<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(CHECK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___ TO ___
Commission file number 1-9634
LARIZZA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Ohio 34-1376202
(State of Incorporation) (I.R.S. Employer Identification No.)
Suite 1040
201 West Big Beaver Road
Troy, Michigan 48084
(Address of principal executive offices and zip code)
(810) 689-5800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Number of shares of Common Stock, without par value, of the registrant
outstanding as of July 31, 1995: 22,088,107
<PAGE> 2
LARIZZA INDUSTRIES, INC.
FORM 10-Q
QUARTER ENDED JUNE 30, 1995
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information:
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets -
June 30, 1995 and December 31, 1994 . . . . . . . . . . . . . . . . . . . 3
Consolidated Condensed Statements of Operations -
Three Months and Six Months Ended June 30, 1995 and 1994 . . . . . . . . . 4
Consolidated Condensed Statements of Cash Flows -
Six Months Ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Condensed Financial Statements . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . 7
Part II. Other Information:
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . 9
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . 9
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LARIZZA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
--------- ---------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 500 794
Accounts receivable, net 30,842 26,363
Inventories:
Raw materials 4,670 4,302
Work in process 1,252 1,992
Finished goods 3,562 2,307
-------- --------
Total inventories 9,484 8,601
-------- --------
Reimbursable tooling costs 10,275 4,810
Net current assets of discontinued operations - 1,624
Deferred income taxes 708 734
Other current assets 909 1,239
-------- --------
Total current assets 52,718 44,165
-------- --------
Property, plant and equipment, at cost 56,944 52,966
Less accumulated depreciation and amortization 25,822 23,479
-------- --------
Net property, plant and equipment 31,122 29,487
-------- --------
Notes receivable from principal shareholders 2,331 2,264
Goodwill and other intangibles, net 7,341 7,416
Net noncurrent assets of discontinued operations - 122
-------- --------
$93,512 83,454
======== ========
Current liabilities:
Current installments of long-term debt and capitalized
lease obligation $ 244 2,101
Accounts payable 27,934 20,064
Income taxes payable 3,183 6,954
Accrued salaries and wages 1,849 2,047
Accrual for loss on sale of discontinued operations - 2,331
Other accrued expenses 6,707 7,020
-------- --------
Total current liabilities 39,917 40,517
-------- --------
Long-term debt, excluding current installments 30,450 30,000
Capitalized lease obligation, excluding current installments 395 510
Deferred income taxes 304 315
Other long-term liabilities 2,296 1,931
Shareholders' equity:
Common stock 76,780 76,780
Additional paid-in capital 5,551 5,551
Accumulated deficit (57,964) (67,484)
Foreign currency translation adjustment (4,217) (4,666)
-------- --------
Total shareholders' equity 20,150 10,181
-------- --------
$93,512 83,454
======== ========
</TABLE>
See accompanying notes to unaudited consolidated condensed financial
statements.
3
<PAGE> 4
LARIZZA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1995 1994 1995 1994
------- ------ ------- -------
<S> <C> <C> <C> <C>
Net sales $55,034 42,779 110,653 83,840
Cost of goods sold 44,691 32,848 89,467 65,022
------- ------ ------- -------
Gross profit 10,343 9,931 21,186 18,818
Selling, general and administrative expenses 3,967 3,655 7,906 6,751
------- ------ ------- -------
Operating income 6,376 6,276 13,280 12,067
Other income (expense):
Interest expense, net (634) (587) (1,311) (1,738)
Other, net (108) (339) (501) 255
------- ------ ------- -------
(742) (926) (1,812) (1,483)
Income from continuing operations before income tax
provision and extraordinary gain 5,634 5,350 11,468 10,584
Income tax provision 1,250 980 2,750 2,815
------- ------ ------- -------
Income from continuing operations before extraordinary gain 4,384 4,370 8,718 7,769
Discontinued operation:
Gain on disposal of discontinued operation 802 - 802 -
------- ------ ------- -------
Income before extraordinary gain 5,186 4,370 9,520 7,769
Extraordinary gain on refinancing of debt - 2,405 - 2,405
------- ------ ------- -------
Net income $ 5,186 6,775 9,520 10,174
======= ====== ======= =======
Income per common share:
Primary:
Income from continuing operations before
extraordinary gain $ 0.20 0.20 0.39 0.41
Gain from discontinued operation 0.04 - 0.04 -
Extraordinary gain - 0.11 - 0.13
------- ------ ------- -------
Net income per common share $ 0.24 0.31 0.43 0.54
======= ====== ======= =======
Fully diluted:
Income from continuing operations before
extraordinary gain 0.39
Gain from discontinued operation -
Extraordinary gain 0.11
-------
Net income per common share 0.50
=======
Weighted average number of shares of common stock outstanding
Primary 22,088 22,088 22,088 18,930
Fully diluted 22,088
</TABLE>
See accompanying notes to unaudited consolidated condensed financial
statements.
4
<PAGE> 5
LARIZZA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
1995 1994
-------- --------
<S> <C> <C>
Operations:
Net income $9,520 10,174
Noncash items:
Depreciation and amortization 2,508 2,065
Amortization of deferred gain - (368)
Extraordinary gain on refinancing of debt - (2,405)
Gain on sale of discontinued operation (802) -
Interest accrued on long-term debt - 791
Operating working capital increase (7,385) (522)
Other, net 512 (360)
------- -------
4,353 9,007
Investments:
Proceeds from sale of discontinued operation, net of subsidiary cash 1,164 -
Property, plant and equipment, net (3,728) (3,162)
Other, net (67) (63)
------- -------
(2,631) (3,225)
Financing:
Issuance of debt - 36,000
Repayments of debt (1,536) (42,213)
------- -------
(1,536) (6,213)
Effect of exchange rates on cash (480) (371)
------- -------
Net decrease in cash and cash equivalents (294) (434)
Cash and cash equivalents at beginning of period 794 559
------- -------
Cash and cash equivalents at end of period $ 500 125
======= =======
Noncash financing activities:
Conversion of debt to equity $59,578
=======
</TABLE>
See accompanying notes to unaudited consolidated condensed financial
statements.
5
<PAGE> 6
LARIZZA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1995
(1) Basis of Presentation
In the opinion of management, the information furnished herein includes
all adjustments (all of which are of a normal recurring nature)
necessary for fair presentation of the results for the interim periods.
(2) Income Per Share
Primary income per common share is calculated by dividing net income by
the weighted average number of common shares outstanding during the
period.
On a fully-diluted basis, both net income and shares outstanding were
adjusted to assume the conversion of the convertible term loan of
$47,000,000 plus accrued interest into 8,283,040 shares of common stock
at the beginning of the period. To adjust net income for the first six
months of 1994, interest expense of $791,000 related to the convertible
term loan was added back into income.
(3) On June 1, 1995, the Company sold the common and preferred stock of its
wholly-owned subsidiary, General Nuclear Corp. The net cash proceeds of
approximately $1,155,000 resulted in a gain on sale of $802,000 after
considering the accrual for loss on sale of General Nuclear Corp. of
$2,195,000.
6
<PAGE> 7
ITEM 2.
LARIZZA INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Second Quarter Ended June 30, 1995 compared with
Second Quarter Ended June 30, 1994
The Company's net sales increased $12.3 million, or 28.6%, in the quarter ended
June 30, 1995 compared to the quarter ended June 30, 1994. This increase was
primarily due to new programs which were launched during the third quarter of
1994, increased production levels of certain vehicles in which the Company's
products are used and the acquisition of Hughes Plastics, Inc. in October
1994.
Gross profit increased $0.4 million, or 4.1%, in the quarter ended June 30,
1995 compared to the quarter ended June 30, 1994. The gross profit margin
decreased to 18.8% in the 1995 period from 23.2% in the 1994 period. This
decrease was caused primarily by losses incurred at Hughes Plastics, Inc. and
increased raw material costs, partially offset by the effect of higher sales on
fixed costs.
Operating income for the quarter ended June 30, 1995 was $6.4 million compared
to operating income of $6.3 million for the quarter ended June 30, 1994.
Operating income as a percentage of net sales was 11.6% in the current quarter
compared to 14.7% in the comparable prior year's quarter. The decrease in
operating income margins resulted from decreased gross profit margins,
partially offset by lower selling, general and administrative expenses as a
percentage of net sales.
Selling, general and administrative expenses for the quarter increased by $0.3
million compared to the prior year's quarter due to increased sales, the
addition of Hughes Plastics, Inc. and higher corporate expenses. General and
administrative expenses for the prior quarter included costs associated with
the filing of a Registration Statement which was subsequently withdrawn and a
refinancing of the Company's debt. Selling, general and administrative
expenses also declined as a percentage of net sales because of the effect of
higher sales on fixed costs.
For a description of the Company's sale of its shares of General Nuclear Corp.
and the resulting gain on the disposal of discontinued operations, see Note 3
of Notes to Consolidated Condensed Financial Statements in Part I of this
report.
Six Months Ended June 30, 1995 compared with
Six Months Ended June 30, 1994
Net sales for the six months ended June 30, 1995 increased $26.8 million, or
32.0%, compared with the net sales for the six months ended June 30, 1994.
This increase was primarily due to new programs which were launched during the
third quarter of 1994, increased production levels of certain vehicles in which
the Company's products are used and the acquisition of Hughes Plastics, Inc.
in October 1994.
Gross profit increased $2.4 million, or 12.6%, in the six-month period ended
June 30, 1995 compared to the six-month period ended June 30, 1994. This
increase in gross profit is a result of higher sales, partially offset by lower
gross profit margins. The gross profit margin decreased to 19.1 % in the 1995
period from 22.4% in the 1994 period. This decrease was caused primarily by
losses incurred at Hughes Plastics, Inc. and increased raw material costs,
partially offset by the effect of higher sales on fixed costs.
Operating income for the six months ended June 30, 1995 was $13.3 million
compared to operating income of $12.1 million for the six months ended June 30,
1994. Operating income as a percentage of sales was 12.0% in the current
7
<PAGE> 8
LARIZZA INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
period compared to 14.4% in the comparable prior year period. The decrease in
operating income margins resulted from decreased gross profit margins,
partially offset by lower selling, general and administrative expenses as a
percentage of net sales.
Selling, general and administrative expenses increased $1.2 million in the six
months ended June 30, 1995 compared to the six months ended June 30, 1994, due
to increased sales, the addition of Hughes Plastics, Inc. and higher corporate
expenses. General and administrative expenses for the prior six months
included costs associated with the filing of a Registration Statement which was
subsequently withdrawn and a refinancing of the Company's debt. Selling,
general and administrative expenses also declined as a percentage of net sales
because of the effect of higher sales on fixed costs.
For a description of the Company's sale of its shares of General Nuclear Corp.
and the resulting gain on the disposal of discontinued operations, see Note 3
of Notes to Consolidated Condensed Financial Statements in Part I of this
report.
Interest expense for the six months ended June 30, 1995 decreased $0.4 million
compared to the six months ended June 30, 1994, primarily as a result of the
conversion of $47 million in principal amount of debt, plus the related accrued
interest, into common stock on March 11, 1994.
LIQUIDITY AND CAPITAL RESOURCES:
The Company's net cash position decreased by $0.3 million during the first half
of 1995. After investing $7.4 million in working capital due to increased
sales, $4.4 million was generated from operations. Approximately $1.2 million
was generated from the sale of the stock of General Nuclear Corp. Cash of $3.7
million was used for capital expenditures and $1.5 million was used for
repayments of debt. The Company expects capital expenditures for 1995 to be
approximately $7.5 million.
The Company's primary needs for liquidity during the next twelve months will be
to support its working capital needs, debt service requirements and capital
expenditures. The Company believes that cash generated by operations plus
amounts available under its line of credit will be adequate to fund its cash
requirements for the next twelve months. At June 30, 1995, the Company had
$12.6 million available under its line of credit.
8
<PAGE> 9
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on May 30,
1995. At the annual meeting, the following persons were elected as
directors of the Company and the following votes were cast for or were
withheld from voting with respect to the election of each such person:
<TABLE>
<CAPTION>
Votes
------------------------------------------------
NAME For Withheld Abstain
---- --- -------- -------
<S> <C> <C> <C>
Ronald T. Larizza 17,520,365 31,534 3,106,140
Edward L. Sawyer, Jr. 17,520,565 31,335 3,106,140
Edward W. Wells 17,520,665 31,235 3,106,140
Frank E. Blazey, Jr. 17,520,565 31,335 3,106,140
Stephen J. Lebowski 17,520,665 31,235 3,106,140
Arthur L. Wiseley 17,520,665 31,235 3,106,140
</TABLE>
There were no broker non-votes in connection with the election of the
directors at the annual meeting.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
10.6(c) Lease Amending Agreement between Ronita Properties Limited,
Larizza Industries, Inc. and Manchester Plastics, Ltd., dated
as of March 14, 1995.
10.9(f) Severance Agreement between Larizza Industries, Inc. and
Edward W. Wells, Jr., dated June 15, 1995.
10.9(g) Severance Agreement between Larizza Industries, Inc. and
Terence C. Seikel, dated June 15, 1995.
10.9(h) Severance Agreement between Larizza Industries, Inc. and
Vincent Donovan, dated June 15, 1995.
10.12 Stock Purchase Agreement among Larizza Industries, Inc.,
General Nuclear Acquisition Corp. and General Nuclear Corp.,
dated as of June 1, 1995.
27 Financial Data Schedule
b) Reports on Form 8-K filed during the second quarter:
There were no reports on Form 8-K filed by the Registrant during the
quarter ended June 30, 1995.
9
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LARIZZA INDUSTRIES, INC.
/s/ Terence C. Seikel
-----------------------------
Terence C. Seikel
Date: August 14, 1995 Chief Financial Officer
(Principal Financial Officer and
Duly Authorized Officer of the
Registrant)
10
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Page
------- ----------- ------
<S> <C> <C>
10.6(c) Lease Amending Agreement between Ronita Properties Limited, Larizza Industries, Inc. and
Manchester Plastics, Ltd., dated as of March 14, 1995.
10.9(f) Severance Agreement between Larizza Industries, Inc. and Edward W. Wells, Jr., dated June 15, 1995.
10.9(g) Severance Agreement between Larizza Industries, Inc. and Terence C. Seikel, dated June 15, 1995.
10.9(h) Severance Agreement between Larizza Industries, Inc. and Vincent Donovan, dated June 15, 1995.
10.12 Stock Purchase Agreement among Larizza Industries, Inc., General Nuclear Acquisition Corp. and
General Nuclear Corp., dated as of June 1, 1995.
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.6(c)
<PAGE> 2
LEASE AMENDING AGREEMENT
THIS AGREEMENT made this 14th day of March, 1995.
B E T W E E N:
RONITA PROPERTIES LIMITED
(the "Landlord")
OF THE FIRST PART
-and-
LARIZZA INDUSTRIES INC. and
MANCHESTER PLASTICS LTD.
(the "Tenant")
OF THE SECOND PART
WHEREAS by the lease dated the 25th day of March, 1993 (the "Lease"),
the Landlord leased to the Tenant, for and during the term (the "Term")
expiring on April 14, 2003, certain premises (the "Original Premises")
comprising an area of approximately 115,629 square feet in the building (the
"Building") known municipally as 165 Milner Avenue, Scarborough, Ontario;
AND WHEREAS by a lease amending agreement (the "First Lease Amending
Agreement") dated the 25th day of June, 1993, the landlord leased additional
premises (the "First Additional Premises") comprising approximately 10,631
square feet (inclusive of 1% gross up factor) in the Building for a term
commencing August 1, 1993 and expiring April 14, 2003;
AND WHEREAS by a lease amending agreement (the "Second Lease Amending
Agreement") dated the 17th day of February, 1994, the Landlord leased
additional premises (the "Second Additional Premises") comprising approximately
14,115 square feet (inclusive of 1% gross up factor) in the Building for a term
commencing January 1, 1994 and expiring April 14, 2003;
AND WHEREAS the Landlord is desirous of leasing to the Tenant, and the
Tenant is desirous of leasing from the Landlord, additional premises comprising
the balance of the Building and approximately 27,625 square feet (inclusive of
1% gross up factor) in the Building (the "Third Additional Premises") as
outlined in RED on Schedule "A" hereto for a term commencing April 1, 1995 and
expiring June 30, 2003;
AND WHEREAS terms in this Agreement not otherwise defined herein have
the same meaning as are attributable to them in the Lease;
NOW, THEREFORE, in consideration of the sum of Two Dollars ($2.00) paid
by and other good and valuable consideration given by each of the parties
hereto to the other (the receipt and sufficiency of which is by each of them
acknowledged):
1. The Landlord does hereby demise and lease unto the Tenant the Third
Additional Premises on an "as is" basis for a term to commence on April 1, 1995
and expire on June 30, 2003 on the terms and conditions set out in the Lease,
except as expressly provided for in this Agreement, the First Lease Amending
Agreement and the Second Lease Amending Agreement (collectively the "Amending
Agreements"). From and after April 1, 1995, the Premises demised by the Lease
will be deemed to comprise the entire Building and include the Original
Premises, the First Additional Premises, the Second Additional Premises and the
Third Additional Premises and to definition of Premises contained in the Lease
shall be deemed to include such premises (comprising an aggregate area of
168,000 square feet).
<PAGE> 3
- 2 -
1A. Section 2.3 of the Lease is hereby amended to provide that the Term of
the Lease in respect of the Premises (all 168,000 square feet) is to expire
June 30, 2003.
2. Section 3.2 of the Lease is hereby amended by deleting paragraphs
3.2(a)(iv) -- (ix) and subsection 3.2(d) and replacing same with the following:
"3.2(a) (v) for the period from April 1, 1995 to June 30, 1995
at the annual rate of $315,281.25, being monthly
instalments of $26,273.43, comprised as follows:
(a) in respect of the Original Premises, First
Additional Premises and Second Additional
Premises (comprising 140,375 square feet and
called the "Current Premises"), monthly
instalments of $23,395.83;
(b) in respect of the Third Additional Premises, at
the annual rate of $34,531.25, being $1.25 per
square foot of the Rentable Area of the Third
Additional Premises, payable in monthly
instalments of $2,877.60;
(vi) for the period from July 1, 1995 to June 30, 1996 at
the annual rate of $326,511.25, being monthly
instalments of $27,209.27, comprised as follows:
(a) in respect of the Current Premises, at the
annual rate of $291,980.00, being $2.08 per
square foot of the Rentable Area of the
Current Premises, payable in monthly
instalments of $24,331.67;
(b) in respect of the Third Additional Premises,
at the annual rate of $34,531.25, being $1.25
per square foot of the Rentable Area of the
Third Additional Premises, payable in monthly
instalments of $2,877.60;
(vii) for the period from July 1, 1996 to March 31, 1997
at the annual rate of $337,741.25, being monthly
instalments of $28,145.10, comprised as follows:
(a) in respect of the Current Premises, at the
annual rate of $303,210.00 being $2.16 per
square foot of the Rentable Area of the
Current Premises, payable in monthly instal-
ments of $25,267.50;
(b) in respect of the Third Additional Premises,
at the annual rate of $34,531.25, being $1.25
per square foot of the Rentable Area of the
Third Additional Premises, payable in monthly
instalments of $2,877.60;
(viii) for the period from April 1, 1997 to June 30, 1997, at
the annual rate of $362,880.00, being $2.16 per square
foot of the Rentable Area of the Original Premises,
payable in monthly instalments of $30,240.00;
(ix) for the period from July 1, 1997 to June 30, 1998, at
the annual rate of $378,000.00, being $2.25 per square
foot of the Rentable Area of the Premises, payable in
monthly instalments of $31,500.00;
(x) for the period from July 1, 1998 to June 30, 1999, at
the annual rate of $396,480.00, being $2.36 per
<PAGE> 4
- 3 -
square foot of the Rentable Area of the Premises,
payable in monthly instalments of $33,040.00;
(xi) for the period from July 1, 1999 to June 30, 2000, at
the annual rate of $416,640.00, being $2.48 per square
foot of the Rentable Area of the Premises, payable in
monthly instalments of $34,720.00;
(xii) for the period from July 1, 2000 to June 30, 2001, at
the annual rate of $436,800.00, being $2.60 per square
foot of the Rentable Area of the Premises, payable in
monthly instalments of $36,400.00;
(xiii) for the period from July 1, 2001 to June 30, 2002, at
the annual rate of $460,320.00, being $2.75 per square
foot of the Rentable Area of the Premises, payable in
monthly instalments of $38,360.00; and
(xiv) for the period from July 1, 2002 to June 30, 2003, at
an annual rate of $482,160.00, being $2.87 per square
foot of the Rentable Area of the Premises, payable in
monthly instalments of $40,180.00.
3.2(d) Basic and Additional Rent shall be adjusted on the basis of
actual Rentable Area of the Leased Premises determined to
be 168,000 square feet."
3. The deposit set out in subsection 3.3(a) being held as security and on
account of last month's Basic Rent, as set out in said section, shall be
increased from $35,923.13 to the sum of $42,992.60 (including goods and
services tax), requiring an additional payment of $7,069.47.
4. (a) Provided and so long as: (i) the Tenant and the occupant of the whole
of the Leased Premises is the Tenant which executed this Agreement: (ii) the
Tenant has throughout the Term duly, regularly and punctually paid all of the
Rent and observed all the other terms and conditions contained in the Lease;
(iii) the Tenant maintains the Building and property as would a prudent owner
and notifies the Landlord on a timely basis of any necessary repairs or
replacements, then the Tenant shall be responsible for maintaining and
repairing the Building and the property (except for those structural repairs
which are the responsibility of the Landlord pursuant to the Lease), in which
case the Tenant shall pay the costs set out in section 5.2(b)(ii)-(x),
inclusive, directly.
(b) Section 5.2(b)(xii) is hereby amended with effect from February 15,
1995, by replacing the sum of "3%" with the sum of "1.5%".
5. Section 6.1 of the Lease is hereby amended to provide that the Tenant
shall transfer the Utility account for the Building to its name and shall pay
all amounts in respect thereof directly to the supplier thereof and no
administration fee is payable to the Landlord in respect thereof.
6. Section 15.15 of the Lease is hereby amended by deleting the sum of
"$445,813.10" on the top of page 31 (as amended by the Second Amending
Agreement) and replacing same with the sum of "$533,551.20".
7. All covenants, conditions and agreements contained in the Lease shall
remain in full force and effect and unamended except as otherwise expressly
herein set forth. The Landlord and Tenant hereby mutually covenant that they
will perform and observe the terms, covenants, conditions and agreements
contained in the Lease (as amended by this agreement) as fully and faithfully
as if such terms, covenants, conditions and agreements had been repeated herein
in full.
<PAGE> 5
-4-
8. This Agreement shall enure to the benefit of and be binding upon the
respective parties hereto, their successors and permitted assigns.
RONITA PROPERTIES LIMITED
Per:
------------------------------
c/s
Per:
------------------------------
LARIZZA INDUSTRIES INC.
Per: /s/ TERENCE C. SEIKEL
------------------------------
c/s
Per:
------------------------------
MANCHESTER PLASTICS LTD.
Per: /s/ M.J. PROKOPETZ
------------------------------
c/s
Per:
------------------------------
<PAGE> 1
EXHIBIT 10.9(f)
<PAGE> 2
LARIZZA INDUSTRIES INC.
Suite 1040
201 W. Big Beaver Road
Troy, Michigan 48084
June 15, 1995
Edward W. Wells, Jr.
Suite 1040
201 W. Big Beaver Road
Troy, Michigan 48084
Dear Ed:
The Board of Directors of Larizza Industries, Inc. (the "Company") has
decided to provide you severance benefits if and when your employment with the
Company terminates as follows:
1. Right to Receive Benefits. You shall receive the severance
benefits described in paragraph 2 if at any time during the Period (as defined
in, and subject to, the provisions of paragraph 5) you terminate your
employment with the Company or the Company terminates your employment.
2. Severance Benefits. Severance benefits are:
(a) a continuation of your annual salary you were receiving at the
time of termination and an annual bonus (prorated if these benefits
terminate mid-year pursuant to paragraph 2(a)(i) below) equal in amount
and payable in the same manner as the most recent bonus which was
received by you from the Company in the then most recently completed
employment year, until the first to occur of,
(i) the date you first provide any services for compensation or
other remuneration to any entity or person who conducts a business
which is competitive with the Company's business, and
(ii) two years after the date of such termination;
provided, however, if your employment is terminated by you or the
Company during the second year of the Period, for any reason whatsoever,
the salary and bonus benefits provided for in this paragraph 2(a) shall
continue for one year after such termination and not the two years
provided for in paragraph 2(a)(ii), above.
(b) during the time in which severance payments are payable to you
pursuant to the preceding clause (a), medical, dental, life, disability
and prescription drug coverages/insurance presently offered to you as an
employee of the Company shall continue and shall be paid by the Company
as long as similar medical, dental, life, disability and prescription
drug coverages/insurance continues for Company executive employees. In
the event Company medical, dental, life, disability and prescription
drug coverages/insurance are unavailable to you for any reason, then the
Company shall
<PAGE> 3
June 15, 1995
Page 2
reimburse you up to 150% of your monthly medical, dental, life,
disability and drug coverages/insurance benefits costs based upon
similar coverages and costs provided when you were employed by the
Company;
(c) in addition, during the time in which severance payments
are payable to you pursuant to clause 2(a) above, or for a period
of one year after the termination of your employment, whichever is
shorter, you may retain the use of the automobile provided you during
your employment by the Company and all costs associated with this
automobile usage shall be borne by the Company. Payment for the costs
associated with this automobile usage shall be made in the same
manner following employment termination as these costs were handled
while you were employed with the Company.
Salary benefits will be payable in accordance with the Company's usual payroll
procedures covering you immediately before your termination.
3. Employment Status. Nothing in this Agreement changes the present
status of your continued employment with the Company or otherwise affects your
present employment status with the Company.
4. Benefits Exclusive. The severance benefits provided in this
Agreement are exclusive and in lieu of any other severance benefits to which
you may be entitled.
5. Period. Ronald T. Larizza ("RTL") presently owns and/or controls
at least 50% of the Common/voting Stock ("Stock") of the Company which
effectively provides RTL management control of the Company. RTL presently
contemplates the sale or disposition of substantial amounts of Stock causing
RTL the loss of management control of the Company ("Stock Sale"). In the
event a Stock Sale occurs before June 15, 1997, you shall be entitled to the
severance benefits as provided in paragraph 2, above, if your employment with
the Company terminates within two years of a Stock Sale (the "Period");
provided, however, if the Company terminates your employment within 90 days
before a Stock Sale, this termination will be deemed to have occurred within
the first year of the Period and you shall be entitled to the severance
benefits provided under paragraph 2 commencing on the date of the Stock Sale.
Notwithstanding the foregoing, if a Stock Sale is not closed before June 15,
1997, this Agreement and all of your rights and benefits under this Agreement
shall terminate and become null and void.
6. Modification. This Agreement is the complete agreement between us
and may be modified only by a written instrument executed by both of us.
7. Law. This Agreement will be governed by and construed in accordance
with the internal laws of the State of Michigan.
8. Successor Obligations. This Agreement will be binding upon and
inure to the benefit of the Company and its successors and assigns, and the
Company will require any successor to, or transferee of, all or substantially
all of its business or assets to assume all of the Company's obligations under
this Agreement (such successor or assign will be deemed, for purposes of this
Agreement, to be the Company). This Agreement will be binding upon you and will
inure to your benefit, but you may not assign this Agreement without the
Company's prior
<PAGE> 4
June 15, 1995
Page 3
written consent. Notwithstanding the terms of the Confidentiality Agreement
executed by the Company in June/July, 1995, after a Stock Sale, subject to the
terms of this Agreement, you may be employed by, or consult with, any entity or
person who executed a Confidentiality Agreement.
9. Duplicate Copies. This Agreement may be executed in counterparts,
both of which together will be deemed an original of this Agreement.
10. Severability. The provisions of this Agreement will be deemed
severable, and if any part of any provision is held illegal, void or invalid
under applicable law, such provision may be changed to the extent reasonably
necessary to make the provision, as so changed, legal, valid and binding. If
any provision of this Agreement is held illegal, void or invalid in its
entirety, the remaining provisions of this Agreement will not in any way be
affected or impaired but will remain binding in accordance with their terms.
If the terms of this Agreement are acceptable to you, please sign the
enclosed copy and return it to me, at which time this Agreement will become
effective.
Very truly yours,
WITNESSES: LARIZZA INDUSTRIES, INC.
/s/ PATRICK T. DUERR By: /s/ RONALD T. LARIZZA
---------------------------------- ----------------------------------
/s/ JANICE HAGEN Ronald T. Larizza
---------------------------------- Its: President
/s/ GINA GUARINO
----------------------------------
The terms of this Agreement are
agreed and accepted as of June 16,
1995
WITNESSES:
/s/ JANICE HAGEN /s/ EDWARD WELLS
---------------------------------- ------------------------------
/s/ GINA GUARINO Edward W. Wells, Jr.
----------------------------------
<PAGE> 1
EXHIBIT 10.9(g)
<PAGE> 2
LARIZZA INDUSTRIES INC.
Suite 1040
201 W. Big Beaver Road
Troy, Michigan 48084
June 15, 1995
Terence C. Seikel
Suite 1040
201 W. Big Beaver Road
Troy, Michigan 48084
Dear Terry:
The Board of Directors of Larizza Industries, Inc. (the "Company") has
decided to provide you severance benefits if and when your employment with the
Company terminates as follows:
1. Right to Receive Benefits. You shall receive the severance
benefits described in paragraph 2 if at any time during the Period (as defined
in, and subject to, the provisions of paragraph 5) you terminate your
employment with the Company or the Company terminates your employment.
2. Severance Benefits. Severance benefits are:
(a) a continuation of your annual salary you were receiving at
the time of termination and an annual bonus (prorated if these benefits
terminate mid-year pursuant to paragraph 2(a)(i) below) equal in amount
and payable in the same manner as the most recent bonus which was
received by you from the Company in the then most recently completed
employment year, until the first to occur of,
(i) the date you first provide any services for compensation
or other remuneration to any entity or person who conducts a
business which is competitive with the Company's business, and
(ii) two years after the date of such termination;
provided, however, if your employment is terminated by you or the
Company during the second year of the Period, for any reason
whatsoever, the salary and bonus benefits provided for in this
paragraph 2(a) shall continue for one year after such termination and
not the two years provided for in paragraph 2(a)(ii), above.
(b) during the time in which severance payments are payable to
you pursuant to the preceding clause (a), medical, dental, life,
disability and prescription drug coverages/insurance presently offered
to you as an employee of the Company shall continue and shall be paid
by the Company as long as similar medical, dental, life, disability and
prescription drug coverages/insurance continues for Company executive
employees. In the event Company medical, dental, life, disability and
prescription drug coverages/insurance are unavailable to you for any
reason, then the Company shall
<PAGE> 3
June 15, 1995
Page 2
reimburse you up to 150% of your monthly medical, dental, life,
disability and drug coverages/insurance benefits costs based upon
similar coverages and costs provided when you were employed by the
Company;
(c) in addition, during the time in which severance payments are
payable to you pursuant to clause 2(a) above, or for a period of one
year after the termination of your employment, whichever is shorter, you
may retain the use of the automobile provided you during your employment
by the Company and all costs associated with this automobile usage shall
be borne by the Company. Payment for the costs associated with this
automobile usage shall be made in the same manner following employment
termination as these costs were handled while you were employed with the
Company.
Salary benefits will be payable in accordance with the Company's usual payroll
procedures covering you immediately before your termination.
3. Employment Status. Nothing in this Agreement changes the present
status of your continued employment with the Company or otherwise affects your
present employment status with the Company.
4. Benefits Exclusive. The severance benefits provided in this
Agreement are exclusive and in lieu of any other severance benefits to which
you may be entitled.
5. Period. Ronald T. Larizza ("RTL") presently owns and/or controls
at least 50% of the Common/voting Stock ("Stock") of the Company which
effectively provides RTL management control of the Company. RTL presently
contemplates the sale or disposition of substantial amounts of Stock causing
RTL the loss of management control of the Company ("Stock Sale"). In the event
a Stock Sale occurs before June 15, 1997, you shall be entitled to the
severance benefits as provided in paragraph 2, above, if your employment with
the Company terminates within two years of a Stock Sale (the "Period");
provided, however, if the Company terminates your employment within 90 days
before a Stock Sale, this termination will be deemed to have occurred within
the first year of the Period and you shall be entitled to the severance
benefits provided under paragraph 2 commencing on the date of the Stock Sale.
Notwithstanding the foregoing, if a Stock Sale is not closed before June 15,
1997, this Agreement and all of your rights and benefits under this Agreement
shall terminate and become null and void.
6. Modification. This Agreement is the complete agreement between us
and may be modified only by a written instrument executed by both of us.
7. Law. This Agreement will be governed by and construed in
accordance with the internal laws of the State of Michigan.
8. Successor Obligations. This Agreement will be binding upon and
inure to the benefit of the Company and its successors and assigns, and the
Company will require any successor to, or transferee of, all or substantially
all of its business or assets to assume all of the Company's obligations under
this Agreement (such successor or assign will be deemed, for purposes of this
Agreement, to be the Company). This Agreement will be binding upon you and will
inure to your benefit, but you may not assign this Agreement without the
Company's prior
<PAGE> 4
June 15, 1995
Page 3
written consent. Notwithstanding the terms of the Confidentiality Agreement
executed by the Company in June/July, 1995, after a Stock Sale, subject to the
terms of this Agreement, you may be employed by, or consult with, any entity or
person who executed a Confidentiality Agreement.
9. Duplicate Copies. This Agreement may be executed in counterparts,
both of which together will be deemed an original of this Agreement.
10. Severability. The provisions of this Agreement will be deemed
severable, and if any part of any provision is held illegal, void or invalid
under applicable law, such provision may be changed to the extent reasonably
necessary to make the provision, as so changed, legal, valid and binding. If
any provision of this Agreement is held illegal , void or invalid in entirety,
the remaining provisions of this Agreement will not in any way be affected or
impaired but will remain binding in accordance with their terms.
If the terms of this Agreement are acceptable to you, please sign the
enclosed copy and return it to me, at which time this Agreement will become
effective.
Very truly yours,
WITNESSES: LARIZZA INDUSTRIES, INC.
/s/ PATRICK T. DUERR By: /s/ RONALD T. LARIZZA
---------------------------- -----------------------
/s/ JANICE HAGEN Ronald T. Larizza
---------------------------- Its: President
/s/ GINA GUARINO
----------------------------
The terms of this Agreement are agreed
and accepted as of June 16, 1995
WITNESSES:
/s/ JANICE HAGEN /s/ TERENCE C. SEIKEL
---------------------------- ----------------------------
Terence C. Seikel
/s/ GINA GUARINO
----------------------------
<PAGE> 1
EXHIBIT 10.9(h)
<PAGE> 2
LARIZZA INDUSTRIES INC.
Suite 1040
201 W. Big Beaver Road
Troy, Michigan 48084
June 15, 1995
Vincent Donovan
Suite 1040
201 W. Big Beaver Road
Troy, Michigan 48084
Dear Vince:
The Board of Directors of Larizza Industries, Inc. (the "Company") had
decided to provide you severance benefits if and when your employment with the
Company terminates as follows:
1. Right to Receive Benefits. You shall receive the severance
benefits described in paragraph 2 if at any time during the Period (as defined
in, and subject to, the provisions of paragraph 5) you terminate your
employment with the Company or the Company terminates your employment.
2. Severance Benefits. Severance benefits are:
(a) a continuation of your annual salary you were receiving at
the time of termination and an annual bonus (prorated if these benefits
terminate mid-year pursuant to paragraph 2(a)(i) below) equal in amount
and payable in the same manner as the most recent bonus which was
receive by you from the company in the then most recently completed
employment year, until the first to occur of,
(i) the date your first provide any services for compensation or
other remuneration to any entity or person who conducts a
business which is competitive with the Company's business, and
(ii) two years after the date of such termination;
provided, however, if your employment is terminated by your or the
Company during the second year of the Period, for any reason whatsoever,
the salary and bonus benefits provided for in this paragraph 2(a) shall
continue for one year after such termination and not the two years
provided for in paragraph 2(a)(i), above.
(b) during the time in which severance payments are payable to
you pursuant to the preceding clause (a), medical, dental, life,
disability and prescription drug coverages/insurance presently offered
to you as an employee of the Company shall continue and shall be paid by
the Company as long as similar medical, dental, life, disability and
prescription drug coverage/insurance continues for Company executive
employees. In the event Company medical, dental, life, disability and
prescription drug coverage/insurance are unavailable to your for any
reason, then the Company shall
<PAGE> 3
June 15, 1995
Page 2
reimburse you up to 150% of your monthly medical, dental, life,
disability and drug coverages/insurance benefits costs based upon
similar coverages and costs provided when you were employed by the
Company;
(c) in addition, during the time in which severance payments are
payable to you pursuant to clause 2(a) above, or for a period of one
year after the termination of your employment, whichever is shorter, you
may retain the use of the automobile provided you during your employment
by the Company and all costs associated with this automobile usage shall
be borne by the Company. Payment for the costs associated with this
automobile usage shall be made in the same manner following employment
termination as these costs were handled while you were employed with
the Company.
Salary benefits will be payable in accordance with the Company's usual payroll
procedures covering you immediately before your termination.
3. Employment Status. Nothing in this Agreement changes the
present status of your continued employment with the Company or otherwise
affects your present employment status with the Company.
4. Benefits Exclusive. The severance benefits provided in this
Agreement are exclusive and in lieu of any other severance benefits to which
you may be entitled.
5. Period. Ronald T. Larizza ("RTL") presently owns and/or
controls at least 50% of the Common/voting Stock ("Stock") of the Company which
effectively provides RTL management control of the Company. RTL presently
contemplates the sale or disposition of substantial amounts of Stock causing
RTL the loss of management control of the Company ("Stock Sale"). In the event
a Stock Sale occurs before June 15, 1997, you shall be entitled to the
severance benefits as provided in paragraph 2, above, if your employment with
the Company terminates within two years of a Stock Sale (the "Period");
provided, however, if the Company terminates your employment within 90 days
before a Stock Sale, this termination will be deemed to have occurred within
the first year of the Period and you shall be entitled to the severance
benefits provided under paragraph 2 commencing on the date of the Stock Sale.
Notwithstanding the foregoing, if a Stock Sale is not closed before June 15,
1997, this Agreement and all of your rights and benefits under this Agreement
shall terminate and become null and void.
6. Modification. This Agreement is the complete agreement between
us and may be modified only by a written instrument executed by both of us.
7. Law. This Agreement will be governed by and construed in
accordance with the internal laws of the State of Michigan.
8. Successor Obligations. This Agreement will be binding upon and
inure to the benefit of the Company and its successors and assigns, and the
Company will require any successor to, or transferee of, all or substantially
all of its business or assets to assume all of the Company's obligations under
this Agreement (such successor or assign will be deemed, for purposes of this
Agreement, to be the Company). This Agreement will be binding upon you and will
inure to your benefit, but you may not assign this Agreement without the
Company's prior
<PAGE> 4
June 15, 1995
Page 3
written consent. Notwithstanding the terms of the Confidentiality Agreement
executed by the Company in June/July, 1995, after a Stock Sale, subject to the
terms of this Agreement, you may be employed by, or consult with, any entity or
person who executed a Confidentiality Agreement.
9. Duplicate Copies. This Agreement may be executed in counterparts,
both of which together will be deemed an original of this Agreement.
10. Severability. The provisions of this Agreement will be deemed
severable, and if any part of any provision is held illegal, void or invalid
under applicable law, such provision may be changed to the extent reasonably
necessary to make the provision, as so changed, legal, valid, and binding. If
any provision of this Agreement is held illegal, void or invalid in its
entirety, the remaining provisions of this Agreement will not in any way be
affected or impaired but will remain binding in accordance with their terms.
If the terms of this Agreement are acceptable to you, please sign the
enclosed copy and return it to me, at which time this Agreement will become
effective.
Very truly yours,
WITNESSES: LARIZZA INDUSTRIES, INC.
/s/ PATRICK T. DUERR By: /s/ RONALD T. LARIZZA
---------------------------- ---------------------------
Ronald T. Larizza
/s/ JANICE HAGEN Its: President
----------------------------
/s/ GINA GUARINO
----------------------------
The terms of this Agreement are agreed
and accepted as of June 16, 1995
WITNESSES:
/s/ PAULINE BURDETT /s/ VINCENT DONOVAN
---------------------------- ----------------------------
Vincent Donovan
/s/ JANICE HAGEN
----------------------------
<PAGE> 1
EXHIBIT 10.12
<PAGE> 2
===============================================================================
STOCK PURCHASE AGREEMENT
===============================================================================
Among
Larizza Industries, Inc.,
an Ohio corporation ("Seller")
- and -
General Nuclear Acquisition Corp.,
a Pennsylvania corporation ("Buyer")
- and -
General Nuclear Corp.,
a Pennsylvania corporation ("GNC")
As of June 1, 1995
<PAGE> 3
INDEX
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C> <C>
1. SALE AND PURCHASE OF SHARES 1
1.1 Agreement to Purchase and Sell Shares 1
1.2 Purchase Price and Payment 1
1.3 The Closing 2
2. REPRESENTATIONS AND WARRANTIES 2
2.1 Representations and Warranties of Seller 2
2.1.1 Organization and Qualification 2
2.1.2 Authority Relative to This Agreement 2
2.1.3 Consents and Approvals; No Violation 2
2.1.4 Capitalization 3
2.1.5 Title to Shares 3
2.1.6 Rights to Acquire Shares 3
2.1.7 Tax Liabilities 3
2.1.8 Litigation and Claims 3
2.2 Representations and Warranties of Buyer 4
2.2.1 Organization and Qualification 4
2.2.2 Authority Relative to This Agreement 4
2.2.3 Consents and Approvals; No Violation 4
2.2.4 Financial Capacity 5
2.2.5 Investment Intent and Access to Information 5
2.2.6 Accredited Investor 5
2.2.7 Licenses 5
2.2.8 Litigation and Claims 5
2.2.9 Performance of Obligations 6
2.2.10 Access for Audit 6
2.2.11 Disclosure of Material Fact 6
3. COVENANTS BEFORE CLOSING 6
3.1 Covenants of Seller
3.1.1 Approval of Sale of Purchased Assets 6
3.1.2 Consents 6
3.1.3 Delivery of Books and Records 6
3.2 Covenants of GNC and Buyer 7
3.2.1 Confidentiality 7
3.2.2 Approval of Sale of Purchased Assets 7
3.2.3 INTENTIONALLY OMITTED 7
3.2.4 Consents 7
</TABLE>
(i)
<PAGE> 4
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C> <C>
3.2.5 Further Assurances 7
3.2.6 Tax Matters 7
4. CONDITIONS TO CLOSING 8
4.1 Conditions to Buyer's Obligations 8
4.1.1 Accuracy of Seller's Representations and Warranties 8
4.1.2 Compliance with Covenants 8
4.1.3 No Material Casualty 8
4.1.4 No Material Litigation 8
4.1.5 No Bankruptcy 8
4.1.6 Resignations 8
4.2 Conditions to Seller's Obligations 8
4.2.1 Accuracy of Buyer's Representations and Warranties 8
4.2.2 Compliance with Covenants 8
4.2.3 Certificate of Buyer and Officers 8
4.2.4 No Material Casualty 9
4.2.5 No Material Litigation 9
4.3 Buyer's Remedy for Failure of Condition 9
4.4 Seller's Remedy for Failure of Condition 9
5. WARRANTIES; INDEMNIFICATION 9
5.1 Survival 9
5.2 Indemnity by Seller 9
5.3 Indemnity by Buyer 10
5.4 Defense of Claims 10
5.5 Limitation of Liability 11
5.5.1 Seller's Limits 11
5.5.2 Buyer's Limits 11
6. OTHER COVENANTS AND AGREEMENTS 11
6.1 Sale Restriction 11
6.2 Performance of Obligations 11
6.3 Brokerage 11
6.4 Expenses 12
6.5 No Disclosures 12
6.6 Plant Closing Liability 12
6.7 Books and Records 12
7. MISCELLANEOUS 12
7.1 Notices 12
</TABLE>
(ii)
<PAGE> 5
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
7.2 Entire Agreement 13
7.3 Waivers and Amendments 13
7.4 Governing Law and Forum 13
7.5 Variations in Pronouns 14
7.6 Counterparts 14
7.7 Exhibits 14
7.8 Headings 14
7.9 Binding Effect 14
7.10 Severability 14
7.11 Survival of Provision 14
7.12 Acknowledgement 14
</TABLE>
(iii)
<PAGE> 6
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of June
1, 1995, among Larizza Industries, Inc., an Ohio corporation ("Seller") and
General Nuclear Acquisition Corp, a Pennsylvania corporation ("Buyer").
RECITALS
A. Seller is the owner of all of the issued and outstanding capital
stock of General Nuclear Corp., a Pennsylvania corporation ("GNC").
B. GNC is engaged in the business of manufacturing high precision
valves, valve components and specialized fasteners for the cooling systems of
nuclear reactors used in the United States Navy Nuclear submarines and air
craft carriers (the "Business").
C. Seller desires to sell to Buyer, and Buyer desires to buy from
Seller, all of the issued and outstanding shares of GNC's capital stock upon
the terms and conditions set forth in this Agreement.
THEREFORE, the parties agree as follows:
1. SALE AND PURCHASE OF SHARES.
1.1 Agreement to Purchase and Sell Shares. Upon the terms and/
subject to the conditions set forth in this Agreement, at the Closing (as
defined in Section 1.3), Seller shall sell and deliver to Buyer, and Buyer
shall buy from Seller, 7,544 Common Shares and 11,316 Preferred Shares of GNC
constituting all of the issued and outstanding capital stock of GNC (the
"Shares"). The certificates for the Shares shall, when so delivered by
Seller, be duly endorsed for transfer to Buyer, or have an executed stock power
endorsed to Buyer attached to the certificate.
1.2 Purchase Price and Payment. Subject to the adjustment provisions
contained in Section 1.2(c), the purchase price (the "Purchase Price") for
the shares shall be as follows:
(a) $1,242,642 payable by wire transfer delivered by Buyer to
Seller at the Closing; and
(b) Within 30 days after the Closing, Seller will determine
the net cash transfer since May 17, 1995 through the Closing (the
"Period") from Seller to GNC or from GNC to Seller, as the case
may be. If based upon the Seller's calculation, the Seller has
contributed to GNC net cash during the Period, the Buyer shall pay
the amount of such net cash to Seller immediately in cash. If based
upon the Seller's calculation, GNC has paid to Seller net cash
during the Period, Seller shall pay Buyer the amount of the net cash
immediately in cash.
Buyer acknowledges and agrees that Seller's agreement to sell the Shares to
Buyer is in reliance upon, and conditioned upon, GNC retaining all of its
liabilities and obligations, which constitutes
<PAGE> 7
part of the Purchase Price. The obligations which remain with GNC include the
performance of ongoing contracts. Buyer also acknowledges and agrees that the
Purchase Price was based upon and reflects GNC's retention and performance of
such liabilities and obligations.
1.3 The Closing. The sale and purchase of the Shares pursuant to this
Agreement shall be closed and consummated (the "Closing") at 9:00 a.m. at the
offices of Seller, 201 W. Big Beaver Road, Suite 1040, Troy, Michigan 48084, on
June 1, 1995, or at such other time and place as may be mutually agreeable to
the parties hereto (the "Closing Date"). At the Closing, Seller shall deliver
the Shares pursuant to Section 1.1, Buyer shall pay $1,242,642 to Seller, and
Buyer and Seller shall comply with the applicable covenants and conditions to
closing set forth in Sections 3 and 4.
2. REPRESENTATIONS AND WARRANTIES.
2.1 Representations and Warranties of Seller. Seller represents and
warrants to Buyer the following as of the date of this Agreement and as of the
Closing Date.
2.1.1 Organization and Qualification. Seller and GNC are
corporations duly organized, validly existing and in good standing under
the laws of their respective states of incorporation. GNC has all
requisite corporate power and authority to own, lease, and operate its
assets, properties and Business and to carry on its Business as now
being conducted. GNC is duly qualified and is in good standing in each
jurisdiction in which the nature or conduct of its Business or the
character or location of its properties (owned or leased) makes such
qualification necessary, except where failure to be so qualified would
not have a material adverse effect on the Business.
2.1.2 Authority Relative to This Agreement. Seller has full
corporate power and authority to enter into and perform this Agreement.
The execution and performance by Seller of this Agreement have been duly
and validly authorized on behalf of Seller by its Board of Directors. No
other corporate action by Seller is necessary to authorize Seller's
execution and performance of this Agreement. This Agreement has been
fully and validly executed and delivered by Seller and constitutes a
valid and binding agreement of Seller, enforceable against Seller in
accordance with its terms, except as it may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights and except that the remedy of specific performance and
injunctive and other forms of equitable relief are subject to equitable
defenses and to the discretion of the court before which any proceedings
may be brought.
2.1.3 Consents and Approvals; No Violation. Except for any
consents required under customer and supplier purchase orders,
government contracts, service agreements, software licenses, insurance
policies, employee benefit plans, employment agreements, agreements with
sales representatives, licenses and permits and real and personal
property leases and in connection with any customer-owned tooling,
designs or drawings (which consents the parties acknowledge are not
being obtained and which are hereby waived), and except as set forth in
the attached Exhibit 2.1.3, neither the execution nor the performance by
Seller of this Agreement, (a) will require any authorization, consent or
approval of any governmental or regulatory authority or of any other
person or entity, the absence of which would have a material adverse
effect on the Business, (b) will conflict
2
<PAGE> 8
with, or breach any provision of, the Articles of Incorporation,
regulations or bylaws of Seller or GNC, (c) will conflict with,
in any material respect, violate or breach, in any material respect,
any provision of, or require the consent of any governmental agency
or body or any third party, the absence of which would have a
material adverse effect on the Business, under, any of the provisions
of any material authorization or order of any governmental agency or
body or any third party, or any material note, lease, agreement or
other instrument or obligation to which Seller or GNC is a party,
or by which either of them or any of GNC's properties or assets
may be bound, or (d) will violate, in any material respect,
any material order, injunction, or arbitration award, or any
statute, rule, regulation or ruling of any court or governmental
authority, United States or foreign, applicable to Seller, GNC or
the Shares.
2.1.4 Capitalization. The authorized capital stock and the
outstanding capital stock of GNC are as listed on the attached
Exhibit 2.1.4. The shares described on Exhibit 2.1.4 represent all
of the issued and outstanding shares of capital stock of GNC of
any class or nature whatsoever. All of the outstanding common
shares of GNC are validly issued, fully paid, nonassessable, and
free of exercisable preemptive rights.
2.1.5 Title to Shares. On the date of the Closing, Seller
shall have good title to all of the Shares, free and clear of all
pledges, liens, encumbrances, security interests, warrants, calls,
commitments, subscriptions, agreements, voting trusts or agreements,
proxies, unpaid taxes, claims and options of whatever nature.
2.1.6 Rights to Acquire Shares. There is no oral or written
subscription, option, warrant, call, right, contract, agreement,
commitment, understanding or arrangement relating to the issuance,
sale, delivery or transfer by GNC or by Seller, of the capital stock
of GNC, including any rights of conversion or exchange under any
outstanding security or any other instruments.
2.1.7 Tax Liabilities. GNC has filed all federal tax returns
required to be filed by it. All such tax returns are true and correct
in all material respects. Except as set forth on the attached
Exhibit 2.1.7, GNC has paid all federal taxes that have become due.
GNC has properly withheld from the salaries, wages or other
compensation paid or payable to its officers, employees or other
persons, and has paid to the appropriate federal taxing authorities,
all amounts required to be withheld therefrom under applicable
laws, rules or regulations. Seller shall file, at its expense, the
federal tax returns due for GNC for the period through the Closing
Date as part of the consolidated return being filed for Seller and
shall pay all federal taxes that may be due based upon those income
tax returns. Buyer shall be responsible for filing any and all
federal tax returns for GNC for the period commencing on the Closing
Date and for filing any and all state and local tax returns which
become due after the Closing Date and for the payment of all
taxes in respect thereof.
2.1.8 Litigation and Claims. There is no action, lawsuit, or
proceeding pending or threatened, nor is there any claim or
investigation against Seller in any court or before any Federal,
State, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or before
any arbitrator that would preclude Seller from consummating the
transactions contemplated by this Agreement,
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preclude Seller from performing all of the obligations assumed by it
under this Agreement, or materially adversely affect Seller from
performing all of the obligations assumed under this Agreement.
Seller is not subject to any consent decree, order, writ, decree,
injunction, judgment or other finding or determination of any court
or before any Federal, State, municipal or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, in connection with any such proceeding to which
Seller is an affected party and which is applicable to Seller's
consummation of the transactions contemplated by this Agreement or
its performance of this Agreement.
2.2 Representations and Warranties of Buyer. Buyer and GNC, jointly
and severally, represent and warrant to Seller the following as of the date of
this Agreement and as of the Closing Date:
2.2.1 Organization and Qualification. Buyer is a corporation
duly organized, validly existing and in good standing under the laws
of its state of incorporation. Buyer has all requisite corporate power
and authority to own, lease and operate its assets, properties and
business and the Shares and the Business and to carry on its business
and the Business as now being conducted. Buyer is duly qualified and
is in good standing in each jurisdiction in which the nature or
conduct of its business or the character or location of its
properties (owned or leased) makes such qualification necessary, except
where failure to be so qualified would not have a material adverse
effect on its business.
2.2.2 Authority Relative to This Agreement. Buyer and GNC have
full corporate power and authority to enter into and perform this
Agreement. The execution and performance by Buyer and GNC of this
Agreement have been duly and validly authorized on behalf of Buyer
and GNC by their respective Boards of Directors and, if necessary,
their respective shareholders. No other corporate action by Buyer or
GNC is necessary to authorize Buyer's and GNC's, as applicable,
execution and performance of this Agreement. This Agreement has
been duly and validly executed and delivered by Buyer and when
executed and delivered by Buyer and GNC, as applicable, will
constitute, a valid and binding agreement of Buyer and GNC, as
applicable, enforceable against Buyer and GNC, as applicable, in
accordance with their terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance laws or other similar laws relating to
creditors' rights and except that the remedy of specific performance
and injunctive and other forms of equitable relief are subject to
equitable defenses and to the discretion of the court before which
any proceedings may be brought.
2.2.3 Consents and Approvals; No Violation. Except as set
forth in the attached Exhibit 2.2.3, neither the execution nor the
performance by Buyer of this Agreement to which it is a party, (a)
will require any authorization, consent or approval of any
governmental or regulatory authority or of any other person or
entity, the absence of which would have a material adverse effect
on Buyer's business, (b) will conflict with, or breach any provision
of, the Articles of Incorporation or bylaws of Buyer, (c) will
conflict with, in any material respect, violate or breach, in any
material respect, any provision of, or require the consent of any
governmental agency or body or any third party, the absence of which
would have a material adverse effect on Buyer's business, under,
any of the provisions of any material authorization or order of any
governmental
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agency or body or any third party, or any material note, lease,
agreement or other instrument or obligation to which Buyer is a party,
or by which it or any of its properties or assets may be bound, or (d)
will violate, in any material respect, any material order, injunction,
or arbitration award, or any statute, rule, regulation or ruling of
any court or governmental authority, United States or foreign,
applicable to Buyer or to any of its properties or assets.
2.2.4 Financial Capacity. Buyer has the financial capacity to
consummate the transactions contemplated by this Agreement to which
it is a party, including those arising after the Closing Date. Buyer
is and shall be on and after the Closing, capitalized with at least
$150,000 in cash contributed by Buyer's shareholders as equity.
2.2.5 Investment Intent and Access to Information. Buyer is
acquiring the Shares under this Agreement for its own account, for
investment, and not with a present intention of, or a view to, or
for, the sale or distribution of all or any portion of the Shares,
except pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Act"), pursuant to Rule 144
under the Act, or pursuant to an exemption from registration under
the Act. Buyer acknowledges that the Shares will not be registered
under the Act or under applicable state securities laws and are
"restricted securities" with limits on transferability under the Act
and applicable state securities laws. Seller may place a legend on
the Shares delivered to Buyer setting forth such restrictions. At
all times following its initial contract with Seller pertaining to
the Shares, Seller has made available to Buyer the opportunity to
ask questions of, and receive answers from, Seller, GNC and persons
acting on their behalf concerning the terms and conditions of the
transactions contemplated by this Agreement and concerning Seller
and GNC, and to obtain any additional information, to the extent
Seller or GNC possessed such information or could acquire it without
unreasonable effort or expense, that was necessary to verify the
information furnished about the foregoing to Buyer by Seller or GNC.
2.2.6 Accredited Investor. Buyer has such knowledge and
experience in financial and business matters and of the Business
that it is capable of evaluating the merits and risks of the purchase
of the Shares.
2.2.7 Licenses. Prior to the Closing, Buyer shall have
obtained all licenses, permits, bonds, certifications, registrations,
authorizations and approvals (collectively "Approvals") necessary to
Buyer's ownership of GNC. Buyer has never been denied, and has no
reason to believe that it would be denied, any such Approval.
2.2.8 Litigation and Claims. There is no action, lawsuit, or
proceeding pending or threatened, nor is there any claim or
investigation against Buyer in any court or before any Federal,
State, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or before
any arbitrator that would preclude Buyer from consummating the
transactions contemplated by this Agreement, preclude Buyer from
performing all of the obligations assumed by it under this Agreement,
or materially adversely affect Buyer from performing all of the
obligations assumed under this Agreement. Buyer is not subject to any
consent decree, order, writ, decree, injunction, judgment or other
finding or determination of any court or before any Federal, State,
municipal or other governmental department, commission, board, bureau,
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agency or instrumentality, domestic or foreign, in connection with any
such proceeding to which Buyer is an affected party and which is
applicable to Buyer's consummation of the transactions contemplated by
this Agreement or its performance of this Agreement.
2.2.9 Performance of Obligations. Buyer has all necessary and
appropriate power, capacity and authority to, and Buyer shall, cause GNC
to perform all obligations and responsibilities retained by GNC pursuant
to this Agreement or otherwise.
2.2.10 Access for Audit. Before the date of this Agreement,
Seller caused, and Buyer acknowledges that Seller caused, its and GNC's
officers, directors, employees and agents, to give Buyer and its
officers, employees, counsel, accountants, agents and other authorized
representatives full access during normal business hours to all of the
facilities, assets, properties, books of account, leases, agreements,
commitments, records and personnel of GNC requested by Buyer, and to
furnish Buyer or its representatives with all such information
concerning GNC as Buyer requested so that Buyer had a full opportunity
to make a full business, financial, accounting and legal audit of the
business and affairs of GNC.
2.2.11 Disclosure of Material Fact. Buyer has disclosed to
Seller all material facts with respect to its business. The
representations and warranties of Buyer contained in this Agreement do
not contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements contained herein not
misleading.
2.3 Facts Within GNC's and/or Buyer's Knowledge. Buyer acknowledges
that, (a) its principals have been operating GNC over the past several years,
(b) Buyer and its principals are fully knowledgeable of all aspects of GNC's
financial condition, operations and business, (c) Buyer and its principals are
not relying on any representation or warranty by Seller or any of its officers
except those which are expressly made in this Agreement, and (d) Seller shall
not be required to indemnify Buyer or otherwise be responsible to Buyer for
breach of any representation, warranty or covenant, which is contrary to facts
known or which should have been known to GNC and/or Buyer, or to their
respective officers, directors, shareholders or principals.
3. COVENANTS BEFORE CLOSING.
3.1 Covenants of Seller.
3.1.1 Approval of Sale of Purchased Assets. Seller shall cause
its Board of Directors to approve this Agreement and the sale of the
Shares and other transactions contemplated by this Agreement and shall
provide evidence of such approvals to Buyer at the Closing.
3.1.2 Consents. On or before the Closing Date, Seller shall
obtain all of the consents and approvals required to be set forth in
Exhibit 2.1.3. Seller shall deliver evidence of such consents to Buyer
on or before the Closing.
3.1.3 Delivery of Books and Records. Seller shall deliver all
of GNC's books and records to Buyer at the Closing. Buyer shall allow
Seller access to such books and
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records, during Buyer's normal business hours upon reasonable advance
notice from Seller to Buyer.
3.2 Covenants of GNC and Buyer. GNC and Buyer, jointly and severally,
covenant as follows:
3.2.1 Confidentiality. Between the date of this Agreement and
the Closing Date, Buyer will, and will require its agents and employees
to, hold in confidence, and will not disclose or use to compete with
Seller or GNC, any confidential or proprietary information of Seller or
GNC disclosed to Buyer in connection with its investigation of Seller
and GNC or otherwise, subject to any legal requirement that Buyer
disclose such information. If for any reason the Closing does not occur
by the Closing Date, Buyer will promptly surrender to Seller all
information of Seller or GNC disclosed to Buyer in connection with its
investigation of GNC or otherwise and all copies of the foregoing and
Buyer shall continue to be bound by the covenant in the previous
sentence, it being understood that, until the Closing, if any, all such
confidential information is the property of Seller and GNC and not of
Buyer.
3.2.2 Approval of Sale of Purchased Assets. Buyer shall cause
its Board of Directors and, if necessary, shareholders to approve this
Agreement and the purchase of the Shares and the purchase of the Shares
and other transactions contemplated by this Agreement and shall provide
evidence of such approvals to Seller at the Closing.
3.2.3 [INTENTIONALLY OMITTED.]
3.2.4 Consents. On or before the Closing Date, Buyer shall
obtain all of the consents and approvals required to be set forth in
Exhibit 2.2.3. Buyer shall deliver evidence of such consents to Seller
on or before the Closing.
3.2.5 Further Assurances. Buyer will promptly prepare, execute
and deliver to Seller such lists, instruments and documents and
cooperate with Seller in such other respects as Seller may from time to
time, before or after the Closing, reasonably request.
3.2.6 Tax Matters. At Seller's option, Buyer shall join with
Seller in making an Internal Revenue Code Section 338(h)(10) election to
treat the purchase and sale of the Shares as a purchase and sale of the
assets of GNC for federal income tax purposes. At the Closing, Buyer
shall execute an Internal Revenue Service Form 8023 or such other form
or document as may be necessary to facilitate a Section 338(h)(10)
election. If Seller exercises its option to make a Section 338(h)(10)
election, Buyer agrees to take all actions (and to cause GNC to take all
actions) which are necessary or proper to effect and implement such
election including, without limitation, (a) filing all federal income
tax returns in accordance with purchase price allocations prepared by
Seller in the manner required by the Internal Revenue Code and the
Treasury regulations thereunder, (b) attaching a copy of the Form 8023
(and all other information required by the Treasury regulations) to the
first federal income tax return of or including GNC due after the
Closing, and (c) providing Seller all information relating to
post-closing events which directly or indirectly impact the tax
consequences of the election.
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4. CONDITIONS TO CLOSING.
4.1 Conditions to Buyer's Obligations. The obligations of Buyer under
this Agreement are subject to the satisfaction of the following conditions at
or prior to the Closing; provided, that Buyer may waive the satisfaction of any
such condition:
4.1.1 Accuracy of Seller's Representations and Warranties.
Subject to the provisions of Section 2.3, the representations and
warranties made by Seller in Section 2.1 shall be true, accurate and
correct, in all material respects, at and as of the Closing Date.
4.1.2 Compliance with Covenants. The covenants required to be
performed by Seller before the Closing pursuant to Section 3.1 shall
have been so performed, in all material respects, on or before the
Closing Date.
4.1.3 No Material Casualty. There shall have been no material
loss, damage or casualty to GNC's assets between the date of this
Agreement and the Closing Date.
4.1.4 No Material Litigation. No action or proceeding shall have
been instituted or adversely concluded by any governmental
instrumentality, agency, or other person before any court or
governmental agency which has restrained, prevented, or conditioned the
consummation of the transactions contemplated by this Agreement.
4.1.5 No Bankruptcy. None of GNC, Seller or any of their
affiliates shall be the subject of any bankruptcy or similar proceeding
on or before the Closing Date.
4.1.6 Resignations. Resignations of all current officers and
directors of GNC shall have been submitted to Buyer on or before the
Closing Date.
4.2 Conditions to Seller's Obligations. The obligations of Seller
under this Agreement are subject to the satisfaction of the following conditions
at or prior to the Closing; provided, that Seller may waive the satisfaction of
any such condition.
4.2.1 Accuracy of Buyer's Representations and Warranties. The
representations and warranties made by Buyer in Section 2.2 shall be
true, accurate and correct, in all material respects, at and as of the
Closing Date.
4.2.2 Compliance with Covenants. The covenants required to be
performed by Buyer before the Closing, pursuant to Section 3.2, shall
have been performed, in all material respects, on or before the Closing
Date, and Buyer shall have delivered evidence of such compliance to
Seller on the Closing Date.
4.2.3 Certificate of Buyer and Officers. Buyer shall have
delivered to Seller a Certificate, dated as of the Closing Date, signed
by Buyer and the chief executive and principal financial officers of
Buyer, certifying as to the fulfillment of the conditions specified in
Sections 4.2.1 and 4.2.2 in the form attached as Exhibit 4.2.3.
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4.2.4 No Material Casualty. There shall have been no material
loss, damage, or casualty to GNC's assets between the date of this
Agreement and the Closing Date.
4.2.5 No Material Litigation. No action or proceeding shall
have been instituted or adversely concluded by any governmental
instrumentality, agency or other person before any court or governmental
agency which has restrained, prevented or conditioned the consummation
of the transactions contemplated by this Agreement.
4.3 Buyer's Remedy for Failure of Condition. If any condition to
Buyer's obligations under this Agreement as set forth in Section 4.1 is not met
on or before the Closing Date, or if the transactions contemplated by this
Agreement are not consummated on or before the Closing Date for any other
reason (except for a failure of a condition to Seller's obligations as set
forth in Section 4.2), Buyer may terminate this Agreement by written notice to
Seller. This remedy shall be in addition to, and not in lieu of, any other
right or remedy of Buyer against Seller for breach of, or for failure to close,
this Agreement, including, without limitation, Buyer's right to specific
performance, damages or both. Buyer has and will expend substantial time and
money based on this Agreement, and Buyer's damages for Seller's failure to
close this Agreement or for Seller's breach of any term, provision, condition
or covenant of this Agreement would include any costs or expenses incurred by
Buyer in connection with the preparation of this Agreement. Buyer may not
recover in excess of $100,000 in damages from Seller if the transactions
contemplated by this Agreement are not consummated.
4.4 Seller's Remedy for Failure of Condition. If any condition to
Seller's obligations under this Agreement as set forth in Section 4.2 is not
met on or before the Closing Date, or if the transactions contemplated by this
Agreement are not consummated on or before the Closing Date for any other
reason (except for a failure of a condition to Buyer's obligations as set forth
in Section 4.1), Seller may terminate this Agreement by written notice to
Buyer. This remedy shall be in addition to, and not in lieu of, any other right
or remedy of Seller against Buyer for breach of, or for failure to close, this
Agreement, including, without limitation, Seller's right to specific
performance, damages or both. Seller has and will expend substantial time and
money based on this Agreement, and Seller's damages for Buyer's failure to
close this Agreement or for Buyer's breach of any term, provision, condition or
covenant of this Agreement would include any costs or expenses incurred by
Seller in connection with the preparation of this Agreement. Seller may not
recover in excess of $100,000 in damages from Buyer if the transactions
contemplated by this Agreement are not consummated.
5. WARRANTIES; INDEMNIFICATION.
5.1 Survival. Subject to Section 5.5, all representations,
warranties, covenants, indemnifications and agreements of Buyer, GNC and Seller
contained in this Agreement shall survive the execution and delivery of this
Agreement and the Closing Date:
5.2 Indemnity by Seller. Subject to Section 5.5, Seller shall
indemnify, defend and hold harmless Buyer, its successors and assigns, and any
parent, subsidiary or affiliate of Buyer and Buyer's officers, directors,
shareholders, agents, employees and representatives (collectively, "Buyer's
Affiliates") from and against all demands, claims, actions or causes of
action, assessments, losses, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties, reasonable attorneys' fees
and costs and expenses incident to proceedings, investigations
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or the defense of any claims (collectively, "Losses"), incurred by,
imposed upon or asserted against Buyer or Buyer's Affiliates,
arising from, or attributable to, a breach of, or failure to
perform any of Seller's representations, warranties, covenants or
agreements contained in this Agreement or in any of the documents
executed in connection with this Agreement, except as otherwise
provided in Section 2.3.
5.3 Indemnity by Buyer. Subject to Section 5.5, Buyer and GNC, jointly
and severally, shall indemnify, defend and hold harmless Seller, its successors
and assigns, and any parent, subsidiary or affiliate of Seller and any of
Seller's officers, directors, shareholders, agents, employees and
representatives (collectively, "Seller's Affiliates") from and against all
Losses incurred by, imposed upon or asserted against Seller or Seller's
Affiliates, arising from, or attributable to, any of the following.
(a) a breach of, or failure to perform any of Buyer's or GNC's
representations, warranties, covenants or agreements contained in this
Agreement or in any of the documents executed in connection with this
Agreement.
(b) any failure to cause GNC to discharge or perform any obligations
or covenants retained by GNC pursuant to this Agreement or otherwise.
(c) any sales, use, transfer, excise, recording or documentary tax or
similar tax (other than Seller's income taxes) relating to the sale of the
Shares by Seller to Buyer or otherwise relating to the consummation of the
transactions contemplated by this Agreement.
(d) any products or other liability, obligation or claim relating to
products manufactured or sold in connection with the Business of GNC or
Buyer prior to, on or after the Closing.
5.4 Defense of Claims. If any party ("Indemnified Party") receives
notice of, or discovers, any claim or the commencement of any action for which
the other party ("Indemnitor") is or may be liable under this Agreement
("Indemnified Claim"), the Indemnified Party shall promptly notify the
Indemnitor of such claim or action in writing and shall provide Indemnitor with
copies of any pleadings or other documents evidencing such Indemnified Claim.
The Indemnitor shall be entitled to participate in the defense of any
Indemnified Claim, and, if it so elects, to assume the defense of the
Indemnified Claim, with counsel reasonably satisfactory to the Indemnified
Party. After written notice from the Indemnitor to the Indemnified Party of
such election to assume the defense, the Indemnitor shall not be liable to the
Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense of the Indemnified Claim,
other than costs and expenses of the Indemnified Party incurred at the request
of the Indemnitor. The assumption of the defense of any such Indemnified Claim
shall not be deemed an admission by the Indemnitor that it is liable for any
such Indemnified Claim. The Indemnitor may, at its election, settle or
compromise any Indemnified Claim, but the Indemnified Party shall not settle or
compromise any Indemnified Claim without the prior consent of the Indemnitor,
unless the Indemnitor shall have failed or refused to assist the Indemnified
Party in the defense of such Indemnified Claim or shall unreasonably withhold
its consent to a proposed settlement or compromise of such claim. The parties
shall use their best efforts to agree on whether indemnifiable damages exist,
and if so, the amount. Any amounts
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determined to be owed shall be paid within 30 days of such determination. The
parties agree to reasonably cooperate with each other in the defense of claims
under this Agreement.
5.5 Limitation of Liability.
5.5.1 Seller's Limits. Notwithstanding anything in this
Agreement to the contrary, Seller shall not be liable to indemnify Buyer
or any of Buyer's Affiliates, (i) for the first $25,000 in the aggregate
of Buyer's and Buyer's Affiliates' Indemnified Claims; provided that
this limitation shall not apply if Buyer's and Buyer's Affiliates'
aggregate Indemnified Claims exceed $25,000, or (ii) with respect to any
Indemnified Claim of Buyer or any of Buyer's Affiliates for which
Seller has not received notice on or before the first annual anniversary
of the Closing Date, or (iii) with respect to Buyer's and Buyer's
Affiliates' aggregate Indemnified Claims in excess of $1,242,642 or the
amount of cash actually received by Seller from Buyer pursuant to this
Agreement, if less, or (iv) if the Closing occurs, for any incidental,
consequential or lost profits damages (as opposed to out-of-pocket
expenses), or (v) for any breach of any representation, warranty,
covenant or agreement of Seller which is contrary to facts known to
Buyer and/or Buyer's Affiliates on or before the Closing Date.
5.5.2 Buyer's Limits. Notwithstanding anything in this
Agreement to the contrary, Buyer and GNC shall not be liable to
indemnify Seller or any of Seller's Affiliates, (i) for the first
$25,000 in the aggregate of Seller's and Seller's Affiliates'
Indemnified Claims; provided that this limitation shall not apply if
Seller's and Seller's Affiliates' aggregate Indemnified Claims exceed
$25,000, or (ii) with respect to Buyer's and Buyer's Affiliates'
aggregate Indemnified Claims in excess of $1,242,642 or the amount of
cash actually paid by Buyer to Seller, if less.
6. OTHER COVENANTS AND AGREEMENTS.
6.1 Sale Restrictions. Buyer shall not pledge, hypothecate, sell or
otherwise transfer any of the Shares except, (i) pursuant to an effective
registration statement under the Act and appropriate blue sky laws, or (ii)
pursuant to exemptions from registration under the Act and appropriate blue
sky laws.
6.2 Performance of Obligations. Buyer shall cause GNC to perform all
of its duties and obligations from and after the Closing Date, including,
without limitation, all duties or obligations imposed pursuant to its existing
liabilities and contracts or by any governmental body or agency or pursuant to
any federal, state or local law, rule, regulation or ordinance, including, but
not limited to, correction of any existing violations of any federal, state or
local law, rule, regulation or ordinance, whether or not any of such duties,
obligations or violations existed before the Closing Date.
6.3 Brokerages. Except as expressly disclosed by Seller, all
negotiations relative to this Agreement and the transactions contemplated in
this Agreement have been carried on by the parties to this Agreement directly
without the intervention of any person; and such negotiations, and the
consummation of the transactions under this Agreement, will not result in any
liability by any party for any finder's fee, brokerage commission or other
similar fee, which will be paid by Seller. Each party (the "Party") shall
indemnify the other parties and hold them harmless from
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and against any claim for brokerage or finder's fees or other commissions
resulting from actions of the Party which are not in accordance with the
preceding sentence.
6.4 Expenses. Each party to this Agreement shall pay its own
expenses in connection with the negotiation, execution and performance of this
Agreement, the transactions contemplated by this Agreement, and all things
required to be done by them pursuant to this Agreement, including counsel fees,
brokerage or financial advisor fees, filing fees and accounting fees, except as
otherwise expressly provided in this Agreement. All sales, use, excise,
transfer, recording and documentary taxes and similar taxes applicable to the
conveyance or transfer of the Shares pursuant to this Agreement shall be paid
by Buyer.
6.5 No Disclosures. The parties acknowledge and agree that the
negotiations and discussions between the parties with respect to this
transaction have been confidential. Neither Buyer nor Seller shall make any
public disclosure or publicity release pertaining to the existence or subject
matter of this Agreement without the consent of the other parties; provided,
however, that the parties shall be permitted to make such disclosure to the
public or to governmental agencies as is reasonably deemed necessary to comply
with the applicable securities laws or the policies of the American Stock
Exchange or any other governmental agency as required in the recertification
process or in the Business. Additionally, Buyer and Seller shall keep
confidential all facts and information learned before the date of this
Agreement that pertain in any way to any party to this Agreement.
6.6 Plant Closing Liability. Buyer and GNC shall take no action
after the Closing Date that will create any liability on the part of Seller to
any of GNC's employees or to any unit of local government under the Workers
Adjustment and Retraining Notification Act.
6.7 Books and Records. For a period of eight (8) years after the
closing, Buyer shall retain the books of account and other accounting and tax
records relating to the conduct of the Business before the Closing. Seller
shall have the right to examine such books and records transferred to Buyer,
or at its own cost, to make extracts or copies therefrom, within such
eight-year period during reasonable business hours, and during such other
time as Buyer and Seller may agree. At least 30 days prior to the end of such
eight-year period, or any subsequent retention period, Seller shall notify
Buyer in writing whether either of them desires the further retention of any
such records for any longer period, and, in the event either of them desires
any of such records to be retained for any longer period, such records, at the
option of Buyer, shall be either retained by Buyer or be promptly shipped to
Seller at Seller's expense.
7. MISCELLANEOUS.
7.1 Notices. Any notice or other communication required or which
may be given under this Agreement shall be in writing and either delivered
personally to the addressee, telegraphed, telecopied or telexed to the
addressee or mailed, certified or registered mail, postage prepaid, and shall
be deemed given when so delivered personally, telegraphed or telexed, or, if
mailed, three (3) business days after the date of mailing, as follows:
12
<PAGE> 18
If to Seller: Larizza Industries, Inc.
201 W. Big Beaver Road
Suite 1040
Troy, MI 48084
Attention: Ronald T. Larizza
Telecopy Number: (810) 524-4996
With a Copy to: Honigman Miller Schwartz and Cohn
2290 First National Building
Detroit, MI 48226
Attention: Patrick T. Duerr, Esq.
Telecopy Number: (313) 962-1076
If to Buyer: General Nuclear Acquisition Corp.
Shady Creek Road
P.O. Box 400
New Stanton, PA 15672
With a Copy to: Dino S. Persio, Esq.
Smorto Persio Zadzilko Webb & McGill
129 South Center Street
Ebensburg, PA 15931
or to such other address as such party shall designate in writing delivered to
the other parties to this Agreement.
7.2 Entire Agreement. This Agreement (including the Exhibits to this
Agreement) contains the entire agreement among the parties with respect to the
purchase and sale of the Shares and the other transactions contemplated by this
Agreement and supersedes all prior agreements, commitments and discussions,
written or oral, with respect to such transactions, which are merged into this
Agreement and shall be of no further force or effect.
7.3 Waivers and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions of
this Agreement may be waived, only by a written instrument signed by the
parties, or in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege under this
Agreement shall operate as a waiver of such right, power or privilege, nor
shall any waiver on the part of any party of any right, power or privilege
under this Agreement, nor any single or partial exercise of any right, power or
privilege under this Agreement, preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege under this Agreement.
7.4 Governing Law and Forum. This Agreement is being executed in the
State of Michigan and shall be governed by and construed in accordance with the
laws of the State of Michigan, except that if any provision of this Agreement
would be illegal, void, invalid or unenforceable under such laws, in connection
with a suit or proceeding validly instituted in another jurisdiction, then the
laws of such other jurisdiction shall govern insofar as is necessary to sustain
the validity or enforceability of the terms of this Agreement. Any action or
proceeding
13
<PAGE> 19
in connection with this Agreement shall only be brought in a court of record of
the State of Michigan, County of Oakland, Southern Division, or in the United
States District Court for the Eastern District of Michigan, and Buyer, GNC and
Seller consent to be subject to the personal jurisdiction of such courts.
7.5 Variations in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the person or persons may require.
7.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.7 Exhibits. The Exhibits to this Agreement are a part of this
Agreement as if set forth in full in this Agreement.
7.8 Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
7.9 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties to this Agreement and their respective permitted
successors and assigns; provided that the parties may not assign or transfer
any of their rights or delegate any of their obligations under this Agreement
without the prior written consent of the other parties, and any purported
assignment or transfer by any party that is not in compliance with the
foregoing is void.
7.10 Severability. The provisions of this Agreement shall be deemed
severable, and if any provision of this Agreement is determined to be illegal
or invalid under applicable law, such provision may be changed to the extent
reasonably necessary to make the provision, as so changed, legal, valid and
binding. If any provision of this Agreement is determined to be illegal or
invalid in its entirety, such illegality or invalidity shall have no effect on
the other provisions of this Agreement, which shall remain valid, operative
and enforceable.
7.11 Survival of Provisions. The provisions and the rights and
obligations of the parties set forth in Sections 5 and 6 shall survive the
Closing and shall be binding upon and fully enforceable against the parties and
their respective successors and assigns as applicable at all times on or after
the Closing, in accordance with their terms, except as otherwise expressly
provided by this Agreement.
7.12 Acknowledgement. THE PARTIES TO THIS AGREEMENT ACKNOWLEDGE AND
AGREE THAT THEY ARE SOPHISTICATED BUSINESS PEOPLE, THAT THEY HAVE SUFFICIENT
KNOWLEDGE AND EXPERTISE IN BUSINESS AND FINANCIAL MATTERS TO EVALUATE THE
MERITS AND RISKS ASSOCIATED WITH THE EXECUTION AND PERFORMANCE OF THIS
AGREEMENT, INCLUDING THE EXHIBITS AND ALL RELATED DOCUMENTS AND AGREEMENTS (THE
"RELATED AGREEMENTS"), THAT THEY HAVE FULLY READ AND FULLY UNDERSTAND ALL OF
THE TERMS AND PROVISIONS OF THIS AGREEMENT, THE ATTACHED EXHIBITS AND THE
RELATED AGREEMENTS, THAT THEY HAVE BEEN REPRESENTED BY COMPETENT LEGAL COUNSEL
OF THEIR OWN CHOOSING AND THAT THEY
14
<PAGE> 20
EXECUTE THIS AGREEMENT, THE EXHIBITS AND ALL RELATED AGREEMENTS, FREELY,
WITHOUT DURESS OR COERCION AND WITH FULL KNOWLEDGE OF THE SIGNIFICANCE AND
CONSEQUENCES.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LARIZZA INDUSTRIES, INC.
Subscribed to and sworn to me
By: /s/ TERENCE C. SEIKEL this 1st day of June, 1995, at
--------------------------------- Oakland County, Michigan.
Its: CFO
--------------------------------
"Seller" /s/ JANICE K. HAGEN
---------------------------------
My commission expires 4-8-96.
GENERAL NUCLEAR ACQUISITION CORP. GENERAL NUCLEAR CORP.
By: /s/ RICKY LANG By: /s/ RICKY LANG
--------------------------------- ------------------------------
Its: President Its: President
-------------------------------- -----------------------------
"Buyer" "GNC"
Subscribed to and sworn to me Subscribed to and sworn to me
this 1st day of June, 1995, at this 1st day of June, 1995, at
Oakland County, Michigan. Oakland County, Michigan.
/s/ JANICE K. HAGEN /s/ JANICE K. HAGEN
------------------------------------ ---------------------------------
My commission expires 4-8-96. My commission expires 4-8-96.
JANICE K. HAGEN
NOTARY PUBLIC-OAKLAND COUNTY, MICH.
MY COMMISSION EXPIRES 04-08-96
15
<PAGE> 21
EXHIBITS TO AGREEMENT
<TABLE>
<CAPTION>
PAGE SECTION
---- -------
<S> <C> <C>
2, 6 2.1.3 Consents and Approvals--Seller
3 2.1.4 Capitalization
3 2.1.7 Tax Liabilities
4, 7 2.2.3 Consents and Approvals--Buyer
8 4.2.3 Certificate of Buyer and Officers
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE LARIZZA
INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET - JUNE 30, 1995, AND CONSOLIDATED
STATEMENT OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND ACCOMPANYING NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 500
<SECURITIES> 0
<RECEIVABLES> 30,842
<ALLOWANCES> 0
<INVENTORY> 9,484
<CURRENT-ASSETS> 52,718
<PP&E> 56,944
<DEPRECIATION> 25,822
<TOTAL-ASSETS> 93,512
<CURRENT-LIABILITIES> 39,917
<BONDS> 0
<COMMON> 76,780
0
0
<OTHER-SE> (56,630)
<TOTAL-LIABILITY-AND-EQUITY> 93,512
<SALES> 110,653
<TOTAL-REVENUES> 110,653
<CGS> 89,467
<TOTAL-COSTS> 89,467
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,311
<INCOME-PRETAX> 11,468
<INCOME-TAX> 2,750
<INCOME-CONTINUING> 8,718
<DISCONTINUED> 802
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,520
<EPS-PRIMARY> .43
<EPS-DILUTED> .43
</TABLE>
