Anniversary Period, over (B) $24 million; provided that in the event Plant
Profits for such Anniversary Period exceeds $33 million then the Earnout Amount
for such Anniversary Period shall be equal to $30 million (subject to reduction
pursuant to Section 1.4(b) below).
(b) Notwithstanding anything to the contrary set forth in this
Agreement, in no event shall Buyer be obligated pursuant to this Section 1.4 to
pay to Seller an aggregate amount in excess of (i) $30 million minus (ii) the
sum of (A) any amount previously paid pursuant to this Section 1.4 plus (B) the
principal amount paid under the Note.
(c) Within sixty (60) days after the end of each Anniversary Period,
Buyer will prepare and deliver to Seller an accounting of the Plant Profits and
the Earnout Amount for such Anniversary Period (the "Earnout Statement")
together with the Earnout Amount (if any) for such Anniversary Period in
immediately available funds. Upon delivery of the Earnout Statement, Buyer
will permit Seller and its representatives access to the Company's and, if
applicable, the Buyer's financial books and records during normal business
hours for the purpose of reviewing such accounting. If Seller disagrees with
any item on the Earnout Statement, Seller shall notify Buyer in writing of such
disagreement within thirty (30) days after Seller's receipt thereof (such
notice setting forth the basis for such disagreement in reasonable detail) and
Buyer and Seller shall thereafter negotiate in good faith to resolve any such
disagreements. If Buyer and Seller are unable to resolve any such
disagreements within thirty (30) days after such Seller's notice, Buyer and
Seller shall jointly retain the Auditor to resolve the disagreements in
accordance with Section 1.3(b) above (substituting the words "Earnout
Statement" for the words "Closing Statement of Working Capital" therein).
Within five business days after the Auditor notifies Buyer of the Auditor's
determination that Buyer owes an additional amount to Seller pursuant to this
Section 1.4 for such Anniversary Period, Buyer shall pay such additional amount
to Seller in immediately available funds plus interest on such additional
amount accruing after the sixty (60) days after the end of such Anniversary
Period at the Prime Rate, calculated on the basis of a 365-day year, and such
payment (excluding interest) shall be part of the Earnout Amount for such
Anniversary Period.
(d) For purposes hereof, "Plant Profits" for any given Anniversary
Period shall mean the consolidated net income solely with respect to the
Company's operations at Kendallville, Indiana, Bluffton, Ohio and Upper
Sandusky, Ohio facilities (and excluding the Company's Rochester Hills,
Michigan facility) (the "Southern Plants") for such Anniversary Period, as
determined in accordance with GAAP plus, to the extent such net income has been
reduced thereby, (i) the amount of federal, state and local income taxes and
other taxes imposed upon net income or receipts of the Southern
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<PAGE> 8
Plants plus (ii) the amount of amortization in respect of intangible assets
(including launch costs) for such Anniversary Period plus (iii) the amount of
interest expense for indebtedness for borrowed money (including capitalized
leases) for such Anniversary Period plus (iv) management fees paid to Buyer, if
any; provided however that such Plant Profits will be adjusted pursuant to
Schedule 1.4(d) attached hereto (the "Plant Profits Adjustments Schedule").
(e) At the request of Seller, representatives of Buyer shall
meet with representatives of Seller on a quarterly basis (the "Oversight
Committee") to review and discuss the Company's current and future operations
including, without limitation, current and future staffing levels and repair
and maintenance matters as they relate to Plant Profits. The Buyer will,
promptly upon completion thereof, provide Seller copies of the Company's
unaudited balance sheet and related statement of operations on a quarterly
basis during each Anniversary Period.
1.5 CLOSING TRANSACTIONS.
(a) Closing. The closing of Buyer's purchase of the Company Stock
contemplated by this Agreement (the "Closing") will take place at the offices
of Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois 60601, on May
31, 1996 or on such other date selected by Buyer which is reasonably
satisfactory to Seller. The date and time of the Closing are herein referred
to as the "Closing Date."
(b) Buyer's Deliveries. Subject to the conditions set forth in this
Agreement, Buyer agrees to deliver to Seller the following items at Closing:
(i) an amount equal to the Cash Purchase Price in immediately
available funds;
(ii) certificates representing the Shares;
(iii) the Note;
(iv) the Warrant;
(v) an opinion, dated as of the Closing Date, of Kirkland &
Ellis, counsel to Buyer, substantially in the form of Exhibit C attached
hereto;
(vi) certified copies of the resolutions of Buyer's board of
directors approving the transactions contemplated by this Agreement; and
(vii) evidence of HSR approval.
(c) Seller's Deliveries. Subject to the conditions set forth in
this Agreement, Seller agrees to deliver to Buyer the following items at
Closing:
(i) certificates representing the Company Stock owned by
Seller, duly endorsed for transfer with all requisite state and federal
transfer stamps (if any) affixed thereto;
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<PAGE> 9
(ii) all minute books and stock transfer books of the Company in
Seller's possession or under its control;
(iii) all third party and governmental consents, approvals,
filings, releases and terminations required in connection with the
consummation of the transactions contemplated hereby that are received by
Seller prior to the Closing Date;
(iv) the resignations from the Board of Directors of the Company
of Lee Gardner and Timothy Wadhams in form reasonably satisfactory to
Buyer;
(v) all documents and assistance necessary (including estoppel
certificates, owner's affidavits and gap undertakings) for Buyer to
obtain, at Buyer's cost and expense, ALTA Owners Policies of Title
Insurance, Form B-1990, for each parcel of Real Property, issued by
Lawyers Title Insurance Company (the "Title Insurer"), effective as of the
Closing Date, in such amount as Buyer reasonably determines to be the fair
market value thereof (including all Improvements thereon), insuring the
Company's interest in such parcel as of the Closing Date, subject only to
the Permitted Encumbrances, and with such endorsements and other terms and
conditions as Buyer may reasonably request;
(vi) all documentation and assistance necessary to enable Buyer
to procure, at Buyer's cost and expense, current surveys for each parcel
of the Real Property (the "Surveys"), prepared by a licensed surveyor and
conforming to 1992 ALTA/ACSM Minimum Detail Requirements for Urban Land
Title Surveys, and such standards as the Title Insurer may reasonably
require as a condition to the removal of any survey exceptions from the
Title Policy, and certified to Seller, Buyer, Buyer's lenders and the
Title Insurer, in a form sufficient to permit the issuance of the title
policies described in Section 1.5(c)(v);
(vii) an opinion, dated as of the Closing Date, of Seller's
counsel, substantially in the form set forth on Exhibit D attached hereto;
(viii) certified copies of the resolutions of the Seller's
board of directors approving the transactions contemplated by this
Agreement; and
(ix) certificates of the secretary of state of each state in
which the Company is qualified to do business as set forth on the
Qualifications Schedule (as defined in Section 2.1 below), stating that
the Company is in good standing in such state.
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<PAGE> 10
ARTICLE II
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
As a material inducement to Buyer to enter into this Agreement, Seller
represents and warrants that:
2.1 ORGANIZATION AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and is qualified to do business in every
jurisdiction in which the nature of its business or its ownership of property
requires it to be so qualified. All such jurisdictions in which the Company is
so qualified are set forth on Schedule 2.1 attached hereto (the "Qualifications
Schedule"). Except as set forth on the Environmental Requirements Schedule,
the Company has full corporate power and authority and all material licenses,
permits and authorizations necessary to own and operate its properties and to
carry on its business as now conducted and presently proposed to be conducted.
The copies of the Company's certificate of incorporation and by-laws included
in the Qualifications Schedule reflect all amendments made thereto and are
correct and complete.
2.2 AUTHORIZATION OF TRANSACTIONS. No corporate proceedings on the
part of the Company are necessary to approve and authorize the execution and
delivery of this Agreement and all other agreements contemplated hereby and the
consummation of the transactions contemplated hereby and thereby.
2.3 CAPITALIZATION. All of the issued and outstanding shares of the
Company Stock have been duly authorized, are validly issued, fully paid and
nonassessable, are not subject to, nor were they issued in violation of, any
preemptive rights, and are owned of record and beneficially by Seller. There
are no outstanding or authorized options, warrants, rights, contracts, calls,
puts, rights to subscribe, conversion rights or other similar securities,
agreements or commitments to which the Company is a party or by which the
Company is bound providing for the issuance, disposition or acquisition of any
of its capital stock (other than this Agreement). There are no outstanding or
authorized stock appreciation, phantom stock or similar rights with respect to
the Company. There are no voting trusts, proxies or any other agreements or
understandings with respect to the voting of the capital stock of the Company.
The Company is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock.
2.4 SUBSIDIARIES; INVESTMENTS. The Company does not own or hold any
shares of stock or any other security or interest in any other Person or any
rights to acquire any such security or interest. For purposes hereof, "Person"
means an individual, a partnership, a limited liability company, a corporation,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
2.5 ABSENCE OF CONFLICTS. Except as set forth in Schedule 2.5
attached hereto (the "Restrictions Schedule"), the execution, delivery and
performance of this Agreement and the
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<PAGE> 11
consummation of the transactions contemplated hereby do not and will not (a)
conflict with or result in any breach of any of the provisions of, (b)
constitute a default under, (c) result in a violation of, (d) give any third
party the right to terminate or to accelerate any obligation under, (e) result
in the creation of any lien, security interest, charge or encumbrance upon the
Company Stock under, or (f) require any authorization, consent, approval,
exemption or other action by or notice to any court or other governmental body
under, the provisions of the certificate of incorporation or by-laws of the
Company or any indenture, mortgage, lease, loan agreement or other agreement or
instrument by which the Company is bound or affected, or any law, statute, rule
or regulation or any judgment, order or decree to which the Company is subject.
2.6 FINANCIAL STATEMENTS. Schedule 2.6 attached hereto (the
"Financial Statements Schedule") includes copies of the (i) unaudited balance
sheet as of April 30, 1996 (the "Latest Balance Sheet") and the related
statement of income and operations for the 4-months then ended and (ii)
unaudited balance sheet as of, and the related statements of income for, the
fiscal year ended December 31, 1994 and 1995. Except as set forth on the
Financial Statements Schedule, each of the foregoing financial statements
(including in all cases the notes thereto, if any) (the "Financial Statements")
is accurate and complete, was prepared from the Company's financial books and
financial records, presents fairly the Company's financial condition and
results of operations as of the times and for the periods referred to therein,
and has been prepared in accordance with GAAP.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no
obligations or liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise, whether or not known, whether due or to become due and regardless
of when asserted) arising out of transactions entered into at or prior to the
Closing, or any action or inaction at or prior to the Closing, or any state of
facts existing at or prior to the Closing, except (i) liabilities or
obligations under contracts or commitments included in the Contracts Schedule
(as defined) or under contracts and commitments which are not required to be
disclosed thereon (but not liabilities for breaches thereof), (ii) liabilities
reflected on the liabilities side of the Latest Balance Sheet, (iii)
liabilities which have arisen after the date of the Latest Balance Sheet in the
ordinary course of business (none of which is a liability for breach of
contract, breach of warranty, tort or infringement, or a claim or lawsuit, or
an environmental liability), and (iv) liabilities otherwise expressly disclosed
in this Agreement or the schedules attached hereto or generally described on
the Financial Statements Schedule.
2.8 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth in
Schedule 2.8 attached hereto (the "Developments Schedule") since April 30,
1996, the Company has conducted its business and operations in the usual and
ordinary course of business in accordance with past custom and practice,
including, without limitation, collection of accounts receivable, payment of
accounts payable, repairs and maintenance, capital expenditures and cash
management practices generally, and except as expressly contemplated by this
Agreement, since April 30, 1996, the Company has not:
(a) suffered a material adverse change in the business, financial
condition, operating results, assets or customer, supplier, employee or sales
representative relations of the Company;
(b) redeemed or repurchased, directly or indirectly, any shares of
its capital stock;
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<PAGE> 12
(c) issued, sold or transferred any notes, bonds or other debt
securities or any equity securities, securities convertible, exchangeable or
exercisable into equity securities, or warrants, options or other rights to
acquire equity securities, of the Company;
(d) borrowed any amount or incurred or become subject to any
liabilities, except current liabilities incurred in the ordinary course of
business and intercompany borrowings from Seller;
(e) mortgaged, pledged or subjected to any lien, charge or any other
encumbrance, any portion of its properties or assets;
(f) sold, leased, assigned or transferred (including without
limitation transfers to Seller or its affiliates) any portion of its tangible
assets (excluding cash), except in the ordinary course of business, or
cancelled without fair consideration any debts or claims owing to or held by
it;
(g) sold, assigned, licensed or transferred (including without
limitation transfers to any Seller or affiliates) any Proprietary Rights or
disclosed any confidential information other than to an affiliate of the
Company or pursuant to agreements preserving all rights of the Company in such
confidential information or, to the Company's knowledge, received any
confidential information of any third party in violation of any obligation of
confidentiality;
(h) suffered any theft, damage, destruction or loss in excess of
$50,000, to its tangible assets, whether or not covered by insurance or
suffered any substantial destruction of the Company's books and records;
(i) entered into, amended or terminated any lease, contract,
agreement, commitment, or any other transaction in excess of $50,000 other than
in the ordinary course of business and in accordance with past custom and
practice, or entered into any transaction or agreement which will survive the
Closing with any Insider;
(j) made or granted any bonus or any wage, salary or compensation
increase in excess of $50,000 per year to any employee, sales representative,
or consultants or made or granted any increase in any employee benefit plan or
arrangement, or amended or terminated any existing employee benefit plan or
arrangement or adopted any new employee benefit plan or arrangement;
(k) made any loans or advances (except intercompany loans or
advances) to, or guarantees for the benefit of, any persons; or
(l) changed or authorized any change in its certificate of
incorporation or by-laws.
2.9 REAL AND PERSONAL PROPERTY.
(a) Schedule 2.9(a) attached hereto (the "Real Property Schedule")
sets forth a list of all owned U.S. real property and owned foreign real
property (collectively, the "Real Property"). With respect to each such parcel
of Real Property except as set forth on the Real Property Schedule: (i)
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<PAGE> 13
such parcel is free and clear of all encumbrances, except Permitted
Encumbrances; (ii) there are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any person the right of use or
occupancy of any portion of such parcel; and (iii) there are no outstanding
actions or rights of first refusal to purchase such parcel (other than the
right of the Buyer pursuant to this Agreement), or any portion thereof or
interest therein. "Permitted Encumbrances" shall mean: (A) statutory liens for
current taxes or other governmental charges with respect to the Real Property
not yet due and payable or the amount or validity of which is being contested
in good faith by appropriate proceedings by Seller and for which appropriate
accruals have been established in accordance with GAAP; (B) mechanics,
carriers, workers, repairers and similar statutory liens arising or incurred in
the ordinary course of business for amounts which are not delinquent and which
are not, individually or in the aggregate, material to the Company; (C) zoning,
entitlement, building and other land use regulations imposed by governmental
agencies having jurisdiction over the Real Property which are not violated by
the current use and operation of the Real Property (except as set forth on
Schedule 2.9(f)); and (D) those matters shown on the title commitments and
policies delivered pursuant to Section 1.5(c)(v) above.
(b) The assets owned or leased by the Company, including all
buildings, machinery, equipment, and other tangible assets, are in adequate
operating condition for the conduct of the business of the Company as presently
conducted.
(c) Except as set forth on Schedule 2.9(c) attached hereto (the
"Personal Property Schedule"), the Company has good title to, or a valid
leasehold interest in, all personal property used in connection with the
operation of the business of the Company, free and clear of all mortgages,
pledges, security interests, encumbrances, charges or other liens.
(d) Schedule 2.9(d) attached hereto (the "Leases Schedule") sets
forth a list of all of the Company's real property leases and subleases
("Leases") and each leased and subleased parcel of real property in which the
Company has a leasehold or subleasehold interest (the "Leased Real Property").
Each of the Leases is in full force and effect and the Company holds a valid
and existing leasehold or subleasehold interest under each of the Leases.
Seller has delivered to Buyer complete and accurate copies of each of the
Leases. With respect to each Lease: (i) the Lease is legal, valid, binding,
enforceable and in full force and effect except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and limitations on the availability of
equitable remedies and other matters affecting the landlord's interests; (ii)
the Lease will continue to be legal, valid, binding, enforceable and in full
force and effect on identical terms following the Closing except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and limitations
on the availability of equitable remedies and other matters affecting the
landlord's interests; (iii) neither the Company, nor to the knowledge of the
Company any other party to the Lease, is in breach or default, and no event has
occurred which, with notice or lapse of time, would constitute such a breach or
default or permit termination, modification or acceleration under the Lease;
(iv) the Lease has not been modified in any respect, except to the extent that
such modifications are disclosed by the documents delivered to Buyer and there
are no disputes between the parties to the Lease; and (v) the Company has not
assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any
interest in the Lease.
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<PAGE> 14
(e) There are no proceedings in eminent domain or other similar
proceedings pending or, to the knowledge of Seller, threatened, affecting any
portion of the Real Property or, to Seller's knowledge, the Leased Real
Property. There exists no writ, injunction, decree, order or judgment
outstanding, nor any litigation, pending or to the knowledge of Seller
threatened, relating to the ownership, lease, use, occupancy or operation by
any person of the Real Property or the Leased Real Property. The current use
of the Real Property (and, to Seller's knowledge, the Leased Real Property)
does not violate in any material respect any instrument of record or agreement
affecting such Real Property or Leased Real Property. There are no dues,
assessments or other amounts currently owed with respect to the Real Property
due under an instrument of record. Except as set forth on Schedule 2.9(e)
attached hereto, (the "Occupancy Schedule") there is no violation of any
covenant, condition, restriction, easement, agreement or order of any
governmental authority having jurisdiction over any of the Real Property (or,
to Seller's knowledge, with respect to the Leased Real Property) that affects
such real property or the use or occupancy thereof. No damage or destruction
has occurred with respect to any of the Real Property or the Leased Real
Property that, individually or in the aggregate, has had or resulted in, or
will have or result in, a significant adverse effect on the operation of the
Company.
(f) Except as set forth on Schedule 2.9(f) attached hereto (the
"Improvements Schedule"), all components of all buildings, structures and other
improvements included within the Real Property and the Leased Real Property
(the "Improvements") are in adequate condition to operate the Company's
business as currently operated, to the best of Seller's knowledge and belief,
there are no facts or conditions affecting any of the Improvements which would,
individually or in the aggregate, interfere in any significant respect with the
use, occupancy or operation thereof as currently used, occupied or operated or
currently intended to be used, occupied or operated. Except as set forth on
the Improvements Schedule, all water, gas, electrical, steam, compressed air,
telecommunication, sanitary and storm sewage lines and systems and other
similar systems serving the Real Property and the Leased Real Property are
installed and operating and are sufficient to enable the Real Property and the
Leased Real Property to continue to be used and operated in the manner
currently being used and operated. Except as disclosed on the Surveys, each
Improvement has direct access to a public street adjoining the Real Property
and the Leased Real Property on which such Improvement is situated over the
driveways and accessways currently being used in connection with the use and
operation of such Improvement and no existing accessway crosses or encroaches
upon any property or property interest not owned by the Company. To the
knowledge of Seller, no Improvement or portion thereof is dependent for its
access, operation or utility on any land, building or other improvement not
included in the Real Property and the Leased Real Property. Except as
disclosed on the Surveys, there are no survey defects or encroachments from or
onto any of the Real Property and the Leased Real Property.
2.10 ACCOUNTS RECEIVABLE. Except as set forth on Schedule 2.10
attached hereto (the "Accounts Receivable Schedule"), all of the notes and
accounts receivable of the Company reflected on the Latest Balance Sheet are,
and all notes and accounts receivable of the Company reflected on the Closing
Statement of Working Capital will be, good and valid receivables, net of
allowance for doubtful accounts. As of the Closing Date, there are no
individual accounts receivable which are more than 151 days past due, except
as set forth on the Accounts Receivable Schedule. As of the
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<PAGE> 15
Closing Date, no person or entity will have any lien on such receivables or any
part thereof, and no agreement for deduction, free goods, discount, reduction
for excess transportation, or other deferred price or quantity adjustment will
have been made with respect to any such receivables other than in the ordinary
course of business.
2.11 INVENTORY. Except as set forth in Schedule 2.11 attached
hereto (the "Inventory Schedule"), the inventories of the Company reflected on
the Latest Balance Sheet are of, and the inventories of the Company as
reflected on the Closing Statement of Working Capital will consist of, a
quantity and quality usable and saleable in the ordinary course of business
without discount, are not damaged, defective, slow- moving (i.e., greater than
the requirement based on written releases (other than service parts)) or
obsolete (in each case net of any reserves for slow moving or obsolete
inventory reflected on the Closing Statement of Working Capital).
2.12 TAXES.
(a) Except as set forth in Schedule 2.12 attached hereto (the "Taxes
Schedule"), the Company has filed all Tax Returns which it is required to file
under applicable laws and regulations; all such Tax Returns are complete and
correct and have been prepared in compliance with all applicable laws and
regulations; the Company has paid all Taxes due and owing by it (whether or not
such Taxes are required to be shown on a Tax Return) and has withheld and paid
over to the appropriate taxing authority all Taxes which it is required to
withhold from amounts paid or owing to any employee, equityholder, creditor or
other third party; the Company has not waived any statute of limitations with
respect to any Taxes or agreed to any extension of time with respect to any Tax
assessment or deficiency; the Company has not incurred any liability for Taxes
other than in the ordinary course of business; the assessment of any additional
Taxes for periods for which Tax Returns have been filed by the Company shall
not exceed the recorded liability therefor on the Closing Statement of Working
Capital (excluding any amount recorded which is attributable solely to timing
differences between book and Tax income); no foreign, federal, state or local
tax audits or administrative or judicial proceedings are pending or being
conducted with respect to the Company, no information related to Tax matters
has been requested by any foreign, federal, state or local taxing authority and
no written notice indicating an intent to open an audit or other review has
been received by the Company from any foreign, federal, state or local taxing
authority; and there are no material unresolved questions or claims concerning
the Company's Tax liability.
(b) Except as set forth in the Taxes Schedule, with respect to each
Affiliated Group of which the Company is or has been a member: (i) such
Affiliated Group has filed all Federal income Tax Returns which it is required
to file under applicable law and regulations and all such Federal income Tax
Returns are complete and correct and have been prepared in compliance in all
material respects with all applicable laws and regulations; (ii) no material
assessment for any additional Federal income Taxes for periods for which Tax
Returns have been filed by such Affiliated Group have been made against such
Affiliated Group; and (iii) no Federal income Tax audits or administrative or
judicial proceedings are pending or being conducted with respect to such
Affiliated Group.
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<PAGE> 16
(c) The Company has not made an election under Section 341(f) of
the Internal Revenue Code of 1986, as amended ("IRC"). The Company is not
liable for the Taxes of another Person under (a) Treasury Regulation Section
1.1502-6 (or comparable provisions of state, local or foreign law), (b) as a
transferee or successor, (c) by contract or indemnity or (d) otherwise. The
Company is not a party to any tax sharing agreement. The Company and each
Affiliated Group have disclosed on their federal income Tax Returns any
position taken for which substantial authority (within he meaning of IRC
Section 6662(d)(2)(B)(i)) did not exist at the time the return is filed. The
Company has not made any payments, is not obligated to make payments and is not
a party to an agreement that could obligate it to make any payments that would
not be deductible under IRC Section 280G.
(d) No claim has been made, for which the statute of limitations has
not expired, by a taxing authority in a jurisdiction where the Company does not
file tax returns that the Company is or may be subject to taxes assessed by
such jurisdiction.
(e) There are no liens for Taxes (other than for current Taxes not
yet due and payable) upon the assets of the Company.
(f) The Company will not be required (i) as a result of a change in
method of accounting for a taxable period ending on or prior to the Closing
Date, to include any adjustment in taxable income for any taxable period (or
any portion thereof) or (ii) as a result of any "closing agreement," as
described in IRC Section 7121 (or any corresponding provision of state, local
or foreign income Tax law), to include any item of income in, or exclude any
item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date.
(g) The Company has not been a member of an Affiliated Group other
than the one of which Seller or the Company was the common parent, or filed or
been included in a combined, consolidated or unitary income Tax Return, other
than one filed by Seller or the Company.
(h) Buyer will not be required to deduct and withhold any amount
pursuant to IRC Section 1445(a) upon the transfer of the Company Stock to the
Buyer.
(i) The Company does not own any interest in real property in any
jurisdiction in which a tax (other than a net income or franchise tax or
transfer tax) is imposed on the gain on a transfer of an interest in real
property.
(j) As used in this Agreement, the following terms shall have the
following respective meanings:
(i) "Affiliated Group" means an affiliated group as defined in
Section 1504 of the Code (or any similar combined, consolidated or unitary
group defined under state, local or foreign income Tax law).
(ii) "Tax" or "Taxes" means any federal, state, local or foreign
income, gross receipts, franchise, estimated, alternative minimum, add-on
minimum, sales, use, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium,
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<PAGE> 17
windfall profit, environmental, customs, duties, real property,
personal property, capital stock, social security, unemployment,
disability, payroll, license, employee or other withholding, or
other tax, of any kind whatsoever, including any interest,
penalties or additions to tax or additional amounts in respect of
the foregoing.
(iii) "Tax Returns" means returns, declarations,
reports, claims for refund, information returns or other
documents (including any related or supporting schedules,
statements or information) filed or required to be filed in
connection with the determination, assessment or collection of
Taxes of any party or the administration of any laws,
regulations or administrative requirements relating to any
Taxes.
2.13 CONTRACTS AND COMMITMENTS.
(a) Except as specifically contemplated by this Agreement and except
as set forth in Schedule 2.13 attached hereto (the "Contracts Schedule"), the
Company is not a party to or bound by, whether written or oral, any: (i)
collective bargaining agreement or contract with any labor union or any bonus,
pension, profit sharing, retirement or any other form of deferred compensation
plan or any stock purchase, stock option, hospitalization insurance or similar
plan or practice, whether formal or informal; (ii) contract for the employment
of any officer, individual employee or other Person on a full-time or
consulting basis or any severance agreements; (iii) agreement or indenture
relating to the borrowing of money or to mortgaging, pledging or otherwise
placing a lien on any of its assets; (iv) agreements with respect to the
lending or investing of funds; (v) license, sublicense or royalty agreements;
(vi) lease or agreement under which it is lessee of, or holds or operates, any
personal property owned by any other party calling for payments in excess of
$50,000 annually; (vii) lease or agreement under which it is lessor of or
permits any third party to hold or operate any property, real or personal,
owned or controlled by it; (viii) contract or group of related contracts with
the same party for the purchase or sale of supplies, products or other personal
property or for the furnishing or receipt of services which involves a sum in
excess of $50,000 annually; (ix) contract or group of related contracts with
the same party continuing over a period of more than 6 months from the date or
dates thereof, not terminable by it on 30 days' or less notice without
penalties or payments; (x) contract which prohibits it from freely engaging in
business anywhere in the world; (xi) contract relating to the distribution,
marketing or sales of its products; (xii) agreements, contracts or
understandings pursuant to which the Company subcontracts work to third
parties; (xiii) contract or other agreement under which it agrees to indemnify
another party under a contract involving a sum in excess of $50,000 annually or
guarantee the obligations of another party in an amount in excess of $50,000;
or (xiv) other agreement material to it whether or not entered into in the
ordinary course of business.
(b) Except as specifically contemplated by this Agreement or
disclosed in the Contracts Schedule, (i) neither the Seller nor the Company has
knowledge of any cancellation, breach or anticipated breach by any other party
to any contract or commitment required to be disclosed on the Contracts
Schedule, (ii) the Company has performed all the obligations required to be
performed in connection with the contracts or commitments required to be
disclosed on the Contracts Schedule and is not in receipt of any written claim
of default under any contract or commitment required to be disclosed on the
Contracts Schedule, (iii) the Company has no present expectation or intention
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<PAGE> 18
of not fully performing any obligation pursuant to any contract required to be
disclosed on the Contracts Schedule, and (iv) since September 1, 1995, to the
knowledge of Messrs. Junk, Hunt, Glogowski, Pitzer or Wasylyk, no customer has
indicated in writing or orally to Seller or to the Company that it will stop or
materially decrease the rate of any business done with the Company which
accounts for $5.0 million in revenues or that it desires to renegotiate its
contract with the Company.
(c) The Contracts Schedule includes all written contracts which
are referred to on the Contracts Schedule, in each case together with all
amendments, waivers or other changes thereto. The Contracts Schedule contains
a description of all material terms of all oral contracts referred to therein.
2.14 PROPRIETARY RIGHTS.
(a) "Proprietary Rights" shall mean all of the following items owned
by, issued to or licensed to, the Company: (i) patents, patent applications,
patent disclosures and inventions; (ii) trademarks, service marks, trade dress,
logos, designs, trade names and corporate names together with all goodwill
associated therewith; (iii) copyrights registered or unregistered and
copyrightable works and all derivative works thereof; (iv) all registrations,
applications and renewals for any of the foregoing; (v) trade secrets and
confidential information; (vi) computer software and licensed program products
licensed to or used by the Company; (vii) any other proprietary rights; and
(viii) all copies and tangible embodiments, in each case including, without
limitation, the items set forth on Schedule 2.14 attached hereto (the
"Proprietary Rights Schedule").
(b) The Proprietary Rights comprise all of the intellectual property
owned by or used in and necessary for the operation of the Company's business
as currently conducted or as currently proposed to be conducted by the Company.
The Proprietary Rights Schedule sets forth a complete and correct list of: (i)
all patented or registered Proprietary Rights and all pending patent
applications and other applications for registration of Proprietary Rights
owned, filed or used by the Company; (ii) all trade names and unregistered
trademarks used by the Company; (iii) all computer software (other than
"off-the-shelf" software) licensed to or used by the Company; and (iv) all
licenses or similar agreements or arrangements to which the Company is a party
either as licensee or licensor.
(c) Except as set forth in the Proprietary Rights Schedule, (i) the
Company owns and possesses all right, title and interest in and to, or has a
valid and enforceable right to use, each of the Proprietary Rights free and
clear of all liens and encumbrances, and no claim by any third party contesting
the validity, enforceability, use or ownership of any of the Proprietary Rights
has been made, is currently outstanding or to the knowledge of Seller is
threatened, and to the knowledge of Seller there are no grounds for same; (ii)
the Company has received no notices of, nor is the Company aware of any facts
which indicate a likelihood of, any infringement or misappropriation by, or
conflict with any rights of, any third party with respect to any Proprietary
Right including, without limitation, any demand or request that the Company
license rights from a third party; and (iii) to the Seller's knowledge the
Company has not otherwise infringed, misappropriated or otherwise conflicted
with any rights of any third parties and the Company is not aware of any
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<PAGE> 19
infringement which will occur as a result of the continued operation of the
Company's business as currently conducted.
(d) Except as otherwise set forth in Section 6.19 below, all of
the Proprietary Rights are or will be owned by, or properly assigned or
licensed to, the Company at the time of the Closing. The transactions
contemplated by this Agreement will have no adverse effect on the Company's
right, title and interest in and to the Proprietary Rights. The Company has
taken all reasonable actions to maintain and protect the Proprietary Rights
necessary in light of the nature of the Company's business so as not to
adversely affect the ownership, validity or enforcement of such Proprietary
Rights.
(e) To the knowledge of Seller and the Company, Seller has no rights
in any patent, patent application, or, to its knowledge, discovery capable of
being patented that blocks the Company's ability to practice the best use of
any item listed in the Proprietary Rights Schedule.
2.15 LITIGATION; PROCEEDINGS. Except as set forth in Schedule 2.15
attached hereto (the "Litigation Schedule"), there are no actions, suits,
proceedings, orders or investigations pending or, to the knowledge of the
Company and Seller, threatened against or affecting the Company or any of its
assets at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, and there is no basis known to the
Company or Seller for any of the foregoing. Except as set forth on the
Litigation Schedule, in the two years prior to the Closing Date the Company has
not received any written opinion or written legal advice to the effect that the
Company is exposed from a legal standpoint to any liability which may be
material to the Company's business as previously or presently conducted or
business prospects.
2.16 BROKERAGE. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Company or Seller.
2.17 GOVERNMENTAL LICENSES AND PERMITS.
(a) Schedule 2.17(a) attached hereto (the "Licenses Schedule")
contains a complete listing and summary description of all permits,
certificates of occupancy, licenses, franchises, certificates, approvals and
other authorizations of foreign, federal, state and local governments or other
similar rights (collectively, the "Licenses") owned or possessed by the Company
and no other Licenses are required in the conduct of its business or used by
the Company in the conduct of its business. Except as indicated on the
Licenses Schedule, the Company owns or possesses all right, title and interest
in and to all of the Licenses which are necessary to conduct its business as
presently conducted. No loss or expiration of any License is, to the knowledge
of the Company or Seller, threatened, pending or reasonably foreseeable
(including, without limitation, as a result of the transactions contemplated
hereby) other than expiration in accordance with the terms thereof.
(b) Except for HSR Approval and except as set forth on Schedule
2.17(b) attached hereto (the "Governmental Consent Schedule"), no permit,
approval or authorization of, or declaration to
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<PAGE> 20
or filing with, any governmental or regulatory authority is required to be
obtained by the Company or Seller in connection with its execution, delivery
and performance of this Agreement or the consummation of any other transaction
contemplated hereby. "HSR Approval" shall mean all authorizations and
approvals required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976
as amended and the rules and regulations promulgated thereunder that are
required for the consummation of the transactions contemplated hereby.
2.18 EMPLOYEE BENEFIT PLANS.
(a) Except as set forth on Schedule 2.18 attached hereto (the
"Employee Benefit Plans Schedule"), with respect to current or former employees
of the Company, the Company does not maintain or contribute to or have any
liability with respect to any (i) nonqualified deferred compensation, bonus or
retirement plans or arrangements, (ii) qualified defined contribution or
defined benefit plans or arrangements which are employee pension benefit plans
(as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974 ("ERISA"), or (iii) employee welfare benefit plans (as defined in Section
3(1) of ERISA), stock option or stock purchase plans, or material fringe
benefit plans or programs. Except as set forth on the Employee Benefit Plans
Schedule, since January 1, 1990, the Company has not contributed to any
multiemployer plan (as defined in Section 3(37) of ERISA), and the Company has
not maintained or contributed to any defined benefit plan (as defined in
Section 3(35) of ERISA). Except as set forth on the Employee Benefit Plans
Schedule, the Company does not maintain or contribute to any employee welfare
benefit plan which provides health, accident or life insurance benefits to
former employees, their spouses or dependents, other than in accordance with
Section 4980B of the IRC ("COBRA").
(b) The employee pension benefit plans and employee welfare benefit
plans set forth on the Employee Benefit Plans Schedule (and related trusts and
insurance contracts) comply in form and in operation in all material respects
with all applicable laws and regulations, including ERISA and the IRC; and each
such employee pension benefit plan meets the requirements of "qualified plans"
under Section 401(a) of the IRC, and each such employee pension benefit plan,
and each trust (if any) forming a part thereof, has received a favorable
determination letter, or has timely applied for a favorable determination
letter, from the Internal Revenue Service as to the qualification under the IRC
of such plan and the tax-exempt status of such related trust, or is a new plan
which is made up of employee pension benefit plans which previously received
such a favorable determination letter, and nothing has occurred since the date
of such determination letter that could adversely affect the qualification of
such plan or the tax exempt status of such related trust.
(c) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports and Summary Plan Descriptions) with
respect to the employee pension benefit plans and employee welfare benefit
plans have been properly and timely filed in substantial compliance with
applicable law and regulations with the appropriate government agency and
distributed to participants as required. The Company has complied with the
requirements of COBRA.
(d) With respect to each employee pension benefit plan, all
contributions which are due (including all employer contributions and employee
salary reduction contributions) have been paid
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<PAGE> 21
to such employee pension benefit plan, all contributions for prior plan years
which are not yet due and with respect to the current plan year for the period
ending on the Closing Date have been made or accrued in accordance with GAAP,
and, with respect to the employee welfare benefit plans, all premiums or other
payments which are due on or before the Closing Date have been paid.
(e) The Company has no liability or potential liability to the
Pension Benefit Guaranty Corporation, the Internal Revenue Service, any
multiemployer plan, the Department of Labor, or to any participant or
beneficiary other than ordinary benefit claims or payments with respect to any
employee pension benefit plan currently or previously maintained by any
company, which together with the Company would be deemed to be part of a
"controlled group" within the meaning of subsections (b), (c), (m) or (o) of
Section 414 of the IRC.
(f) With respect to each employee pension benefit plan and each
employee welfare benefit plan, (i) there have been no prohibited transactions
as defined in Section 406 of ERISA or Section 4975 of the IRC, (ii) no
fiduciary (as defined in Section 3(21) of ERISA) has any liability for breach
of fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of such plans, and (iii) no actions,
investigations, suits or claims with respect to the assets thereof (other than
routine claims for benefits) are pending or threatened, and the Company has no
knowledge of any facts which would give rise to or could reasonably be expected
to give rise to any such actions, suits or claims.
(g) With respect to each of the employee pension benefit plans and
each employee welfare benefit plan, the Company has furnished to Buyer true and
complete copies of (i) the plan documents and summary plan descriptions, (ii)
the most recent determination letter received from the Internal Revenue
Service, (iii) the last Form 5500 Annual Report (including all schedules and
other attachments), and (iv) all related trust agreements, insurance contracts
or other funding agreements which implement such plans.
2.19 INSURANCE. Schedule 2.19 attached hereto (the "Insurance
Schedule") lists and briefly describes the insurance coverage maintained by the
Company with respect to its properties, assets and business. All such coverage
shall terminate as of the Closing Date.
2.20 OFFICERS AND DIRECTORS; BANK ACCOUNTS. Schedule 2.20 attached
hereto (the "Officers and Directors Schedule") lists all officers and directors
of the Company, and all of the Company's bank accounts (designating each
authorized signatory and the level of each signatory's authorization).
2.21 AFFILIATE TRANSACTIONS. Except as generally described on
Schedule 2.21 attached hereto (the "Affiliate Transactions Schedule"), neither
Seller nor any of its affiliates (collectively, the "Insiders") is a party to
any agreement, contract, commitment or transaction with the Company or that
pertains to the business of the Company or has any interest in any property,
real or personal or mixed, tangible or intangible, used in or pertaining to the
business of the Company.
2.22 COMPLIANCE WITH LAWS. Except as set forth on Schedule 2.22
attached hereto (the "Compliance Schedule"), the Company has complied with all
applicable laws, regulations and
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<PAGE> 22
zoning ordinances of foreign, federal, state and local governments and all
agencies thereof which affect the business, business practices (including, but
not limited to, the Company's production, marketing, sales and distribution of
its products and services), any real or personal properties of the Company and
to which the Company may be subject, and the Company is not aware of and has
not received any notice alleging a violation of any such laws or regulations.
2.23 ENVIRONMENTAL AND SAFETY MATTERS.
(a) Except as set forth on Schedule 2.23(a) attached hereto (the
"Environmental Requirements Schedule"), the Company since January 1, 1993 has
complied, and is in compliance, with all Environmental and Safety Requirements
(as defined).
(b) Without limiting the generality of the foregoing, the Company
has obtained and since January 1, 1993 complied with, and is currently in
compliance with, all permits, licenses and other authorizations that may be
required pursuant to Environmental and Safety Requirements for the occupation
of its facilities and the operation of its businesses. A list of all such
permits, licenses and other authorizations is set forth on Schedule 2.23(b)
attached hereto (the "Environmental Permits Schedule").
(c) Except as set forth on Schedule 2.23(c) attached hereto (the
"Environmental Claims Schedule"), since January 1, 1993 the Company has not
received any claim, complaint, citation, report or other information regarding
any actual or alleged violation of Environmental and Safety Requirements or any
liabilities or potential liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any investigatory, remedial or corrective
obligations, arising under Environmental and Safety Requirements
("Environmental Claim"). The Company has not received an Environmental Claim
prior to January 1, 1993, the subject matter of which has not been fully
settled or resolved.
(d) Without limitation upon any other subsection of this Section
2.23, except as disclosed on Schedule 2.23(d) attached hereto
(the"Environmental Disclosure Schedule"), to Seller's knowledge none of the
following exists at any property used, occupied or operated by the Company:
(i) underground storage tanks;
(ii) asbestos-containing material in any form or condition;
(iii) materials or equipment containing polychlorinated
biphenyls; or
(iv) surface impoundments, landfills, or other disposal
areas.
(e) Except as set forth on Schedule 2.23(e) attached hereto (the
"Hazardous Substances Schedule"), the Company has not treated, stored, disposed
of, arranged for or permitted the disposal of, transported, handled, or
released any substance, including without limitation any hazardous substance,
or owned or operated any property or facility (and no such property or facility
is contaminated by any such substance) in a manner that has given or could give
rise to liabilities of
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<PAGE> 23
the Company, including any liability for response costs, corrective action
costs, personal injury, property damage, natural resources damages or attorney
fees, pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA") or the Solid Waste Disposal Act,
as amended ("SWDA") or any other Environmental and Safety Requirements.
(f) To the Company's knowledge, no facts, events or conditions
relating to the past or present facilities, properties or operations of the
Company prevent, hinder or limit compliance with Environmental and Safety
Requirements, give rise to any investigatory, remedial or corrective
obligations pursuant to Environmental and Safety Requirements, or give rise to
any other liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise) pursuant to Environmental and Safety Requirements, including without
limitation any relating to onsite or offsite releases or threatened releases of
hazardous or otherwise regulated materials, substances or wastes, personal
injury, property damage or natural resources damage.
(g) Neither this Agreement nor the transaction that is the subject
of this Agreement will result in any obligations for site investigation or
cleanup, or notification to or consent of government agencies or third parties,
pursuant to any transaction-triggered or responsible property transfer
Environmental and Safety Requirements.
(h) The Company has not, either expressly or by operation of law,
assumed or undertaken any liability, including without limitation any
obligation for corrective or remedial action, of any other Person arising under
Environmental and Safety Requirements.
(i) To the knowledge of Seller, no Environmental Lien (as defined)
has attached to any property owned, leased or operated by the Company.
(j) As used in this Section 2.23, the following terms shall have the
following respective meanings:
(i) "Environmental and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and
similar provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and
all common law concerning public health and safety, worker health and
safety, and pollution or protection of the environment, including without
limitation all those relating to the presence, use, production,
generation, handling, transport, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous or otherwise
regulated materials, substances or wastes, chemical substances or
mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or byproducts, asbestos, polychlorinated biphenyls or noise.
(ii) "Environmental Lien" shall mean a lien, either recorded or
unrecorded, in favor of any governmental entity, relating to any liability
of the Company arising under Environmental and Safety Requirements.
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2.24 PRODUCT WARRANTY AND PRODUCT LIABILITY.
(a) No liabilities (other than ordinary course liabilities (such
ordinary course liabilities not to include recalls)) exist for repair,
replacement or other damages in connection with any products designed,
manufactured, merchandised, serviced, distributed, sold or delivered by the
Company at any time prior to the Closing Date. No products heretofore sold by
the Company are now subject to any guarantee or warranty other than the
Company's and its customers' standard terms and conditions of purchase and
sale.
(b) The Company has no liabilities, other than ordinary course
liabilities, arising out of any injury to individuals or property as a result
of the ownership, possession, or use of any product manufactured, sold, leased,
or delivered by the Company and to the Company's knowledge there is no basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against the Company giving rise to any
liability.
2.25 EMPLOYEES. To the knowledge of the Seller and the Company, none
of the management and other key employees of the Company has any plans to
terminate employment with the Company. Except as set forth on Schedule 2.25
attached hereto (the "Employees Schedule"), Seller and the Company have no
knowledge of any organizational effort presently being made or threatened by or
on behalf of any labor union with respect to the employees of the Company.
Except as set forth in the Employees Schedule, the Company has complied with
all applicable laws relating to the employment of labor and within the last
three years, the Company has not experienced any strikes, unresolved
grievances, unfair labor practice claims or unresolved disputes with former
employees of the Company regarding termination and/or severance pay.
2.26 POWERS OF ATTORNEY; GUARANTEES. Except as set forth on Schedule
2.26 attached hereto (the "Powers Schedule"), there are no outstanding powers
of attorney executed on behalf of the Company. The Company is not a guarantor
or otherwise liable for any indebtedness or other obligations of any other
Person other than endorsements for collection in the ordinary course of
business.
2.27 PRODUCTS. Except as set forth on Schedule 2.27 attached hereto
(the "Products Schedule"), to the knowledge of Seller and the Company, no
products, components or parts currently produced by the Company which are
projected to generate at least $250,000 in annual revenues are presently
scheduled to balance out prior to December 31, 1997.
2.28 FORD LTA. Schedule 2.28 attached hereto (the "Ford LTA
Schedule") sets forth the current status of the Company's LTA negotiations with
Ford Motor Company.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO SELLER
As a material inducement to Buyer to enter into this Agreement, Seller
represents and warrants to Buyer that:
3.1 AUTHORIZATION OF TRANSACTIONS. Seller has full power and
authority to execute and deliver this Agreement and all other agreements
contemplated hereby to which Seller is a party, and to perform its obligations
and to consummate the transactions contemplated hereby and thereby. This
Agreement and the other agreements contemplated hereby to which Seller is a
party has been duly executed and delivered by Seller and constitute the valid
and binding agreements of Seller, enforceable against Seller in accordance with
their terms, except as enforceability hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally and limitations on the availability of equitable remedies.
3.2 ABSENCE OF CONFLICTS. Neither the execution, delivery or
performance of this Agreement and the other documents contemplated hereby to
which Seller is a party, nor the consummation of the transactions contemplated
hereby and thereby, will (a) conflict with, (b) result in a breach of any of
the provisions of, (c) constitute a default under, (d) result in the violation
of, (e) give any third party the right to terminate or to accelerate any
obligation under, (f) result in the creation of any lien, security interest or
charge or encumbrance upon the Company Stock under, or (g) require any
authorization, consent, approval, execution or other action by or notice to any
court or other governmental body under, the provisions of any indenture,
mortgage, lease, loan agreement or other agreement or instrument to which
Seller is bound or affected, or any statute, regulation, rule, judgment, order,
decree or other restriction of any government, governmental agency or court to
which Seller is subject. No notice to, filing with or authorization, consent
or approval of any government or governmental agency by Seller is necessary for
the consummation of the transactions contemplated by this Agreement and the
other documents contemplated hereby to which Seller is a party.
3.3 SHARES. The authorized, issued and outstanding capital stock of
the Company is as it is set forth in the recitals of this Agreement and Seller
holds of record and owns beneficially 100% of the issued and outstanding shares
of Company Stock, free and clear of any restrictions on transfer (other than
any restrictions under the Securities Act of 1933, as amended, and the state
securities laws), claims, taxes, liens, charges, encumbrances, pledges,
security interests, options, warrants, rights, contracts, calls, commitments,
equities and demands. Seller is not a party to any option, warrant, right,
contract, call, put or other agreement or commitment providing for the
disposition or acquisition of any capital stock of the Company (other than this
Agreement). Seller is not a party to any voting trust, proxy or other
agreement or understanding with respect to the voting of any capital stock of
the Company.
3.4 LITIGATION. There are no actions, suits, proceedings, orders or
investigations pending or, to the best of Seller's knowledge, threatened
against or affecting Seller at law or in equity, or before or by any federal,
state, municipal or other governmental department, commission, board,
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bureau, agency or instrumentality, domestic or foreign, which would adversely
affect Seller's performance under this Agreement and the other agreements
contemplated hereby to which Seller is a party or the consummation of the
transactions contemplated hereby or thereby.
3.5 INVESTMENT REPRESENTATION. In connection with the issuance
of the Shares and the Warrant hereunder from Parent, Seller represents and
warrants to Buyer that:
(a) Seller has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the Shares and the Warrant, has
had full access to such other information concerning Parent and Buyer as Seller
has requested and possesses substantial information about, and familiarity with
Parent and Buyer as a result of the information provided to Seller;
(b) Seller is able to bear the economic risk of the investment in
the Shares and the Warrant for an indefinite period of time;
(c) Seller is acquiring the Shares and the warrant hereunder for its
own account with the present intention of holding such security for investment
purposes and has no intention of selling such security in a public distribution
in violation of federal or state securities laws; and
Seller is an accredited investor, as such term is defined in Rule 501 of
Regulation D promulgated under the Securities Act of 1933, as amended.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
As a material inducement to Seller to enter into this Agreement, each of
Buyer and Parent, as appropriate, hereby represents and warrants to Seller
that:
4.1 CORPORATE ORGANIZATION AND POWER. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Michigan, with full corporate power and authority to enter into this
Agreement and the other agreements contemplated hereby to which Buyer is a
party and perform its obligations hereunder and thereunder. Parent is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, with full corporate power and authority to enter
into this Agreement and the other agreements contemplated hereby to which
Parent is a party and perform its obligations hereunder and thereunder.
4.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement and the other agreements contemplated hereby to which Buyer or Parent
is a party by Buyer and Parent, respectively, and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all requisite corporate action on the part of Buyer and Parent,
respectively, and no other corporate proceedings on their part are necessary to
authorize the execution, delivery or performance of this Agreement. This
Agreement constitutes, and each of the other agreements contemplated hereby to
which Buyer or Parent is a party will when executed
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<PAGE> 27
constitute, a valid and binding obligation of Buyer and Parent, respectively,
enforceable in accordance with their terms, except as enforceability hereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and limitations on the availability of
equitable remedies.
4.3 ABSENCE OF CONFLICTS. Neither the execution, delivery or
performance of this Agreement and the other documents contemplated hereby to
which Buyer or Parent is a party, nor the consummation of the transactions
contemplated hereby and thereby, will (a) conflict with, (b) result in a breach
of any of the provisions of, (c) constitute a default under, (d) result in the
violation of, (e) give any third party the right to terminate or to accelerate
any obligation under, or (f) require any authorization, consent, approval,
execution or other action by or notice to any court or other governmental body
under, the provisions of any indenture, mortgage, lease, loan agreement or
other agreement or instrument to which Buyer or Parent is bound or affected, or
any statute, regulation, rule, judgment, order, decree or other restriction of
any government, governmental agency or court to which Buyer or Parent is
subject. No notice to, filing with or authorization, consent or approval of
any government or governmental agency by Buyer or Parent is necessary for the
consummation of the transactions contemplated by this Agreement and the other
documents contemplated hereby to which Buyer or Parent is a party.
4.4 INVESTMENT INTENT. Buyer is acquiring the Company Stock for its
own account for investment and not with a view to, or for sale in connection
with, any distribution thereof, nor with any present intention of distributing
or selling the same in violation of applicable securities laws.
4.5 LITIGATION. There are no actions, suits, proceedings, orders or
investigations pending or, to the best of Buyer's knowledge, threatened against
or affecting Buyer or Parent at law or in equity, or before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which would adversely affect
Buyer's or Parent's performance under this Agreement and the other agreements
contemplated hereby to which Buyer or Parent is a party or the consummation of
the transactions contemplated hereby or thereby.
4.6 REPORTS. Since September 1, 1994, Parent has filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that were and are required to be filed with the
Securities and Exchange Commission, including but not limited to Forms 10-K,
Forms 10-Q, Forms 8-K and proxy statements (all such reports and statements are
collectively referred to herein as the "Parent Reports"). As of their
respective dates, the Parent Reports complied and all will comply in all
material respects with all the statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed and did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
BROKERS' FEES. Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Seller could become liable or
obligated.
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ARTICLE V
INDEMNIFICATION AND RELATED MATTERS
5.1 SURVIVAL. All representations, warranties, covenants and
agreements set forth in this Agreement or in any writing delivered in connection
with this Agreement will survive the Closing Date and the consummation of the
transactions contemplated hereby and will not be affected by any examination
made for or on behalf of Buyer, the knowledge of any of its officers, directors,
stockholders, employees or agents, or the acceptance of any certificate or
opinion; provided, however, with respect to representations and warranties set
forth in Articles II, III and IV, such representations and warranties shall
survive for the periods set forth in subsections 5.2(c) and 5.2(d), as
applicable.
5.2 INDEMNIFICATION.
(a) Seller agrees to indemnify Buyer, its officers, directors and
stockholders (the "Buyer Group") and hold them harmless from and against any
loss, liability, deficiency, damage or expense including, without limitation,
reasonable legal expenses and costs and including interest and penalties (a
"Loss") (net of (x) any amounts when and as recovered by the Buyer Group with
respect to the matter for which the Buyer Group is being indemnified under
insurance policies for the benefit of the Buyer Group that reduce the losses
that would otherwise be sustained, except to the extent by which the Buyer Group
can demonstrate the premiums of such policies have increased as a result of such
recovery (it being understood that in the event such a Loss is incurred and
indemnity hereunder is requested prior to the Buyer Group's receipt of any such
insurance proceeds, Seller shall indemnify the Buyer Group in full and the Buyer
Group will pay over such proceeds to the Seller when and as received by the
Buyer Group, but not in excess of the amount previously so paid by Seller), (y)
any reduction in federal, state, local or foreign income or franchise tax
liability when and as realized at any time by the Buyer Group in connection with
the losses in respect to which indemnification is sought hereunder and (z) any
reserves to the extent reflected on the Closing Statement of Working Capital
which relate directly to any item for which indemnification is sought hereunder)
which the Buyer Group may suffer, sustain or become subject to, to the extent
resulting from (i) the breach by Seller of any representation or warranty made
by Seller contained in Articles II or III hereof; provided, however, with
respect to Section 2.23 above, without giving effect to any disclosure set forth
on the Hazardous Substances Schedule, (ii) the breach by Seller of any
representation, warranty (other than representations and warranties set forth in
Articles II or III hereof), covenant or agreement made by Seller contained in
this Agreement, any exhibit hereto or any certificate delivered by the Company
or Seller to Buyer in connection with the Closing, (iii) any claims of any
brokers or finders claiming by, through or under Seller or by, through or under
the Company in respect of the transactions contemplated herein, (iv) the
Company's non-compliance with applicable Environmental and Safety Requirements
(other than applicable OSHA rules and regulations), (v) any customer claim
arising under or related to any tooling costs incurred and billed by the Company
or Seller prior to the Closing Date, (vi) the operations or ownership of
property at any of the Sellers', its subsidiaries' or their successors' or
transferees' facilities located in Oxford,
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<PAGE> 29
Michigan, Troy, Michigan, St. Clair Shores, Michigan, Berne, Indiana or
Harrison, Michigan, whether arising before or after the Closing Date including,
without limitation, any claims or liabilities relating to the items set forth
on the Litigation Schedule in which the injury, or event giving rise to the
claim thereunder, occurred at any such facility (except as otherwise provided
for in the Component Resourcing Agreement dated May 6, 1996 among Seller, Buyer
and W. C. McCurdy Company (the "Oxford Agreement")), (vii) the Company's
non-compliance with applicable OSHA rules and regulations (and any similar
state statutes, rules and regulations) other than with respect to those matters
addressed in Section 6.18 below, (viii) any indemnification or other obligation
arising under, or related to, the Company's sale of its assets located in St.
Clair Shores, Michigan and Troy, Michigan and (ix) the matters addressed under
Section 6.20 hereof.
(b) (i) With respect to claims for breaches of representations and
warranties referred to in Section (a)(i) above, Seller will be liable to the
Buyer Group for Losses arising therefrom only if the aggregate amount of all
such Losses resulting to the Buyer Group from all such breaches or claims
exceeds $1,500,000, in which case Seller will be liable only for such excess,
and (ii) with respect to any claim referred to in Section 5.2(a) above, Seller
shall not be liable to the Buyer Group to the extent such Losses exceed the
Purchase Price; provided that the foregoing clause (i) shall not apply in
respect of any Loss with respect to the breach by the Seller of any
representation or warranty made by Seller in Sections 2.2, 2.3 and 2.12 (solely
to the extent such Loss is attributable to federal or state income taxes or any
franchise taxes, including any interest or penalties payable thereon) and in
Sections 3.1 and 3.3.
(c) Seller will be liable to the Buyer Group with respect to claims
referred to (i) in subsection (a)(i) above only if Buyer gives Seller written
notice thereof within two years after the Closing Date, except for claims
arising from breaches of the representations and warranties (A) set forth in
Section 2.12 as to which claims must be made prior to the expiration of the
applicable statute of limitation with respect thereto, (B) set forth in Sections
2.2, 2.3, 3.1 and 3.3 as to which claims may be made at any time, and (C) set
forth in Section 2.23 as to which claims may be made any time within five years
after the Closing Date, (ii) in subsection (a)(vii) above only for Losses
actually incurred within 90 days after the Closing Date by the Company or the
Buyer Group relating to any injury which occurs, or any fines or other penalties
which are imposed on the Company or the Buyer Group, as a result of the
occurrence of such non-compliance, prior to the Closing Date or during the
period of 90 days after the Closing Date, all such Losses not to exceed $150,000
in the aggregate and (iii) in subsection (a)(iv) above only for Losses actually
incurred within 90 days after the Closing Date by the Company or the Buyer Group
relating to any fines or other penalties which are imposed on the Company or the
Buyer Group as a result of the occurrence of such non-compliance prior to the
Closing Date or during the period of 90 days after the Closing Date.
(d) Buyer agrees to indemnify Seller and hold Seller harmless from
and against any Loss which Seller may suffer, sustain or become subject to, as
the result of a breach of any representation, warranty, covenant, or agreement
by Buyer contained in this Agreement; provided however, with respect to claims
for breaches of representations and warranties set forth in (i) Sections 4.3 and
4.5, Buyer will be liable only if Seller gives Buyer written notice thereof
within two (2) years after the Closing Date and (ii) Section 4.6, Buyer will be
liable only if Seller gives Buyer written notice thereof prior to the expiration
of the applicable statute of limitations with respect thereto.
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<PAGE> 30
(e) If a party hereto seeks indemnification under this Section 5.2,
such party (the "Indemnified Party") shall give written notice to the other
party (the "Indemnifying Party") of the facts and circumstances giving rise to
the claim. In that regard, if any suit, action, claim, liability or obligation
shall be brought or asserted by any third party (a "Third Party Claim") which,
if adversely determined, would entitle the Indemnified Party to an indemnity
payment pursuant to this Section 5.2, the Indemnified Party shall promptly
notify the Indemnifying Party of the same in writing, specifying in reasonable
detail the basis of such claim and the facts pertaining thereto and the
Indemnifying Party may elect (except that the Indemnifying Party may not so
elect without the Indemnified Party's written consent if (i) such Third Party
Claim seeks to impose any liability or obligation upon the Indemnified Party
other than for money damages, or (ii) such Third Party Claim relates to a claim
made by the Indemnified Party's customers or employees) to assume and control
the defense thereof (and shall consult with the Indemnified Party with respect
thereto), including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of expenses; provided, however, that the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without prior written
consent of the Indemnified Party (not to be withheld unreasonably) unless the
judgment or proposed settlement involves only the payment of money damages
solely by the Indemnifying Party and does not impose an injunction or any other
equitable relief upon the Indemnified Party.
(f) If the Indemnifying Party has failed to assume the defense of any
Third Party Claim, the Indemnified Party may defend against such Third Party
Claim in any manner it may reasonably deem appropriate; provided, however, if
the Indemnifying Party is prevented from electing control of any defense as a
result of the Indemnified Party's refusal to give written consent thereto (i)
the Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim involving the payment
of money damages by the Indemnifying Party without the prior written consent of
the Indemnifying Party (not to be withheld unreasonably), (ii) the fees and
expenses of any counsel employed by the Indemnified Party shall be split evenly
between the Indemnified Party and the Indemnifying Party and (iii) the
Indemnifying Party shall have the right to employ counsel separate from counsel
employed by the Indemnifying Party in any such action and to participate in the
defense thereof. If the Indemnifying Party elects to assume and control the
defense, the Indemnified Party shall have the right to employ counsel separate
from counsel employed by the Indemnifying Party in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
employed by the Indemnified Party shall be at the expense of the Indemnified
Party unless the employment thereof has been specifically authorized by the
Indemnifying Party in writing.
(g) Effective upon the Closing, except as otherwise set forth in the
Oxford Agreement, Seller hereby irrevocably waives, releases and discharges
forever the Company from any and all liabilities and obligations to Seller, its
affiliates, officers and directors of any kind or nature whatsoever in existence
as of the Closing Date, whether in its or his capacity as Seller hereunder, as a
stockholder, officer or director of the Company or otherwise, including, without
limitation, in respect of rights of contribution or indemnification, in each
case whether absolute or contingent, liquidated or unliquidated, and whether
arising hereunder or under any other agreement or understanding or otherwise at
law or equity, and Seller hereby covenants and agrees that it will
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indemnify and hold harmless the Company and the Buyer Group from and against
all such liabilities or obligations.
(h) (i) After the Closing, and with respect to environmental matters
for which Seller is obligated to indemnify Buyer under Section 5.2(a)(iv) and
under Section 5.2(a)(i) (which would entitle the Indemnified Party to an
indemnity payment pursuant to this Section 5.2), Seller shall, upon
acknowledging such obligation in writing, have the option to assume principal
control of any such environmental matter and to (i) obtain any tests, reports,
and surveys necessary to define and delineate the extent of any contamination or
noncompliance, (ii) contact governmental authorities, make any reports to such
authorities, submit any remediation or compliance plans to such authorities,
negotiate with such authorities, and otherwise deal with such authorities, (iii)
prepare the work plan for any remediation or correction of noncompliance, and
(iv) conduct or direct any such remediation or correction of noncompliance. If
Seller elects to assume principal control of such environmental matter, Seller
shall manage such environmental matter in good faith and any activities
conducted in connection therewith shall be undertaken promptly and concluded
expeditiously, using all reasonable efforts, subject to the schedules and
approvals required by the applicable governmental or regulatory authorities. To
carry out its obligations under this Agreement, Seller shall, provided Seller
provides Buyer reasonable advance notice, have reasonable access to the affected
premises and the right to perform any such environmental remediation,
investigation, assessment, sampling, monitoring, treatment, removal, cleanup or
other action required by governmental authorities to comply with Environmental
and Safety Requirements ("Remediation") by means approved by applicable
governmental or regulatory authorities and considered reasonable and customary
in the environmental engineering profession (including the right to construct
and maintain wells, dikes, "caps" or covers, barriers, pump and treat systems,
soil vapor extraction systems, other testing and treatment equipment and
systems, related buildings and structures, and supporting utility services on
such premises, the right to perform excavations and exhumations of soils and
subsurface materials and withdrawals and reinjections of groundwater on such
premises); provided, however, that Seller will not unreasonably interfere with
the normal business operations of the Company and provided, further, that Seller
shall not compound or aggravate any environmental matter for which it is not
indemnifying Buyer pursuant to Section 5.2(a) above. Seller agrees to promptly
dispose of all soil, groundwater, waste, decontamination water, cuttings,
samples, or other material generated as a result of the Remediation, and agrees
to restore the affected premises as nearly as is feasible to its prior condition
as soon as practicable. Any such Remediation shall be deemed sufficient to
satisfy corresponding obligations under this Agreement so long as the result
meets or exceeds applicable standards (including any standards resulting from
any site-specific risk assessments) under all applicable Environmental and
Safety Requirements in effect at the time of completion of the Remediation based
on the use of the property as of the Closing Date. Buyer will cooperate with
Seller (including by making relevant personnel and non-privileged records
available to Seller at all reasonable times without charge for any immaterial
internal costs) in connection with the Remediation.
(ii) Buyer will cooperate with Seller in connection with Seller's
efforts to seek reimbursement under applicable governmental underground
storage tank or other reimbursement programs relating to Environmental and
Safety Requirements and under applicable insurance policies of the Company
which are in effect for periods prior to the
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<PAGE> 32
Closing relating to remediation or other liabilities for which Seller may
be responsible that are related to or arise out of Environmental and
Safety Requirements.
(iii) Seller shall keep the Buyer regularly informed regarding such
Remediation and shall provide the Buyer with copies of all monitoring,
sampling and other data relating to the Remediation. Seller shall give
Buyer the opportunity to review and comment in advance upon any material
submissions to governmental or regulatory authorities with respect to the
Remediation and Seller shall reasonably address and incorporate Buyer's
comments that are within the scope of Seller's obligation hereunder. Buyer
shall have the right to attend and participate in material meetings with
governmental or regulatory authorities with respect to the Remediation.
(iv) To better delineate the respective obligations of Seller and
Buyer with respect to environmental matters involving the Company, Buyer
will use commercially reasonable best efforts to cause the Company to
conduct its operations after the Closing Date in material compliance with
Environmental and Safety Requirements so as not to compound or aggravate
any environmental condition or noncompliance for which Seller is
responsible under this Agreement.
(v) Buyer will maintain in confidence information concerning any
environmental matter for which Seller is obligated to indemnify Buyer
under Section 5.2(a). Notwithstanding the foregoing, Buyer may disclose
such information (A) in confidence to any Person with whom Buyer proposes
to enter into contract for any commercial purpose, including financing
entities; (B) as required by Environmental and Safety Requirements or any
other applicable law, including, without limitation, securities laws; (C)
in order to attain compliance with Environmental and Safety Requirements;
and (D) that is otherwise publicly available. Buyer shall not take action
designed to initiate or encourage a claim by a third party, including any
governmental agency, concerning an environmental matter for which Seller
is obligated to indemnify Buyer under Section 5.2(a). Notwithstanding the
foregoing, Buyer may take any action required by Environmental and Safety
Requirements, in order to attain compliance with Environmental and Safety
Requirements, or take such proactive action that is reasonable and prudent
under the circumstance in order to prevent or mitigate a risk to human
health or the environment. If Buyer intends to disclose information or
take action concerning an environmental matter for which Seller is
obligated to indemnify Buyer under Section 5.2(a), Buyer will notify
Seller of such proposed disclosure or action.
(i) The indemnification provisions in this Agreement shall be the
exclusive remedy (other than equitable remedies and remedies for intentional
misrepresentation) for any breach of the representations, warranties and
covenants contained in this Agreement. Without limiting the generality of the
foregoing, Buyer explicitly waives to the extent permitted by applicable law any
rights and remedies under the common law, and any statutory rights and remedies,
that it otherwise might have against Seller after the Closing with respect to
the Company, excluding any remedy that Buyer may have for intentional
misrepresentation, in which case the foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory or common law remedy the
Buyer may have for such intentional misrepresentation.
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<PAGE> 33
(j) Nothing set forth in this Section 5.2 shall be construed to
require the Company or the Buyer Group to modify the terms, scope or size of
their insurance coverage as in effect on the Closing Date.
(k) Subject to the terms and conditions set forth in this Section
5.2, in the event of a breach of any representation, warranty, covenant or
agreement contained in this Agreement, the non-breaching party may, at its
option, setoff all or any portion of a Loss for which the parties do not dispute
(or any other Loss after a Final Determination is made with respect thereto
pursuant to Section 5.3(e) below) which such party suffers, sustains or becomes
subject to as a result of such breach against any amounts due or to become due
to the breaching party pursuant to this Agreement or the Note.
5.3 ARBITRATION PROCEDURES.
(a) The parties hereto agree that the arbitration procedure set forth
below shall be the sole and exclusive method for resolving and remedying claims
for money damages arising out of this Agreement (the "Disputes"), except as
otherwise provided by Sections 1.3 and 1.4 above. Nothing in this Section 5.3
shall prohibit a party hereto from instituting litigation to enforce any Final
Determination (as defined in subsection (e) below) or availing itself of the
other remedies set forth in Sections 6.6, 6.8(b) and 6.11(f) below. The parties
hereto hereby agree and acknowledge that, except as otherwise provided in this
Section 5.3 or in the Commercial Arbitration Rules of the American Arbitration
Association, as in effect from time to time, the arbitration procedures and any
Final Determination hereunder shall be governed by, and shall be enforced
pursuant to the Uniform Arbitration Act of the State of Michigan.
(b) In the event that any party hereto asserts that there exists a
Dispute, such party shall deliver a written notice to each other party involved
therein specifying the nature of the asserted Dispute and requesting a meeting
to attempt to resolve the same. If no such resolution is reached within 20
business days after such delivery of such notice, the party delivering such
notice of Dispute (the "Disputing Person") may, within 45 business days after
delivery of such notice, commence arbitration hereunder by delivering to each
other party involved therein a notice of arbitration (a "Notice of
Arbitration"). Such Notice of Arbitration shall specify the matters as to which
arbitration is sought, the nature of any Dispute, the claims of each party to
the arbitration and shall specify the amount and nature of any damages, if any,
sought to be recovered as a result of any alleged claim, and any other matters
required by the Commercial Arbitration Rules of the American Arbitration
Association, as in effect from time to time, to be included therein, if any.
(c) Buyer and Seller shall each select one independent arbitrator
expert in the subject matter of the Dispute (the arbitrators so selected shall
be referred to herein as "Buyer's Arbitrator" and "Seller's Arbitrator,"
respectively). In the event that either party fails to select an independent
arbitrator as set forth herein within 20 days from delivery of a Notice of
Arbitration, then the matter shall be resolved by the arbitrator selected by the
other party. Seller's Arbitrator and Buyer's Arbitrator shall select a third
independent arbitrator expert in the subject matter of the dispute, and the
three arbitrators so selected shall resolve the matter according to the
procedures set forth in this
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Section 5.3. If Seller's Arbitrator and Buyer's Arbitrator are unable to agree
on a third arbitrator within 20 days after their selection, Seller's Arbitrator
and Buyer's Arbitrator shall each prepare a list of three independent
arbitrators. Seller's Arbitrator and Buyer's Arbitrator shall each have the
opportunity to designate as objectionable and eliminate one arbitrator from the
other arbitrator's list within seven days after submission thereof, and the
third arbitrator shall then be selected by lot from the arbitrators remaining
on the lists submitted by Seller's Arbitrator and Buyer's Arbitrator.
(d) The arbitrator(s) selected pursuant to subsection (c) above will
determine the allocation of the costs and expenses of arbitration based upon the
percentage which the portion of the contested amount not awarded to each party
bears to the amount actually contested by such party. For example, if Buyer
submits a claim for $1,000, and if Seller contests only $500 of the amount
claimed by Buyer, and if the arbitrator(s) ultimately resolves the dispute by
awarding Buyer $300 of the $500 contested, then the costs and expenses of
arbitration will be allocated 60% (i.e. 300 / 500) to Seller and 40% (i.e. 200 /
500) to Buyer.
(e) The arbitration shall be conducted under the Commercial
Arbitration Rules of the American Arbitration Association as in effect from time
to time, except as modified by the agreement of all parties. The arbitrator(s)
shall so conduct the arbitration that a final result, determination, finding,
judgment and/or award (the "Final Determination") is made or rendered as soon as
practicable, but in no event later than the later of 90 business days after the
delivery of the Notice of Arbitration and 10 days following completion of the
arbitration. The Final Determination must be agreed upon and signed by the sole
arbitrator or by at least two of the three arbitrators (as the case may be).
The Final Determination shall be final and binding on all parties and there
shall be no appeal from or reexamination of the Final Determination, except for
fraud, perjury, evident partiality or misconduct by an arbitrator prejudicing
the rights of any party and except to correct manifest clerical errors.
(f) Buyer and Seller may enforce any Final Determination in any state
or federal court having jurisdiction over the dispute. For the purpose of any
action or proceeding instituted with respect to any Final Determination, each
party hereto hereby irrevocably submits to the jurisdiction of such courts,
irrevocably consents to the service of process by registered mail or personal
service and hereby irrevocably waives, to the fullest extent permitted by law,
any objection which it may have or hereafter have as to personal jurisdiction,
the laying of the venue of any such action or proceeding brought in any such
court and any claim that any such action or proceeding brought in such court has
been brought in any inconvenient forum.
(g) If any party shall fail to pay the amount of any damages, if any,
assessed against it within 10 days of the delivery to such party of such Final
Determination, the unpaid amount shall bear interest from the date of such
delivery at the lesser of (i) the prime rate, as declared by Citibank, N.A. from
time to time (which rate shall be adjusted on the effective date of each change
in such rate) (the "Prime Rate") plus 300 basis points and (ii) the maximum rate
permitted by applicable usury laws. Interest on any such unpaid amount shall be
compounded semiannually, computed on the basis of a 365-day year and shall be
payable on demand. In addition, such party shall promptly reimburse the other
party for all reasonable costs or expenses of any nature or kind whatsoever
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(including but not limited to all attorneys' fees) incurred in seeking to
collect such damages or to enforce any Final Determination.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 TAX MATTERS. The following provisions shall govern the
allocation of responsibility as between Buyer and Seller for certain tax
matters following the Closing Date:
(a) Tax Periods Ending on or Before the Closing Date. Buyer
shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns for the Company for all periods ending on or prior to the Closing
Date which are filed after the Closing Date (other than (i) income Tax
Returns with respect to periods for which the consolidated, unitary and
combined income Tax Returns of Seller will include the operations of the
Company and (ii) Tax Returns filed under the Michigan Single Business Tax,
each of such Tax Returns the Seller will prepare and pay such Taxes).
Seller shall pay to Buyer within fifteen (15) days of the date on which any
such Taxes are paid by Buyer with respect to such period an amount equal to
such Taxes to the extent such Taxes are not accrued on the Closing
Statement of Working Capital.
(b) Tax Periods Beginning Before and Ending After the Closing
Date. Buyer shall prepare or cause to be prepared and file or cause to be
filed any Tax Returns of the Company for Tax periods which begin before the
Closing Date and end after the Closing Date. Seller shall pay to Buyer
within fifteen (15) days of the date on which Taxes are paid with respect
to such periods an amount equal to the portion of such Taxes which relates
to the portion of such Taxable period ending on the Closing Date to the
extent such Taxes are not accrued on the Closing Statement of Working
Capital. For purposes of this Section, in the case of any Taxes that are
imposed on a periodic basis and are payable for a Taxable period that
includes (but does not end on) the Closing Date, the portion of such Taxes
which relates to the portion of such Taxable period ending on the Closing
Date shall (x) in the case of any Taxes other than Taxes based upon or
related to income, be deemed to be the amount of such Tax for the entire
Taxable period multiplied by a fraction the numerator of which is the
number of days in the Taxable period ending on the Closing Date and the
denominator of which is the number of days in the entire Taxable period,
and (y) in the case of any Tax based upon or related to income be deemed
equal to the amount which would be payable if the relevant Taxable period
ended on the Closing Date. Any credits relating to a Taxable period that
begins before and ends after the Closing Date shall be taken into account
as though the relevant Taxable period ended on the Closing Date. All
determinations necessary to give effect to the foregoing allocations shall
be made in a manner consistent with prior practice of such Company.
(c) Cooperation on Tax Matters.
(i) Buyer, the Company and Seller shall cooperate fully, as
and to the extent reasonably requested by the other party, in
connection with the filing of Tax Returns pursuant to this Section and
any audit, litigation or other proceeding with respect to Taxes.
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<PAGE> 36
Such cooperation shall include (i) the provision of records and information
necessary for completion of 1996 Tax Returns within sixty (60) days after
Closing and (ii) the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any
such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Company and Seller
agree (A) to retain all books and records with respect to Tax matters and
pertinent to the Company relating to any taxable period beginning before
the Closing Date until the expiration of the statute of limitations (and,
to the extent notified by Buyer or Seller, any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) to give the other party
reasonable written notice prior to transferring , destroying or discarding
any such books and records and, if the other party so requests, the Company
or Seller, as the case may be, shall allow the other party to take
possession of such books and records.
(ii) Buyer and Seller further agree, upon request, to use their
best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).
(d) Tax Sharing Agreements. All tax-sharing agreements or similar
agreements with respect to or involving the Company shall be terminated as of
the Closing Date and, after the Closing Date, the Company shall not be bound
thereby or have any liability thereunder.
(e) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by Seller
when due, and Seller will, at its own expense, file all necessary Tax Returns
and other documentation with respect to all such transfer, documentary, sales,
use, stamp, registration and other Taxes and fees, and, if required by
applicable law, Buyer will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation.
6.2 EMPLOYEE BENEFIT MATTERS.
(a) Effective the day following the Closing Date, those employees of
the Company whose employment with the Company shall continue after the Closing
Date (the "Continued Employees") shall cease to be covered under the employee
benefit plans of Seller and shall participate under the employee benefit plans,
programs and policies maintained by the Company. Seller shall remain liable
for all benefits accrued or claims incurred on or prior to the Closing Date
under all plans, programs and policies maintained by Seller, and the Company
shall be liable for all benefits accrued and claims incurred after the Closing
Date under the plans, programs and policies maintained by the Company. The
Continued Employees shall be covered under the Company's employee benefit plans
without any exclusion for pre-existing conditions and shall recognize the
employees service with Seller for purposes of vesting and eligibility under
such plans.
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(b) Seller shall remain liable for all workers' compensation claims
accrued or incurred on or prior to, or incurred as a result of any event
occurring or state of facts existing on or prior to, the Closing Date, and the
Company shall be liable for all workers' compensation claims incurred as a
result of any event occurring or state of facts existing after the Closing
Date.
(c) As of the Closing Date, Seller shall vest each Continued
Employee under each employee benefit plan which is an employee pension benefit
plan (as defined in Section 3(2) of ERISA), and shall distribute the benefits
accrued through the Closing Date for such Continued Employees under each such
plan in accordance with the terms of said plans, assuming for such purpose that
the employees had terminated employment on the Closing Date. Seller has made
or shall make all contributions for the benefit of the Continued Employees to
such plans, excluding profit sharing to the extent such contributions are
discretionary, for the pro rata portion of the 1996 fiscal year from January 1,
1996 through the Closing Date.
(d) Seller shall be solely responsible for the provision of health
care continuation coverage required under COBRA for those former employees of
the Company and other persons whose entitlement to continuation coverage
occurred on or before the Closing Date. The Company shall offer continuation
coverage under its group health plans to all eligible Continued Employees after
the Closing Date.
(e) Buyer shall cause the Company to use reasonable efforts to
continue to employ those employees employed by the Company as of the Closing
Date (except for those employees identified on Schedule 6.2 attached hereto),
at salaries and positions that are substantially the same as in effect
immediately prior to the Closing Date, until July 30, 1996.
(f) Seller shall pay within 45 days following the Closing Date (i)
all stay bonuses, employee retention bonuses, success bonuses and similar
arrangements which have been granted to the Company's employees prior to the
Closing Date and (ii) the pro-rata portion (based on the number of days between
January 1, 1996 and the Closing Date) of non-discretionary annual employee
bonuses.
(g) Except as otherwise provided, on and after the Closing Date and
through December 31, 1996, the retirees and employees of the Company as set
forth on Schedule 6.2(g) attached hereto (the "Retiree Schedule") (the
"Retirees") may remain covered (or eligible for coverage) under Seller's
employee benefit plans described in the January 1, 1996 Actuarial Valuation of
Post Retirement Life and Health Benefit Plans report. Seller will provide the
Company, on a quarterly basis, with a detailed description of the actual costs
of such Retirees' coverage under Seller's employee benefit plans and the
Company shall reimburse Seller for such costs, without regard to any claim by
the Company or Buyer for any offset or other claim against Seller . Upon
providing written notice to Seller on or prior to December 31, 1996, the
Company shall replace such coverage with coverage under employee benefit plans
sponsored by the Company. The Company also reserves the right to modify such
coverage to the extent allowed by law; provided that the Buyer will indemnify
Seller for and against any claims arising in any way from the Company's failure
to maintain the level of benefit coverage for Retirees which is identical to
the level of benefit coverage presently provided to Retirees by Seller.
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6.3 INTERCOMPANY ACCOUNTS. Immediately prior to the Closing, the
Seller and any of its affiliates will cancel, without payment, any intercompany
accounts payable (or negative accounts receivable) owed by the Company to the
Seller or any of its affiliates.
6.4 PRESS RELEASES AND ANNOUNCEMENTS. After the Closing Date, no
press releases related to this Agreement and the transactions contemplated
herein, or other announcements to the employees, customers or suppliers of the
Company will be issued by a party hereto without the other party's consent
(which shall not be unreasonably withheld) except for any public disclosure
which is required by law or regulation and which must be made within such a
time frame as to prevent the disclosing party from obtaining the other party's
approval in a timely fashion.
6.5 FURTHER TRANSFERS. Seller will execute and deliver such further
instruments of conveyance and transfer and take such additional action as Buyer
may reasonably request to effect, consummate, confirm or evidence the transfer
to Buyer of the Company Stock and any other transactions contemplated hereby.
6.6 SPECIFIC PERFORMANCE. Seller acknowledges that the Company's
business is unique and recognize and affirm that in the event of a breach of
this Agreement by Seller, money damages may be inadequate and Buyer may have no
adequate remedy at law. Accordingly, Seller agrees that Buyer shall have the
right, in addition to any other rights and remedies existing in its favor, to
enforce its rights and Seller's obligations hereunder not only by an action or
actions for damages but also by an action or actions for specific performance,
injunctive and/or other equitable relief.
6.7 TRANSITION ASSISTANCE.
(a) Seller will continue to provide, for a period not to exceed 60
days from the Closing Date, to the Company those transition services which have
been supplied by Seller to Company and are requested by the Company to be
continued solely to the extent necessary to permit an orderly transition to the
Buyer's operations. The Company shall pay to Seller the out-of-pocket expenses
associated with any third- party contractors required in connection with such
services which are pre-approved in writing by the Company.
(b) The Company shall indemnify and hold harmless Seller from and
against all claims, liabilities and obligations (collectively "Claims") which
have resulted from the performance of Services by Seller hereunder; provided,
however, that the Company shall not be required to indemnify or hold harmless
Seller to the extent the Claims are caused by the gross negligence or willful
misconduct of Seller.
(c) Seller will not take any action which is designed or intended to
have, or which would be reasonably anticipated to have, the effect of
discouraging customers, suppliers, lessors, licensors and other business
associates from maintaining in all material respects the same business
relationships with the Company after the date of this Agreement as were
maintained with the Company prior to the date of this Agreement.
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<PAGE> 39
(d) The Company will continue to provide to Seller those
services set forth on Schedule 6.7(d) attached hereto (the "Company Services
Schedule") for the period set forth in the Company Services Schedule. The
costs associated with such services shall be paid as set forth in the Company
Services Schedule. Seller shall indemnify and hold harmless the Company and
Buyer from and against all Claims which have resulted from the performance of
services by the Company hereunder; provided, however, that Seller shall not be
required to indemnify or hold harmless the Company or Buyer to the extent the
Claims are caused by the gross negligence or willful misconduct of the Company
or Buyer.
6.8 INVESTIGATION; CONFIDENTIALITY.
(a) Seller will maintain the confidentiality of, and will not use
for any purpose, all proprietary and other non-public information regarding the
Company (including, without limitation, any of same included in the Proprietary
Rights), except as necessary to file tax returns and other reports to
governmental agencies. In the event that Seller is requested or required (by
oral question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any such information, Seller will notify Buyer promptly of the request
or requirement so that Buyer may seek an appropriate protective order or waive
compliance with the provisions of this Section 6.8. If, in the absence of a
protective order or the receipt of a waiver hereunder, Seller is, on the advice
of counsel, compelled to disclose any information to any tribunal or else stand
liable for contempt, Seller may disclose the information to the tribunal;
provided, however, that Seller shall use its best efforts to obtain, at the
request and expense of Buyer, an order or other assurance that confidential
treatment will be accorded to such portion of the information required to be
disclosed as Buyer shall designate. This Section 6.8 shall survive any
expiration or termination of this Agreement.
(b) The parties hereto acknowledge and agree that in the event of a
breach by any party of any of the provisions of this Section 6.8, monetary
damages will not constitute a sufficient remedy. Consequently, in the event of
any such breach, any non-breaching party and/or their respective successors or
assigns may, in addition to other rights and remedies existing in their favor,
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce or prevent
any violations of the provisions hereof, in each case without the requirement
of posting a bond or proving actual damages.
6.9 EXPENSES. Except as otherwise provided herein, Buyer and Seller
will pay all of their own fees, costs and expenses (including, without
limitation, fees, costs and expenses of legal counsel, investment bankers,
brokers or other representatives and consultants and appraisal fees, costs and
expenses) incurred in connection with the negotiation of this Agreement, the
performance of its obligations hereunder, and the consummation of the
transactions contemplated hereby; it being understood that Seller will pay the
fees, costs and expenses of the Company and that the Company will not pay any
of Seller's fees, costs and expenses (including, without limitation, legal and
accounting fees, costs and expenses) arising in connection with the
transactions contemplated thereby if the transactions are consummated.
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6.10 BOOKS AND RECORDS. Unless otherwise consented to in writing by
Seller or Buyer (as the case may be), Buyer and Seller will not, for a period
of 7 years following the date hereof, destroy, alter or otherwise dispose of
any of the books and records of the Company acquired by Buyer hereunder or
retained by Seller without first offering to surrender to Seller or Buyer such
books and records or any portion thereof of which Seller or Buyer may intend to
destroy, alter or dispose of. Buyer and Seller will allow the other party's
representatives, attorneys and accountants access to such books and records,
upon reasonable request and during such party's normal business hours, for the
purpose of examining and copying the same in connection with any matter whether
or not relating to or arising out of this Agreement or the transactions
contemplated hereby.
6.11 NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY. In
consideration of Buyer's agreement to enter into this Agreement, and as a
condition thereto, Seller covenants and agrees as follows:
(a) The Company manufacturers certain automotive products primarily
using stamping processes and which include chassis and suspension components,
sub-assemblies, and modules (which, whether or not being manufactured as of the
date hereof, are referred to herein as "Stampings"), including control arms,
control links, and other devices to control kinematics.
(b) Seller agrees that for a period of three years from and after
the Closing Date, Seller will not engage directly or indirectly in the
manufacture, solicitation or formulation of proposal, design (with the intent
to manufacture such Stamping) or sale of Stampings anywhere in North America;
provided, however, that notwithstanding the foregoing, nothing contained in
this Agreement shall (i) limit or affect businesses currently owned by Seller
which may manufacture or sell Stampings, (ii) limit or restrict Seller from
engaging in the manufacturing or sale of Stampings in conjunction with forging,
hydroforming or tubular products operations, (iii) limit or restrict Seller
from engaging in the manufacturing or sale of Stampings sold in the automotive
aftermarket, (iv) limit or restrict Seller from engaging in the manufacturing
or sale of Stampings as prototype parts for design contracts for which the
intent is to provide design support services to independent third parties and
not to ultimately manufacture such part or (v) prevent Seller from acquiring an
entity which does manufacture or sell Stampings so long as the competing
business comprises ten percent or less of the sales of the acquired entity.
(c) Seller further agrees that for a period of five years from and
after the Closing Date it will not directly or indirectly engage in the
solicitation, manufacture or sale of any control arms or control links, whether
produced by stamping, forging, hydroforming, casting or otherwise, on any of
the following platforms: the Ford DN-101, UN-105, CDW-27, CT-120, VX-133,
PN-96, PHN-131, and UN-93 and the Chrysler T- 300; provided that nothing set
forth herein shall prohibit Seller from continuing to sell or manufacture
control links on the preceding platforms to the extent the Seller is engaged in
such sale or manufacturing on the Closing Date.
(d) Seller agrees that, for a period of two years from the Closing
Date, Seller will not, and will use its best efforts to not permit Seller's
affiliates to, directly or indirectly contact or solicit for the purpose of
offering employment to or hiring (whether as an employee, consultant, agent,
independent contractor or otherwise) or actually hire any management or other
key employee
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employed by the Company on the Closing Date, without the prior written consent
of the Company.
(e) If the final judgment of a court of competent jurisdiction
declares that any term or provision of Section 6.12 is invalid or
unenforceable, the parties hereto agree that the court making the determination
of invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
(f) Seller acknowledges and agrees that in the event of a breach by
Seller of any of the provisions of this Section 6.12, monetary damages will not
constitute a sufficient remedy. Consequently, in the event of any such breach,
the Company, Buyer and/or their respective successors or assigns may, in
addition to other rights and remedies existing in their favor, after written
notice to Seller, apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce
or prevent any violations of the provisions hereof, in each case without the
requirement of posting a bond or proving actual damages.
6.12 OPERATING LEASES.
(a) Seller and Buyer will use commercially reasonable efforts to
have Seller and its affiliates removed as obligors under Lease Supplement and
Acceptance Certificate No. 2 - 4 dated June 28, 1995 and Lease Supplement and
Acceptance Certificate No. 1 - 2 dated June 13, 1995 (collectively, the
"Supplements"), each supplementing that certain Master Equipment Lease
Agreement dated June 13, 1995 among Nationsbanc Leasing Corporation of North
Carolina and Seller and certain of its affiliates (the "Nationsbanc Lease")
and, prior to such removal, Seller and Buyer shall each comply with the terms
of their respective obligations under the Nationsbanc Lease (including, without
limitation, the obligation of each to make rent payments pursuant to the
Nationsbanc Lease), and shall use commercially reasonable efforts to prevent
and/or cure any default which may arise under the Nationsbanc Lease as a result
of Seller's or Buyer's or their respective affiliates' actions or inactions;
provided, however, that Buyer and the Company shall have no obligations with
respect to the Nationsbanc Lease in excess of the stated obligations under the
Nationsbanc Lease with respect to the Supplements (the "Lease Obligations") and
Seller shall indemnify and hold harmless Buyer and the Company with respect to
any obligations arising in connection with the Nationsbanc Lease which in the
aggregate exceed the Lease Obligations.
(b) Seller and Buyer will use commercially reasonable efforts to
have Seller removed as a guarantor under the property lease for the Company's
Rochester Hills, Michigan facility and prior to such removal Buyer shall, and
shall cause the Company to, comply with the terms of its obligations under such
lease and Seller shall comply with the terms of its obligations under such
guarantee arrangements.
6.13 SECURITIES LAWS LEGEND. The Shares and the Warrant will be
imprinted with a legend in substantially the following form:
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The security represented by this certificate has not been registered under
the Securities Act of 1933, as amended (the "Act"), and may not be sold or
transferred in the absence of an effective registration statement under
the Act or an exemption from registration thereunder. Prior to any sale
or transfer of this certificate, except pursuant to an effective
registration statement under the Act covering such sale or transfer, the
holder hereof shall have delivered to the issuer hereof (the "Company") an
opinion of counsel reasonably satisfactory to the Company to the effect
that such sale or transfer is exempt from registration under the Act.
6.14 ROHDE SETTLEMENT. Buyer shall be responsible for and
reimburse Seller for the 2 1/2% commission payments arising under the
Settlement Agreement and Release of Claims dated June, 1995 between Seller and
James A. Rohde and James A. Rohde Company (the "Settlement Agreement") solely
to the extent any such commission payment relates directly to a part (as
identified in the Settlement Agreement) which is sold by the Company after the
Closing ("Company Parts"). Seller agrees to indemnify and hold harmless Buyer
and the Company from any other obligation arising under the Settlement
Agreement including, without limitation, the 2 1/2% commission payments
relating to those parts identified in the Settlement Agreement which are not
Company Parts.
6.15 LICENSE AND PATENTS.
(a) To the extent not assigned prior to the Closing Date, Seller
shall use best efforts to have all rights which are currently available to the
Company under the Multinational Software Product License Agreement dated June
10, 1993 between qad.inc. and Masco Industries, Inc., the Software License
Agreement dated December 12, 1994 between Trinary Systems Inc. and MascoTech,
Inc., the Progress Software User Agreement among Progress Software Corporation,
Masco Corporation, MascoTech, Inc. and Trimas Inc. and all other agreements
ancillary thereto assigned and transferred, at the Seller's expense, to the
Company. Seller shall also use best efforts to assign and transfer, at
Seller's expense, its rights to, and ownership of, the source codes relating to
those customized applications currently used by the Company that participate in
the qad Application Program System.
(b) Seller shall provide assistance to Buyer with respect to the
completion of the recordation of those patent assignments which were assigned
and filed by Seller prior to the Closing Date.
6.16 ACCOUNT COLLECTION. Buyer will use best efforts to collect each
of the items described on the Carved-Out Assets Schedule and will promptly pay
such collected amounts (net of third-party collection cost, if any, associated
therewith) to Seller. Buyer will permit Seller's representatives access during
normal business hours and at reasonable intervals to Buyer's and the Company's
representatives to review and discuss the status of such collection efforts.
If Seller so requests in writing, Buyer will assign any claim, refund, right of
recovery or right of recoupment with respect to any item set forth on the
Carved-Out Assets Schedule.
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6.17 LITIGATION MATTER. With respect to item No. 1 (Fernandez-Dyson)
of the Litigation Schedule, Seller hereby assumes all loss, obligations and
liabilities arising under or relating to such litigation matter and agrees to
indemnify, defend and hold harmless Buyer and the Company from any loss,
obligation or liability arising under or relating to such litigation matter.
6.18 PLANT IMPROVEMENTS.
(a) Buyer currently expects to incur costs of approximately $750,000
with respect to improvements or replacement of certain of the sprinkler systems
at the Company's facilities. In the event Buyer and the Company do not within
one year after the Closing Date incur in the aggregate at least $750,000 of
costs, fees and expenses relating to the improvement or replacement of such
sprinkler systems, then Buyer shall promptly pay to Seller an amount equal to
50% multiplied by the difference of $750,000 over the amount of costs, fees and
expenses actually incurred by the Company and Buyer relating to such sprinkler
system.
(b) Seller will reimburse the Company and Buyer for all reasonable
costs and expenses arising under or related to the installation of 360 degree
brake monitors on those presses owned by the Company as of the date hereof
which the Company or Buyer shall identify by written notice to Seller. Buyer
and the Company shall provide Seller and its representatives reasonable access
during normal business hours to assist in or monitor the installation of such
brake monitor systems.
6.19 THE MASCOTECH NAME. Following the Closing, the Company will
change its name and neither the Company nor Buyer shall have any right to use
the name "MascoTech Stamping Technologies, Inc." or "MascoTech" or any
variation thereof; provided, however, that the Company may continue (after
placing a sticker over such name) to utilize any stationary, invoices, package
inserts, service manuals, training manuals, purchase orders or other clerical
or similar supplies containing such name until the stock of such supplies
existing as of the Closing Date is fully depleted.
6.20 KENDALLVILLE FACILITY ENVIRONMENTAL CONDITIONS.
(a) After the Closing Date, Buyer may conduct environmental Phase II
investigations at the Kendallville facility for the purpose of determining
whether Contamination (as defined below) exists at the facility. Such
investigations shall be conducted by a nationally recognized environmental
consulting firm retained by Buyer. The cost of such investigations shall be
borne solely by Buyer.
(b) If Buyer's investigations detect Contamination at the
Kendallville facility, Buyer shall provide Seller with a written notice of the
discovery of such Contamination ("Remediation Notice"). The Remediation Notice
shall identify the environmental consulting firm that conducted the
environmental investigations and describe the environmental investigations
conducted, samples taken, laboratory analysis performed, and the analytical
results.
(c) Upon receiving the Remediation Notice, Seller shall investigate
and remediate such Contamination under the oversight of the Indiana Voluntary
Remediation Program. Ind. Code 13-7-
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<PAGE> 44
8.9-1 et seq. ("Program"). Seller shall, at its expense, investigate,
remediate, and take such other action with respect to the Contamination as is
necessary to obtain the certificate of completion and covenant not to sue
available from IDEM pursuant to the Program.
(d) Within 60 days after receiving the Remediation Notice,
Seller shall submit a completed application to the Indiana Department of
Environmental Management ("IDEM") to enter into the Program. For purposes of
the Program, the application shall identify Seller as the applicant and Buyer
as the owner/operator. The application shall contain all analytical data that
served as the basis for the Remediation Notice together with other relevant
data developed by Seller in its investigation. Seller shall be responsible for
any fees or expenses associated with submitting the application. Upon
acceptance into the Program, Seller shall, at its sole cost and expense,
expeditiously take such actions as required by IDEM to obtain the certificate
of completion and covenant not to sue available from IDEM pursuant to such
Program. Upon receipt of such certificate of completion and covenant not to
sue, any and all obligations of Seller with respect to remediation of the
Contamination shall be deemed to be fully satisfied.
(e) Upon reasonable advance notice by Seller, Buyer shall grant
Seller reasonable access to, and entry upon, the Kendallville facility for the
purpose of investigating or remediating the Contamination and performing its
obligations otherwise agreed to herein. In investigating, remediating, or
otherwise responding to the Contamination, Seller shall not unreasonably
interfere with Buyer's operations at the Kendallville facility.
(f) Seller shall, at its expense, promptly restore as nearly as
feasible to its prior condition any property that is damaged as a result of any
of any activities relating to its investigation, remediation, or response to
the Contamination. Seller shall, at its expense and in its own name, promptly
and properly dispose of any drill cuttings, decontamination water, soil,
groundwater, waste, samples, or other material generated by the investigation,
remediation, or response to the Contamination. Buyer agrees to grant to Seller
title to any and all such materials in order to permit Seller to take the
actions described in the preceding sentence.
(g) Seller shall keep Buyer reasonably apprised of material facts
and events with respect to Seller's remediation of the Contamination. In
particular, Seller shall: (i) provide Buyer with reasonable advance notice
regarding any meetings between Seller and IDEM or any other governmental agency
regarding this matter and allow Buyer to attend, at Buyer's expense, such
meetings; (ii) provide Buyer with copies of letters and notices it receives
from IDEM or any other governmental agency regarding this matter; and (iii)
provide Buyer with drafts of any material submittals to IDEM or any other
governmental agency regarding this matter, including reports, analytical data,
letters, or other documents, allow Buyer to comment on such draft submittals,
reasonably address such comments, and provide Buyer with copies of the final
submittals.
(h) Buyer and Seller agree to reasonably cooperate with one another
regarding the investigation and remediation of the Contamination and agree that
any activity conducted by either party in connection therewith shall be
undertaken promptly, conducted in compliance with law, and concluded
expeditiously.
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<PAGE> 45
As used in this section "Contamination" means the presence of any
"Hazardous Substance," as defined in Ind. Code 13-7-8.9-2, or "Petroleum," as
defined in Ind. Code 13-7-8.9-3, at concentrations exceeding cleanup goals or
other applicable action levels established by IDEM pursuant to applicable
Environmental and Safety Requirements.
ARTICLE VII
MISCELLANEOUS
7.1 AMENDMENT AND WAIVER. This Agreement may be amended and any
provision of this Agreement may be waived, provided that any such amendment or
waiver will be binding upon a party only if such amendment or waiver is set
forth in a writing executed by Buyer and Seller. No course of dealing between
or among any Persons having any interest in this Agreement will be deemed
effective to modify, amend or discharge any part of this Agreement or any rights
or obligations of any party under or by reason of this Agreement.
7.2 NOTICES. All notices, demands and other communications given or
delivered under this Agreement will be in writing and will be deemed to have
been given when personally delivered, mailed by first class mail, return receipt
requested, delivered by express courier service or telecopied. Notices, demands
and communications to the Company, Seller and Buyer will, unless another address
is specified in writing, be sent to the address or telecopy number indicated
below:
Notices to Seller (and, prior to the Closing, the Company):
MascoTech, Inc.
21001 Van Born Road
Taylor, MI 48180
Attention: President
Telecopy: (313) 374-6430
with a copy to:
MascoTech, Inc.
21001 Van Born Road
Taylor, MI 48180
Attention: General Counsel
Telecopy: (313) 374-6430
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<PAGE> 46
Notices to Buyer (and after the Closing, the Company):
R.J. Tower Corporation
c/o Hidden Creek Industries
4508 IDS Center
Minneapolis, MN 55402
Attention: Scott D. Rued
Telecopy: (612) 332-2012
with a copy to:
Tower Automotive, Inc.
6303 28th Street, S.E.
Grand Rapids, MI 49546
Attention: Anthony A. Barone
Telecopy: (616) 954-7554
and an additional copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Jeffrey C. Hammes
John A. Schoenfeld
Telecopy: (312) 861-2200
7.3 BINDING AGREEMENT; ASSIGNMENT.
(a) This Agreement and all of the provisions hereof will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided that neither this Agreement nor any
of the rights, interests or obligations hereunder may be assigned by Seller
without the prior written consent of Buyer (except to a successor of Seller) or
by Buyer (except as otherwise provided in this Agreement) without the prior
written consent of Seller. Without limiting the generality of the foregoing:
(i) Buyer may (at any time prior to the Closing), at its sole
discretion, assign, in whole or in part, its rights and obligations
pursuant to this Agreement to one or more of its wholly owned
Subsidiaries. Buyer's Subsidiaries include Subsidiaries which may be
organized subsequent to the date hereof; and
(ii) Buyer may assign its rights under this Agreement for
collateral security purposes to any lenders providing financing to Buyer,
the Company or any of their affiliates.
7.4 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of
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<PAGE> 47
this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
7.5 NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
Person.
7.6 CAPTIONS. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement
and will not be deemed to limit, characterize or in any way affect any
provision of this Agreement, and all provisions of this Agreement will be
enforced and construed as if no caption had been used in this Agreement.
7.7 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein contain the entire agreement between the parties and supersede any prior
understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any
way.
7.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which taken
together will constitute one and the same instrument.
7.9 GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND
THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF MICHIGAN, WITHOUT GIVING EFFECT TO
ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE
OF MICHIGAN OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF MICHIGAN.
7.10 PARTIES IN INTEREST. Nothing in this Agreement, express or
implied, is intended to confer on any Person other than the parties and their
respective successors and assigns any rights or remedies under or by virtue of
this Agreement.
7.11 KNOWLEDGE. As applied to the Company in this Agreement, the
terms "knowledge" or "aware" shall mean and include the actual knowledge or
awareness of the Company or Seller, as applicable (which shall include the
actual knowledge and awareness of the officers, directors and senior employees
of the Company (excluding the plant manager of the Kendallville plant) or those
employees of Seller involved in the negotiation of this Agreement, as
applicable.
* * * * *
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<PAGE> 48
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
R. J. TOWER CORPORATION
By:/s/ Anthony Barone
-----------------------
Its:
-----------------------
TOWER AUTOMOTIVE, INC.
By: Anthony Barone
------------------------
Its:
------------------------
MASCOTECH, INC.
By:
---------------------------
Its: Vice President
---------------------------
<PAGE> 49
LIST OF EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Warrant
Exhibit C - Form of Opinion of Buyer's Counsel
Exhibit D - Form of Opinion of Seller's Counsel
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<PAGE> 50
LIST OF SCHEDULES
Schedule 1.1 - Stock Ownership Schedule
Schedule 1.3(a) - Carved-Out Assets Schedule
Schedule 1.4(d) - Plant Profits Adjustments Schedule
Schedule 2.1 - Qualifications Schedule
Schedule 2.5 - Restrictions Schedule
Schedule 2.6 - Financial Statements Schedule
Schedule 2.8 - Developments Schedule
Schedule 2.9(a) - Real Property Schedule
Schedule 2.9(c) - Personal Property Schedule
Schedule 2.9(d) - Leases Schedule
Schedule 2.9(e) - Occupancy Schedule
Schedule 2.9(f) - Improvements Schedule
Schedule 2.10 - Accounts Receivable Schedule
Schedule 2.11 - Inventory Schedule
Schedule 2.12 - Taxes Schedule
Schedule 2.13 - Contracts Schedule
Schedule 2.14 - Proprietary Rights Schedule
Schedule 2.15 - Litigation Schedule
Schedule 2.17(a) - Licenses Schedule
Schedule 2.17(b) - Governmental Consent Schedule
Schedule 2.18 - Employee Benefit Plans Schedule
Schedule 2.19 - Insurance Schedule
Schedule 2.20 - Officers and Directors Schedule
Schedule 2.21 - Affiliate Transactions Schedule
Schedule 2.22 - Compliance Schedule
Schedule 2.23(a) - Environmental Requirements Schedule
Schedule 2.23(b) - Environmental Permits Schedule
Schedule 2.23(c) - Environmental Claims Schedule
Schedule 2.23(d) - Environmental Disclosure Schedule
Schedule 2.23(e) - Hazardous Substances Schedule
Schedule 2.25 - Employees Schedule
Schedule 2.26 - Powers Schedule
Schedule 2.27 - Products Schedule
Schedule 2.28 - Ford LTA Schedule
Schedule 5.2(a) - Known Environmental Matters Schedule
Schedule 6.2 - Employee Benefit Matters Schedule
Schedule 6.2(g) - Retirees Schedule
Schedule 6.7 - Transition Services Schedule
Schedule 6.7(d) - Company Services Schedule
Schedule 6.13 - Operating Leases Schedule
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<PAGE> 51
EXHIBIT C
FORM OF OPINION OF BUYER'S COUNSEL
Any opinion expressed herein may be based upon assumptions customarily contained
in opinions delivered by counsel in connection with transactions of this type
and may expressly rely as to matters of fact upon certificates furnished by
appropriate officers of Buyer or Parent, or appropriate government officials.
1. Buyer is a corporation validly existing and in good standing under
the laws of the State of Michigan. Parent is a corporation validly
existing and in good standing under the laws of the State of Delaware
2. Buyer and Parent have full corporate power and authority to execute
and deliver the Stock Purchase Agreement and to perform their obligations
thereunder.
3. The Stock Purchase Agreement and the other agreements contemplated
by the Stock Purchase Agreement to which Buyer or Parent is a party have been
duly authorized, executed, and delivered by Buyer or Parent, as applicable, and
each such agreement is a valid and legally binding obligation of Buyer or
Parent, as applicable, enforceable in accordance with its terms and conditions,
except as enforceability thereof may be limited by bankruptcy or other laws
affecting creditor's rights generally and limitations on the availability of
equitable remedies, whether such principles are considered in a proceeding in
law or equity.
4. The Shares have been validly issued and are outstanding, fully paid
and nonassessable.
5. The Warrant Shares, upon exercise of the Warrant and payment of the
Exercise Price (as such term is defined in the Warrant) thereof, will upon
issuance, be validly issued, fully paid and nonassessable.
<PAGE> 52
EXHIBIT D
FORM OF OPINION OF SELLER'S COUNSEL
Any opinion expressed herein may be based upon assumptions customarily
contained in opinions delivered by counsel in connection with transactions of
this type and may expressly rely as to matters of fact upon certificates
furnished by appropriate officers of the Company, Seller or appropriate
government officials. The opinion expressed herein may be relied upon by
certain financial institutions that will provide the financing arranged by
Buyer.
1. The Company is a corporation duly incorporated, validly existing,
and in good standing under the laws of the State of Delaware.
2. The Company is duly qualified to do business as a foreign
corporation in all jurisdictions set forth on Schedule 4.1 of the Stock
Purchase Agreement.
3. Seller has full corporate power and authority to execute and deliver
the Stock Purchase Agreement and to perform its obligations thereunder.
4. The Stock Purchase Agreement and the other agreements contemplated by
the Stock Purchase Agreement to which the Company or Seller is a party have been
duly authorized, executed, and delivered by the Company or Seller, as
applicable, and each such agreement is a valid and legally binding obligation of
the Company or Seller, as applicable, enforceable in accordance with its terms
and conditions, except as enforceability thereof may be limited by bankruptcy or
other laws affecting creditor's rights generally and limitations on the
availability of equitable remedies, whether such principles are considered in a
proceeding in equity or at law.
5. Neither the execution and delivery of the Stock Purchase Agreement,
nor the consummation of the transactions contemplated thereby, will:
(a) to the best of our knowledge, violate any law, statute,
regulation or rule which is typically applicable to transactions
similar to the transactions contemplated by the Stock Purchase
Agreement to which the Company or Seller is subject or any
injunction, judgement, order, decree, ruling charge, or other
restriction of any government, governmental agency, or court to which
the Company or Seller is subject or any provision of the charter or
bylaws of the Company, or
(b) result in the imposition of any interest upon any of the
Company's assets (except for any liens related to financing arranged
by Buyer).
6. Except for HSR Approval and except as set forth Schedule 4.17(b) of
the Stock Purchase Agreement, neither Seller nor the Company is required to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the parties
to consummate the transactions contemplated by the Stock Purchase Agreement.
<PAGE> 53
7. The Company's authorized capital stock consists of ______ shares
of common stock, par value $____per share, all of which are issued and
outstanding; and to the best of our knowledge, all of the outstanding
capital stock of the Company has been duly authorized and validly issued
and is fully paid and nonassessable. There are no securities convertible
into or exchangeable or exercisable for shares of the Company's capital
stock or for shares of stock or securities convertible into or exchangeable
or exercisable for shares of the Company's capital stock.
