SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 29, 1995
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ARVIN INDUSTRIES, INC.
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(Exact name of registrant as specified in charter)
AMENDMENT NO. 1
Indiana 1-302 35-0550190
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(State of other (Commission file number) (IRS employer
jurisdiction of identification no.)
incorporation)
One Noblitt Plaza, Box 3000, Columbus, Indiana--------47202-3000
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (812)379-3000
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This Form 8-K/A amends the Form 8-K dated September 29, 1995 and
filed October 4, 1995. This amendment supplements the
information previously provided under Item 5 and the exhibits
filed therewith. Included in this amendment are Item 2, pro
forma financial information (Item 7(b)), and additional exhibits
(Item 7(c)).
Item 2. Acquisition or Disposition of Assets
On September 29, 1995, Arvin Industries, Inc. (the "Company")
sold its seventy percent ownership interest in Space Industries
International, Inc. ("SIII") to an entity formed by certain
members of SIII's management. Upon completion of the sale, the
entity which acquired SIII changed its name to Calspan SRL
Corporation. Arvin received approximately $30.6 million in cash
and will guarantee $22.9 million of the debt of Calspan SRL
Corporation. The price and related terms of this transaction were
determined by negotiations between the Company and the other
persons who or which were parties to the various constituent
agreements pertaining to this transaction. Pro forma financial
information is provided under Item 7 (b) and is incorporated by
reference herein.
Joseph P. Allen, IV is a Director of the Company and was
President, Chief Executive Officer and a Director of SIII prior
to its disposition by the Company. Mr. Allen
also held options to acquire common stock of SIII.
The entity which acquired SIII was organized by Mr. Allen and
another officer of SIII. Mr. Allen, together with certain other
officers of SIII and certain other investors, indirectly owned
all of the equity of Calspan SRL Corporation at the time that the
acquisition was completed.
For additional information, see the (i) Agreement and Plan of
Merger, (ii) Stockholder Agreement, (iii) Guaranty Agreement,
(iv) Intercreditor Agreement and (v) the Company's press release
dated October 4, 1995, which are attached hereto as Exhibits (2)
and 99, respectively, and incorporated by reference herein.
Item 7. Financial Statements and Exhibits
(b) Pro forma financial information
Selected unaudited pro forma consolidated financial
information of Arvin Industries, Inc.
Pro Forma Consolidated Statement of Operations for the six
months ended July 2, 1995
Pro Forma Consolidated Statement of Operations for the six
months ended July 3, 1994
Pro Forma Consolidated Statement of Operations for the year
ended January 1, 1995
Pro Forma Consolidated Statement of Operations for the year
ended January 2, 1994
Pro Forma Consolidated Statement of Operations for the year
ended January 3, 1993
Pro Forma Consolidated Statement of Financial Condition at
July 2, 1995
Footnotes to Pro Forma Financial Statements
Selected Unaudited Pro Forma Consolidated Financial Information
The selected unaudited pro forma consolidated financial
information of the Company, included in Item 7(b) of this Form 8-
K/A, is based on and should be read in conjunction with the
audited financial statements and notes thereto appearing in the
Company's annual report on Form 10-K for the year ended January
1, 1995 and the unaudited financial statements and notes thereto
appearing in the Company's Form 10-Q for the 6 month period ended
July 2, 1995. The unaudited pro forma statements of operations
for the 6 month periods ended July 2, 1995 and July 3, 1994 and
for each of the three years ended January 1, 1995, give effect to
the sale of Space Industries International, Inc. (SIII) as if
such sale had occurred on December 30, 1991. The unaudited pro
forma statement of financial condition as of July 2, 1995 gives
effect to the sale of SIII as if such sale had occurred on July
2, 1995.
The unaudited pro forma adjustments are based upon available
information and certain assumptions that management believes are
reasonable in the circumstances. The unaudited pro forma
information does not purport to represent what the Company's
financial position or results of operations would actually have
been if the sale of SIII had occurred on December 30, 1991 or
July 2, 1995, nor to project the Company's financial position or
results of operations for any future date or period.
<PAGE>
<TABLE>
Arvin Industries, Inc.
Pro Forma Consolidated Statement of Operations (Unaudited)
(Dollars in millions, except per share amounts)
<CAPTION>
For the Six Months Ended July 2, 1995
-------------------------------------
Restated Sale of Pro Forma
Historical (9)(10) SIII (1) as adjusted (1)
-------------- -------------- --------------
<S> <C> <C> <C>
Net Sales $ 1,069.6 $ 65.7 $ 1,003.9
Costs and Expenses:
Cost of goods sold 928.8 55.0 873.8
Selling, operating general and administrative 88.9 10.1 78.8
Corporate general and administrative (5) 6.0 .0 6.0
Interest expense (4) 22.9 .8 22.1
Interest income (.8) (.3) (.5)
Other expense, net .2 .0 .2
Restructuring charges (7) 3.6 .0 3.6
Special charges & credits, net 3.0 (3.9) 6.9
-------------- -------------- --------------
1,052.6 61.7 990.9
-------------- -------------- --------------
Earnings from Continuing
Operations Before Income Taxes 17.0 4.0 13.0
Income taxes (3) (6.7) (1.9) (4.8)
Minority interest in net income of
consolidated subsidiaries (2.4) (1.0) (1.4)
Equity earnings of affiliates 2.0 .9 1.1
-------------- -------------- --------------
Earnings from Continuing Operations $ 9.9 $ 2.0 $ 7.9
============== ============== ==============
Earnings from Continuing Operations Per Common Share (6)
Primary $ 0.45 $ 0.10 $ 0.35
Fully Diluted $ 0.45 $ 0.10 $ 0.35
Average Common Shares Outstanding (000's) (6)
Primary 22,368 22,368
Fully Diluted 25,318 25,318
See footnotes to pro forma consolidated financial statements.
<PAGE>
</TABLE>
<TABLE>
Arvin Industries, Inc.
Pro Forma Consolidated Statement of Operations (Unaudited)
(Dollars in millions, except per share amounts)
<CAPTION>
For the Six Months Ended July 3, 1994
-------------------------------------
Sale of Pro Forma
Historical (10) SIII (1) as adjusted (1)
-------------- -------------- --------------
<S> <C> <C> <C>
Net Sales $ 1,018.7 $ 103.6 $ 915.1
Costs and Expenses:
Cost of goods sold 862.4 87.2 775.2
Selling, operating general and administrative 91.7 16.1 75.6
Corporate general and administrative (5) 6.0 .0 6.0
Interest expense (4) 21.0 .7 20.3
Interest income (.9) .0 (.9)
Other expense, net 5.5 .6 4.9
-------------- -------------- --------------
985.7 104.6 881.1
-------------- -------------- --------------
Earnings from Continuing
Operations Before Income Taxes 33.0 (1.0) 34.0
Income taxes (3) (13.6) .1 (13.7)
Minority interest in net (income) loss of
consolidated subsidiaries (.8) .1 (.9)
Equity earnings of affiliates .5 .0 .5
-------------- -------------- --------------
Earnings from Continuing Operations $ 19.1 $ (.8) $ 19.9
============== ============== ==============
Earnings from Continuing Operations Per Common Share (6)
Primary $ .85 $ (.04) $ .89
Fully Diluted $ .83 $ (.04) $ .87
Average Common Shares Outstanding (000's) (6)
Primary 22,434 22,434
Fully Diluted 25,855 25,855
See footnotes to pro forma consolidated financial statements.
<PAGE>
</TABLE>
<TABLE>
Arvin Industries, Inc.
Pro Forma Consolidated Statement of Operations (Unaudited)
(Dollars in millions, except per share amounts)
<CAPTION>
For the Year Ended January 1, 1995
----------------------------------
Sale of Pro Forma
Historical (10) SIII (1) as adjusted (1)
-------------- -------------- --------------
<S> <C> <C> <C>
Net Sales $ 2,039.3 $ 189.8 $ 1,849.5
Costs and Expenses:
Cost of goods sold 1,732.0 158.3 1,573.7
Selling, operating general and administrative 181.0 31.1 149.9
Corporate general and administrative (5) 12.6 .0 12.6
Interest expense (4) 44.1 1.3 42.8
Interest income (2.7) .0 (2.7)
Other expense, net 7.4 1.1 6.3
Restructuring charges (7) 72.9 52.6 20.3
Special charges 8.2 .4 7.8
-------------- -------------- ---------------
2,055.5 244.8 1,810.7
-------------- -------------- --------------
Earnings from Continuing
Operations Before Income Taxes (16.2) (55.0) 38.8
Income taxes (3) (18.2) (2.0) (16.2)
Minority interest in net (income) loss of
consolidated subsidiaries 13.3 15.0 (1.7)
Equity earnings (loss) of affiliates 3.7 .0 3.7
-------------- -------------- --------------
Earnings from Continuing Operations $ (17.4) $ (42.0) $ 24.6
============== ============== ==============
Earnings from Continuing Operations Per Common Share (6)
Primary $ (0.78) $ (1.88) $ 1.10
Fully Diluted $ (0.78) $ (1.88) $ 1.10
Average Common Shares Outstanding (000's) (6)
Primary 22,386 22,386
Fully Diluted 25,778 25,778
See footnotes to pro forma consolidated financial statements.
<PAGE>
</TABLE>
<TABLE>
Arvin Industries, Inc.
Pro Forma Consolidated Statement of Operations (Unaudited)
(Dollars in millions, except per share amounts)
<CAPTION>
For the Year Ended January 2, 1994
----------------------------------
Sale of Pro Forma
Historical (10) SIII (1)(8) as adjusted (1)(8)
-------------- -------------- --------------
<S> <C> <C> <C>
Net Sales $ 1,852.2 $ 211.4 $ 1,640.8
Costs and Expenses:
Cost of goods sold 1,560.3 175.7 1,384.6
Selling, operating general and administrative 178.6 33.0 145.6
Corporate general and administrative (5) 16.0 .0 16.0
Interest expense (4) 37.2 2.2 35.0
Interest income (2.1) .0 (2.1)
Other expense, net 5.7 .9 4.8
-------------- -------------- --------------
1,795.7 211.8 1,583.9
-------------- -------------- --------------
Earnings from Continuing
Operations Before Income Taxes 56.5 (.4) 56.9
Income taxes (3) (23.2) (.1) (23.1)
Minority interest in net (income) loss of
consolidated subsidiaries .7 (.2) .9
Equity earnings of affiliates 3.8 .0 3.8
-------------- -------------- --------------
Earnings from Continuing Operations $ 37.8 $ (.7) $ 38.5
============== ============== ==============
Earnings from Continuing Operations Per Common Share (6)
Primary $ 1.70 $ 1.73
Fully Diluted $ 1.64 $ 1.67
Average Common Shares Outstanding (000's) (6)
Primary 22,311 22,311
Fully Diluted 25,793 25,793
See footnotes to pro forma consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Arvin Industries, Inc.
Pro Forma Consolidated Statement of Operations (Unaudited)
(Dollars in millions, except per share amounts)
<CAPTION>
For the Year Ended January 3, 1993
----------------------------------
Sale of Pro Forma
Historical (10) SIII (1)(8) as adjusted (1)(8)
-------------- ------------- -------------
<S> <C> <C> <C>
Net Sales $ 1,798.0 $ 210.8 $ 1,587.2
Costs and Expenses:
Cost of goods sold 1,475.1 169.8 1,305.3
Selling, operating general and administrative 202.6 31.1 171.5
Corporate general and administrative (5) 14.2 .0 14.2
Interest expense (4) 38.8 2.3 36.5
Interest income (2.4) .0 (2.4)
Other expense, net 12.6 .0 12.6
-------------- -------------- --------------
1,740.9 203.2 1,537.7
-------------- -------------- --------------
Earnings from Continuing
Operations Before Income Taxes 57.1 7.6 49.5
Income taxes (3) (25.0) (3.4) (21.6)
Minority interest in net loss of
consolidated subsidiaries .5 .0 .5
Equity earnings of affiliates 7.3 .0 7.3
-------------- -------------- --------------
Earnings from Continuing Operations $ 39.9 $ 4.2 $ 35.7
============== ============== ==============
Earnings from Continuing Operations Per Common Share (6)
Primary $ 1.70 $ 1.82
Fully Diluted $ 1.70 $ 1.82
Average Common Shares Outstanding (000's) (6)
Primary 20,054 20,054
Fully Diluted 23,658 23,658
See footnotes to pro forma consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Arvin Industries, Inc.
Pro Forma Consolidated Statement of Financial Condition (Unaudited)
(Dollars in millions, except per share amounts)
At July 2, 1995
-------------------------------------
Restated Sale of Pro Forma
Historical (9) SIII (1) as adjusted (1)
-------------- -------------- --------------
<S> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 33.8 $ 13.1 $ 20.7
Receivables 332.0 37.1 294.9
Allowance for doubtful accounts (3.5) (.5) (3.0)
Inventories 109.2 2.8 106.4
Other current assets 93.3 (1.0) 94.3
-------------- -------------- --------------
Total current assets 564.8 51.5 513.3
-------------- -------------- --------------
Non-Current Assets:
Property, plant and equipment:
Land, buildings, machinery & equipment 930.4 33.1 897.3
Less: Allowance for depreciation 490.7 20.5 470.2
-------------- -------------- --------------
439.7 12.6 427.1
Goodwill 177.2 .0 177.2
Accumulated Amortization of Goodwill (28.9) .0 (28.9)
Assets of business transferred under
contractual arrangement .0 (71.8) 71.8
Investment in affiliates 92.8 .0 92.8
Other assets 57.7 7.7 50.0
-------------- -------------- --------------
Total non-current assets 738.5 (51.5) 790.0
-------------- -------------- --------------
$ 1,303.3 $ .0 $ 1,303.3
============== ============== ==============
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term debt (2) $ 94.4 $ 30.6 $ 63.8
Accounts payable 216.7 3.1 213.6
Accrued expenses 118.7 15.8 102.9
Income taxes payable 4.0 .7 3.3
-------------- -------------- --------------
Total current liabilities 433.8 50.2 383.6
-------------- -------------- --------------
Long-term employee benefits 62.1 9.7 52.4
Other long term liabilities 15.7 (1.9) 17.6
Long-term debt 348.3 .0 348.3
Liabilities and deferred credit of
business transferred .0 (71.8) 71.8
Minority interest 46.9 13.8 33.1
Shareholders' Equity:
Common shares ($2.50 par value) 60.5 .0 60.5
Capital in excess of par value 207.1 .0 207.1
Retained earnings 192.0 .0 192.0
Minimum pension liability adjustment (.6) .0 (.6)
Cumulative translation adjustment (19.9) .0 (19.9)
Common shares held in treasury (at cost) (42.6) .0 (42.6)
-------------- -------------- --------------
Total shareholders' equity 396.5 .0 396.5
-------------- -------------- --------------
$ 1,303.3 $ .0 $ 1,303.3
============== ============== ==============
See footnotes to pro forma consolidated financial statements.
</TABLE>
Footnotes to Pro Forma Financial Statements
1. The unaudited pro forma statements of operations for the
6 month periods ended July 2, 1995 and July 3, 1994,
respectively, and for each of the three years ended January
1, 1995, give effect to the sale of Space Industries
International, Inc. (SIII) as if such sale had occurred on
December 30, 1991. The unaudited pro forma statement of
financial condition as of July 2, 1995 gives effect to the
sale of SIII as if such sale had occurred on July 2, 1995.
The accounting treatment reflected in the pro forma
Consolidated Statement of Financial Condition follows the
Securities and Exchange Commission's Staff Accounting
Bulletins Topic 5E (SAB Topic 5E) "Accounting for
divestiture of a subsidiary or other business operation."
Accordingly, the assets of SIII at July 2, 1995 have been
recorded under the caption of "Assets of business
transferred under contractual arrangements" with a
corresponding amount recorded as "Liabilities and deferred
credit of business transferred." The sale transaction
reflected in the pro forma balance sheet approximated book
value. At September 29, 1995, the date the transaction
occurred, the Company estimated a $1.6 million gain on sale
which has been deferred under the guidelines of SAB Topic
5E.
2. Arvin received approximately $30.6 million in cash and
has guaranteed $22.9 million of the new company's debt.
This guarantee is scheduled to decline quarterly over a four
year period before expiring. The pro forma Statement of
Financial Condition reflects the proceeds as a reduction of
short-term debt.
3. The provisions for the Company's and SIII's pro forma
income taxes are based on the historical effective tax rates
and are recalculated based upon the pro forma results of
operations for the six months ended July 2, 1995 and July 3,
1994 and for each of the three years ended January 1, 1995.
4. For purposes of preparing the pro forma financial
information, a uniform ratio of consolidated debt to equity
has been assumed for all of the Company's operations.
Accordingly, interest expense has been reduced by the amount
of the interest allocation to SIII for its proportionate
share of corporate borrowings, based upon the ratio of
SIII's assets to total consolidated assets (including
SIII's).
5. SIII's general and administrative expenses exclude
allocations of the Company's corporate general and administrative
expenses. No significant reductions in on-going corporate
general and administrative expenses are expected to be
realized as a result of the sale of SIII.
6. The primary "historical" and "pro forma as adjusted"
earnings (loss) per share amounts have been determined based
upon the weighted average number of common shares
outstanding and include common stock equivalents. The
"historical" and "pro forma as adjusted" earnings (loss)
per share exclude the effect of preferred stock purchase
rights for the six months ended July 2, 1995 and for the
years ended January 1, 1995 and January 3, 1993
respectively, as they are anti-dilutive for these periods.
7. Non-recurring restructuring charges are more fully
described in Note 3 to the financial statements and notes
thereto included in the Company's annual report on Form 10-K
for the period ended January 1, 1995.
8. During the third quarter of 1993, the Company completed
the combination of assets of its Calspan and SRL
subsidiaries, which were wholly owned by the Company, with
the assets of Space Industries International, Inc. After
the combination, the Company owned 70 percent of the new
company, SIII. Accordingly, the unaudited pro forma
statement of operations, as adjusted, for the periods
presented prior to the combination gives effect to the
disposition of Calspan and SRL.
9. The historical amounts reported in the statement of
financial condition as of July 2, 1995 and in the statement
of operations for the six months then ended have been
restated to reflect a 50 percent affiliate, which had been
consolidated in the Company's financial statements beginning
January 2, 1995, on the equity basis.
10. Certain amounts reported in the historical statement of
operations for the 6 months ended July 2, 1995 and July 3,
1994 and for each of the two years ended January 1, 1995,
have been reclassified to conform with the current year
presentation of the statement of operations to be filed on
Form 10-Q for the third quarter of 1995.
(c) Exhibits
2. Plan of acquisition, reorganization, arrangement,
liquidation or succession
(a) Agreement and Plan of Merger dated August 14, 1995
(b) Stockholder Agreement
(c) Guaranty Agreement
(d) Intercreditor Agreement
99. Additional exhibits
Press release issued October 4, 1995 regarding the sale of the
Company's seventy percent ownership in Space Industries
International, Inc.
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 thereunto duly authorized.
ARVIN INDUSTRIES, INC.
by: /s/ William M. Lowe, Jr.
_________________________________
William M. Lowe, Jr.
Controller & Chief Accounting Officer
Date: November 14, 1995
<PAGE>
Exhibit 2(a)
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
AMONG
SPACE INDUSTRIES INTERNATIONAL, INC.,
ARGOTYCHE, L.P.
AND
SPACE ACQUISITION CORPORATION
AUGUST 14, 1995
<PAGE>
TABLE OF CONTENTS
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) ACTIONS AT AND IMMEDIATELY FOLLOWING THE CLOSING. . . . . . 6
(d) EFFECTS OF MERGER . . . . . . . . . . . . . . . . . . . . . 6
(e) PROCEDURE FOR PAYMENT . . . . . . . . . . . . . . . . . . . 7
(f) CLOSING OF TRANSFER RECORDS . . . . . . . . . . . . . . . . 9
(g) DISSENTING SHARES . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . 9
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. . . . . . 10
(b) CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . 10
(c) AUTHORIZATION OF TRANSACTION. . . . . . . . . . . . . . . . 10
(d) NONCONTRAVENTION. . . . . . . . . . . . . . . . . . . . . . 11
(e) FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . 11
(f) ABSENCE OF UNDISCLOSED LIABILITIES. . . . . . . . . . . . . 12
(g) LITIGATION AND LIABILITIES. . . . . . . . . . . . . . . . . 12
(h) CONSENTS AND APPROVALS. . . . . . . . . . . . . . . . . . . 12
(i) CERTAIN AGREEMENTS. . . . . . . . . . . . . . . . . . . . . 13
(j) ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . 13
(k) BROKERS' FEES . . . . . . . . . . . . . . . . . . . . . . . 14
(l) DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . 14
(m) KNOWLEDGE OF OFFICERS OF PARENT OR PURCHASER. . . . . . . . 14
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER. . . . . 14
(a) ORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . . 14
(b) CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . 14
(c) AUTHORIZATION OF TRANSACTION. . . . . . . . . . . . . . . . 14
(d) NONCONTRAVENTION. . . . . . . . . . . . . . . . . . . . . . 15
(e) BROKERS' FEES . . . . . . . . . . . . . . . . . . . . . . . 15
(f) DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . 15
(g) CREDIT AGREEMENT. . . . . . . . . . . . . . . . . . . . . . 15
(h) ARVIN AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) NOTICES AND CONSENTS. . . . . . . . . . . . . . . . . . . . 16
(c) REGULATORY MATTERS AND APPROVALS. . . . . . . . . . . . . . 16
(d) OPERATION OF THE COMPANY'S BUSINESS . . . . . . . . . . . . 17
(e) FULL ACCESS . . . . . . . . . . . . . . . . . . . . . . . . 18
<PAGE>
(f) NOTICE OF DEVELOPMENTS. . . . . . . . . . . . . . . . . . . 18
(g) ACQUISITION PROPOSALS . . . . . . . . . . . . . . . . . . . 18
(h) INSURANCE AND INDEMNIFICATION . . . . . . . . . . . . . . . 19
SECTION 6. CONDITIONS TO OBLIGATIONS TO CLOSE. . . . . . . . . . . . . . . 20
(a) CONDITIONS TO OBLIGATIONS OF PARENT AND PURCHASER . . . . . 20
(b) CONDITIONS TO OBLIGATIONS OF THE COMPANY. . . . . . . . . . 21
SECTION 7. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 24
(a) SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . . 24
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS . . . . . . . . . . 24
(c) NO THIRD PARTY BENEFICIARIES. . . . . . . . . . . . . . . . 24
(d) ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . 24
(e) SUCCESSION AND ASSIGNMENT . . . . . . . . . . . . . . . . . 24
(f) COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . 24
(g) HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . 24
(h) NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(i) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . 26
(j) AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . 26
(k) SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . 26
(l) EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . 26
(m) CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . 26
(n) INCORPORATION OF EXHIBITS AND SCHEDULES . . . . . . . . . . 26
EXHIBIT A -- Agreements to be Terminated (Consents and Approvals)
EXHIBIT B -- Form of Press Release
EXHIBIT C -- Indemnification Provision of the By-Laws of the Company
<PAGE>
AGREEMENT AND PLAN OF MERGER
Agreement entered into as of August 14, 1995, by and among Argotyche,
L.P., a Delaware limited partnership ("Parent"), Space Acquisition
Corporation, a Delaware corporation ("Purchaser"), and Space Industries
International, Inc., a Delaware corporation (the "Company"). Parent,
Purchaser and the Company are referred to collectively herein as the
"Parties".
RECITALS
WHEREAS, Parent and Purchaser desire to engage in a transaction whereby
the Company will be merged with and into Purchaser, a wholly-owned subsidiary
of Parent, on the terms described herein (the "Merger");
WHEREAS, the Special Committee of the Board of Directors of the Company
has received the opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, dated July 18, 1995, to the effect that, as of such date, the
Merger Consideration (defined below) is fair, from a financial point of view,
to the Minority Stockholders (defined below) of the Company;
WHEREAS, the Special Committee has determined that the Merger, including
the Merger Consideration, is fair to and in the best interests of the
Minority Stockholders, and so advised the Board of Directors;
WHEREAS, the Board of Directors of the Company has determined that the
Merger, including the Merger Consideration, is fair to and in the best
interests of the Minority Stockholders and has approved this Agreement; and
WHEREAS, Arvin Industries, Inc., which beneficially owns approximately
70% of the outstanding Company Common Shares (defined below), has entered
into the Arvin Agreement (defined below), which, among other things, provides
that Arvin will vote all of the Company Common Shares held by Arvin in favor
of the Merger;
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties and
covenants herein contained, the Parties, intending to be legally bound
hereby, agree as follows.
SECTION 1. DEFINITIONS.
"AFFILIATE" has the meaning set forth in Rule 12b-2 under the Securities
Exchange Act.
"AGREEMENT" means this Agreement as executed as of the date first above
written or, if amended as provided herein, as amended.
"ARVIN" means Arvin Industries, Inc., an Indiana corporation.
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"ARVIN AGREEMENT" means the Stockholder Agreement, dated as of the date
hereof, between Arvin and Parent relating, among other things, to the Company
Common Shares and Company Preferred Shares owned by Arvin.
"BENEFIT PLANS" shall mean all annuity, bonus, deferred compensation,
pension, retirement, incentive, group insurance, disability, employee
welfare, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, phantom stock and stock option
plans, all employment, compensation, severance or termination contracts, all
collective bargaining agreements, other employee benefit plans and any
applicable "change of control" or similar provisions in any plan, contract or
arrangement which cover employees or former employees of the Company and any
of its Subsidiaries.
"BUSINESS DAY" shall mean any day of the week other than Saturday, Sunday
or a day that is a legal holiday in Washington, D.C., Chicago, Illinois or
Detroit, Michigan on which commercial banking institutions are obligated to
close for business.
"CERTIFICATE OF MERGER" has the meaning set forth in Section 2(c) below.
"CERTIFICATES" has the meaning set forth in Section 2(e)(ii) below.
"CLOSING" has the meaning set forth in Section 2(b) below.
"CLOSING DATE" has the meaning set forth in Section 2(b) below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning set forth in the first paragraph of this
Agreement.
"COMPANY ACQUISITION PROPOSAL" shall mean any proposal (other than any
proposal by Parent or Purchaser with respect to the Merger) regarding (i) any
merger, consolidation, share exchange, business combination or other similar
transaction or series of related transactions involving the Company or any
Significant Subsidiary of the Company; (ii) any sale, lease, exchange,
transfer or other disposition of the assets of the Company or any of its
Subsidiaries, constituting 50% or more of the consolidated assets of the
Company or accounting for 50% or more of the consolidated revenues of the
Company in any one transaction or in a series of related transactions; and
(iii) any offer to purchase, tender offer, exchange offer or any similar
transaction or series of related transactions made by any Person involving
50% or more of the outstanding shares of any class of capital stock of the
Company.
"COMPANY COMMON SHARE" means any share of the Common Stock, $.01 par
value per share, of the Company.
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"COMPANY DISCLOSURE SCHEDULE" means the disclosure schedule delivered by
the Company concurrently with this Agreement which shall be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
Section 3.
"COMPANY PREFERRED SHARE" means any share of the Series A Convertible
Redeemable Preferred Stock, $.01 par value per share, of the Company.
"COMPANY STOCKHOLDER" means any Person who or which holds any of the
Company Common Shares.
"COMPANY STOCKHOLDER VOTE" has the meaning set forth in Section 5(c)(ii)
below.
"COMPANY TRIGGERING EVENT" shall be deemed to have occurred if (i) the
Board of Directors of the Company shall have failed to recommend, shall have
withdrawn or shall have modified, in a manner adverse to either Parent or
Purchaser, its recommendation or approval of this Agreement for any reason;
(ii) the Board of Directors of the Company shall have approved, endorsed or
recommended any Company Acquisition Proposal; (iii) the Company shall have
entered into any Contract to consummate any Company Acquisition Proposal; or
(iv) any Person or group (as defined in Section 13(d) of the Securities
Exchange Act) (other than either Parent or Purchaser or any of their
Affiliates and other than Arvin) shall have become the beneficial owner of
20% or more of the outstanding shares of any class of capital stock of the
Company.
"CONTRACT" means any loan or credit agreement, note, bond, indenture,
mortgage, deed of trust, lease, franchise, permit, authorization, license,
contract, instrument, employee benefit plan or practice or other agreement,
obligation, instrument or commitment of any nature.
"CREDIT AGREEMENT" means the Amended and Restated Credit Agreement, dated
as of the date hereof, by and among Purchaser, Arvin, the Subsidiary
Guarantors set forth on the signature pages thereof, the Banks set forth on
the signature pages thereof and NBD Bank, as Agent.
"DELAWARE GENERAL CORPORATION LAW" means the General Corporation Law of
the State of Delaware, as amended.
"DISSENTING SHARES" has the meaning set forth in Section 2(g).
"EFFECTIVE TIME" has the meaning set forth in Section 2(d)(i) below.
"ERISA" means the Employer Retirement Income Security Act of 1974, as
amended.
"EXCHANGE AGENT" means Harris Trust and Savings Bank, Chicago, Illinois.
"EXPENSE REIMBURSEMENT AMOUNT" has the meaning set forth in Section 7(c)
below.
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"FINANCIAL STATEMENTS" has the meaning set forth in Section 3(e) below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"GOVERNMENT CONTRACT" means with respect to any Person, any contract
between such Person and the United States government or any department,
agency or instrumentality thereof, and any subcontract at any time held by
such Person under a prime government contract.
"INCLUDING" means "including, but not limited to."
"IRS" means the Internal Revenue Service.
"MERGER" has the meaning set forth in the first recital above.
"MERGER CONSIDERATION" has the meaning set forth in Section 2(d)(v) below.
"MINORITY STOCKHOLDERS" means the Company Stockholders, other than Arvin,
Parent, Purchaser and the officers and directors of Parent and Purchaser.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"PARENT" has the meaning set forth in the first paragraph of this
Agreement.
"PARTIES" has the meaning set forth in the first paragraph of this
Agreement.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"PREFERRED CONSIDERATION" has the meaning set forth in Section 2(d)(v)
below.
"PROXY MATERIALS" means the definitive notice of meeting, proxy statement
(including exhibits) and proxy card to be distributed to the Company
Stockholders in connection with the Company Stockholder Vote.
"PURCHASER" has the meaning set forth in the first paragraph of this
Agreement.
"PURCHASER COMMON STOCK" means the Common Stock, $.01 par value per share
of the Purchaser.
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"PURCHASER DISCLOSURE SCHEDULE" means the disclosure schedule delivered
by Parent and Purchaser concurrently with this Agreement which shall be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in Section 4.
"REQUISITE COMPANY STOCKHOLDER APPROVAL" has the meaning set forth in
Section 3(c)(ii) below.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, OTHER THAN (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes
that the taxpayer is contesting in good faith through appropriate
proceedings, (c) purchase money liens and liens securing rental payments
under capital lease arrangements, and (d) other liens arising in the Ordinary
Course of Business and not incurred in connection with the borrowing of money.
"SERIES A WARRANTS" means the Series A Warrants of the Company issued
pursuant to the Warrant Agreement, dated as of July, 16, 1993, between the
Company and Harris Trust and Savings Bank, as Warrant Agent.
"SERIES B WARRANTS" means the Series B Warrants of the Company issued
pursuant to the Warrant Agreement, dated as of July, 16, 1993, between the
Company and Harris Trust and Savings Bank, as Warrant Agent.
"SIGNIFICANT SUBSIDIARY" shall have the meaning set forth in Rule 1-02 of
Regulation S-X of the Rules and Regulations of the SEC.
"SPECIAL COMMITTEE" means the Special Committee of the Board of Directors
of the Company established to consider the Merger.
"SUBSIDIARY" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has
the power to vote or direct the voting of sufficient securities to elect a
majority of the directors.
"SURVIVING CORPORATION" has the meaning set forth in Section 2(a) below.
"TERMINATION FEE" has the meaning set forth in Section 7(d) below.
"WARRANTS" means the Series A Warrants and the Series B Warrants.
SECTION 2. THE MERGER.
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(a) THE MERGER. Upon and subject to the terms and conditions of
this Agreement and in accordance with the relevant provisions of the Delaware
General Corporation Law, the Merger shall take place at the Effective Time.
Following the Merger, except as provided in the following sentence, Purchaser
shall be the corporation surviving the Merger (the "Surviving Corporation")
and shall continue its existence under the laws of Delaware, and the separate
corporate existence of the Company shall cease. At the election of Parent
and Purchaser, the Merger may be structured so that (i) Purchaser shall be
merged with and into the Company, with the result that the Company shall be
the Surviving Corporation, (ii) a wholly owned subsidiary of Purchaser
("Acquisition Sub") shall be merged with and into the Company in the Merger,
with the result that the Company shall be the Surviving Corporation in the
Merger, or (iii) the Company shall be merged with and into Acquisition Sub,
with the result that Acquisition Sub shall be the Surviving Corporation;
PROVIDED, HOWEVER, such restructuring shall not adversely affect any
representation, warranty or covenant made herein or adversely affect the
rights of any Company Stockholder or the Company. The Company agrees that if
Parent and Purchaser make any election under the preceding sentence, the
Company shall enter into an amendment to this Agreement that will implement
such election, and shall take all other action necessary or desirable to
implement such election; PROVIDED, HOWEVER, neither such amendment nor such
other action adversely affects the rights of any Company Stockholder or the
Company hereunder.
(b) THE CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Andrews &
Kurth L.L.P. in Washington, D.C., or such other place as the Parties may
mutually determine, commencing at 9:00 a.m. local time on the second Business
Day following the satisfaction or waiver of all conditions to the obligations
of the Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date and time as the Parties may mutually
determine (the "Closing Date").
(c) ACTIONS AT AND IMMEDIATELY FOLLOWING THE CLOSING.
(i) At the Closing, (A) the Company will deliver to
Parent and Purchaser the various certificates, instruments, and
documents referred to in Section 6(a) below, (B) Parent and Purchaser
will deliver to the Company the various certificates, instruments,
and documents referred to in Section 6(b) below and (C) Parent will
deliver to the Exchange Agent (without duplication) the Merger
Consideration, the Preferred Consideration and the amount, if any,
for the Dissenting Shares in the manner provided below in this
Section 2.
(ii) following the Closing, the Company and Purchaser
(or another corporation which is a direct or indirect subsidiary of
Parent) shall execute and acknowledge a Certificate of Merger in due
and proper form (the "Certificate of Merger") and shall cause such
Certificate of Merger to be filed with the Secretary of State of the
State of Delaware.
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(d) EFFECTS OF MERGER.
(i) GENERAL. The Merger shall become effective at the
time (the "Effective Time") the Parties file the Certificate of
Merger with the Secretary of State of the State of Delaware. The
Merger shall have the effect set forth in the Delaware General
Corporation Law. The Surviving Corporation may, at any time after
the Effective Time, take any action (including executing and
delivering any document) in the name and on behalf of either
Purchaser or the Company in order to fully carry out and effectuate
the Merger.
(ii) CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Surviving Corporation at and as of the Effective
Time shall be the same as the Certificate of Incorporation of
Purchaser immediately prior to the Effective Time (except that the
name of the Surviving Corporation shall be "Calspan SRL Corporation").
(iii) BY-LAWS. The By-laws of Purchaser in effect at
and as of the Effective Time will become the By-laws of the Surviving
Corporation without any modification or amendment in the Merger.
(iv) DIRECTORS AND OFFICERS. The directors and officers
of Purchaser in office at and as of the Effective Time will become
the directors and officers of the Surviving Corporation (retaining
their respective positions and terms of office) until their
successors are duly elected and qualified.
(v) CONVERSION OF COMPANY SHARES AND COMPANY PREFERRED
SHARES. At and as of the Effective Time, (A) each Company Common
Share (including the Warrants attached thereto) issued and
outstanding immediately prior to the Effective Time (other than (x)
Company Common Shares owned by Purchaser or held in the treasury of
the Company or by any Subsidiary of the Company, all of which shall
be canceled and no payment shall be made with respect thereto and (y)
Dissenting Shares) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right
to receive $4.10 in cash (the "Merger Consideration"), payable to the
holder thereof, without interest thereon, upon surrender of the
certificate representing such share; and (B) each Company Preferred
Share issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into the right to receive $100, plus
an amount representing the accrued and unpaid dividends thereon, to
the Effective Time, in cash (the "Preferred Consideration") upon
surrender of the certificate representing such share. No Company
Common Share or Company Preferred Share that is exchanged in
connection with the transactions contemplated by this Agreement shall
be deemed to be outstanding or
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to have any rights other than those set forth above in this Section
2(d)(v) after the Effective Time.
(vi) PURCHASER COMMON STOCK. At and as of the
Effective Time, each share of Purchaser Common Stock shall remain
outstanding.
(vii) COMPANY OPTIONS. Each stock option or warrant
granted to employees and directors of the Company and its
Subsidiaries or to any other Persons, with respect to Company Common
Shares shall not be cancelled by the Merger and shall be governed in
accordance with its terms or applicable law, as the case may be.
(e) PROCEDURE FOR PAYMENT.
(i) Immediately after the Effective Time, the Purchaser
shall deposit in trust with the Exchange Agent cash in an aggregate
amount necessary (A) to make the payments pursuant to Section 2(d)(v)
hereof to holders (other than the Purchaser or Parent or any of their
respective subsidiaries or affiliates) of Company Common Shares and
Company Preferred Shares (such amount being hereinafter referred to
as the "Exchange Fund"), and (B) to make cash payments, at the rate
of $4.10 per share, to holders of Dissenting Shares, if any. The
Exchange Agent shall, pursuant to irrevocable instructions, make the
payments provided for in the preceding sentence out of the Exchange
Fund. The Exchange Agent shall invest portions of the Exchange Fund
as Purchaser directs, provided that all such investments shall be in
obligations of or guaranteed by the United States of America with
remaining maturities not exceeding 180 days, in commercial paper
obligations receiving the highest rating from either Moody's
Investors Services, Inc. or Standard & Poor's Corporation, or in
certificates of deposit or banker's acceptances of commercial banks
with capital exceeding $500 million (collectively, "Permitted
Investments"); provided, however, that the maturities of Permitted
Investments shall be such as to permit the Exchange Agent to make
prompt payment to former stockholders of the Company entitled thereto
as contemplated by this Section. The Purchaser shall promptly
replenish the Exchange Fund to the extent of any losses incurred as a
result of Permitted Investments. All earnings on Permitted
Investments shall be paid to the Purchaser. If for any reason
(including losses) the Exchange Fund is inadequate to pay the amounts
to which holders of Company Common Shares or Company Preferred Shares
shall be entitled under this Section, the Purchaser shall in any
event be liable for payment thereof. The Exchange Fund shall not be
used except as provided in this Agreement.
(ii) As soon as practicable after the Effective Time,
the Surviving Corporation shall cause the Exchange Agent to mail to
each record holder, as of the Effective Time, of an outstanding
certificate or certificates which immediately prior to the Effective
Time represented Company Common Shares or Company Preferred
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Shares (the "Certificates"), a form of letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Exchange Agent) and instructions for use in
effecting the surrender of the Certificate or payment therefor. Upon
surrender to the Exchange Agent of a Certificate representing Company
Common Shares (together with the Warrants attached thereto), together
with such letter of transmittal duly executed, the holder of such
Certificate shall be paid in exchange therefor cash in an amount
equal to the product of the number of Company Common Shares
represented by such Certificate multiplied by the Merger
Consideration and such Certificate (and the Warrants attached
thereto) shall forthwith be cancelled. Upon surrender to the
Exchange Agent of a Certificate representing Company Preferred
Shares, together with such letter of transmittal duly executed, the
holder of such Certificate shall be paid in exchange therefor cash in
an amount equal to the product of the number of Company Preferred
Shares represented by such Certificate multiplied by the Preferred
Consideration and such Certificate shall forthwith be cancelled. No
interest will be paid or accrued on the cash payable upon the
surrender of the Certificates. If payment is to be made to a Person
other than the Person in whose name the Certificate surrendered is
registered, it shall be a condition of payment that the Certificate
so surrendered shall be properly endorsed or otherwise in proper form
for transfer and that the Person requesting such payment shall pay
any transfer or other taxes required by reason of the payment to a
Person other than the registered holder of the Certificate
surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. After
the Effective Time, until surrendered in accordance with the
provisions of this Section 2(e), each Certificate (other than
Certificates representing shares owned by the Purchaser or any
affiliate of the Purchaser and Dissenting Shares) shall represent for
all purposes solely the right to receive the Merger Consideration or
the Preferred Consideration, as the case may be, in cash multiplied
by the number of Company Common Shares or Company Preferred Shares
evidenced by such Certificate, without any interest thereon.
(iii) After the Effective Time, there shall be no
transfers of Company Common Shares or Company Preferred Shares that
were outstanding immediately prior to the Effective Time on the stock
transfer books of the Surviving Corporation. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged for cash as provided in this Section
2.
(iv) Any portion of the Exchange Fund (including the
proceeds of any investments thereof) that remains unclaimed by the
stockholders of the Company more than 180 days after the Effective
Time shall be repaid to the Surviving Corporation and holders of
Certificates shall thereafter look only to the Surviving Corporation
only as general creditors thereof for payment of any Merger
Consideration payable upon due surrender of their Certificates.
Notwithstanding the
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foregoing, neither the Purchaser nor the Surviving Corporation shall
be liable to a holder of a Certificate for amounts delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar laws.
(f) CLOSING OF TRANSFER RECORDS. After the close of business on the
day of the Effective Time, the stock transfer ledger of the Company shall be
closed and transfers of Company Common Shares and Company Preferred Shares
outstanding prior to the Effective Time shall not be made on the stock
transfer books of the Surviving Corporation.
(g) DISSENTING SHARES. Notwithstanding anything in this Agreement
to the contrary, in the event that dissenters' rights are available in
connection with the Merger pursuant to Section 262 of the Delaware General
Corporation Law, Company Common Shares that are issued and outstanding
immediately prior to the Effective Time and that are held by stockholders who
did not vote in favor of the Merger and comply with all of the relevant
provisions of Section 262 of the Delaware General Corporation Law (the
"Dissenting Shares") shall not be converted into or be exchangeable for the
right to receive the Merger Consideration, unless and until such holders
shall have failed to perfect or shall have effectively withdrawn or lost such
right, and such holder's Company Common Shares shall thereupon be deemed to
have been converted into and to have become exchangeable for the right to
receive, as of the Effective Time, the Merger Consideration without any
interest thereon. The Company shall give the Purchaser (i) prompt notice of
any written demands for appraisal of Company Common Shares received by the
Company and (ii) the opportunity to direct all negotiations and proceedings
with respect to any such demands. The Company shall not, without the prior
consent of the Purchaser, voluntarily make any payment with respect to, or
settle or offer to settle, any such demands.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Parent and Purchaser (except as set forth in the
Company Disclosure Schedule) as follows. With respect to any representations
or warranties in this Section 3 indicated to be limited to the knowledge of
the Company (or words to like effect), such knowledge will be deemed to
include the knowledge of officers of the Company who are also affiliated (as
defined in Rule 405 under the Securities Act) with Parent or Purchaser.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Each of the
Company and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Each of the Company and its Subsidiaries is duly authorized
to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required, except for failures that
would not have a material adverse effect on the Company and its Subsidiaries
taken as a whole.
(b) CAPITALIZATION.
(i) As of May 31, 1995, the entire authorized capital
stock of the Company consisted of (A) 19,000,000 shares of Company
Common Stock, of which
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9,973,243 shares (excluding treasury shares) were issued and
outstanding, and (B) 1,000,000 shares of preferred stock, of
which 12,184 shares of Company Preferred Stock were issued and
outstanding. To the best of the Company's knowledge, at and as of
the Closing Date, all Warrants will be attached to shares of
Company Common Stock in the form of units, consisting of one
Company Common Share, one Series A Warrant and one Series B Warrant,
and will not be separately transferable.
(ii) To the best of the Company's knowledge, other than
the Warrants and except as set forth in the Company Disclosure
Schedule, there are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require the
Company to issue, sell, or otherwise cause to become outstanding any
of its capital stock or any other securities convertible into or
evidencing the right to subscribe for any of its capital stock. To
the best of the Company's knowledge, there are no outstanding or
authorized stock appreciation, phantom stock, profit participation,
or similar rights with respect to the Company. At and as of the
Closing, the Company will not be a party to any agreement relating to
the registration of shares of capital stock of the Company or any
successor entity.
(iii) The Company Disclosure Schedule correctly sets
forth the name of each Subsidiary, the jurisdiction of its
incorporation and the Persons owning its outstanding capital stock.
(c) AUTHORIZATION OF TRANSACTION.
(i) The Company has corporate power and authority to
execute and deliver this Agreement, and to consummate the
transactions contemplated hereby. The Board of Directors of the
Company, at a meeting duly called and held and at which a quorum was
present and acting throughout by the requisite vote of all directors
present, has approved this Agreement and the Merger in accordance
with the applicable provisions of the Delaware General Corporation
Law and (i) determined that the Merger is fair to and in the best
interest of the Company's stockholders, (ii) recommended approval of
this Agreement and the Merger by the Company's stockholders, and
(iii) duly and validly authorized the execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby. Except for the approval of the
Company's stockholders, no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been
duly executed and delivered on behalf of the Company and constitutes
the valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms and conditions,
except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in
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effect relating to creditors' rights and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(ii) The only votes of Company Stockholders required to
adopt the Agreement are (A) the affirmative vote of the holders of a
majority of Company Common Shares pursuant to Section 251 of the
Delaware General Corporation Law and (B) the affirmative vote of a
majority of the Minority Stockholders, represented in person or by
proxy, at the special stockholder meeting called by the Company for
the purpose of considering and voting upon the Merger (collectively,
the "Requisite Company Stockholder Approval").
(d) NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any of the Company and its
Subsidiaries is subject or any provision of the charter or bylaws of any of
the Company and its Subsidiaries, except for any such matters which, both
individually and in the aggregate, would not have a material adverse effect
on the Company or on its ability to consummate the transactions contemplated
hereby. Other than in connection with the provisions of the Delaware General
Corporation Law and as set forth on the Company Disclosure Schedule, none of
the Company and its Subsidiaries needs to give any notice to, make any filing
with, or obtain any authorization, consent, permit or approval of any
government or governmental agency or regulatory authority in order for the
Parties to consummate the transaction contemplated by this Agreement.
(e) FINANCIAL STATEMENTS.
(i) The Company has prepared and distributed to its
stockholders a quarterly report titled "Modified Form 10-Q
Equivalent" for the fiscal quarter ended April 2, 1995 (the "Form
10-Q Equivalent") and an annual report titled "Modified Form 10-K
Equivalent" for the fiscal year ended January 1, 1995 (the "Form 10-K
Equivalent" and, together with the Form 10-Q Equivalent, the
"Stockholder Reports").
(ii) The (A) audited consolidated statements of
operations, cash flows and stockholders' equity of the Company for
the years ended January 2, 1994 and January 1, 1995 and the audited
consolidated balance sheets of the Company as of January 1, 1995 and
January 2, 1994, including the footnotes thereto, included in the
Form 10-K Equivalent (the "Annual Financial Statements") have been
prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby, present fairly the financial
condition of the Company and its Subsidiaries as of the indicated
dates and the results of operations of the Company and its
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Subsidiaries for the indicated periods, and are consistent with the
books and records of the Company and its Subsidiaries, and (B)
interim unaudited consolidated statements of operations, cash flows
and stockholders' equity of the Company for the three months ended
April 2, 1995 and the consolidated balance sheet of the Company and
its Subsidiaries as of such date included in the Form 10-Q Equivalent
and previously provided to Parent and Purchaser (the "Interim
Statements" and, together with the Annual Financial Statements, the
"Financial Statements") have been prepared on the same basis as the
Annual Financial Statements except that such Interim Statements are
subject to normal recurring adjustments and omit certain footnote
disclosure.
(f) ABSENCE OF UNDISCLOSED LIABILITIES. To the best of the
Company's knowledge, except as described in the Proxy Materials, neither the
Company nor any of its Subsidiaries has any liability or obligation of any
kind, accrued, absolute, asserted or unasserted, contingent or otherwise,
including any guaranty with respect to any obligation, except (i) such
liabilities or obligations as are reflected, reserved against or disclosed in
the Financial Statements and (ii) such liabilities or obligations as have
been incurred since April 2, 1995, which do not singly or in the aggregate
have a material adverse effect on the Company and its Subsidiaries taken as a
whole.
(g) LITIGATION AND LIABILITIES. Except as disclosed in the Proxy
Materials and the Stockholder Reports, to the best of the Company's
knowledge, there are no (i) actions, suits, proceedings or investigations
pending or threatened against the Company or any of its Subsidiaries or (ii)
obligations or liabilities, whether or not accrued, contingent or otherwise,
or any fact or circumstances of which the Company is aware (including those
relating to tax, environmental, product liability and occupational safety and
health matters), in any case, that could reasonably be expected to result in
any claims against or obligations or liabilities of the Company or any of its
Subsidiaries, that, alone or in the aggregate, could have a material adverse
effect on the financial condition, properties, business, or result of
operations of the Company and its Subsidiaries taken as a whole. To the best
of the Company's knowledge, the Company is not subject to any outstanding
order, writ, injunction or decree that could have a material adverse effect
on the Company or could prevent or delay in any material respect the
consummation of the transactions contemplated hereby.
(h) CONSENTS AND APPROVALS. To the best of the Company's knowledge,
neither the execution and delivery of this Agreement by the Company nor the
consummation of the transactions contemplated hereby will (i) conflict with
or result in any breach of any provision of the respective certificates of
incorporation or by-laws (or other similar governing documents) of the
Company or any of its Significant Subsidiaries; (ii) except as set forth on
the Company Disclosure Schedule and except for the Company's existing Credit
Agreement, dated as of March 3, 1994 with NBD Bank, N.A., result in a default
(or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, license,
agreement or other instrument or obligation to which the Company or any of
its Subsidiaries or by which the Company or any of its Subsidiaries or any of
their respective assets may be bound, except for such defaults (or rights of
termination, cancellation, or acceleration) which, in the aggregate, would
not have a
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material adverse effect on the Company and its Subsidiaries taken as whole
and would not prevent or delay in any material respect the consummation of
the transactions contemplated hereby; or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company,
any of its Subsidiaries or any of their respective assets, except for
violations which would not in the aggregate have a material adverse effect on
the Company and its Subsidiaries taken as whole and would not prevent or
delay in any material respect the consummation of the transactions
contemplated hereby.
(i) CERTAIN AGREEMENTS. Except as set forth on the Company
Disclosure Schedule, there are no contracts, agreements, arrangements or
understandings to which the Company or any of its Subsidiaries is a party
which create, govern or purport to govern the right of another party (other
than Parent or Purchaser) to acquire the Company.
(j) ENVIRONMENTAL MATTERS.
(i) As used in this Agreement "Hazardous Material"
shall mean: (1) any "hazardous substance" as now defined pursuant to
the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601(14); (2) any "pollutant or contaminant"
as defined in 42 U.S.C. Section 9601(33); (3) any material now
defined as "hazardous waste" pursuant to 40 C.F.R. Part 261; (4) any
petroleum, including crude oil and any fraction thereof; (5) natural
synthetic gas usable for fuel; (6) any "hazardous chemical" as
defined pursuant to 29 C.F.R. Part 1910; and (7) any asbestos,
polychlorinated biphenyl ("PCB"), radium, or isomer of dioxin, or any
material or thing containing or composed of such substance or
substances.
(ii) As used in this Agreement "Environmental Laws"
shall mean: any federal, state or local law, rule, or regulation or
common law, relating to public health or safety, worker health or
safety, or pollution, damage to or protection of the environment
including, without limitation, laws relating to emissions,
discharges, releases or threatened release of Hazardous Materials
into the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface), or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, generation, disposal, transport or handling of
any Hazardous Material.
(iii) Except as indicated on the Company Disclosure
Schedule, there are no specific facts or circumstances known to the
Company that would indicate that the Company or any of its
Subsidiaries will likely be subject to liability in respect of a
violation or alleged violation of any Environmental Laws, which would
be material to the Company and its Subsidiaries, taken as a whole.
(k) BROKERS' FEES. The Company does not have any liability or
obligation to pay any fees or commissions to any broker, finder, or similar
agent with respect to the transactions
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contemplated by this Agreement, except for the fees payable to Merrill Lynch,
Pierce, Fenner & Smith Incorporated under its engagement letter with the
Company, dated June 2, 1995.
(l) DISCLOSURE. The Company Information contained in the Proxy
Materials will not, on the date the Proxy Materials are first mailed to
stockholders, and the Proxy Materials, if amended, will not, on the date of
the Company Stockholder Vote contain any statement which, at the time and in
light of the circumstances under which it is made, is false or misleading
with respect to any material fact or which omits to state any material fact
necessary in order to make the statements therein not false or misleading in
light of the circumstances in which they are made. As used herein, "Company
Information" means all information with respect to the Company or any of its
Subsidiaries provided for use in the Proxy Materials, as the case may be.
(m) KNOWLEDGE OF OFFICERS OF PARENT OR PURCHASER. The
representations and warranties set forth in this Section 3 shall not be
breached by the existence of facts, conditions or events that Joseph P. Allen
or David H. Langstaff, as directors and officers of the Company, in the
performance of their duties on behalf of the Company, knew of as of the date
of this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER.
Parent and Purchaser represent and warrant to the Company (except as set
forth in the Purchaser Disclosure Schedule) as follows:
(a) ORGANIZATION. Parent is a limited partnership duly organized
and validly existing under the laws of the State of Delaware. Purchaser is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. Parent and Purchaser have delivered to the
Company true and correct copies of their organizational documents.
(b) CAPITALIZATION. The entire authorized capital stock of
Purchaser consists of (i) 19,000,000 shares of Common Stock, $.01 par value
per share, of which 100 shares are issued and outstanding, and (ii) 1,000,000
shares of preferred stock, of which, as of the date of this Agreement, no
shares are issued or outstanding.
(c) AUTHORIZATION OF TRANSACTION. Each of Parent and Purchaser has
requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby to be consummated by it.
This Agreement has been duly authorized by the general partner of Parent and
by the board of directors of Purchaser, has been duly executed and delivered
on behalf of each of Parent and Purchaser, and constitutes the valid and
legally binding obligation of each of Parent and Purchaser, enforceable
against Parent and Purchaser in accordance with its terms and conditions,
except that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought.
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(d) NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummations of the transactions contemplated
hereby, will (i) violate any constitution, statue, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which either of Parent or
Purchaser is subject or any provision of the charter or bylaws of either
Parent or Purchaser or (ii) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party a put
right or repurchase obligation or the right to accelerate, terminate, modify
or cancel, or require any notice under, any material agreement, contract,
lease, license, instrument, or other material arrangement to which either
Parent or Purchaser is a party or by which it is bound or to which any of its
material assets is subject, except for any such matters which, both
individually and in the aggregate, would not have a material adverse effect
on either Parent or Purchaser or on either Parent's or Purchaser's ability to
consummate the transactions contemplated hereby. Other than in connection
with the provisions of the Delaware General Corporation Law, neither Parent
nor Purchaser needs to give any notice to, make any filing with, or obtain
any authorization, consent, or approval for any government or governmental
agency in order for the Parties to consummate the transactions contemplated
by this Agreement.
(e) BROKERS' FEES. Neither Parent nor Purchaser has any liability
or obligation to pay any fees or commission to any broker, finder, or similar
agent with respect to the transaction contemplated by this Agreement.
(f) DISCLOSURE. The information regarding Parent and Purchaser
contained in the Proxy Materials will not, on the date the Proxy Materials
are first mailed to stockholders of the Company, and the Proxy Materials, if
amended, will not, on the date of the Company Stockholder Vote, contain any
statement which, as the time and in light of the circumstances under which it
is made, is false or misleading with respect to any material fact or which
omits to state any material fact necessary in order to make the statements
therein not false or misleading; PROVIDED, HOWEVER, that this representation
is limited to information regarding Parent or Purchaser that was provided by
Parent or Purchaser to the Company, specifically for use in the Proxy
Materials.
(g) CREDIT AGREEMENT. Parent has provided to the Company a true and
correct copy of the Credit Agreement to provide debt financing in an amount
that, together with the equity financing referred to in Section 6(a)(ix),
will be sufficient to enable Purchaser to consummate the Merger. Such Credit
Agreement is in full force and effect as of the date hereof and neither
Parent nor Purchaser is aware of any information that indicates that Parent
or Purchaser (as the case may be) will not be able, in any material respect,
to satisfy all conditions precedent to the availability of funds thereunder.
(h) ARVIN AGREEMENT. Parent has provided to the Company a true and
correct copy of the Stockholder Agreement among Arvin, Purchaser and Parent,
which agreement is currently in effect and provides, among other things, that
said Stockholder Agreement shall terminate if the Company terminates this
Agreement pursuant to Section 7(a)(ii) hereof.
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(i) Except as set forth in the Company Disclosure Schedule, the
Proxy Materials and the Stockholder Reports, or as disclosed to the Board of
Directors, the directors and officers of Purchaser and Parent who are
directors and officers of the Company are not as of the date hereof aware of
any material favorable facts concerning the business, financial condition,
operations or results of operations of the Company and its Subsidiaries,
taken as a whole.
SECTION 5. COVENANTS. The Parties agree that, from and after the
execution of this Agreement and until the Effective Time, unless otherwise
set forth in the Company Disclosure Schedule or the Purchaser Disclosure
Schedule (as the case may be):
(a) GENERAL. Each of the Parties will use all commercially
reasonable efforts to take all action and to do all things necessary, proper,
or advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of
the closing conditions set forth in Section 6 below).
(b) NOTICES AND CONSENTS. The Company will give any notices (and
will cause each of its Subsidiaries to give any notices) to third parties,
and will use all commercially reasonable efforts to obtain (and will cause
each of its Subsidiaries to use all commercially reasonable efforts to
obtain) any third party consents or approvals, that either Parent or
Purchaser reasonably may request in connection with the matters referred to
in Section 3(d) above. The Company will cooperate with Parent and Purchaser
and assist Parent and Purchaser in connection with obtaining the consents and
approvals of third parties to the termination of the agreements set forth on
EXHIBIT A hereto and such other agreements of the Company (other than
agreements governing employee stock options) that require the consent of
third parties for their termination as may be identified by Parent or
Purchaser to the Company in writing prior to the Closing.
(c) REGULATORY MATTERS AND APPROVALS. Each of the Parties will (and
the Company will cause each of its Subsidiaries to) give any notices to, make
any filings with, and use all commercially reasonably efforts to obtain any
authorizations, consents, and approvals of governments, governmental agencies
and regulatory authorities in connection with the matters referred to in
Section 3(d) and Section 4(d) above. Without limiting the generality of the
foregoing:
(i) PROXY STATEMENT. The Company will prepare and mail
to its stockholders the Proxy Materials relating to the Company
Stockholder Vote. Parent and Purchaser agree to furnish to the
Company all information regarding Parent and Purchaser reasonably
requested by the Company in connection with the preparation of the
Proxy Materials.
(ii) THE COMPANY STOCKHOLDER VOTE. The Company will call a
special meeting of its stockholders as soon as reasonably practicable
to obtain the Requisite Company Stockholder Approval (the "Company
Stockholder Vote"). The Company will mail the Proxy Materials to its
stockholders as soon as reasonably practicable. The Proxy Materials
will contain the affirmative recommendations of the board of
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directors of the Company in favor of the adoption of this Agreement
and the approval of the Merger. Notwithstanding the foregoing,
nothing in this Section 5(c)(ii) shall be construed to require any
director of the Company to take any actions or permit any event
described above to the extent that any director, upon advice of legal
counsel to the Special Committee, determines in good faith that such
action would cause him to be subject to a substantial risk of a
breach of his fiduciary duties under applicable law.
(iii) REGULATORY FILINGS. Each of the Parties will file
(and the Company will cause each of its Subsidiaries to file) any
form or report or related material that it may be required to file
with any governmental entity under the laws of the United States or
any foreign jurisdiction, will use all commercially reasonable
efforts to obtain (and the Company will cause each of its
Subsidiaries to use all commercially reasonable efforts to obtain)
termination of any applicable waiting periods, and will make (and the
Company will cause each of its Subsidiaries to make) any further
filings that may be necessary, proper, or advisable.
(d) OPERATION OF THE COMPANY'S BUSINESS. From and after the date
hereof until the Effective Time, the Company will not (and will not cause or
permit any of its Subsidiaries to) engage in any practice, take any action,
or enter into any transaction outside the Ordinary Course of Business, unless
(i) Purchaser shall otherwise agree in writing, (ii) expressly contemplated
hereby or (iii) otherwise provided in a Contract to which the Company or any
of its Subsidiaries is a party which is in effect prior to the date hereof.
Without limiting the generality of the foregoing:
(i) none of the Company and its Subsidiaries will
authorize or effect any change in its charter or bylaws;
(ii) none of the Company and its Subsidiaries will
grant any options, warrants, or other rights to purchase or obtain
any of its capital stock or issue, sell, or otherwise dispose of any
of its capital stock (except upon the conversion or exercise of
options and warrants outstanding on the date hereof and identified on
the Disclosure Schedule);
(iii) none of the Company and its Subsidiaries will
declare, set aside, or pay any dividend or distribution with respect
to its capital stock (whether in cash or in kind), or redeem,
repurchase, or otherwise acquire any of its capital stock;
(iv) none of the Company and its Subsidiaries will
issue any note, bond, or other debt security or create, incur,
assume, or guarantee any indebtedness for borrowed money or
capitalized lease obligation outside the Ordinary Course of Business;
(v) none of the Company and its Subsidiaries will grant
any Security Interest on any of its assets outside the Ordinary
Course of Business; or transfer, lease, license, sell, mortgage,
pledge, dispose of or encumber any assets or incur or modify any
indebtedness or other liability other than in the Ordinary Course of
Business;
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<PAGE>
(vi) none of the Company and its Subsidiaries will make
any capital investment in, make any loan to, acquire the securities
or assets of, or merge or consolidate with, any other Person outside
the Ordinary Course of Business;
(vii) none of the Company and any of its Subsidiaries
will make any acquisition of a material amount of assets or
securities or enter into any material contract or any release or
relinquishment of any material contract rights, not in the Ordinary
Course of Business;
(viii) none of the Company and its Subsidiaries will
make any change in employment terms for any of its directors,
officers, and employees outside the Ordinary Course of Business;
neither the Company nor any of its Subsidiaries will grant any
severance or termination pay to, or enter into any employment or
severance agreement with any director, officer or other employee of
the Company or any of its Subsidiaries, other than pursuant to
Benefit Plans in existence as of the date of this Agreement and in
the Ordinary Course of Business; and neither the Company nor any of
its Subsidiaries will establish, adopt, enter into, or, except as
required by law, amend any Benefits Plans, or make any new grants or
awards under any Benefit Plans other than in the Ordinary Course of
Business; and
(ix) none of the Company and it Subsidiaries will
commit to any of the foregoing.
The covenants of the Company set forth in this Section 5(d) shall not
be breached by actions taken or omitted by Joseph P. Allen or David H.
Langstaff, in their capacities as officers of the Company, unless such
actions were taken or omitted, directly or indirectly, at the direction, or
with the consent or approval, of the Board of Directors of the Company.
(e) FULL ACCESS. The Company will (and will cause each of its
Subsidiaries to) permit representatives of each of Parent and Purchaser
(including representatives of potential financing sources) to have full
access at all reasonable times, and in a manner so as not to interfere with
the normal business operations of the Company and its Subsidiaries, to all
premises, properties, personnel, books, records (including tax and accounting
records), contracts, and documents of or pertaining to each of the Company
and its Subsidiaries.
(f) NOTICE OF DEVELOPMENTS. The Company will give prompt written
notice to Parent and Purchaser of any material adverse development causing a
breach of any of its
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representations and warranties in Section 3 above and Parent and Purchaser
will give prompt written notice to the Company of any material adverse
development causing a breach of any of their representations and warranties
in Section 4 above. No disclosure by the Company, Parent or Purchaser
pursuant to this Section 5(f), however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(g) ACQUISITION PROPOSALS. The Company shall not, and it shall not
authorize or permit any of its Subsidiaries, officers, directors or employees
or any advisors or agents retained by the Company or its Subsidiaries,
directly or indirectly, to (i) solicit, initiate or knowingly encourage or
induce the making of any Company Acquisition Proposal, (ii) negotiate with
any third party with respect to any Company Acquisition Proposal, (iii)
endorse or recommend the Company Acquisition Proposal of any third party or
(iv) enter into any Contract with any third party with the intent to effect
any Company Acquisition Proposal. Notwithstanding the foregoing, nothing in
this Section 5(g)(i) shall limit or prohibit the Company from issuing a press
release, substantially in the form of EXHIBIT B to this Agreement, at any
time following the execution of this Agreement or (ii) shall limit or
prohibit the Company or any officer, director or employee of the Company or
any advisor or agent retained by the Company (in each case, as authorized by
the Special Committee) from (A) furnishing or causing to be furnished
information concerning the Company, (B) participating in discussions and
negotiations through its authorized representatives with persons who have
sought such information if the Special Committee, upon the advice of its
legal counsel, determines in good faith that the failure to provide such
information or to participate in such discussions or negotiations would cause
the members of the Board of Directors to be subject to a substantial risk of
a breach of their fiduciary duties under applicable law, and (C) entering
into a Contract to effect a Company Acquisition Proposal that the Special
Committee, with the advice of its legal and financial advisors, determines in
good faith is more favorable to the stockholders than the Merger contemplated
hereby. (The foregoing sentence shall not relieve any Person from the
responsibility of protecting confidential information of the Company when it
is furnished to a third party.)
(h) INSURANCE AND INDEMNIFICATION.
(i) Parent and Purchaser shall maintain, or cause to be
maintained, in effect for a period ending not sooner than the sixth
anniversary of the Effective Time of the Merger, at no expense to the
beneficiaries thereof, coverage under the current directors' and
officers' liability insurance policies ("D&O insurance") maintained
by Arvin on behalf of the directors, officers or other covered
employees of the Company with respect to matters occurring at or
prior to the Effective Time; PROVIDED, HOWEVER, that in the event
Arvin terminates, fails to renew or allows such D&O insurance
policies to lapse prior to the sixth anniversary of the Effective
Time, Parent and Purchaser at their election shall either (a) provide
or cause to be provided such D&O insurance coverage under a separate
policy which shall provide for coverage on the whole no less
favorable to the insured than that provided by the current policies,
or (b) cause Arvin to indemnify such officers, directors and covered
employees to the extent, and subject to the limitations of, the
coverage provided by
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such current policies for the period ending on the sixth anniversary
of the Effective Time.
(ii) For a period of six years after the Effective
Date, the Surviving Corporation shall observe the indemnification
provision now existing in the Bylaws of the Company (a copy of which
provision is set forth in EXHIBIT C) for the benefit of any
individual who served as a director or officer of the Company at any
time in the Bylaws prior to the Effective Time notwithstanding any
amendment of such provisions after the Effective Time, and such
indemnification provisions in said Exhibit C shall be a part of this
Agreement as though set forth in this Section 5(h)(ii).
(iii) This Section 5(h) shall survive consummation of
the Merger.
(iv) STOCK OPTIONS. The Company shall cooperate with
Parent and Purchaser in the event Parent and Purchaser desire to
modify, cancel or grant substitutes for any stock options or
warrants granted to employees or directors of the Company or any of
its Subsidiaries or to any other Persons so long as such cooperation
does not result in a breach of any representation, warranty or
covenant of the Company herein (unless previously waived by Parent
and Purchaser).
(v) FINANCING. Parent and Purchaser will use their
best efforts to obtain the financing identified in Section 6(a)(viii)
on or prior to the Closing Date.
SECTION 6. CONDITIONS TO OBLIGATIONS TO CLOSE.
(a) CONDITIONS TO OBLIGATIONS OF PARENT AND PURCHASER. The
obligations of Parent and Purchaser to consummate the Merger are subject to
satisfaction of the following conditions:
(i) the Requisite Company Stockholder Approval shall
have been obtained;
(ii) the Company and its Subsidiaries shall have
procured all of the third party and governmental consents specified
in Section 5(b) and the first section of Section 5(c) above,
including any required consents under the agreements listed on the
Company Disclosure Schedule;
(iii) the representations and warranties set forth in
Section 3 above shall be true and correct in all material respects at
and as of the Closing Date; the Company shall have performed and
complied with all of its covenants hereunder in all material respects
through the Closing;
(iv) there shall be in effect no preliminary or
permanent injunction or any judgment, order, decree, ruling, or
charge which would (w) prevent the
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consummation of any of the transactions contemplated by this
Agreement, (x) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, (y) affect
materially and adversely the right of the Surviving Corporation to
own the former assets, to operate the former businesses, and to
control the former Subsidiaries of the Company, or (z) affect
materially and adversely the right of any of the former Subsidiaries
of the Company to own its assets and to operate its businesses (and
no such injunction, judgment, order, decree, ruling, or charge shall
be in effect);
(v) there shall not have occurred any material adverse
change in the business, financial condition, operations or results of
operations of the Company and its Subsidiaries taken as a whole,
except (A) as contemplated by this Agreement or (B) as occurs after
the date hereof directly as a result of specific facts which were
known prior to the date hereof to Joseph P. Allen and David H.
Langstaff, as directors and officers of the Company in the
performance of their duties;
(vi) the Company shall have delivered to Parent and
Purchaser a certificate to the effect that each of the conditions
specified above in Section 6(a)(i)-(vi) is satisfied in all respects;
(vii) the Credit Agreement shall have been executed by
the parties thereto, and shall be in full force and effect and shall
provide available funds for the transactions contemplated by this
Agreement of not less than $39,000,000;
(viii) Purchaser and/or Parent shall have received
equity financing funds for the purpose of consummating the Merger of
not less than $5,000,000;
(ix) the Arvin Agreement shall be in full force and
effect; Arvin shall have consummated the transactions contemplated
under the Arvin Agreement; and Arvin shall not have withdrawn, or
communicated its intention to withdraw or challenge, its proxy given
thereunder to Parent;
(x) Parent and Purchaser shall have received all
applicable authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3(d) and Section 4(d)
above;
(xi) the number of Dissenting Shares shall not exceed
five percent of the total Company Common Shares outstanding on the
date hereof; and
(xii) all certificates, instruments and other documents
required to be delivered to Parent or Purchaser hereunder or
otherwise to effect the Merger shall be reasonably satisfactory in
form and substance to Parent and Purchaser.
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Parent and Purchaser may waive any condition specified in this Section 6(a)
if they execute a writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to consummate the Merger is subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth in
Section 4 above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) Parent and Purchaser shall have performed and
complied with all of their covenants hereunder in all material
respects through the Closing;
(iii) there shall be in effect no preliminary or
permanent injunction or any judgment, order, decree, ruling, or
charge which would (w) prevent consummation of any of the
transactions contemplated by this Agreement, (x) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (y) affect adversely the right of the Surviving
Corporation to own the former assets, to operate the former
businesses, and to control the former Subsidiaries of the Company, or
(z) affect adversely the right of any of the former Subsidiaries of
the Company to own its assets and to operate its businesses (and no
such injunction, judgment, order, decree, ruling, or charge shall be
in effect);
(iv) Parent and Purchaser shall have delivered to the
Company a certificate to the effect that each of the conditions
specified above in Section 6(b)(i)-(iii) is satisfied in all respects;
(v) the Requisite Company Stockholder Approval shall
have been obtained;
(vi) the Parties shall have received all applicable
authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3(d) and Section 4(d)
above;
(vii) on the date of Closing, the Special Committee
shall have received an opinion (or a confirmation of such an opinion
delivered at an earlier date) of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, dated such date and in form and substance
reasonably satisfactory to the Special Committee, to the effect that
the consideration to be paid to the Minority Stockholders upon
consummation of the Merger is fair, from a financial point of view,
to such stockholders; and
(viii) all actions to be taken by each of Parent and
Purchaser in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and
other documents required to effect the transactions
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contemplated hereby shall be reasonably satisfactory in form and
substance to the Company.
The Company may waive any condition specified in this Section 6(b) if it
executes a writing so stating at or prior to the Closing.
SECTION 7. TERMINATION. The Parties may terminate this Agreement
with the prior authorization of their respective board of directors or
general partner (whether before or after stockholder approval) as provided
below:
(a) The Parties may terminate this Agreement by mutual written
consent at any time prior to the Effective Time. In addition:
(i) Either of Parent or Purchaser may terminate this
Agreement by giving written notice to the Company at any time prior
to the Effective Time, if the Closing shall not have occurred on or
before November 30, 1995, by reason of the failure of any condition
precedent under Section 6(a) hereof (unless the failure results
primarily from either of Parent or Purchaser breaching any material
representation, warranty, or covenant contained in this Agreement).
(ii) The Company may terminate this Agreement by giving
written notice to Parent and Purchaser at any time (A) prior to the
Effective Time, if the Closing shall not have occurred on or before
November 30, 1995, by reason of the failure of any condition
precedent under Section 6(b) hereof (unless the failure results
primarily from the Company breaching any representation, warranty, or
covenant contained in this Agreement), (B) prior to the Effective
Time, at any time after the Company Stockholder Vote if the Requisite
Company Stockholder Approval is not obtained (unless such event
constitutes a Company Triggering Event, in which case the provisions
of Section 7(c) and Section 7(d) shall apply); or (C) prior to the
Effective Time, if the Company receives a bona fide offer to effect a
Company Acquisition Proposal which the Special Committee, upon advice
of its legal and financial advisors, determines in good faith is more
favorable to the stockholders than the Merger contemplated hereby,
provided that the Special Committee shall have recommended to the
Board of Directors approval of such Company Acquisition Proposal and
the Board of Directors shall have approved such Company Acquisition
Proposal.
(b) Any nonbreaching Party may terminate this Agreement by giving
written notice to the other Parties at any time prior to the Effective Time
in the event a Party has breached any material representation, warranty or
covenant for the benefit of such non-breaching party contained in this
Agreement in any material respect, the terminating Party has notified the
breaching Party of the breach, and the breach has continued without cure for
a period of 10 days after the notice of breach. Termination by the Company
shall be by action of its Board of Directors after receipt of the
recommendation of the Special Committee.
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(c) Either Parent or Purchaser may terminate this Agreement by
giving written notice to the Company at any time prior to the Effective Time
upon the occurrence of any Company Triggering Event.
(d) EFFECT OF TERMINATION. If this Agreement is terminated pursuant
to Section 7(a) or Section 7(c), this Agreement shall become void and of no
effect, without any liability on the part of any party hereto or its
Affiliates, directors, officers, stockholders or partners other than as
provided in this Section 7(d), which section is intended to serve as
liquidated damages. If this Agreement is terminated pursuant to Section
7(b), all rights and obligations of the Parties hereunder shall terminate
without any liability of any Party to any other Party, except for any
liability of any Party then in breach.
If this Agreement is terminated by the Company pursuant to Section
7(a)(ii)(C) or is terminated b either Parent or Purchaser in the event of a
Company Triggering Event pursuant to Section 7(c), the Company shall promptly
reimburse Parent for all of Parent's and Purchaser's actual, documented,
customary and reasonable fees and expenses (including the fees and expenses
of its counsel, bank and accountants) incurred in connection with the
transactions contemplated by this Agreement, not to exceed $500,000 in the
aggregate (the "Expense Reimbursement Amount"); PROVIDED, HOWEVER, that if a
Company Acquisition Proposal is in fact consummated, then promptly upon such
consummation the Company shall, in addition to the Expense Reimbursement
Amount, pay Parent, in cash, the termination fee described below (the
"Termination Fee"). The Termination Fee shall be in an amount determined by
subtracting the Expense Reimbursement Amount from the amount equal to 10% of
the difference between (A) the product of the Merger Consideration multiplied
by the number of Company Common Shares outstanding on the date hereof and (B)
the total consideration (in whatever form) paid to the holders of Company
Common Shares pursuant to the terms of such consummated Company Acquisition
Proposal; PROVIDED, HOWEVER, that the Termination Fee shall be not less than
$450,000 and not more than $900,000.
The provisions contained in this Section 7(d) shall survive the
termination of this Agreement.
SECTION 8. MISCELLANEOUS.
(a) SURVIVAL. None of the representations, warranties, and
covenants of the Parties (other than the provisions in Section 2 above
concerning the payment of the Merger Consideration and the provisions in
Sections 7(c) and (d) above) will survive the Effective Time.
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Except as provided in
Section 5(g), no Party shall issue any press release or make any public
announcement relating to the subject matter of this Agreement without the
prior written approval of the other Parties; PROVIDED, HOWEVER, that any
Party may make any public disclosure it believes in good faith is required by
applicable law (in which case the disclosing Party will use all commercially
reasonable efforts to advise the other Parties prior to making the
disclosure).
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(c) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns; PROVIDED, HOWEVER, that (i) the
provisions in Section 2 above concerning payment of the Merger Consideration
are intended for the benefit of the Company's Stockholders, and (ii) the
provisions in Section 5(h) above concerning insurance and indemnification are
intended for the benefit of the individuals specified therein.
(d) ENTIRE AGREEMENT. This Agreement (including the Company
Disclosure Schedule, the Purchaser Disclosure Schedule, and the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way
to the subject matter hereof.
(e) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement
or any of its rights, interests, or obligations hereunder without the prior
written approval of the other Parties.
(f) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) NOTICES.
(i) All notices, directions and other communications
hereunder (collectively, "Communications") shall be in writing and
shall be delivered by messenger, by first class mail (postage
prepaid), by telecopier or by overnight air courier, and shall be
addressed or sent to the telecopier number, as provided.
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If to the Company: Copy to:
Space Industries International, Inc. Holland & Knight
800 Connecticut Ave., N.W. 2100 Pennsylvania Ave., N.W.
Suite 1111 Suite 400
Washington, D.C. 20006 Washington, D.C. 20037
Attention: Katherine A. Snavely, Attention: Stephen J. Weiss
Vice President Telecopier No.: (202) 955-5564
Telecopier No.: (202) 861-0321 Verify No.: (202) 955-3000
Verify No.: (202) 888-4700
If to Parent or Purchaser: Copy to:
Argotyche, L.P. Andrews & Kurth L.L.P.
24020 Old Hundred Road 425 Lexington Ave.
Comus, Md. 20842 New York, N.Y. 10017
Attention: David H. Langstaff
Telecopier No.: (301) 349-2749 Attention: Stuart Bressman
Verify: No.: (301) 916-3633 Telecopier No.: (212) 850-2929
Verify No.: (212) 850-2800
and
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: James V. Baird
Telecopier No.: (713) 220-4285
Verify No.: (713) 220-4200
(ii) All Communications shall be presumed to have been
received: (i) when personally delivered by messenger, if personally
delivered; (ii) four Business Days after being deposited in the U.S.
mail (postage prepaid), if mailed; (iii) when receipt is confirmed,
if telecopied; and (iv) the next Business Day after timely delivery
to an overnight air courier, if sent by an overnight air courier
guaranteeing next day delivery.
(iii) Any party may change its address or the other
information provided above by notice given to the other party in
accordance with this section.
(i) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Delaware
without giving effect to any choice or
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conflict of law provision or rule (whether of the State of Delaware) or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
(j) AMENDMENTS AND WAIVERS. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of the general partner of Parent, the board of directors
of Purchaser and the board of directors of the Company (after receipt of the
recommendation of the Special Committee); PROVIDED, HOWEVER, that any
amendment effected subsequent to stockholder approval shall be subject to the
restrictions contained in the Delaware General Corporation Law. No amendment
or other modification of any provision of this Agreement and no waiver of any
provision hereof or any right or benefit hereunder shall be valid unless the
same shall be in writing and signed by each of the Parties after receipt of
authorization as described above. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.
(k) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction.
(l) EXPENSES. Except as provided in Section 7(d), each of the
Parties will bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement. Without limiting the
foregoing, the Company will bear the expenses of Holland & Knight, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Steptoe & Johnson and KPMG Peat
Marwick.
(m) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to any
federal, state, local, or foreign statue or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context
otherwise requires.
(n) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
SPACE INDUSTRIES INTERNATIONAL, INC.
By: /S/ KATHERINE A. SNAVELY
------------------------------------
Katherine A. Snavely, Vice President
ARGOTYCHE, L.P.
By SANTAEUS, L.P.
General Partner of Argotyche, L.P.
By DANTAEUS CORP.,
General Partner of Santaeus, L.P.
By: /S/ DAVID H. LANGSTAFF
------------------------------------
David H. Langstaff, President
SPACE ACQUISITION CORPORATION
By: /S/ DAVID H. LANGSTAFF
------------------------------------
David H. Langstaff, President
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<PAGE>
Set forth below is a list briefly identifying the contents of all
exhibits and schedules to the Agreement and Plan of Merger which have been
omitted. Registrant hereby agrees to furnish supplementally to the
Commission upon request a copy of any such exhibit or schedule.
------------------------------------
(A) List of Agreements to be Terminated
(B) Form of Press Release
(C) Indemnification Provisions of the Bylaws of Space Industries
International, Inc.
(D) Disclosure Schedule of Space Industries International, Inc.
pertaining to Capitalization, Subsidiaries and Affiliates and
Environmental Matters.
(E) Stock Option Database As of August 11, 1995.
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<PAGE>
Exhibit 2(b)
CONFORMED COPY
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT, dated as of August 14, 1995, is made by and
among Argotyche, L.P., a Delaware limited partnership ("Parent"), Space
Acquisition Corporation, a Delaware corporation and Parent's wholly owned
subsidiary ("Purchaser"), and Arvin Industries, Inc., an Indiana corporation
("Stockholder").
WHEREAS, Parent desires to acquire all the outstanding equity of Space
Industries International, Inc., a Delaware corporation (the "Company");
WHEREAS, Parent, Purchaser and the Company have entered into an Agreement
and Plan of Merger, dated as of the date hereof (the "Merger Agreement"),
pursuant to which, among other things, subject to certain terms and conditions,
the Company will merge with and into Purchaser (the "Merger") and all the
outstanding shares of the Company's Common Stock, $.01 par value ("Common
Stock"), other than those held by the Parent and Purchaser, will be converted
into the right to receive the Merger Consideration (as defined in the Merger
Agreement);
WHEREAS, as of the date hereof, Stockholder owns beneficially 6,981,240
shares of Common Stock (the "Common Shares"), representing approximately 70% of
the total issued and outstanding Common Stock and 10,000 shares of the Company's
Series A Convertible Redeemable Preferred Stock, $.01 par value (the "Preferred
Shares" and, together with the Common Shares, the "Shares");
WHEREAS, Stockholder has entered into an Agreement in Principle, dated June
30, 1995, with Dr. Joseph P. Allen, IV and Mr. David H. Langstaff;
WHEREAS, in connection with the Merger, Purchaser has entered into an
Amended and Restated Credit Agreement, dated as of the date hereof (the "Credit
Agreement"), with NBD Bank and Manufacturers and Traders Bank, as Banks (the
"Banks"), and NBD Bank, as Agent (the "Agent"), providing for certain loans and
advances (the "Loans") to Purchaser to enable Parent and Purchaser to consummate
the Merger;
WHEREAS, as a requirement under the Credit Agreement, Stockholder has
entered into a Guaranty Agreement, dated as of the date hereof (the "Guaranty"),
for the benefit of the Agent and the Banks in the form of Exhibit A to the
Credit Agreement;
WHEREAS, Stockholder, the Agent, the Banks and Purchaser have entered into
an Intercreditor Agreement, dated as of the date hereof (the "Intercreditor
Agreement"), in the form of Exhibit A to the Guaranty Agreement; and
<PAGE>
WHEREAS, this Agreement is entered into by Parent, Purchaser and
Stockholder in order to induce Parent and Purchaser to enter into the Merger
Agreement and the Credit Agreement and to provide reasonable assurances that the
transactions contemplated by the Merger Agreement will be consummated.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency are hereby acknowledged,
the parties hereto, intending to be legally bound hereby, agree as follows:
SECTION 1. AGREEMENT TO VOTE IN FAVOR OF MERGER AND TO GRANT PROXY.
(i) AGREEMENT TO VOTE IN FAVOR OF MERGER. Except as otherwise provided
herein, so long as the Merger Agreement is in effect, Stockholder
specifically agrees to: (i) if requested by the Company, vote all of the
Common Shares and, if applicable, all of the Preferred Shares in favor of the
calling of a special meeting of the stockholders of the Company (the "Special
Meeting") to be held as soon as is practicable for the purpose of voting upon
and approving the Merger, the Merger Agreement and the transactions
contemplated thereby, and (ii) at the Special Meeting, vote all of the Common
Shares (and, if applicable, all of the Preferred Shares) in favor of the
Merger, the Merger Agreement and the transactions contemplated thereby.
(i) PROXY. Stockholder hereby revokes any proxy heretofore granted
with respect to any shares of capital stock of the Company owned by
Stockholder. Stockholder hereby agrees to grant to the Parent a proxy in the
form of Exhibit A attached hereto (the "Proxy") simultaneously with the
execution of this Agreement; provided, however, that in the event of the
termination of this Agreement or the Merger Agreement, the Proxy will
automatically be revoked as of the time of such termination. It is expressly
understood and agreed that the Proxy is coupled with an interest and that
Parent shall have no duty, liability or obligation whatsoever to Stockholder
arising out of the exercise by Parent of the Proxy granted hereby unless
Parent acts in a manner inconsistent with the understandings set forth in
this Agreement and the Merger Agreement.
SECTION 2. RESTRICTIONS ON SALE OR OTHER DISPOSITION OR ENCUMBRANCE OF
SHARES. Stockholder hereby covenants and agrees, that, except as contemplated
by this Agreement and except as provided in the Tagalong Rights Agreement,
dated as of July 16, 1993 (the "Tagalong Rights Agreement"), among
Stockholder, the Company and a corporation no longer existing named "Space
Industries International, Inc.", it shall not, and shall not offer or agree
to, sell, transfer, tender, assign, place in trust, hypothecate or otherwise
dispose of, or create or permit to exist any security interest, lien, claim,
pledge, option, right of first refusal, agreement, proxy, limitation on
Stockholder's voting or dispositive rights, charge or other encumbrance of
any nature whatsoever (collectively, "Liens") with respect to any of the
Shares.
SECTION 3. NO SOLICITATION.
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<PAGE>
(i) Stockholder agrees that it shall not, and shall not permit any
affiliate to, directly or indirectly, through any agent or representative or
otherwise, (i) take any action to solicit, initiate or encourage any
Acquisition Proposal (as defined below); (ii) except as may be required by
James K. Baker, Joseph P. Allen and Steven C. Beering (the "Company
Directors") in the exercise of their fiduciary duties in their capacity as
members of the Board of Directors of the Company, engage in negotiations
with, or disclose any nonpublic information relating to the Company or any
subsidiary of the Company or afford access to the properties, books or
records of the Company or any subsidiary of the Company to, any Person (as
defined below) that may be considering making, or has made, an Acquisition
Proposal; or (iii) except as may be required by the Company Directors in the
exercise of their fiduciary duties in their capacity as members of the Board
of Directors of the Company, otherwise cooperate in any way with, or assist
or participate in or facilitate or encourage, any effort or attempt by any
Person to do or seek any of the foregoing. Except as may be required by the
Company Directors in the exercise of their fiduciary duties in their capacity
as members of the Board of Directors of the Company, Stockholder agrees that
it shall cease and cause to be terminated all existing discussions or
negotiations in which it or any of its agents or other representatives is or
has been engaged with any Person with respect to any of the foregoing.
(ii) Notwithstanding Section 3(a), during the period from the date the
Proxy Statement is mailed until (but not including) the date the Special
Meeting is held, Stockholder and its affiliates, agents and representatives
shall be permitted to take any of the actions prohibited by Section 3(a)
above with (i) three particular Persons to be disclosed in writing by
Stockholder to Parent and Purchaser no later than the date on which the press
release announcing the Merger is issued pursuant to Section 5(g) of the
Merger Agreement (the "Permitted Contacts"), and (ii) any Person which makes
an unsolicited offer to Stockholder to acquire the Shares with respect to
which any member of the Board of Directors of Stockholder reasonably believes
it has a fiduciary duty to negotiate (an "Additional Contact").
(iii) For purposes of this Agreement, (i) "Person" means an individual,
a corporation, a limited liability company, a partnership, an association, a
trust or any other entity or organization, including a government or
political subdivision or any agency or instrumentality thereof other than
Parent, Purchaser or any of their affiliates and (ii) "Acquisition Proposal"
means any offer or proposal for, or any indication of interest in, a merger
or other business combination involving the Company or any Subsidiary of the
Company or the acquisition of any equity interest in, or a substantial
portion of the assets of, the Company or any Subsidiary of the Company, other
than the transactions contemplated by the Merger Agreement.
SECTION 4. VOTING AGREEMENT. Except as otherwise provided herein,
Stockholder hereby agrees that prior to the time, if any, that the Merger
Agreement is terminated, at any meeting of the stockholders of the Company,
however called, and in any action by consent of the stockholders of the
Company, Stockholder shall vote the Shares: (a) in favor of the Merger, the
Merger Agreement (as amended from time to time with the prior consent of
Stockholder in the case of any material amendment) or any of the transactions
contemplated by the Merger Agreement; and (b) against any proposal for any
recapitalization, merger, sale of assets or other business combination
between the
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Company and any Person (other than the Merger) or any other action or
agreement that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement or which could result in any of the conditions to any party's
obligations under the Merger Agreement not being fulfilled. Stockholder
shall not seek any appraisal right. Stockholder acknowledges receipt of a
copy of the Merger Agreement.
SECTION 5. CERTAIN CLAIMS. The Stockholder agrees that it will not
assert that the Board of Directors of the Company or the Special Committee
has breached its fiduciary duties to the Stockholder if, at any time prior to
the termination of the Merger Agreement, the Board of Directors of the
Company refuses to accept or recommend an offer by a third party to acquire
any or all of the outstanding shares of Company Common Stock for
consideration not in excess of $4.50 per share or if the Merger is
consummated.
SECTION 6. GUARANTY OF LOANS. Stockholder covenants and agrees that at
or prior to the Closing of the Merger it will execute and deliver to the
Agent and the Banks such documents, agreements, opinions and instruments as
are required under the Guaranty, the Intercreditor Agreement and the Credit
Agreement in order for the Loans to be made to Purchaser under the Credit
Agreement. Stockholder acknowledges and agrees that the Guaranty is necessary
for the issuance of the Loans and that the Merger cannot be completed without
such Guaranty.
SECTION 7. DIRECTORS AND OFFICERS INSURANCE. Stockholder covenants and
agrees to maintain in effect for a period ending not sooner than the sixth
anniversary of the Effective Time of the Merger, at no expense to the
beneficiaries thereof, coverage under the current directors' and officers'
liability insurance policies maintained by or on behalf of the directors,
officers or other covered employees of the Company with respect to matters
occurring at or prior to the Effective Time; PROVIDED, HOWEVER, that in the
event Stockholder terminates, fails to renew or allows such policies to lapse
prior to the sixth anniversary of the Effective Time, Stockholder at its
election shall either (a) provide such insurance coverage under a separate
policy which shall provide for coverage on the whole no less favorable to the
insureds than that provided by the current policies, or (b) indemnify such
officers, directors and covered employees to the extent, and subject to the
limitations of, the coverage provided by such current policies during the
period ending on the sixth anniversary of the Effective Time.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder
represents and warrants to Parent and Purchaser as of the date hereof and as
of the Closing Date, as follows:
(i) it is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Indiana, and it has all corporate
power, authority, capacity and right to enter into this Agreement and the
Guaranty and to consummate the transactions contemplated hereby and thereby;
(ii) the execution and delivery of this Agreement, the Guaranty and the
Intercreditor Agreement and the performance by it of its obligations
hereunder and thereunder are within its
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corporate powers and have been duly authorized by all necessary corporate
action on its part; each of this Agreement, the Guaranty and the
Intercreditor Agreement has been duly executed and delivered by Stockholder,
and this Agreement constitutes a valid and binding agreement enforceable by
Parent and Purchaser against it in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights generally
and except for limitations imposed by general principles of equity;
(iii) no approval, authorization, consent or filing is required in
connection with the execution, delivery and performance of this Agreement, the
Guaranty or the Intercreditor Agreement by Stockholder;
(iv) the execution, delivery and performance of this Agreement, the
Guaranty and the Intercreditor Agreement by it does not and will not contravene
or conflict with or, with the passage of time, the serving of notice or both
violate or constitute a default under any agreement, contract or other
instrument, or any law, rule, regulation, order or decree, binding upon or
applicable to it;
(v) Stockholder is the sole record and beneficial owner of the Shares
and has good title to the Shares free and clear of all Liens (other than the
Tagalong Rights Agreement), and the Shares are the only shares of Company
Common Stock or Company Preferred Stock which Stockholder owns, has any
rights to acquire or over which Stockholder exercises control or direction
either alone or in concert with third parties; and
(vi) Stockholder has the right to grant to Parent the Proxy and to
dispose of and vote the Shares as provided in this Agreement and there are no
proxies, voting trusts or other agreements or understandings with respect to
the voting of any of the Shares other than this Agreement.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER.
Parent and Purchaser hereby represent and warrant that:
(i) Parent is a limited partnership duly organized and existing under
the laws of the State of Delaware;
(ii) Purchaser is a corporation duly incorporated and validly existing
under the laws of the State of Delaware;
(iii) each of Parent and Purchaser has all necessary partnership or
corporate (as the case may be) power, authority, capacity and right to enter
into this Agreement and the Merger Agreement and to consummate the transactions
contemplated hereby and thereby;
(iv) each of this Agreement, the Intercreditor Agreement, the Credit
Agreement and the Merger Agreement has been duly executed and delivered by
Parent and/or Purchaser (as the case may be), and this Agreement constitutes
a valid and binding agreement enforceable against
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<PAGE>
Parent and Purchaser in accordance with its terms, except as the
enforceability hereof or thereof may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and except for limitations imposed by general principles of
equity;
(v) no approval, authorization, consent or filing is required in
connection with the execution, delivery and performance of this Agreement,
the Credit Agreement or the Intercreditor Agreement by Parent or Purchaser
(as the case may be);
(vi) the execution, delivery and performance of this Agreement, the
Credit Agreement and the Intercreditor Agreement by Parent or Purchaser (as
the case may be) does not and will not contravene or conflict with or, with
the passage of time, the serving of notice or both violate or constitute a
default under any agreement, contract or other instrument, or any law, rule,
regulation, order or decree, binding upon or applicable to Parent or
Purchaser (as the case may be); and
(vii) to the best of Parent's and Purchaser's knowledge, no director or
officer of Stockholder (other than Joseph P. Allen, IV) has any economic
interest in Parent, Purchaser or the Merger, other than by reason of being a
stockholder or optionholder of the Company and, to the knowledge of Parent and
Purchaser, no such interest has been, or is presently intended to be, offered or
proposed to any such person (other than Joseph P. Allen, IV), except that Parent
and Purchaser may invite one or more directors of Stockholder to serve as a
director of the Surviving Corporation after the Merger.
SECTION 10. REMEDIES. The parties hereto acknowledge that irreparable
damage would result if this Agreement is not specifically enforced and that,
therefore, the rights and obligations of the parties under this Agreement may
be enforced by a decree of specific performance issued by a court of
competent jurisdiction and appropriate injunctive relief may be applied for
and granted in connection therewith. Such remedies shall, however, not be
exclusive and shall be in addition to any other remedies which any party may
have under this Agreement, at law or otherwise.
SECTION 11. EXPENSES. Except as otherwise provided herein or in the
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
SECTION 12. FURTHER ASSURANCES. Each of Stockholder, Parent and
Purchaser will execute and deliver all such further documents and instruments
and take all such further action as may be necessary in order to permit the
consummation of the transactions contemplated hereby and by the Merger
Agreement.
SECTION 13. DEFINITIONS. Capitalized terms used herein, but not otherwise
defined, are used herein with the same respective meanings ascribed to such
terms in the Merger Agreement, unless the context otherwise requires.
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SECTION 14. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among Stockholder, Parent and Purchaser with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, among Stockholder, Parent and Purchaser (or any affiliate
or representative of Parent or Purchaser) with respect to the subject matter
hereof.
SECTION 15. ASSIGNMENT. This Agreement shall not be assigned, except
that Parent may assign all or any of its rights and obligations hereunder to
any affiliate of Parent, PROVIDED that no such assignment shall relieve
Parent of its obligations hereunder if such assignee does not perform such
obligations.
SECTION 16. PARTIES IN INTEREST. This Agreement shall be binding upon,
inure solely to the benefit of, and be enforceable by, the parties hereto and
their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, except that the provisions in Section 7 concerning
insurance and indemnification are intended for the benefit of the individuals
specified therein.
SECTION 17. AMENDMENT; WAIVER. This Agreement may not be amended and
no provision of this Agreement may be waived except by an instrument in
writing signed by the parties hereto.
SECTION 18. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of this Agreement is not affected in any manner materially
adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the terms of this Agreement remain as
originally contemplated to the fullest extent possible.
SECTION 19. TERMINATION. This Agreement shall terminate upon
termination of the Merger Agreement, upon termination by Stockholder pursuant
to Section 19(b) or upon written agreement of the parties hereto, provided
that a party will not be relieved from liability for any breach of this
Agreement.
(i) Stockholder may terminate this Agreement by giving written notice
to Parent and Purchaser in the event that (i) any of the Permitted Contacts
makes a BONA FIDE Acquisition Proposal to Stockholder or the Company or (ii)
any Additional Contact makes a BONA FIDE Acquisition Proposal to Stockholder
or the Company.
(ii) If (i) Stockholder terminates this Agreement pursuant to Section
19(b), (ii) the Company terminates the Merger Agreement pursuant to Section
7(a)(ii)(C) thereof or Parent or Purchaser terminates the Merger Agreement
pursuant to Section 7(c) thereof in connection with an Acquisition Proposal
made by or on behalf of any Person (or any Affiliate of any such Person)
7
<PAGE>
directly or indirectly solicited, and referred to the Company, by
Stockholder, or (iii) Stockholder, in violation of the terms of this
Agreement, sells, transfers, assigns or otherwise disposes (collectively, a
"Sale") of any of the Shares to any Person other than Parent or Purchaser, or
grants a proxy to vote or votes the Shares in favor of any Acquisition
Proposal, or enters into any agreement with respect to any of the foregoing,
Stockholder shall promptly (A) pay Parent an amount equal to all of Parent's
and Purchaser's reasonable fees and expenses (including, without limitation,
the fees and expenses of its counsel, bank and accountants) incurred in
connection with the transactions contemplated by this Agreement, the Merger
Agreement and the Credit Agreement, not to exceed $500,000 in the aggregate,
and (B) pay Parent an amount equal to three percent (3%) (or, in the event of
a termination by Stockholder pursuant to Section 19(b)(i), two percent (2%))
of the total consideration (in whatever form) proposed to be paid to the
holders of the Common Stock of the Company (including Stockholder) in
connection with such Acquisition Proposal or Sale; PROVIDED, HOWEVER, that
there shall be credited against any amounts owed pursuant to clauses (A) or
(B) of this subsection the amount of any Termination Fee and Expense
Reimbursement Amount payable by the Company to Parent or Purchaser pursuant
to the Merger Agreement.
(iii) Notwithstanding anything herein to the contrary, Sections 7, 19
and 20 of this Agreement shall survive the termination of this Agreement and
the Effective Time of the Merger.
SECTION 20. CONFIDENTIALITY. The parties hereto agree that all
discussions and negotiations in connection with this Agreement and the Merger
will be conducted with the utmost confidentiality and that no party will
disclose any confidential information regarding any other party obtained
during the course of these discussions and negotiations except to their
respective attorneys, accountants, financial advisors and executives who have
a need to know in order to implement the purpose of this Agreement and except
or any be required to be disclosed to the Company in order to consummate the
Merger. Unless specifically required by law, including Federal securities
laws, the parties hereto shall not make any public disclosure with respect to
this Agreement or the Merger, other than as necessary to consummate the
transactions contemplated by this Agreement and the Merger Agreement, without
prior written consent of the other parties.
SECTION 21. NOTICES. All notices or other communications hereunder
shall be in writing and shall be deemed given if delivered by receipted hand
delivery or mailed by prepaid registered or certified mail (return receipt
requested) or by cable, telegram, telex or telecopy addressed as follows:
If to Parent or Purchaser: Mr. David H. Langstaff
c/o Space Industries International, Inc.
800 Connecticut Avenue, N.W. - Suite 1111
Washington, D.C. 20006
Tel: 202-888-4705
Fax: 202-861-0321
with a copy to: Andrews & Kurth L.L.P.
425 Lexington Avenue
8
<PAGE>
10th Floor
New York, New York 10017
Attention: Stuart Bressman
Tel: 212-850-2800
Fax: 212-850-2929
If to Stockholder: Mr. Richard A. Smith
Chief Financial Officer
Arvin Industries, Inc.
One Noblitt Plaza
Box 3000
Columbus, Indiana 47202-3000
Tel: 812-379-3000
Fax: 812-379-3688
with a copy to: Dickstein, Shapiro & Morin L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
Attention: John W. Griffin
Tel: 202-785-9700
Fax: 202-887-0684
SECTION 22. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
SECTION 23. HEADINGS. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
9
<PAGE>
SECTION 24. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be signed as of the date first above written.
ARVIN INDUSTRIES, INC.
By: /s/ RICHARD A. SMITH
----------------------------------
Name: Richard A. Smith
Title: Chief Financial Officer
ARGOTYCHE, L.P.
By SANTAEUS, L.P.
General Partner of Argotyche, L.P.
By DANTAEUS CORP.
General Partner of Santaeus, L.P.
By: /s/ DAVID H. LANGSTAFF
----------------------------------
Name: David H. Langstaff
Title: President
SPACE ACQUISITION CORPORATION
By: /s/ DAVID H. LANGSTAFF
----------------------------------
Name: David H. Langstaff
Title: President
10
<PAGE>
EXHIBIT 2(c)
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of August 14, 1995 (this
"Guaranty"), is made by ARVIN INDUSTRIES, INC., an Indiana corporation (the
"Guarantor"), in favor of NBD BANK, a Michigan banking corporation as agent
for the benefit of the Banks (the "Agent").
RECITALS
A. Space Acquisition Corporation, a Delaware corporation (the
"Borrower"), the Agent and the Banks have entered into an Amended and
Restated Credit Agreement, dated as of August 11, 1995 (as amended or
modified from time to time, the "Credit Agreement"), pursuant to which the
Banks have agreed to provide to the Borrower unsecured revolving credit
facilities in an aggregate principal amount of $39,000,000. (All capitalized
terms used herein but not defined herein shall have the meanings ascribed to
such terms in the Credit Agreement).
B. Space Industries International, Inc., a Delaware corporation
("Space Industries"), Argotyche, L.P., a Delaware limited partnership (the
"Partnership"), and the Borrower have entered an Agreement Plan of Merger,
dated as of August 14, 1995 (as amended or modified from time to time, the
"Merger Agreement"), pursuant to which Borrower has agreed to purchase all of
the issued and outstanding capital stock of Space Industries, including all
of the issued and outstanding common stock of Space Industries owned
beneficially and of record by the Guarantor (the "Arvin Stock").
C. The Borrower intends to finance a portion of the transactions
contemplated by the Merger Agreement, and the purchase of the Arvin Stock,
with funds to be provided to the Borrower by the Banks pursuant to the Credit
Agreement.
D. As a condition precedent to the effectiveness of the Banks'
obligations under the Credit Agreement, the Guarantor is required to
guarantee, among other things, the payment of certain Indebtedness of the
Borrower under the Credit Agreement constituting Commitment B Loans, as
hereinafter described.
E. The Guarantor is familiar with the Credit Agreement (which,
together with all documents, agreements, instruments and certificates
relating thereto, as amended or modified from time to time, are herein
collectively referred to as the "Operative Documents"), and the Guarantor has
determined that it is in its best interests and to its financial benefit to
enter into this Guaranty.
<PAGE>
F. It is a condition precedent to the Guarantor's entering into
and making this Guaranty that the Borrower, the Guarantor and the Agent enter
into an Intercreditor Agreement substantially in the form attached hereto as
EXHIBIT A (the "Intercreditor Agreement").
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and as further consideration
and as an inducement to the Bank to enter into the Credit Agreement, the
Guarantor agrees with the Agent as follows:
1. GUARANTEE OF OBLIGATIONS. (a) The Guarantor hereby, as
guarantor and not as surety only, (i) guarantees to the Agent and the Banks
the prompt payment of any and all indebtedness, obligations and liabilities
which constitute principal, interest (including interest which otherwise may
cease to accrue with respect to the Borrower by operation of any insolvency
law, rule, regulation or interpretation thereof) or fees (to the extent the
Guarantor has agreed in writing to the payment of such fees) arising out of,
or charged with respect to, the Commitment B Loans made under the Operative
Documents, and (ii) agrees to make prompt payment, on demand, of any and all
costs and expenses incurred by the Agent and the Banks in connection with
enforcing the obligations of the Guarantor hereunder, including without
limitation the reasonable fees and disbursements of counsel for the Agent and
each Bank (all of the foregoing being collectively referred to as the
"Guaranteed Obligations"), PROVIDED, HOWEVER, that the amount of the
Guaranteed Obligations of the Guarantor shall be subject to the limitation
set forth in Section 3 of this Guaranty.
(b) If for any reason any amount payable under or in
connection with any Operative Document constituting any of the Guaranteed
Obligations shall not be paid in full when the same becomes due and payable,
the Guarantor undertakes, but without duplication, to pay forthwith each such
amount to the Agent and the Banks regardless of any defense, setoff or
counterclaim which the Borrower may have or assert. The Guarantor hereby
agrees not to exercise any rights of subrogation or contribution arising from
any payments made by the Guarantor in respect of the Guaranteed Obligations
of the Borrower until all amounts due and owing by the Borrower to the Agent
and the Banks under the Operative Documents have been paid in full.
(c) The date and amount of advances of principal made by the
Banks in respect of the Guaranteed Obligations and of each payment thereon
received by the Banks, and the aggregate principal amount thereof and accrued
interest thereon shown upon the books and records of the Agent or upon the
schedules attached to the Revolving Credit B Notes, and in any certificate
delivered by the Agent or any Bank to the Guarantor in respect thereof, shall
be prima facie evidence of the principal amount and accrued interest owing
and unpaid on the Guaranteed Obligations. The failure to record any such
information on such books and records or upon such schedule shall not,
however, limit or otherwise affect the obligations of the Borrower to repay
the principal amount of the Guaranteed Obligations together with accrued
interest thereon or the obligations of the Guarantor hereunder with respect
thereto.
GUARANTY AGREEMENT
-2-
<PAGE>
2. NATURE OF GUARANTY. This Guaranty is an absolute,
unconditional and irrevocable guaranty of payment and not a guaranty of
collection and is wholly independent of and in addition to other rights and
remedies of the Agent or any Bank and is not contingent upon the pursuit by
the Agent or any Bank of any such rights and remedies, such pursuit being
hereby waived by the Guarantor.
3. LIMITATION OF GUARANTEED OBLIGATIONS. (a) Notwithstanding
the provisions of Section 1 above, and subject to the other provisions of
this Section 3, the aggregate amount of Guaranteed Obligations hereunder
shall not in any event exceed the amounts set forth below under the
column entitled "Arvin Guaranty Amount" on the respective dates set forth
below:
<TABLE>
<CAPTION>
ARVIN GUARANTY ARVIN GUARANTY
DATE REDUCTION AMOUNT
---------- -------------- ---------------
<S> <C> <C>
Effective Date $ -0- $ 22,898,566
12/31/95 1,180,793 21,717,773
03/31/96 1,202,882 20,514,891
06/30/96 1,225,360 19,289,531
09/30/96 1,248,236 18,041,295
12/31/96 1,294,012 16,747,283
03/31/97 1,317,702 15,429,581
06/30/97 1,341,811 14,087,770
09/30/97 1,366,345 12,721,425
12/31/97 1,407,053 11,314,372
03/31/98 1,432,462 9,881,910
06/30/98 1,458,318 8,423,592
09/30/98 1,484,632 6,938,960
12/31/98 1,693,381 5,245,579
03/31/99 1,720,632 3,524,947
06/30/99 1,748,364 1,776,583
09/30/99 1,776,583 - 0 -
</TABLE>
(b) Subject to the terms of the Intercreditor Agreement, upon
any Event of Default under the Credit Agreement, during the pendency of such
Event of Default, the Arvin Guaranty Amount set forth in Section 3(a) above
shall no longer reduce pursuant to the schedule set forth above, it being
understood and agreed that the amount of the Commitment B Loans shall at no
time exceed $22,898,566, less the aggregate amount of previous Arvin Guaranty
Amount reductions under Section 3(a) of this Guaranty. Upon the cure by the
Borrower or Arvin of any such Event of Default, the Arvin Guaranty reduction
schedule under Section 3(a) of this Guaranty shall resume as if there had
been no interruption in such reduction schedule.
GUARANTY AGREEMENT
-3-
<PAGE>
4. WAIVERS AND OTHER AGREEMENTS. The Guarantor hereby
unconditionally (a) waives any requirement that the Agent or any Bank, in the
event of any default by the Borrower, first make demand upon, or seek to
enforce remedies against, the Borrower or any Subsidiary Guarantor before
demanding payment under or seeking to enforce this Guaranty, (b) covenants
that this Guaranty will not be discharged except by complete performance of
all obligations of the Borrower contained in the Operative Documents
constituting Guaranteed Obligations or by performance by the Guarantor of its
obligations hereunder, (c) agrees that this Guaranty shall remain in full
force and effect without regard to, and shall not be affected or impaired by,
without limitation, any invalidity, irregularity or unenforceability in whole
or in part of any of the Operative Documents, or any limitation on the
liability of the Borrower or any Subsidiary Guarantor thereunder, or any
limitation on the method or terms of payment thereunder which may now or
hereafter be caused or imposed in any manner whatsoever, (d) waives
diligence, presentment and protest with respect to, and any notice of
dishonor in the payment of, any amount at any time payable by the Borrower or
any Subsidiary Guarantor under or in connection with, any of the Operative
Documents, and further waives any requirement of notice of acceptance of, or
other formality relating to, this Guaranty, and (e) agrees that the
Guaranteed Obligations shall include any amounts paid by the Borrower or any
Subsidiary Guarantor to the Agent or any Bank relating to the Guaranteed
Obligations which may be required to be returned to the Borrower or to any
Subsidiary Guarantor or to its representative or to a trustee, custodian or
receiver for the Borrower or any Subsidiary Guarantor pursuant to any
applicable law governing insolvency, bankruptcy or the assignment of assets
for the benefit of creditors.
5. OBLIGATIONS ABSOLUTE. Subject to the provisions of Sections 6
and 20 below, the obligations, covenants, agreements and duties of the
Guarantor under this Guaranty shall not be released, affected or impaired by
any of the following whether or not undertaken with notice to or consent of
the Guarantor: (a) any assignment or transfer, in whole or in part, of any of
the Guaranteed Obligations or of any of the Operative Documents, or (b) any
waiver by the Agent or any Bank, or by any other person, of the performance
or observance by the Borrower or any Subsidiary Guarantor of any of the
agreements, covenants, terms or conditions contained in any of the Operative
Documents, or (c) any indulgence in or the extension of the time for payment
by the Borrower or any Subsidiary Guarantor of the amounts payable under or
in connection with any of the Operative Documents, or of the time for
performance by any Borrower or any Subsidiary Guarantor of any other
obligations under or arising out of any of the Operative Documents, or the
extension or renewal thereof, or (d) the modification, amendment or waiver
(whether material or otherwise) of any duty, agreement or obligation of the
Borrower or any Subsidiary Guarantor set forth in any of the Operative
Documents (the modification, amendment or waiver from time to time of any of
the Operative Documents to which the Borrower or any Subsidiary Guarantor is
a party being expressly authorized without further notice to or consent of
the Guarantor), or (e) the voluntary or involuntary liquidation, sale or
other disposition of all or substantially all of the assets of the Borrower
or any Subsidiary Guarantor or any receivership, insolvency, bankruptcy,
reorganization, or other similar proceedings, affecting the Borrower or any
Subsidiary Guarantor or the Borrower's assets or the Subsidiary Guarantor or
any Subsidiary Guarantor's assets, or (f) the release of any security, if
any, for the obligations of the Borrower or any Subsidiary Guarantor under
any of the Operative Documents, PROVIDED that the prior written consent of
the Guarantor to such release has been
GUARANTY AGREEMENT
-4-
<PAGE>
obtained, or (g) the merger or consolidation of the Borrower or any
Subsidiary Guarantor with any other person, or (h) the release or discharge
of the Borrower or any Subsidiary Guarantor from the performance or
observance of any agreement, covenant, term or condition contained in any of
the Operative Documents, by operation of law, or (i) the running of any
limitations period otherwise applicable, or (j) any other cause whether
similar or dissimilar to the foregoing which would release, affect or impair
the obligations, covenants, agreements or duties of the Guarantor hereunder.
6. GUARANTOR CONSENT TO CERTAIN AMENDMENTS. Notwithstanding the
provisions of Section 5 above, in no event shall any of the following
modifications, amendments or waivers to the Operative Documents be permitted
without the prior written consent of the Guarantor: (a) any increase in the
Commitment A amounts (other than as contemplated by the terms of the Credit
Agreement as in effect on the date hereof) or Commitment B amounts under the
Credit Agreement, or any reinstatement by the Borrower of any portion of the
Commitment A amounts after the Borrower has reduced Commitment A pursuant to
Section 2.2(a) of the Credit Agreement, (b) any extension of the Termination
Date under the Credit Agreement, (c) any change in the amount or timing of
the payment of any principal amount of any Commitment B Loan under the Credit
Agreement, other than prepayments which are permitted by the terms of the
Credit Agreement, (d) any amendment, modification or waiver of any term,
covenant or agreement contained in Section 5.1(a), (d)(i), (f), (g) or (h) or
Section 5.2(b), (c), (f), (g), (h), (i), (j), (k), (o), (p) or (q) of the
Credit Agreement, or any change in the definitions of any of the terms
contained in any said Sections, or any amendment, modification or waiver of
any material provision of Section 2.5 of the Credit Agreement, except as
otherwise provided under the terms of the Intercreditor Agreement; PROVIDED,
HOWEVER, that such prior written consent to an action described in this
clause (d) shall be deemed granted if the Guarantor fails to respond within
seven (7) Business Days from the date it actually receives a written request
for such consent.
7. REPRESENTATIONS AND WARRANTIES. As of the date hereof and as
of the Effective Date, the Guarantor represents and warrants that:
(a) CORPORATE EXISTENCE AND POWER. The Guarantor is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Indiana and is duly qualified to do business in each
additional jurisdiction where such qualification is necessary under
applicable law except where the failure to so qualify would not reasonably be
expected to have a material adverse effect upon the condition (financial or
otherwise) of the Guarantor. The Guarantor has all requisite corporate power
to own its properties and to carry on its business as now being conducted and
as proposed to be conducted (except where failure to possess such corporate
power would not reasonably be expected to have a material adverse effect upon
the condition (financial or otherwise) of the Guarantor), to execute and
deliver this Guaranty and to engage in the transactions contemplated by this
Guaranty.
(b) CORPORATE AUTHORITY. The execution, delivery and
performance by the Guarantor of this Guaranty are within its corporate
powers, have been duly authorized by all necessary corporate action and are
not in contravention of any law, rule or regulation, or of any judgment,
GUARANTY AGREEMENT
-5-
<PAGE>
decree, writ, injunction, order or award of any arbitrator, court or
governmental authority, or of the terms of the Guarantor's charter or
by-laws, or of any contract or undertaking to which the Guarantor is a party
or by which it or its property may be bound.
(c) BINDING EFFECT. This Guaranty is the legal, valid and
binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms.
(d) LITIGATION. There is no action, suit or proceeding
pending or, to the best of the Guarantor's knowledge, threatened against or
affecting the Guarantor before or by any court, governmental authority or
arbitrator, which if adversely decided would reasonably be expected to have a
material adverse effect upon the ability of the Guarantor to perform its
obligations under this Guaranty.
(e) CONSENTS, ETC. No consent, approval or authorization of
or declaration, registration or filing with any governmental authority or any
nongovernmental person or entity, including without limitation any creditor
or stockholder of the Guarantor, other than the consent of the sole
shareholder of the Guarantor, is required on the part of the Guarantor in
connection with the execution, delivery and performance of this Guaranty or
the transactions contemplated hereby or as a condition to the legality,
validity or enforceability of this Guaranty.
(f) OTHER BANK DOCUMENTS. Each of the representations and
warranties of the Guarantor set forth in each document, agreement or
instrument evidencing any Indebtedness of the Guarantor to the Agent or any
Bank, as amended from time to time, which, if untrue or incorrect would have
a material adverse effect on the ability of the Guarantor to perform its
obligations under this Guaranty, is true and correct in all material respects
and such representations and warranties are incorporated by reference herein
as if set forth in full herein.
8. COVENANTS. The Guarantor agrees that, until payment in full
of the Guaranteed Obligations, it shall, unless the Required Banks shall
otherwise consent in writing:
(a) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and
maintain its corporate existence, rights, privileges, licenses, franchises
and permits and qualify and remain qualified as a validly existing
corporation in good standing in each jurisdiction in which such qualification
is necessary under applicable law except where the failure to so qualify
would not reasonably be expected to have a material adverse effect upon the
ability of the Guarantor to perform its obligations under this Guaranty.
(b) COMPLIANCE WITH LAWS, ETC. Comply in all material
respects with all applicable laws, rules, regulations and orders of any
governmental authority, noncompliance with which would reasonably be expected
to have a material adverse effect upon the ability of the Guarantor to
perform its obligations under this Guaranty (which compliance may include,
without limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon it or upon its property),
except to the extent that compliance with any of the foregoing is being
contested
GUARANTY AGREEMENT
-6-
<PAGE>
in good faith and by appropriate legal proceedings and with respect to which
adequate financial reserves have been established on the books and records of
the Guarantor in accordance with generally accepted accounting principles.
(c) MAINTENANCE OF INSURANCE. Maintain insurance with
responsible and reputable insurance companies or associations in such amounts
and covering such risks as is usually carried by companies engaged in similar
businesses and owning similar properties similarly situated.
(d) REPORTING REQUIREMENTS. Furnish to the Agent (with a
copy to each Bank), within seven (7) Business Days after becoming aware of
the occurrence of any Event of Default described in Section 10, a statement
of a duly authorized officer of the Guarantor setting forth such details of
such Event of Default as are known to the Guarantor and the action which the
Guarantor has taken and proposes to take with respect thereto.
(e) OTHER DOCUMENTS WITH BANKS. Comply with each and every
agreement and covenant contained in any agreement, document or instrument
evidencing Indebtedness of the Guarantor to the Agent or any Bank, as
amended from time to time, the noncompliance with which would have a
material adverse effect upon the ability of the Guarantor to perform its
obligations under this Guaranty, which agreements and covenants are
incorporated by reference herein as if set forth in full herein.
9. ASSIGNMENT OF ARVIN INDEMNITY. Subject to any and all rights
and defenses which the Guarantor may be entitled to assert under the Arvin
Indemnity, the Guarantor hereby consents to the assignment by the Borrower of
the Arvin Indemnity to, and hereby agrees to give the Agent and the Banks
copies of all notices delivered pursuant to the Arvin Indemnity, and to
otherwise treat the Agent as the assignee of all right, title and interest of
the Borrower in and to the Arvin Indemnity.
10. EVENTS OF DEFAULT. The occurrence of any of the following
events or conditions shall be deemed an "Event of Default" hereunder:
(a) The Guarantor shall fail to pay when due any amount
payable under Section 1 hereof and such failure shall continue for
seven (7) Business Days following written notice thereof to the Guarantor;
or
(b) Any representation or warranty made by the Guarantor
in this Guaranty or in any other document or certificate furnished by or on
behalf of the Guarantor in connection with this Guaranty shall prove to have
been incorrect in any material respect when made; or
(c) The Guarantor shall fail to perform or observe any
other term, covenant or agreement contained in this Guaranty and such failure
shall not be cured within thirty (30) days of notice thereof to the Guarantor
from the Agent.
GUARANTY AGREEMENT
-7-
<PAGE>
11. REMEDIES. (a) Upon the occurrence and during the continuance
of any Event of Default, or any Event of Default under the Credit Agreement,
the Agent may, in addition to the remedies provided in the Operative
Documents, enforce its rights either by suit in equity, or by action at law,
or by other appropriate proceedings, may enforce payment under this Guaranty
and any of its other rights available at law or in equity.
(b) To the extent that it lawfully may, the Guarantor agrees
that (i) it will not at any time insist upon any benefit or advantage of any
law providing for the evaluation or appraisal of any security for the
obligations of the Borrower or any Subsidiary Guarantor under the Operative
Documents prior to any sale of such security in accordance with the Operative
Documents and applicable law; and (ii) it will not allege as a defense under
this Guaranty any stay, moratorium or extension made applicable to the
Borrower or to any Subsidiary Guarantor by any applicable Federal or state
law including without limitation Title 11 of the United States Code.
12. PAYMENTS. All amounts payable by the Guarantor under this
Guaranty shall be paid to the Agent at its main office in Detroit, Michigan,
or otherwise as the Bank may from time to time direct, in full, free and
clear of any present or future taxes, levies, imposts, duties, charges, fees
or withholdings whatsoever. If the Guarantor is compelled by law to make any
deduction or withholding, it will promptly pay to the Agent such additional
amount as will result in the net amount received by the Agent being equal to
the full amount which would have been receivable had there been no deduction
or withholding.
13. NO SETOFF, ETC. BY GUARANTOR. No setoff, counterclaim,
reduction or diminution of an obligation, or any defense of any kind or
nature (other than performance by the Guarantor of its obligations hereunder)
which the undersigned have or may have against the Agent or any Bank shall be
available hereunder to the Guarantor against the Agent or any Bank.
14. OBLIGATIONS OF AGENT AND BANKS; NO CROSS-DEFAULT.
(a) Simultaneously with giving the Borrower any written notice under the Credit
Agreement, the Agent shall deliver a copy of such notice to the Guarantor.
The Agent shall also provide the Guarantor with prompt written notice of the
Agent's acceleration of the Guaranteed Obligations or the exercise of any
other remedy under Section 6.2 of the Credit Agreement. The Guarantor may
cure any default of the Borrower under the Credit Agreement, if such default
is curable, within the period (if any) granted to the Borrower under the
Credit Agreement.
(b) The Agent and each Bank hereby expressly waive any right
to setoff or apply against the Guarantor's obligations hereunder any
deposits or any other Indebtedness owed by the Agent or any Bank to the
Guarantor.
(c) Notwithstanding any provision to the contrary which may
be contained in any document or agreement to which the Guarantor (or an
affiliate of the Guarantor) and the Agent or any Bank may, now or in the
future be, parties or any instrument made, executed and delivered
GUARANTY AGREEMENT
-8-
<PAGE>
by the Guarantor or any affiliate of the Guarantor, no default or Event of
Default hereunder shall constitute a default or event of default under any
other such document, agreement or instrument.
15. AMENDMENTS, ETC. This Guaranty may be amended from time to
time and any provision hereof may be waived. No such amendment or waiver of
any provision of this Guaranty nor consent to any departure by the Guarantor,
the Agent or any Bank therefrom shall in any event be effective unless the
same shall be in writing and signed by the Agent, the Required Banks and the
Guarantor, and then such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
16. NOTICES. All notices, demands, requests, consents and other
communications hereunder shall be in writing and shall be delivered or sent
to the Guarantor at Arvin Industries, Inc., One Noblitt Plaza, P.O. Box 3000,
Columbus, Indiana 47201. Attention: Mr. Richard Smith, Vice President and
Chief Financial Officer, Facsimile Number: (812) 379-3688, with a copy to
Calspan International, Inc., 800 Connecticut Avenue, N.W., Suite 1111,
Washington, D.C. 20006, Attention: Katherine A. Snavely, Vice President -
Corporate Finance, Facsimile No. (202) 861-0321, and to the Agent at 611
Woodward Avenue, Detroit, Michigan 48226, Attention: Midwest Banking
Division, Facsimile No. (313) 225-1671, or to such other address as may be
designated by the Guarantor, the Borrower or the Agent by notice to the other
parties. All notices and other communications shall be deemed to have been
given at the time of actual delivery thereof to such address, or if sent by
certified or registered mail, postage prepaid, to such address, on the fifth
day after mailing.
17. SUBORDINATION, SUBROGATION, ETC. The Guarantor agrees that any
present or future indebtedness, obligations or liabilities of the Borrower to
the Guarantor shall be fully subordinate and junior in right and priority of
payment to any present or future indebtedness, obligations or liabilities of
the Borrower to the Agent and the Banks under the Operative Documents, and
the Guarantor hereby agrees not to exercise any rights of subrogation or
contribution arising from any payments made by the Guarantor in respect of
the Guaranteed Obligations of the Borrower until all amounts due and owing by
the Borrower to the Agent and the Banks under the Operative Documents have
been paid in full.
18. CONDUCT NO WAIVER; REMEDIES CUMULATIVE. The obligations of the
Guarantor under this Guaranty are continuing obligations and a fresh cause of
action shall arise in respect of each Event of Default hereunder. No course
of dealing on the part of the Agent or any Bank nor any delay or failure on
the part of the Agent or any Bank in exercising any right, power or privilege
hereunder shall operate as a waiver of such right, power or privilege or
otherwise prejudice the Agent or any Bank's rights and remedies hereunder;
nor shall any single or partial exercise thereof preclude any further
exercise thereof or the exercise of any other right, power or privilege. No
right or remedy conferred upon or reserved to the Agent or any Bank under
this Guaranty is intended to be exclusive of any other right or remedy, and
every right and remedy shall be cumulative and in addition to every other
right or remedy given hereunder or now or hereafter existing under any
applicable law. Every right and remedy given by this Guaranty or by
applicable law to the Agent or any Bank may be exercised from time to time
and as often as may be deemed expedient by the Agent or any Bank.
GUARANTY AGREEMENT
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<PAGE>
19. RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS. All terms,
covenants, agreements, representations and warranties of the Guarantor made
herein or in any certificate or other document delivered pursuant hereto
shall be deemed to be material and to have been relied upon by the Agent and
the Banks, notwithstanding any investigation heretofore or hereafter made by
the Agent and the Banks or on the Agent's or any Bank's behalf.
20. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon,
and inure to the benefit of, the parties hereto and their respective
permitted successors and assigns; PROVIDED, HOWEVER, that neither the Agent
nor any of the Banks may sell or assign any interest in this Guaranty except
in accordance with any sale or assignment under Section 8.6 of the Credit
Agreement and except with the prior written consent of the Guarantor, other
than any sale or assignment to any Affiliate of the Agent or any Bank, which
may be made without the consent of the Guarantor. Such restriction shall not
be binding upon any grant of a participation interest under Section 8.6(b) of
the Credit Agreement. Any sale, assignment or grant of a participation
interest shall be subject to the terms of this Guaranty and the Intercreditor
Agreement, and any sale or assignment in violation of this Section 20 shall
result in the termination of this Guaranty.
21. SURVIVAL OF AGENT OR ANY BANK'S RIGHTS AND REMEDIES.
Notwithstanding any provision of this Guaranty to the contrary, the execution
and delivery by the Guarantor of this Guaranty, and the Agent and the Banks'
acceptance thereof, shall not be deemed to (a) be a consent to the action,
whether heretofore or hereafter taken, by the Borrower or any Subsidiary
Guarantor in violation of any provision of any Operative Document, (b) be a
waiver of any provision of any Operative Document, or (c) prejudice any
rights or remedies which the Agent or any Bank may now have or have in the
future under or in connection with any Operative Document, including without
limitation, any such rights or remedies with respect to any event of default
or event causing or permitting acceleration under any Operative Document
which may heretofore have occurred and be continuing or may hereafter occur.
22. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVERS. This
Guaranty is a contract made under, and shall be governed by and construed in
accordance with, the laws of the State of Michigan applicable to contracts
made and to be performed entirely within such State and without giving effect
to choice of law principles of such State. The Guarantor further agrees that
any legal action or proceeding with respect to this Guaranty or any Operative
Document or the transactions contemplated hereby may be brought in any court
of the State of Michigan, or in any court of the United States of America
sitting in Michigan, and the Guarantor hereby submits to and accepts
generally and unconditionally the non-exclusive jurisdiction of those courts
with respect to its person and property and irrevocably consents to the
service of process in connection with any such action or proceeding by
personal delivery to the Guarantor or by the mailing thereof by registered or
certified mail, postage prepaid to the Guarantor at its address set forth in
Section 16. Nothing in this Section 22 shall affect the right of the Agent to
serve process in any other manner permitted by law or limit the right of the
Agent to bring any such action or proceeding against the Guarantor or
property in the courts of any other jurisdiction. The Guarantor hereby
irrevocably
GUARANTY AGREEMENT
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<PAGE>
waives any objection to the laying of venue of any such suit or proceeding in
the above described courts.
23. DEFINITIONS; HEADINGS. Terms used but not defined herein shall
have the respective meanings ascribed thereto in the Credit Agreement. The
headings of the various subdivisions hereof are for convenience of reference
only and shall in no way modify any of its terms or provisions hereof.
24. COUNTERPART EXECUTION. This Guaranty may be signed upon any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Guaranty shall become effective as to the Guarantor when a counterpart
hereof shall have been signed by the Guarantor.
25. INTEGRATION; SEVERABILITY; ENFORCEABILITY. This Guaranty
embodies the entire agreement and understanding among the Guarantor, the
Banks and the Agent, and supersedes all prior agreements and understandings
relating to the subject matter hereof. If any one or more provisions of this
Guaranty should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected, impaired, prejudiced or disturbed
thereby. If at any time any portion of the obligations of the Guarantor under
this Guaranty shall be determined by a court of competent jurisdiction to be
invalid, unenforceable or avoidable, the remaining portion of the obligations
of the Guarantor under this Guaranty shall not in any way be affected,
impaired, prejudiced or disturbed thereby and shall remain valid and
enforceable to the fullest extent permitted by applicable law. If at any time
all or any portion of the obligations of the Guarantor under this Guaranty
would otherwise be determined by a court of competent jurisdiction to be
invalid, unenforceable or avoidable under Section 548 of the federal
Bankruptcy Code or under a similar applicable law of any jurisdiction, then
notwithstanding any other provisions of this Guaranty to the contrary such
obligation or portion thereof of the Guarantor under this Guaranty shall be
limited to the value of any quantifiable economic benefits accruing to the
Guarantor as a result of this Guaranty, or (if applicable) such lesser amount
as a court of competent jurisdiction may determine is recoverable under this
Guaranty.
26. REINSTATEMENT. This Guaranty shall remain in full force and
effect and continue to be effective in the event any petition be filed by or
against the Borrower, any Subsidiary Guarantor or the Guarantor for
liquidation or reorganization, in the event the Borrower, any Subsidiary
Guarantor or the Guarantor becomes insolvent or makes an assignment for the
benefit of creditors or in the event a receiver or trustee be appointed for
all or any significant part of the Borrower, any Subsidiary Guarantor or the
Guarantor's assets, and shall continue to be effective or be reinstated, as
the case may be, if at any time payment and performance of the Guaranteed
Obligations, or any part thereof, is, pursuant to applicable law, rescinded
or reduced in amount, or must otherwise be restored or returned by the Agent
or any Bank, whether as a "voidable preference", "fraudulent conveyance", or
otherwise, all as though such payment or performance had not been made. In
the event that any payment, or any part thereof, is rescinded, reduced,
restored or returned, the
GUARANTY AGREEMENT
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<PAGE>
Guaranteed Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
27. WAIVER OF JURY TRIAL. THE AGENT, THE BANKS AND THE GUARANTOR,
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE
TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
GUARANTY OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS GUARANTY OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THEM. NEITHER THE AGENT, ANY
BANK NOR THE GUARANTOR SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR
OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED EXCEPT
WHERE NECESSARY TO PRESERVE SUCH ACTION. THESE PROVISIONS SHALL NOT BE DEEMED
TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE AGENT, ANY BANK
OR THE GUARANTOR EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.
28. RESERVATION OF RIGHTS. Notwithstanding any provision of this
Guaranty to the contrary, the Guarantor shall be entitled to pursue, exercise
and assert in a separate proceeding after payment in full of the Guaranteed
Obligations, all legal or equitable remedies for any breach of this Guaranty
or any of the Operative Documents by the Agent or any Bank; and no payment
hereunder by the Guarantor nor any provision contained herein, including
without limitation the unconditional nature of the Guarantor's obligation
hereunder, shall be construed as a waiver of any such rights by the
Guarantor, or as a limitation on, or with respect to, any such remedies or
the damages recoverable in such proceeding.
GUARANTY AGREEMENT
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<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered as of the day and year first set forth above.
ARVIN INDUSTRIES, INC.
By: /s/ Richard A. Smith
----------------------------------------
Its: Chief Financial Officer
--------------------------------------
Agreed and Accepted this 14th
day of August, 1995:
NBD BANK, as Agent and as a Bank
By: /s/ Edward C. Hathaway
------------------------------
GUARANTY AGREEMENT
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<PAGE>
Exhibit 2(d)
CONFORMED COPY
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT (this "AGREEMENT") dated as of August 11, 1995
by and among ARVIN INDUSTRIES, INC., an Indiana corporation ("ARVIN"), SPACE
ACQUISITION CORPORATION, a Delaware corporation (the "BORROWER"), the Banks
set forth on the signature pages hereof (collectively, the "Banks," and
individually, a "Bank"), and NBD BANK, a Michigan banking corporation, as
Agent (the "AGENT") for the Banks under that certain Amended and Restated
Credit Agreement of even date herewith by and among the Borrower, certain
Subsidiaries of the Borrower, the Banks and the Agent (as amended or modified
from time to time, the "CREDIT AGREEMENT").
W I T N E S S E T H:
WHEREAS, the Borrower was formed on July 27, 1995 for the purpose of
acquiring all of the issued and outstanding capital stock of Space Industries
International, Inc., a Delaware corporation ("SIII"), pursuant to the terms
of that certain Agreement and Plan of Merger dated as of August 11, 1995 (the
"MERGER AGREEMENT"), and upon consummation of the transactions contemplated
by the Merger Agreement, the Borrower will have acquired all of the issued
and outstanding capital stock of SIII, SIII will have merged with and into
the Borrower (with the Borrower being the surviving corporation), and the
Borrower will change its name to "CALSPAN INTERNATIONAL, INC."; and
WHEREAS, pursuant to the Credit Agreement, the Banks, upon the Effective
Date, may extend to the Borrower a revolving credit facility in the aggregate
principal amount of $39,000,000, which may include letters of credit in an
aggregate stated amount not to exceed $10,000,000, in order to provide funds
for the consummation of the transactions contemplated by the Merger
Agreement, for working capital
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purposes and for its other general corporate purposes; and
WHEREAS, it is a condition to the Banks entering into the Credit Agreement
that Arvin guaranty amounts constituting the Commitment B portion of the
Borrower's obligations under the Credit Agreement, pursuant to and as more
specifically described by the terms of a certain Guaranty Agreement of even
date herewith, made by Arvin in favor of the Agent (the "GUARANTY"); and
WHEREAS, it is a condition to Arvin's entering into and making the Guaranty
that the parties hereto enter into this Agreement, and the Borrower and the
Agent have agreed to enter into this Agreement in order to induce Arvin to
enter into and make the Guaranty.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
(1) DEFINITIONS. All capitalized terms used but not defined
herein shall have the meanings ascribed to such terms in the Guaranty.
(2) INFORMATION AND ACCESS TO PROCEEDINGS. The Borrower
covenants and agrees that it shall (A) provide Arvin with copies of
all financial statements and other reports, certificates and documents which
the Borrower furnishes to the Agent pursuant to Section 5.1(d) of the Credit
Agreement at the same time and in the same manner as the Borrower furnishes
such statements and other reports to the Agent, (B) promptly after receipt
thereof (but in no event later than two (2) Business Days after receipt
thereof) provide Arvin with copies of all notices and other material
communications received by it from the Agent or any Bank, including any
notice of Default or Event of Default under the Credit Agreement or any Note,
(C) provide Arvin with access to the Borrower's records, books of accounts
and properties, and opportunity for discussion and audit, on the same basis
as the Borrower provides such access and opportunity to the Agent and the
Banks pursuant to Sections 5.1(e)(i) and (ii) of the Credit Agreement and (D)
give Arvin notice of all meetings of the Borrower's shareholders and board of
directors and any committee thereof and furnish to Arvin copies of all other
material communications from the Borrower to its board of directors or
shareholders, all at the same time and in the same manner as such notice is
given or such other communication is made to the directors or shareholders,
as the case may be. Arvin agrees that all such financial statements and
reports, as well as
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other sensitive materials received from the Borrower, shall be held and
treated as confidential, except to the extent that such information is or
becomes (i) generally available to the public other than as a result of a
wrongful disclosure by Arvin, (ii) available to Arvin from another source,
provided that such source is not (to Arvin's knowledge) prohibited from
disclosing such information, or (iii) discoverable under legal process under
applicable law. The Borrower also agrees to permit a designated
representative of Arvin to attend all meetings of the Borrower's shareholders
or the board of directors; PROVIDED, HOWEVER, that such representative may be
excluded, at the Borrower's option, from that portion of any meeting of the
board of directors in executive session at which there is discussed a
proposed or actual contract or transaction between the Borrower and Arvin or
any other corporation, partnership, association, or other organization in
which one or more of the officers or directors is also an officer or director
of Arvin or in which Arvin has a financial interest.
(3) PURCHASE OF THE LOANS. The Borrower, the Agent and the
Banks, agree with Arvin that:
(a) upon the occurrence and during the continuance of any
Event of Default under the Credit Agreement, or
(b) immediately upon any payment made by Arvin pursuant to
Section 1(b) of the Guaranty,
Arvin shall have the right (but not the obligation) to purchase from, and pay
to the Agent and the Banks all obligations due and owing by the Borrower and
the Subsidiary Guarantors under the Operative Documents (the "Senior Debt"),
including the outstanding principal balance of all (but not less than all) of
the outstanding Notes and all accrued and unpaid interest thereon. The
purchase of the Senior Debt under this Section 3 shall occur not later than
thirty (30) days after Arvin gives notice of its intent to purchase the
Senior Debt and upon such purchase the Agent and Banks shall assign to Arvin
without representation or warranty (except for the representation and
warranty that the Agent and/or the Banks have the organizational power and
authority so to assign and have not previously assigned any portion of the
Senior Debt) all of their right, title and interest in and to the Operative
Documents. Arvin's right to purchase the Senior Debt hereunder shall lapse
upon a revocation by the Agent of an Event of Default if Arvin receives a
notice of revocation of such Event of Default prior to its giving of a notice
of intent
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to purchase hereunder.
(4) LIMITATION ON INDEBTEDNESS AND INVESTMENTS. The Borrower
agrees that, without the prior written consent of Arvin, the Borrower will
not (A) incur any Indebtedness permitted by Section 5.2(g)(ii) of the Credit
Agreement, (B) incur any Indebtedness permitted by Section 5.2(g)(iv) of the
Credit Agreement that is not expressly subordinate and junior in right and
priority of payment to any Indebtedness of the Borrower to Arvin or (C) make
any investments, loans or advances permitted by Section 5.2(m) of the Credit
Agreement if the aggregate book value of such investments, loans and
advances, as measured at the time of any such investment, loan or advance,
exceeds at any time 5% of the consolidated Tangible Capital Funds of the
Borrower and its Subsidiaries as at the end of the immediately preceding
fiscal quarter of the Borrower.
(5) ARVIN CONSENT TO CREDIT AGREEMENT WAIVERS AND MODIFICATION.
Notwithstanding the provisions of Section 6 of the Guaranty or any other
provision of the Guaranty or the Credit Agreement to the contrary, Arvin's
consent shall not be required for any amendment, modification or waiver of
any term, covenant or agreement contained in:
(a) Section 5.2(b) of the Credit Agreement, if the
Borrower's Tangible Capital Funds are greater than the following: $17
million; decreasing to $14.5 million at Fiscal Year End 1996; decreasing to
$12.5 million at Fiscal Year End 1997; decreasing to $10.75 million at Fiscal
Year End 1998; decreasing to $10 million at Fiscal Year End 1999; increasing
to $12.1 million at Fiscal Year End 2000,
(b) Section 5.2(c) of the Credit Agreement, if the
Borrower's Leverage Ratio is less than the following: 2.6; increasing to 2.7
on the first day of Fiscal Year 1997; increasing to 3.2 on the first day of
Fiscal Year 1998; increasing to 3.4 on the first day of Fiscal Year 1999;
decreasing to 2.7 on the first day of Fiscal Year 2000, or
(c) Section 5.2(f) of the Credit Agreement, if the
Borrower's Adjusted Cash Flow Ratio is greater than the following: 1.05;
decreasing to 1.0 on the first day of Fiscal Year 1997.
(6) BORROWER'S REIMBURSEMENT OBLIGATION.
(a) The Borrower and each of the Subsidiary
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Guarantors which becomes party hereto hereby agree, jointly and severally, to
pay to Arvin on demand a sum equal to (i) any and all aggregate amounts paid
or incurred by Arvin under the Guaranty to the Agent on account of the
obligations of the Borrower to the Banks under the Operative Documents, (ii)
any and all costs and expenses incurred by Arvin in connection with enforcing
the obligations of the Borrower and the Subsidiary Guarantors hereunder,
including without limitation, the reasonable fees and disbursements of
counsel for Arvin, and (iii) interest on such amounts for the period
commencing on the date of demand for reimbursement under this Section 6 at
the Overdue Rate (as defined in the Credit Agreement) until the same is paid
in full.
(b) The obligations, covenants, agreements and duties of
the Borrower and the Subsidiary Guarantors under this Section shall not be
released, affected or impaired by any of the following whether or not
undertaken with notice to or consent of Arvin: (i) any assignment or
transfer, in whole or in part, of any of the Guaranteed Obligations or of any
of the Operative Documents, or (ii) any waiver by the Agent or any Bank, or
by any other person, of the performance or observance by Arvin, the Borrower
or any Subsidiary Guarantor of any of the agreements, covenants, terms or
conditions contained in the Guaranty, this Agreement or any of the Operative
Documents, or (iii) any indulgence in or the extension of the time for
payment by Arvin of the amounts payable under or in connection with the
Guaranty, or of the time for performance by Arvin, the Borrower or any
Subsidiary Guarantor of any other obligations under or arising out of the
Guaranty or any of the Operative Documents, or the extension or renewal
thereof, or (iv) the modification, amendment or waiver (whether material or
otherwise) of any duty, agreement or obligation of Arvin, the Borrower or any
Subsidiary Guarantor set forth in the Guaranty or this Agreement any of the
Operative Documents (the modification, amendment or waiver from time to time
of such documents being expressly authorized without further notice to or
consent of the Borrower or the Subsidiary Guarantors), or (v) the existence
of any defense, setoff or counterclaim which the Borrower may have or assert
against Arvin, the Agent or any Bank, or (vi) any purported release or
discharge of Arvin, the Borrower or any Subsidiary Guarantor from the
performance or observance of any agreement, covenant, term or condition
contained in this Agreement, the Guaranty or any of the Operative Documents,
by operation of law, or (vii) the running of any
limitations period otherwise applicable, or (viii) any other cause whether
similar or dissimilar to the foregoing which would release, affect or impair
the obligations, covenants, agreements or duties of the Borrower or any
Subsidiary Guarantor to
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Arvin hereunder.
(c) Notwithstanding provision of Section 6(b) to the
contrary, the Borrower and any Subsidiary Guarantor shall be entitled to
pursue after payment in full of the amounts owed to Guarantor hereunder,
exercise and assert in a separate proceeding, all legal or equitable remedies
for any breach of this Agreement by Arvin, the Agent or any Bank; and no
payment under this Section 6 by the Borrower or any Subsidiary Guarantor nor
any provision contained herein, including without limitation the
unconditional nature of the obligations of the Borrower and the Subsidiary
Guarantors under this Section 6, shall be construed as a waiver of any such
rights by any of them, or as a limitation on, or with respect to, any such
remedies or the damages recoverable in such proceeding.
(7) SECOND PRIORITY SECURITY INTEREST. The parties hereto
agree and acknowledge that, to secure the obligations of the Borrower and the
Subsidiary Guarantors to Arvin under Section 6 hereof (the "SUBORDINATED
OBLIGATIONS"), (A) the Borrower and the Subsidiary Guarantors shall grant
Arvin a security interest in the same collateral (the "COLLATERAL") in which
the Borrower and the Subsidiary Guarantors shall grant the Agent and the
Banks a security interest pursuant to the Security Documents (as defined in
the Credit Agreement) other than the Guaranty, which security interest shall
be evidenced by security agreements, pledge agreements, financing statements
and other documents, all in form and substance satisfactory to Arvin and the
Agent and identical to the Security Agreement is all material respects,
(collectively, the "ARVIN SECURITY DOCUMENTS"), (B) the security interests
created in favor of Arvin by the Arvin Security Documents shall be junior in
priority to the security interests created in favor of the Agent and the
Banks by the Security Documents to secure the Senior Debt and (C)
notwithstanding Section 5.2(h) or any other provision of the Credit Agreement
to the contrary, neither the grant nor the perfection of security interests
by the Borrower and the Subsidiary Guarantors pursuant to the Arvin Security
Documents, in and of itself, constitutes, or will constitute, a default under
the Credit Agreement.
(8) COLLATERAL AGENT. Arvin hereby appoints the Agent as its
agent for the purpose of holding the Collateral, or so much of it as is in or
may come into the possession of the Agent, pursuant to the lien of the
security interests granted under the Arvin Security Documents. The Agent
hereby accepts such appointment and agrees to receive, hold, liquidate,
disburse, release and otherwise deal with such Collateral and the proceeds
and products thereof which may come
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into its possession in accordance with the Arvin Security Documents and this
Agreement and to pay over to Arvin any such Collateral or proceeds to which
Arvin is entitled under Section 9 hereof. The Agent shall have no duties or
responsibilities as agent of Arvin except those expressly set forth herein,
and shall not, by reason of this Agreement, have a fiduciary relationship
with Arvin, and no implied covenants, responsibilities, duties, obligations
or liabilities shall be read into this Agreement or shall otherwise exist
against the Agent. Neither the Agent nor any of its directors, officers,
agents, or employees shall be liable to Arvin for any action taken or not
taken by it or them as agent of Arvin hereunder with the consent or at the
request of Arvin or in the absence of its or their own gross negligence or
willful misconduct. Neither the Agent nor any of its directors, officers,
agents, or employees shall incur any liability by acting in reliance upon any
notice, consent, certificate, statement, or other writing (which may be a
bank wire, telex, telecopy, or similar writing) believed by it to be genuine
or to be signed by the proper party or parties. Arvin agrees to indemnify
and hold harmless the Agent (to the extent not reimbursed by the Borrower,
but without limiting any obligation of the Borrower to make such
reimbursement) against any and all claims, damages, losses, liabilities,
costs or expenses arising out of its actions as agent under this Section 8;
PROVIDED, HOWEVER, that Arvin shall not be liable for any portion of such
claims, damages, losses, liabilities, costs or expenses resulting from the
Agent's breach of its obligations under this Agreement or its gross
negligence or willful misconduct.
(9) SUBORDINATION PROVISIONS. In furtherance of the provisions
of Section 7 of this Agreement, the parties hereto agree as follows:
(a) DEBT SUBORDINATION. All Subordinated Obligations
shall be subordinate and junior in right of payment and all other respects to
all Senior Debt, in the manner hereinafter set forth. No payment of, or
security for, all or any part of the Subordinated Obligations, including
without limitation principal and interest, whether in cash or other property,
by setoff, realizing upon collateral or otherwise, and whether directly or
indirectly, shall be made, given or received, unless and until the Senior
Debt shall have been paid in full or acquired by Arvin.
(b) LIEN SUBORDINATION. As among the Agent, the Banks
and Arvin only, Arvin unconditionally subordinates to the lien securing the
Senior Debt by the Agent for the benefit of the Banks any and all liens and
security interests which Arvin presently or hereinafter may have with respect
to the Arvin
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Security Documents. Such liens and security interests shall be junior in
priority and subordinate to any and all liens and security interests securing
the Senior Debt that the Agent may have in the same property, regardless of
(i) the time or order of attachment, perfection, filing or recording of such
security interests or liens, or the failure to give notice of the acquisition
or expected acquisition of any lien or security interest; (ii) any provision
of the United States Bankruptcy Code or the Uniform Commercial Code of
Michigan or any other Federal or state laws which relate to the priority of
liens or security interests; and (iii) the lapse of perfection or other lack
of perfection of the Agent's liens or security interests. It is further
acknowledged and agreed that none of Arvin, the Borrower or the Agent shall
take any action challenging the validity or enforceability of the liens and
security interests granted by the Borrower to the Agent or Arvin, as the case
may be, to secure the Senior Debt or the Subordinated Obligations, or any of
the subordination or other provisions set forth in this Agreement.
(c) BANKRUPTCY. In the event of any dissolution, winding
up, liquidation, arrangement or reorganization relating to the Borrower, or
upon an assignment for the benefit of creditors or any other marshalling of
the assets and liabilities of the Borrower or otherwise, the Agent and the
Banks shall be entitled to receive payment in full of the Senior Debt before
Arvin is entitled to receive any payment on account of any Subordinated Debt
and to that end (but subject to (i) the power of a court of competent
jurisdiction to make other equitable provision reflecting the rights
conferred upon holders of indebtedness by a lawful plan of reorganization
arrangement or liquidation under applicable bankruptcy or insolvency law;
(ii) the provisions regarding distributions to creditors, claimholders and/or
parties-in-interest under any applicable bankruptcy or insolvency statute,
any statute or procedure for arrangement of debt or assignment for the
benefit of creditors; and (iii) any order or decree entered by a court of
competent jurisdiction in any proceeding pending under any applicable law
with respect to bankruptcy, insolvency, or assignment of the benefit of
creditors), the Agent shall be entitled to receive, on behalf of the Banks,
all payments or distributions of any kind (whether in cash, securities or
other property) which otherwise would be payable or deliverable upon or with
respect to the Subordinated Obligations, and such payments or distributions
shall be paid or delivered directly to the Agent, or its representatives, for
application to the payment or prepayment of the Senior Debt, until the Senior
Debt shall have been paid in full.
(d) UNAUTHORIZED PAYMENTS. In the event that any
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payment or distribution upon or with respect to the Subordinated Debt is
received by Arvin contrary to the subordination provisions of this Agreement,
such payment or distribution shall be received in trust for the benefit of
the Agent, shall be segregated from other funds and property held by Arvin
and shall be forthwith paid over to the Agent, or its representatives, for
application to the payment or prepayment of the Senior Debt until the Senior
Debt shall have been paid in full. Until so delivered, the same shall be
held in trust by Arvin, as the property of the Agent for the benefit of the
Banks. In the event of failure of Arvin to make any such endorsement or
assignment, the Agent, or any of its officers or employees on behalf of the
Agent, is hereby unequivocally authorized to make the same.
(e) REINSTATEMENT. Arvin agrees that if at any time any
payment by the Borrower to the Agent or the Banks, or any part thereof, is
subsequently invalidated, declared to be fraudulent or preferential, set
aside, rescinded and/or required to be repaid by the Agent or any Bank to a
trustee, receiver or any other party under any bankruptcy, insolvency,
arrangement, reorganization or receivership proceedings or upon an assignment
for the benefit of creditors or any other marshalling of the assets of
liabilities of the Borrower, or otherwise, then to the extent of any sum not
finally retained by the Agent or any Bank, Arvin's obligations to the Agent
and the Banks shall be reinstated upon written notice thereof to Arvin by the
Agent and this Agreement shall remain in full force and effect (or be
reinstated), but only to the extent of, and with respect to, any payments not
finally retained by the Agent and the Banks, until the Senior Debt shall have
been paid in full.
(f) REPRESENTATIONS AND WARRANTIES.
i) Arvin hereby represents and warrants that: (A)
the execution, delivery and performance of this Agreement are within its
corporate powers, if applicable, have been duly authorized and are not in
contravention of law or, if applicable, of the terms of its articles of
incorporation or bylaws, or of any law, order, judgment, decree, contract or
undertaking to which it is a party or by which it or any of its properties is
bound or affected; (B) this Agreement constitutes the legal, valid and
binding obligation of Arvin, enforceable against it in accordance with its
terms; and (C) except as provided or to be provided under this Agreement or
the Arvin Security Documents, no security or collateral of any kind has been
taken by Arvin to secure any of the Subordinated Obligations, whether from
the Borrower or otherwise, and there are no Liens on or with respect to any
of the Borrower's assets to secure any part of the Subordinated Obligations.
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ii) The Borrower hereby represents and warrants that:
(A) the execution, delivery and performance of this Agreement are within its
corporate powers, if applicable, have been duly authorized and are not in
contravention of law or, if applicable, of the terms of its articles of
incorporation or bylaws, or of any law, order, judgment, decree, contract or
undertaking to which it is a party or by which it or any of its properties is
bound or affected; (B) this Agreement constitutes the legal, valid and
binding obligation of the Borrower, enforceable against it in accordance with
its terms; and (C) except as provided or to be provided under this Agreement,
the Security Documents or the Arvin Security Documents, no security or
collateral of any kind has been taken by Arvin, the Agent or any Bank to
secure any of the Senior Debt or the Subordinated Obligations, whether from
the Borrower or otherwise, and there are no Liens on or with respect to any
of the Borrower's assets to secure any part of the Senior Debt or the
Subordinated Obligations.
iii) The Agent and the Banks each (for itself only)
hereby represent and warrant that: (A) the execution, delivery and
performance of this Agreement are within its corporate powers, if applicable,
have been duly authorized and are not in contravention of law or, if
applicable, of the terms of its articles of incorporation or bylaws, or of
any law, order, judgment, decree, contract or undertaking to which it is a
party or by which it or any of its properties is bound or affected; (B) this
Agreement constitutes the legal, valid and binding obligation of the Agent
and each of the Banks, enforceable against each in accordance with its terms;
and (C) except as provided or to be provided under the Security Documents, no
security or collateral of any kind has been taken by the Agent or the Banks
to secure any of the Senior Debt, whether from the Borrower or otherwise, and
there are no Liens on or with respect to any of the Borrower's assets to
secure any part of the Senior Debt.
(g) COVENANTS. Until all of the Senior Debt has been paid
in full or Arvin has earlier purchased the Senior Debt, unless otherwise
consented to by the Agent in writing: (i) Arvin will not ask, demand, sue
for, take or receive from the Borrower directly or indirectly, by way of set
off or in any other manner, all or any part of the Subordinated Obligations
or otherwise enforce any of its rights or remedies in connection with the
Subordinated Obligations or the Arvin Security Documents, including without
limitation with respect to any collateral or guaranty therefor, and the
Borrower agrees not to make any payment on the Subordinated Obligations,
whether directly or indirectly or in any other manner;
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(ii) Arvin and the Borrower shall not assign, transfer, hypothecate or
modify, terminate, amend or supplement, or consent to any cancellation,
modification, termination, amendment or supplement of, any of the terms of
the Subordinated Obligations; and (iii) except as provided or to be provided
under the Arvin Security Documents, the Borrower will not hereafter issue any
instrument, agreement or other writing evidencing or securing any part of the
Subordinated Obligations or allow any Liens on or with respect to any of its
assets to secure any part of the Subordinated Obligations, and Arvin will not
receive any such instrument, security or other writing or any such Liens, and
any such instrument, security or other writing and any such Lien shall be
null and void; PROVIDED, HOWEVER, that nothing in this Section 9(g) or
otherwise in this Agreement shall be construed to prohibit Arvin from taking
any actions to protect its rights, enforce its claims or preserve or maintain
its security interests in the Collateral granted under the Arvin Security
Documents so long as Arvin is not attempting to exercise enforcement
remedies, obtain collateral liquidation proceeds or prohibit, hinder or delay
the Agent or any Bank from exercising enforcement remedies.
(h) CONTINUING SUBORDINATION. This Agreement shall
constitute a continuing agreement of subordination which shall remain in
effect until such time as the Senior Debt is paid in full or has been
acquired by Arvin.
(i) RIGHTS NOT CONSTRUED AS DUTIES. The rights
granted to the Agent in this Agreement are solely for its protection and
nothing herein contained imposes on the Agent or any Bank any duties with
respect to any property of the Borrower or Arvin heretofore or hereafter
received by the Agent.
(j) ACTIONS BY THE AGENT. Without notice to or the
consent of Arvin, the Agent may, subject to the terms of this Agreement and
the Guaranty, at any time and from time to time and without impairing or
releasing the subordination provisions of this Agreement, do any one or more
of the following: (i) exercise or refrain from exercising any rights with
respect to the Senior Debt against the Borrower, any guarantor of the Senior
Debt or any other person and (ii) apply any monies or other property paid by
any person or otherwise available to the Senior Debt.
(k) NO LIABILITY. Except as provided in this Agreement
and the Guaranty, neither the Agent nor Arvin hereby makes any warranties,
express or implied, nor does either the Agent or Arvin assume any
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liability to each other with respect to (i) obligors under any instruments or
guaranty; (ii) the enforceability, validity, value or collectibility of the
extension of any credit to the Borrower, or collateral therefor, or any
guaranty or security which may have been granted to any of them in connection
with any agreement; or (iii) the Borrower's title or right to transfer any
collateral or security. The execution of this Agreement by the parties
hereto shall not create or impose any duties or obligations upon any party
hereto, except as expressly provided herein, and no agency or other fiduciary
relationship shall be inferred from such execution.
(10) NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and may be delivered personally
(including by courier), by facsimile transmission (if receipt is confirmed in
writing) or by first class registered or certified mail, postage prepaid,
return receipt requested, addressed to the following addresses or to such
other addresses as may be furnished in writing by one party to all of the
others:
(a) if to the Borrower:
800 Connecticut Avenue, N.W.
Suite 1111
Washington, DC 20006
Attention: Katherine A. Snavely,
Vice President - Corporate Finance
Facsimile: 202 861-0321
with a copy to:
Andrews & Kurth, L.L.P.
4200 Texas Commerce Tower
600 Travis
Houston, TX 77002
Attention: Thomas J. Perich, Esq.
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Facsimile: 713 220-4285
(b) if to Arvin:
One Noblitt Plaza
P.O. Box 3000
Columbus, IN 37202
Attention: Richard Smith,
Vice President and Chief Financial Officer
Facsimile: 812 379-3688
with a copy to:
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
Attention: John W. Griffin, Esq.
Facsimile: 202 887-0689
(c) if to the Agent or the Banks:
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Midwest Banking Division
Facsimile: 313 225-1671
with a copy to:
Dickinson, Wright, Moon, Van Dusen & Freeman
500 Woodward Avenue
Suite 4000
Detroit, MI 48226
Attention: Steven H. Hilfinger, Esq.
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Facsimile: 313 223-3598
Service of any such notice or other communication so made shall be deemed
complete, if by mail, on the day of actual delivery thereof as shown by the
addressee's registry or certification receipt and, if by other means, when
actually received.
(11) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Michigan, without
regard to such jurisdiction's conflicts of laws principles. The parties
agree that venue for any suit, action, proceeding or litigation arising out
of or in relation to this Agreement shall be in any federal or state court
in the State of Michigan having subject matter jurisdiction.
(12) MODIFICATION; WAIVER. This Agreement shall not be altered
or otherwise amended except pursuant to an instrument in writing signed by
all the parties hereto. Any party may waive any misrepresentation by any
other party, or any breach of warranty by, or failure to perform any
covenant, obligation or agreement of, any other party, PROVIDED that mere
inaction or failure to exercise any right, remedy or option under this
Agreement, or delay in exercising the same, shall not operate or be construed
as a waiver, and no waiver will be effective unless set forth in writing and
then only to the extent specifically stated therein.
(13) ENTIRE AGREEMENT. This Agreement, the Guaranty, the
Credit Agreement, the Notes, the schedules and exhibits thereto and hereto,
the Security Documents, the Arvin Security Documents and any other agreements
or certificates delivered pursuant thereto and hereto constitute the entire
agreement of the parties hereto with respect to the matters contemplated
hereby and supersede all previous written or oral negotiations, commitments,
representations and agreements.
(14) ASSIGNMENT; SUCCESSORS AND ASSIGNS. This Agreement may not
be assigned by any party (other than to any Affiliate (as defined in the
Credit Agreement) of such party) without the prior written consent of the
other parties; PROVIDED, HOWEVER, that the Agent or any Bank may assign its
rights under this Agreement in connection with any grant of a participation
interest in accordance with Section 8.6 of the Credit Agreement, and any such
sale, assignment or grant of a participation interest shall be subject to the
terms of the Guaranty and
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this Agreement. All covenants, representations, warranties and agreements of
the parties contained herein shall be binding upon and inure to the benefit
of their respective successors and assigns.
(15) SEVERABILITY. The provisions of this Agreement are
severable, and in the event that any one or more provisions are deemed
illegal or unenforceable, the remaining provisions shall remain in full force
and effect.
(16) NO THIRD PARTY BENEFICIARY. This Agreement is intended
and agreed to be solely for the benefit of the parties hereto, and no third
party shall accrue any benefit, claim or right of any kind whatsoever
pursuant to, under, by or through this Agreement.
(17) EXECUTION IN COUNTERPART. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same instrument.
(18) INTERPRETATION. When a reference is made in this
Agreement to an Article, Section, Schedule or Exhibit, such reference shall
be to an Article, Section, Schedule or Exhibit of this Agreement unless
otherwise indicated. The headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. Wherever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation." Time shall be of the essence in this Agreement.
(19) SUBSIDIARY GUARANTORS. The Borrower shall cause each of
Calspan Corporation, an Ohio corporation, Systems Research Laboratories,
Inc., an Ohio corporation, and Space Industries, Inc., a Texas corporation
(collectively, the "SUBSIDIARY GUARANTORS"), to execute a counterpart of this
Agreement and become parties hereto effective immediately upon the effective
time of the merger pursuant to the Merger Agreement. The Borrower shall also
cause each of the Subsidiary Guarantors to execute a counterpart of the
Guaranty, acknowledging the obligations of the Borrower thereunder. The
Borrower shall, and shall cause each of the Subsidiary Guarantors to execute
and deliver such additional documents or instruments, including the Arvin
Security Documents, and take such further actions as may be reasonably
requested from time to time by the Agent or Arvin to fully consummate,
document and effectuate their respective obligations hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
ARVIN INDUSTRIES, INC.
By /S/ RICHARD A. SMITH
------------------------------
Name: Richard A. Smith
Title: Chief Financial Officer
SPACE ACQUISITION CORPORATION
By /S/ DAVID H. LANGSTAFF
-------------------------------
Name: David H. Langstaff
Title: President
NBD BANK, as Agent and a Bank
By /S/ EDWARD C. HATHAWAY
-------------------------------
Name: Edward C. Hathaway
Title: First Vice President
MANUFACTURERS AND TRADERS
TRUST COMPANY, as a Bank
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By /S/ GEOFFREY R. FENN
-------------------------------
Name: Geoffrey R. Fenn
Title: Vice President
17
Exhibit 99
FOR IMMEDIATE RELEASE
WEDNESDAY, OCTOBER 4, 1995
CONTACT: John W. Brown - 812/379-3389
William Kendall - 812/379-3285
ARVIN REPORTS COMPLETION OF MANAGEMENT BUY-OUT
OF TECHNOLOGY SEGMENT
Columbus, IN. Arvin Industries, Inc. (NYSE:ARV), today
reported it has sold its 70 percent ownership in Space
Industries International, Inc. ("SIII") to a group formed
by SIII senior management. Upon completion of the sale, the
new company changed its name to Calspan SRL Corporation.
"This move is one of the last planned moves to focus Arvin
more on its core automotive businesses and more specifically
Exhaust System and Ride Control Products. It is Arvin's
intent to continue to build on business where it has global
recognition as a major automotive supplier," stated Arvin
CEO Byron Pond.
Arvin received approximately $30.6 million in cash and will
guarantee approximately $23 million of the new company's
debt. This guarantee will decline quarterly over a four
year period before expiring. Proceeds from the sale will be
used for debt reduction and new investment in the company's
core businesses. The results of operations of SIII have
been previously reported by Arvin as the Technology segment.
Arvin Industries, Inc., is a global manufacturer and
supplier of automotive parts and related products and
services.
JWK:br
