<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------------
MASLAND CORPORATION
(NAME OF SUBJECT COMPANY)
PA ACQUISITION CORP.
LEAR CORPORATION
(BIDDERS)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
574806105
(CUSIP NUMBER OF CLASS OF SECURITIES)
JAMES H. VANDENBERGHE
21557 TELEGRAPH ROAD
SOUTHFIELD, MICHIGAN 48034
(810) 746-1500
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
Copy to:
JOHN L. MACCARTHY, ESQ.
WINSTON & STRAWN
35 WEST WACKER DRIVE
SUITE 4200
CHICAGO, ILLINOIS 60601
(312) 558-5600
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
================================================================================================
Transaction Valuation* Amount of Filing Fee
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<S> <C>
$384,865,636.94 $76,973.12
================================================================================================
</TABLE>
* Estimated solely for purposes of calculating the amount of filing fee. The
amount assumes the purchase of 15,473,597 shares of Common Stock, par value
$.01 per share of the Subject Company (together with the associated preferred
stock purchase rights, the "Shares"), comprised of (i) the 13,590,393 Shares
that were outstanding as of May 23, 1996 and (ii) 1,883,204 Shares that would
be issued assuming the exercise as of May 23, 1996 of all the then
outstanding stock options and warrants to acquire Shares pursuant to the
Subject Company's 1991 Stock Purchase and Option Plan, 1993 Stock Option
Incentive Plan and Non-Employee Director Stock Option Plan (the "Stock Option
Shares"), at a price per Share of $26.00 in cash, less $17,447,885.06
representing the number of Stock Option Shares multiplied by an average
exercise price of $9.265 applicable to the stock options and warrants
relating to the Stock Option Shares.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C> <C>
AMOUNT PREVIOUSLY PAID: NONE FILING PARTY: N/A
FORM OR REGISTRATION NO.: N/A DATE FILED: N/A
</TABLE>
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<PAGE> 2
14D-1
CUSIP No. 574806105
<TABLE>
<C> <S> <C>
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1 NAME OF REPORTING PERSONS:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PA Acquisition Corp.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /
/
(b) /
/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
BK, AF
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or
2(f) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
230,771*
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8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) INCLUDES CERTAIN SHARES / /
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) APPROXIMATELY
Approximately 1.7%*
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10 TYPE OF REPORTING PERSON
CO
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* See footnote on following page.
</TABLE>
<PAGE> 3
14D-1
CUSIP No. 574806105
<TABLE>
<C> <S> <C>
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1 NAME OF REPORTING PERSONS:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
LEAR CORPORATION (13-3386776)
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
BK
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or
2(f) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
230,771*
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8 CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES / /
- ------------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) APPROXIMATELY
Approximately 1.7%*
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10 TYPE OF REPORTING PERSON
CO
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</TABLE>
*On May 23, 1996, Lear Corporation ("Parent") and PA Acquisition Corp., a
wholly-owned subsidiary of Parent (the "Purchaser"), entered into certain
agreements (collectively, the "Stockholders Agreement") with William J. Branch,
Larry W. Owen and Darrell F. Sallee (collectively, the "Stockholders") pursuant
to which the Stockholders have agreed, among other things, to validly tender
(and not to withdraw) pursuant to the Purchaser's tender offer all of the Shares
beneficially owned by them (representing an aggregate of 230,771 Shares, or
approximately 1.7% of the Shares outstanding as of May 23, 1996). Pursuant to
the Stockholders Agreement, each of the Stockholders has also constituted Parent
or its nominee as his attorney and proxy to vote, and has agreed to grant a
consent or approval in respect of, the Shares subject to the Stockholders
Agreement (i) in favor of the Merger and the Merger Agreement (each as defined
in the Offer to Purchase (as defined below)) and (ii) against certain
transactions involving Masland Corporation, other than the transactions
contemplated by the Merger Agreement. The Stockholders Agreement is described
more fully in Section 12 of the Offer to Purchase dated May 30, 1996 of Parent
and the Purchaser (the "Offer to Purchase").
<PAGE> 4
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 relates to the offer by PA
Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly-owned
subsidiary of Lear Corporation, a Delaware corporation ("Parent"), to purchase
all of the outstanding shares of Common Stock, par value $.01 per share (the
"Common Stock"), of Masland Corporation, a Delaware corporation (the "Company"),
including the associated rights (the "Rights" and, together with the Common
Stock, the "Shares") to purchase Series A Junior Participating Preferred Stock,
par value $.01 per share, of the Company (or other securities) issued pursuant
to the Rights Agreement, dated as of November 16, 1995, as amended, between the
Company and Mellon Securities Trust Company, as Rights Agent, at a price of
$26.00 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated May 30, 1996 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which, together with the
Offer to Purchase and any amendments or supplements hereto or thereto,
collectively constitute the "Offer"), which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively. The item numbers and responses thereto below
are in accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Masland Corporation, a Delaware
corporation, which has its principal executive offices at 50 Spring Road,
Carlisle, Pennsylvania 17013.
(b) The exact title of the class of equity securities being sought in the
Offer is the Common Stock, par value $.01 per share, including the associated
Rights, of the Company. The information set forth under "Introduction" in the
Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of the Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is being filed by the Purchaser and Parent.
The information set forth in "Introduction" and Section 9 ("Certain Information
Concerning the Purchaser and Parent") of, and Schedule I ("Information
Concerning the Directors and Executive Officers of Parent and the Purchaser")
to, the Offer to Purchase is incorporated herein by reference.
(e)-(f) Neither the Purchaser nor Parent nor, to their knowledge any of the
persons listed in Schedule I ("Information Concerning the Directors and
Executive Officers of Parent and the Purchaser") to the Offer to Purchase, has
during the last five years (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) None.
(b) The information set forth in "Introduction," Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Background of
the Offer") and Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company; The Merger Agreement; The Stockholders Agreement; The Termination,
Consulting and Noncompete Agreement; The Employment Agreement") of the Offer to
Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
4
<PAGE> 5
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(c) The information set forth in "Introduction," Section 6 ("Price
Range of the Shares; Dividends"), Section 11 ("Background of the Offer"),
Section 12 ("Purpose of the Offer and the Merger; Plans for the Company; The
Merger Agreement; The Stockholders Agreement; The Termination, Consulting and
Noncompete Agreement; The Employment Agreement") and Section 13 ("Dividends and
Distributions") of the Offer to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information sct forth in "Introduction," Section 9 ("Certain
Information Concerning the Purchaser and Parent") and Section 12 ("Purpose of
the Offer and the Merger; Plans for the Company; The Merger Agreement; The
Stockholders Agreement; The Termination, Consulting and Noncompete Agreement;
The Employment Agreement") of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in "Introduction," Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Background of
the Offer") and Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company; The Merger Agreement; The Stockholders Agreement; The Termination,
Consulting and Noncompete Agreement; The Employment Agreement") of the Offer to
Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction," Section 10 ("Source and Amount
of Funds") and Section 16 ("Fees and Expenses") of the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning the
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 12 ("Purpose of the Offer and the
Merger; Plans for the Company; The Merger Agreement; The Stockholders Agreement;
The Termination, Consulting and Noncompete Agreement; The Employment Agreement")
of the Offer to Purchase is incorporated herein by reference.
(b)-(c) The information set forth in Section 15 ("Certain Legal Matters")
of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations"), Section 10 ("Source and Amount of Funds") and Section 15
("Certain Legal Matters") of the Offer to Purchase is incorporated herein by
reference.
(e) Not applicable
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
5
<PAGE> 6
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated May 30, 1996.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated May 30, 1996.
(a)(8) Text of Press Release, dated May 24, 1996, issued by the Company and
Parent.
(a)(9) Text of Press Release, dated May 30, 1996, issued by Parent.
(b)(1) Credit Agreement, dated as of August 17, 1995, among Parent, the
financial institutions party thereto, Chemical Bank, as Administrative Agent,
and the Managing Agents, Co-Agents and Lead Managers named therein, as amended.
(c)(1) Agreement and Plan of Merger, dated as of May 23, 1996, by and among
Parent, the Purchaser and the Company.
(c)(2) Stockholders Agreement, dated as of May 23, 1996, among Parent, the
Purchaser, William J. Branch, Larry W. Owen and Darrell F. Sallee.
(c)(3) Confidentiality and Standstill Agreement, dated as of March 14,
1996, between and among the Company, and its subsidiaries, and Parent, and its
subsidiaries.
(c)(4) Agreement to Negotiate Exclusively, dated as of May 2, 1996, by and
between Parent and the Company.
(c)(5) Termination, Consulting and Noncompete Agreement, dated May 29,
1996, among Parent, the Purchaser and William J. Branch.
(c)(6) Employment agreement, dated as of May 29, 1996, between the Company
and Dr. Frank J. Preston.
(d) None.
(e) Not applicable.
(f) None.
6
<PAGE> 7
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: May 30, 1996 PA ACQUISITION CORP.
By: /s/ James H. Vandenberghe
------------------------------------
Name: James H. Vandenberghe
Title: Executive Vice President and
Chief
Financial Officer
LEAR CORPORATION
By: /s/ James H. Vandenberghe
------------------------------------
Name: James H. Vandenberghe
Title: Executive Vice President and
Chief
Financial Officer
7
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME
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<S> <C> <C>
99.1(a) -- Offer to Purchase dated May 30, 1996.
99.2(a) -- Letter of Transmittal.
99.3(a) -- Notice of Guaranteed Delivery.
99.4(a) -- Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees.
99.5(a) -- Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies and
Other Nominees.
99.6(a) -- Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
99.7(a) -- Form of Summary Advertisement dated May 30, 1996.
99.8(a) -- Text of Press Release, dated May 24, 1996, issued by the Company and Parent.
99.9(a) -- Text of Press Release, dated May 30, 1996, issued by Parent.
99.1(b) -- Credit Agreement, dated as of August 17, 1995, among Parent, the financial
institutions party thereto, Chemical Bank, as Administrative Agent, and the
Managing Agents, Co-Agents and Lead Managers named therein, as amended.
99.1(c) -- Agreement and Plan of Merger, dated as of May 23, 1996, by and among Parent,
the Purchaser and the Company.
99.2(c) -- Stockholders Agreement, dated as of May 23, 1996, among Parent, the Purchaser,
William J. Branch, Larry W. Owen and Darrell F. Sallee.
99.3(c) -- Confidentiality and Standstill Agreement, dated as of March 14, 1996, between
and among the Company, and its subsidiaries, and Parent, and its subsidiaries.
99.4(c) -- Agreement to Negotiate Exclusively, dated as of May 2, 1996, by and between
Parent and the Company.
99.5(c) -- Termination, Consulting and Noncompete Agreement, dated May 29, 1996, among
Parent, the Purchaser and William J. Branch.
99.6(c) -- Employment agreement, dated as of May 29, 1996, between the Company and Dr.
Frank J. Preston.
99.1(d) -- None.
99.1(e) -- Not applicable.
99.1(f) -- None.
</TABLE>
8
<PAGE> 1
EXHIBIT 99.1(a)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
MASLAND CORPORATION
AT
$26.00 NET PER SHARE
BY
PA ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
LEAR CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JUNE 26, 1996, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF MASLAND CORPORATION (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED
THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE
STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY
ACCEPT THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE NUMBER OF SHARES OUTSTANDING
ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE AND (2) LENDERS HOLDING MORE
THAN 50% OF THE AGGREGATE OUTSTANDING INDEBTEDNESS UNDER PARENT'S EXISTING
CREDIT AGREEMENT HAVING AGREED TO AMEND SUCH CREDIT AGREEMENT TO PERMIT THE
CONSUMMATION OF THE OFFER AND THE MERGER. SEE SECTIONS 12 AND 14.
------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (1) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal and mail or deliver the certificate(s) representing
tendered Shares, and any other required documents, to the Depositary or tender
such Shares pursuant to the procedure for book-entry transfer set forth in
Section 3 or (2) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such stockholder. A
stockholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if such stockholder
desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis, may tender such Shares
by following the procedure for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional copies
of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed
Delivery and other related materials may be obtained from the Information Agent
or from brokers, dealers, commercial banks and trust companies.
------------------
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
May 30, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
INTRODUCTION............................................................................ 1
THE OFFER............................................................................... 3
1. Terms of the Offer............................................................... 3
2. Acceptance for Payment and Payment for Shares.................................... 4
3. Procedure for Tendering Shares................................................... 6
4. Withdrawal Rights................................................................ 8
5. Certain Federal Income Tax Consequences.......................................... 9
6. Price Range of the Shares; Dividends............................................. 9
7. Effect of the Offer on the Market for the Shares; Stock Quotation; Exchange Act
Registration; Margin Regulations................................................. 10
8. Certain Information Concerning the Company....................................... 11
9. Certain Information Concerning the Purchaser and Parent.......................... 13
10. Source and Amount of Funds....................................................... 15
11. Background of the Offer.......................................................... 16
12. Purpose of the Offer and the Merger; Plans for the Company; The Merger Agreement;
The Stockholders Agreement; The Termination, Consulting and Noncompete Agreement;
The Employment Agreement......................................................... 17
13. Dividends and Distributions...................................................... 27
14. Certain Conditions of the Offer.................................................. 28
15. Certain Legal Matters............................................................ 29
16. Fees and Expenses................................................................ 32
17. Miscellaneous.................................................................... 32
Schedule I -- INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER........................... I-1
</TABLE>
i
<PAGE> 3
TO HOLDERS OF COMMON STOCK OF
MASLAND CORPORATION:
INTRODUCTION
PA Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of Lear Corporation, a Delaware corporation ("Parent"),
hereby offers to purchase all outstanding shares of Common Stock, par value $.01
per share (the "Common Stock"), of Masland Corporation, a Delaware corporation
(the "Company"), including the associated rights (the "Rights" and together with
the Common Stock, the "Shares") to purchase Series A Junior Participating
Preferred Stock, par value $.01 per share, of the Company (or other securities)
issued pursuant to the Rights Agreement, dated as of November 16, 1995, as
amended (the "Rights Agreement"), between the Company and Mellon Securities
Trust Company, as Rights Agent, at a purchase price of $26.00 per Share, net to
the seller in cash (the "Offer Price"), upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of Chase Securities Inc. ("Chase"),
which is acting as Dealer Manager (the "Dealer Manager"), Bankers Trust Company,
which is acting as the Depositary (the "Depositary"), and D.F. King & Co., Inc.,
which is acting as Information Agent (the "Information Agent"), incurred in
connection with the Offer. See Section 16.
The Board of Directors of the Company has unanimously approved the Offer
and the Merger (as defined below) and determined that the Offer and the Merger
are fair to and in the best interests of the stockholders of the Company and
recommends that the Company's stockholders accept the Offer.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) A
NUMBER OF SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE NUMBER OF SHARES
OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE "MINIMUM
CONDITION") AND (2) LENDERS (AS DEFINED BELOW) HOLDING MORE THAN 50% OF THE
AGGREGATE OUTSTANDING INDEBTEDNESS UNDER PARENT'S EXISTING CREDIT AGREEMENT
HAVING AGREED TO AMEND SUCH CREDIT AGREEMENT TO PERMIT THE CONSUMMATION OF THE
OFFER AND THE MERGER (THE "CREDIT AGREEMENT WAIVER CONDITION"). SEE SECTIONS 12
AND 14.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of May 23, 1996 (the "Merger Agreement"), by and among Parent, the Purchaser
and the Company pursuant to which, following the later of the Expiration Date
and the satisfaction or waiver of certain conditions, the Purchaser will be
merged with and into the Company (the "Merger"). In the Merger, each outstanding
Share (other than Shares then held, directly or indirectly, by Parent, the
Purchaser or any subsidiary of Parent, the Purchaser or the Company or held in
the Company's treasury and other than Shares held by stockholders, if any, who
perfect their appraisal rights under Delaware law) will be converted into the
right to receive $26.00, or any higher price per Share paid pursuant to the
Offer, without interest thereon, in cash (the "Merger Consideration") and the
Company will become a wholly-owned subsidiary of Parent. See Section 12.
Concurrently with the execution of the Merger Agreement, Parent and the
Purchaser entered into an agreement, dated as of May 23, 1996 (the "Stockholders
Agreement"), with certain members of senior management of the Company (the
"Stockholders") owning, in the aggregate, 230,771 (or approximately 1.7%) of the
outstanding Shares. Pursuant to the Stockholders Agreement, the Stockholders
have agreed, among other things, to validly tender pursuant to the Offer and not
withdraw all Shares which are beneficially owned by them.
Based on the representations and warranties of the Company contained in the
Merger Agreement, as of May 23, 1996: (i) 13,590,393 Shares were outstanding;
and (ii) 1,883,204 Shares were reserved for issuance upon the exercise of the
stock options and warrants to acquire Common Stock (collectively, the "Stock
1
<PAGE> 4
Options") issued pursuant to the Company's 1991 Stock Purchase and Option Plan,
1993 Stock Option Incentive Plan and Non-Employee Director Stock Option Plan.
Based on the foregoing, the Minimum Condition will be satisfied if
7,736,799 Shares are validly tendered and not withdrawn prior to the Expiration
Date. Because the Stockholders own an aggregate of 230,771 Shares and are
required to tender (and not withdraw) such Shares pursuant to the Offer, the
Minimum Condition will be satisfied by the tender of at least 7,506,028 Shares
held by persons other than the Stockholders. The number of Shares required to be
validly tendered and not withdrawn in order to satisfy the Minimum Condition
will increase to the extent additional Shares are deemed to be outstanding on a
fully diluted basis under the Merger Agreement. For purposes of the Merger
Agreement, "on a fully diluted basis" means, as of any date, the number of
Shares outstanding, together with Shares the Company is then required to issue
pursuant to obligations outstanding at that date under employee stock option or
other benefit plans or otherwise (assuming all options and other rights to
acquire Shares are fully vested and exercisable and all Shares issuable at any
time have been issued), including without limitation, pursuant to the Stock
Options.
Parent is seeking the written consent of Lenders (as defined below) holding
more than 50% of the aggregate outstanding indebtedness (the "Requisite
Lenders") under Parent's existing $1.475 billion Credit Agreement, dated August
17, 1995, as amended (the "Credit Agreement"), to an amendment of such Credit
Agreement to permit the consummation of the Offer and the Merger (the "Credit
Agreement Waiver"). The Offer is conditioned upon, among other things, the
Requisite Lenders having entered into the Credit Agreement Waiver. See Section
10 for a description of the Credit Agreement, the Credit Agreement Waiver and
Parent's plans for financing the Offer and the Merger.
The consummation of the Merger is subject to the satisfaction or waiver of
a number of conditions, including, if required, the approval of the Merger by
the requisite vote or consent of the stockholders of the Company. Under the
General Corporation Law of the State of Delaware (the "Delaware Law"), the
stockholder vote necessary to approve the Merger will be the affirmative vote of
at least a majority of the outstanding Shares, including Shares held by the
Purchaser and its affiliates. Accordingly, if the Purchaser acquires a majority
of the outstanding Shares, the Purchaser will have the voting power required to
approve the Merger without the affirmative vote of any other stockholders of the
Company. Furthermore, if the Purchaser acquires at least 90% of the outstanding
Shares pursuant to the Offer or otherwise, the Purchaser would be able to effect
the Merger pursuant to the "short-form" merger provisions of Section 253 of the
Delaware Law, without prior notice to, or any action by, any other stockholder
of the Company. In such event, the Purchaser intends to effect the Merger as
promptly as practicable following the purchase of Shares in the Offer. See
Section 12.
The Merger Agreement and the Stockholders Agreement are more fully
described in Section 12.
The Rights. The Company has distributed one Right for each outstanding
share of Common Stock pursuant to the Rights Agreement. Based on the information
disclosed by the Company in the Merger Agreement and in the Schedule 14D-9, in
connection with the Company's entering into the Merger Agreement, on May 23,
1996 the Company amended the Rights Agreement so that (i) the Rights Agreement
shall not be applicable to the purchase of the Shares pursuant to the Offer or
the Merger or the consummation of the other transactions contemplated by the
Merger Agreement and (ii) none of Parent, the Purchaser or any of their
affiliates will be deemed to be an "Acquiring Person" (as defined in the Rights
Agreement) by reason of the transactions provided for in the Merger Agreement
and the Stockholders Agreement. If the Rights Agreement had not been so amended
and if the Offer, the Merger Agreement or the Stockholders Agreement or any of
the respective transactions contemplated thereby had resulted in Parent or the
Purchaser being deemed "Acquiring Persons" (as defined in the Rights Agreement),
a distribution to the Company's stockholders (other than Parent and the
Purchaser) of Rights certificates separate from the Common Stock might have been
effected pursuant to the Rights Agreement.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
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THE OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not withdrawn in accordance with
Section 4. The term "Expiration Date" means 12:00 Midnight, New York City time,
on Wednesday, June 26, 1996, unless and until the Purchaser (subject to the
terms of the Merger Agreement) shall have extended the period of time during
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by the Purchaser,
shall expire.
In the Merger Agreement the Purchaser and Parent have agreed that, except
as otherwise required by law, they will not, without the prior consent of the
Company, extend the Offer, except that, without the consent of the Company, the
Purchaser may extend the Expiration Date of the Offer for up to ten business
days after the initial Expiration Date or for longer periods in each case in the
event that at the Expiration Date any condition to the Offer shall not have been
satisfied or earlier waived. As used in this Offer to Purchase, "business day"
has the meaning set forth in Rule 14d-1 under the Exchange Act.
In addition, the Purchaser and Parent have agreed in the Merger Agreement
that, among other things, they will not, without the consent of the Company, (i)
decrease the Offer Price or change the form of consideration payable in the
Offer, (ii) decrease the number of Shares sought in the Offer, (iii) amend or
waive satisfaction of the Minimum Condition or (iv) impose conditions to the
Offer in addition to the conditions set forth in Section 14 or amend any other
term of the Offer in any manner adverse to the holders of Shares.
Subject to the terms of the Merger Agreement and the Stockholders Agreement
and the applicable rules and regulations of the Securities and Exchange
Commission (the "Commission"), the Purchaser expressly reserves the right, in
its sole discretion, at any time and from time to time, and regardless of
whether or not any of the events or facts set forth in Section 14 hereof shall
have occurred or shall have been determined by the Purchaser to have occurred,
(i) to extend the period of time during which the Offer is open, and thereby
delay acceptance for payment of, and the payment for, any Shares, by giving oral
or written notice of such extension to the Depositary and (ii) to amend the
Offer in any other respect by giving oral or written notice of such amendment to
the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER PRICE
FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS RIGHT TO EXTEND
THE OFFER.
If by 12:00 Midnight, New York City time, on Wednesday, June 26, 1996 (or
any other date or time then set as the Expiration Date), any or all conditions
to the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated), subject to the terms and conditions contained in
the Merger Agreement and the Stockholders Agreement and to the applicable rules
and regulations of the Commission, to (i) terminate the Offer and not accept for
payment or pay for any Shares and return all tendered Shares to tendering
stockholders, (ii) waive all the unsatisfied conditions and, subject to
complying with the terms of the Merger Agreement and the Stockholders Agreement
and the applicable rules and regulations of the Commission, accept for payment
and pay for all Shares validly tendered prior to the Expiration Date and not
theretofore withdrawn, (iii) extend the Offer and, subject to the right of
stockholders to withdraw Shares until the Expiration Date, retain the Shares
that have been tendered during the period or periods for which the Offer is
extended or (iv) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, waiver, amendment or termination will be
followed as promptly as practicable by public announcement. In the case of an
extension, Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), requires that the announcement be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a
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manner reasonably designed to inform stockholders of such change) and without
limiting the manner in which the Purchaser may choose to make any public
announcement, the Purchaser will not have any obligation to publish, advertise
or otherwise communicate any such public announcement other than by issuing a
release to the Dow Jones News Service.
If the Purchaser extends the Offer or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its acceptance for
payment of or payment for Shares or it is unable to pay for Shares pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in Section 4.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including a waiver of the Minimum Condition, with the Company's consent, or a
waiver of the Credit Agreement Waiver Condition), the Purchaser will disseminate
additional tender offer materials and extend the Offer to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period
during which an offer must remain open following material changes in the terms
of the offer or information concerning the offer, other than a change in price
or a change in the percentage of securities sought, will depend upon the facts
and circumstances then existing, including the relative materiality of the
changed terms or information. With respect to a change in price or a change in
the percentage of securities sought, a minimum period of 10 business days is
generally required to allow for adequate dissemination to stockholders.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Condition, the Credit Agreement Waiver Condition, the expiration or termination
of all waiting periods imposed by the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the regulations thereunder (the "HSR Act"), and the
other conditions set forth in Section 14. Subject to the terms and conditions
contained in the Merger Agreement and the Stockholders Agreement, the Purchaser
reserves the right (but shall not be obligated) to waive any or all such
conditions.
The Company has provided the Purchaser its lists of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed by the Purchaser to record holders of
Shares, and will be furnished by the Purchaser to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 4, promptly after the Expiration Date. Any determination
concerning the satisfaction or waiver of such terms and conditions will be
within the sole discretion of the Purchaser, and such determination will be
final and binding on all tendering stockholders. See Sections 1 and 14. The
Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, Shares in order to comply in whole or
in part with any applicable law, including, without limitation, the HSR Act. Any
such delays will be effected in compliance with Rule 14e-1(c) under the Exchange
Act (relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after the termination or withdrawal of the Offer).
Parent filed a Notification and Report Form with respect to the Offer under
the HSR Act on May 24, 1996. The waiting period under the HSR Act with respect
to the Offer will expire at 11:59 p.m., New York City time, on the 15th day
after such date (anticipated to be June 8, 1996, unless early termination of the
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waiting period is granted). In addition, the Antitrust Division of the
Department of Justice (the "Antitrust Division") or the Federal Trade Commission
(the "FTC") may extend the waiting period by requesting additional information
or documentary material from Parent. If such a request is made, such waiting
period will expire at 11:59 p.m., New York City time, on the 10th day after
substantial compliance by Parent with such request. See Section 15 hereof for
additional information concerning the HSR Act and the applicability of the
antitrust laws to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares or timely confirmation (a "Book-Entry Confirmation") of the
book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company or the Philadelphia Depository Trust Company (each a
"Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer
Facilities") pursuant to the procedures set forth in Section 3, (ii) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message (as defined below) in
connection with a book-entry transfer, and (iii) any other documents required by
the Letter of Transmittal. The per Share consideration paid to any stockholder
pursuant to the Offer will be the highest per Share consideration paid to any
other stockholder pursuant to the Offer.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against such participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer because of
an invalid tender or otherwise, certificates for any such Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, such Shares will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility), as promptly as practicable after the
expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect
wholly-owned subsidiaries of Parent, the right to purchase Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering stockholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer.
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3. PROCEDURE FOR TENDERING SHARES
Valid Tender. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees, or an Agent's Message
in connection with a book-entry delivery of Shares, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase prior to
the Expiration Date. In addition, either (i) certificates for tendered Shares
must be received by the Depositary along with the Letter of Transmittal at one
of such addresses or such Shares must be tendered pursuant to the procedure for
book-entry transfer set forth below (and a Book-Entry Confirmation received by
the Depositary), in each case prior to the Expiration Date, or (ii) the
tendering stockholder must comply with the guaranteed delivery procedure set
forth below.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at each Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in any of the Book-Entry Transfer Facilities'
systems may make book-entry delivery of Shares by causing a Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account at a Book-Entry
Transfer Facility in accordance with such Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Shares may be
effected through book-entry at a Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message in connection with a
book-entry transfer, and any other required documents, must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering stockholder must comply with the guaranteed delivery procedure
described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (i) the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) such Shares are tendered for
the account of a bank, broker, dealer, credit union, savings association or
other entity that is a member in good standing of a recognized Medallion Program
approved by The Securities Transfer Association, Inc. (such member, an "Eligible
Institution"). In all other cases, all signatures on the Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instructions 1 and 5 to the
Letter of Transmittal. If the certificates for Shares are registered in the name
of a person other than the signer of the Letter of Transmittal, or if payment is
to be made or certificates for Shares not tendered or not accepted for payment
are to be returned to a person other than the registered holder of the
certificates surrendered, the tendered certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as described
above. See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer
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cannot be completed on a timely basis or time will not permit all required
documents to reach the Depositary prior to the Expiration Date, such
stockholder's tender may be effected if all the following conditions are met:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(3) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and any other documents
required by the Letter of Transmittal, are received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day" is any day on which the Nasdaq
National Market (the "Nasdaq National Market") operated by the National
Association of Securities Dealers, Inc. (the "NASD") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a signature guarantee by an Eligible Institution in
the form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for the Shares or a Book-Entry
Confirmation with respect to such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer,
including the tendering stockholder's representation and warranty that the
tender of such Shares complies with Rule 14e-4 under the Exchange Act.
Backup Withholding. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 31%. All
stockholders surrendering Shares pursuant to the Offer should complete and sign
the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding (unless an applicable exemption exists and is proved in
a manner satisfactory to the Purchaser and the Depositary). Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Noncorporate foreign
stockholders should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 to the
Letter of Transmittal.
Appointment. By executing the Letter of Transmittal, the tendering
stockholder will irrevocably appoint designees of the Purchaser as such
stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with
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respect to any and all other Shares or other securities or rights issued or
issuable in respect of such Shares on or after May 23, 1996. All such proxies
shall be considered coupled with an interest in the tendered Shares. Such
appointment will be effective when, and only to the extent that, the Purchaser
accepts for payment Shares tendered by such stockholder as provided herein. Upon
such acceptance for payment, all prior powers of attorney, proxies and consents
given by such stockholder with respect to such Shares or other securities or
rights will, without further action, be revoked and no subsequent powers of
attorney, proxies, consents or revocations may be given (and, if given, will not
be deemed effective). The designees of the Purchaser will thereby be empowered
to exercise all voting and other rights with respect to such Shares and other
securities or rights in respect of any annual, special or adjourned meeting of
the Company's stockholders, actions by written consent in lieu of any such
meeting or otherwise, as they in their sole discretion deem proper. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser must be able to exercise full voting and other rights
with respect to such Shares and other securities or rights, including voting at
any meeting of stockholders then scheduled.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Purchaser, in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders determined by it not to be in proper form or
the acceptance for payment of or payment for which may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right
to waive any defect or irregularity in any tender with respect to any particular
Shares, whether or not similar defects or irregularities are waived in the case
of other Shares. No tender of Shares will be deemed to have been validly made
until all defects or irregularities relating thereto have been cured or waived.
None of the Purchaser, Parent, the Depositary, the Information Agent, the Dealer
Manager or any other person will be under any duty to give notification of any
defects or irregularities in tenders or incur any liability for failure to give
any such notification. The Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after July 28, 1996 (or such
later date as may apply in case the Offer is extended).
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedures
for book-entry transfer set forth in Section 3, any notice of withdrawal must
also specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with such Book-Entry Transfer Facility's procedures. Withdrawals of tenders of
Shares may not be rescinded, and any Shares properly withdrawn will thereafter
be deemed not validly tendered for purposes of the Offer. However, withdrawn
Shares may be retendered by again following one of the procedures described in
Section 3 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent, the Dealer Manager or
any other person will be
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under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW IS FOR
GENERAL INFORMATION ONLY AND IS BASED ON THE LAW AS CURRENTLY IN EFFECT. THE TAX
TREATMENT OF EACH STOCKHOLDER WILL DEPEND IN PART UPON SUCH STOCKHOLDER'S
PARTICULAR SITUATION. SPECIAL TAX CONSEQUENCES NOT DESCRIBED HEREIN MAY BE
APPLICABLE TO PARTICULAR CLASSES OF TAXPAYERS, SUCH AS FINANCIAL INSTITUTIONS,
TAX-EXEMPT ORGANIZATIONS, INSURANCE COMPANIES, BROKER-DEALERS, PERSONS WHO ARE
NOT CITIZENS OR RESIDENTS OF THE UNITED STATES AND STOCKHOLDERS WHO ACQUIRED
THEIR SHARES THROUGH THE EXERCISE OF ANY EMPLOYEE STOCK OPTION OR OTHERWISE AS
COMPENSATION. ALL STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO
THE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING
THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX
LAWS.
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for Federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and may also be a taxable transaction under
applicable state, local or foreign income or other tax laws. Generally, for
Federal income tax purposes, a tendering stockholder will recognize gain or loss
in an amount equal to the difference between the cash received and the
stockholder's adjusted tax basis in the Shares tendered by the stockholder and
purchased pursuant to the Offer or the Merger, as the case may be. Gain or loss
generally will be calculated separately for each block of Shares tendered and
purchased pursuant to the Offer, or cancelled pursuant to the Merger, as the
case may be. For Federal income tax purposes, such gain or loss will be a
capital gain or loss if the Shares are a capital asset in the hands of the
stockholder, and a long-term capital gain or loss if the stockholder's holding
period is more than one year as of the date of the sale of the Shares or the
effective date of the Merger, as the case may be.
6. PRICE RANGE OF THE SHARES; DIVIDENDS
According to the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1995 (the "Company Form 10-K"), the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended March 29, 1996 and information supplied
to the Purchaser by the Company, the Shares are traded on the Nasdaq National
Market under the trading symbol "MSLD". During the first two quarters of fiscal
1996, the Company declared and paid quarterly cash dividends to holders of
Shares of $.05 per Share, and on May 9, 1996, the Company declared a cash
dividend of $.05 per share payable on June 7, 1996 to holders of record on May
24, 1996. During each quarter of fiscal 1995, the Company declared and paid
quarterly cash dividends to holders of Shares of $.05 per Share, aggregating
approximately $2.7 million for the year. The following table sets forth, for the
periods indicated, the high and low bid prices per Share on the Nasdaq National
Market. The information set forth in this Section regarding the Company is
entirely taken from or based upon public
9
<PAGE> 12
information and neither Parent nor the Purchaser assume responsibility for the
accuracy or completeness of the information.
<TABLE>
<CAPTION>
HIGH LOW
---- ----
<S> <C> <C>
FISCAL 1994:
Second Quarter (since November 3, 1993)(1)................ $20 3/4 $15 3/8
Third Quarter............................................. 23 3/8 18 1/8
Fourth Quarter............................................ 20 1/8 15 1/2
FISCAL 1995:
First Quarter............................................. $17 5/8 $13 3/4
Second Quarter............................................ 16 3/4 11 5/8
Third Quarter............................................. 16 11 1/2
Fourth Quarter............................................ 14 3/4 11 7/8
FISCAL 1996:
First Quarter............................................. $15 3/4 $12 1/4
Second Quarter............................................ 15 1/4 13 1/4
Third Quarter............................................. 19 3/8 13 3/8
Fourth Quarter (through May 29, 1996)..................... 26 1/8 17 1/2
</TABLE>
- -------------------------
(1) The Company completed an initial public offering of its Common Stock on
November 3, 1993.
On May 23, 1996, the last full trading day before the public announcement
of the execution of the Merger Agreement and the Purchaser's intention to
acquire the Shares pursuant to the Offer, the closing bid per Share on the
Nasdaq National Market was $24 1/4. On May 29, 1996, the last full trading day
before the commencement of the Offer, the closing bid per Share on the Nasdaq
National Market was $25 5/8. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares, if any, held by the public. The Purchaser cannot
predict whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for, or
marketability of, the Shares or whether such reduction would cause future market
prices to be greater or less than the Offer price.
Stock Quotation. The Shares are currently listed and traded on the Nasdaq
National Market, which constitutes the principal trading market for the Shares.
Depending upon the number of Shares purchased pursuant to the Offer, the Shares
may no longer meet the requirements of the NASD for continued inclusion in the
Nasdaq National Market, which require that an issuer have at least 200,000
publicly held shares, held by at least 400 shareholders or 300 shareholders of
round lots, with a market value of at least $1,000,000, and have net tangible
assets of at least $1,000,000, $2,000,000 or $4,000,000, depending on
profitability levels during the issuer's four most recent fiscal years. If these
standards are not met, the Shares might nevertheless continue to be included in
the NASD's Nasdaq Stock Market (the "Nasdaq Stock Market") with quotations
published in the Nasdaq "additional list" or in one of the "local lists," but if
the number of holders of the Shares were to fall below 300, or if the number of
publicly held Shares were to fall below 100,000 or there were not at least two
registered and active market makers for the Shares, the NASD's rules provide
that the Shares would no longer be "qualified" for Nasdaq Stock Market reporting
and the Nasdaq Stock Market would cease to provide any quotations. Shares held
directly or indirectly by directors, officers or beneficial owners of more than
10% of the Shares are not considered as being publicly held for this purpose.
According to information provided by the Company, as of May 24, 1996 there were
approximately 215 holders of record of Shares and 13,590,393 Shares were
outstanding. If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements of the NASD for continued
inclusion in
10
<PAGE> 13
the Nasdaq National Market or in any other tier of the Nasdaq Stock Market and
the Shares are no longer included in the Nasdaq National Market or in any other
tier of the Nasdaq Stock Market, as the case may be, the market for Shares could
be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD
for continued inclusion in any tier of the Nasdaq Stock Market, it is possible
that the Shares would continue to trade in the over-the-counter market and that
price quotations would be reported by other sources. The extent of the public
market for the Shares and the availability of such quotations would, however,
depend upon the number of holders of Shares remaining at such time, the
interests in maintaining a market in Shares on the part of securities firms, the
possible termination of registration of the Shares under the Exchange Act, as
described below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its stockholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to section 14(a) of the
Exchange Act in connection with stockholders' meetings and the related
requirement of furnishing an annual report to stockholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions. Furthermore, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended (the "Securities Act"), may be impaired or eliminated. The
Purchaser intends to seek delisting of the Shares from the Nasdaq National
Market and to cause the Company to apply for termination of registration of the
Shares under the Exchange Act as soon after the completion of the Offer as the
requirements for such delisting and termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The historical information concerning the Company contained in this Offer
to Purchase, including financial information, has been taken from or based upon
publicly available documents and records on file with the Commission and other
public sources. Neither Parent, the Purchaser nor the Dealer Manager assumes any
responsibility for the accuracy or completeness of the information concerning
the Company contained in such documents and records or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information to Parent or the Purchaser.
According to the Company Form 10-K, the Company is a leading global
designer and manufacturer of automotive interior acoustic systems and components
including carpet and vinyl floor systems, soft-surface interior and luggage
compartment trim and dash insulators and other acoustic components which are
designed to manage noise and vibration for passenger cars and light trucks. The
Company supplies Original Equipment Manufacturers ("OEMs") including Chrysler,
Ford and GM; the North American operations of Honda, Isuzu, Mazda, Mitsubishi,
Nissan, Nummi, Subaru and Toyota; and the European operations of Nissan, Peugeot
and SAAB.
11
<PAGE> 14
Set forth below is certain selected historical consolidated financial
information with respect to the Company and its subsidiaries excerpted or
derived from the information contained in the Company Form 10-K and the
Company's Quarterly Report on Form 10-Q for the quarter ended March 29, 1996.
More comprehensive financial information is included in such reports and other
documents filed by the Company with the Commission, and the following summary is
qualified in its entirety by reference to such reports and such other documents
and all the financial information (including any related notes) contained
therein. Such reports and other documents should be available for inspection and
copies thereof should be obtainable in the manner set forth below under
"Available Information."
MASLAND CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
----------------------- ----------------------------------
MARCH 29, MARCH 31, JUNE 30, JULY 1, JULY 2,
1996 1995 1995 1994 1993
--------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................................... $ 343.4 $ 373.8 $496.6 $ 429.9 $ 353.5
Operating income............................ 26.5 34.2 47.0 45.0 25.8
Interest expense, net....................... 3.0 3.4 4.2 3.7 4.3
Income before provision for income taxes and
minority interest in consolidated
subsidiaries.............................. 23.6 29.6 41.8 40.8 22.0
Net income applicable to common stock....... 11.8 15.0 21.3 20.5 11.7
Net income per common share................. 0.85 1.08 1.53 1.47 0.83
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital............................. $ 51.2 $ 36.4 $ 38.6 $ 22.3 $ 28.9
Total assets................................ 276.8 226.0 228.0 203.8 197.3
Long-term debt.............................. 70.8 40.2 37.0 31.4 50.1
Shareholders' investment.................... 98.8 82.5 88.2 68.5 60.1
</TABLE>
To the knowledge of Parent and the Purchaser, the Company does not as a
matter of course make public forecasts as to its future financial performance.
However, in connection with the preliminary discussions concerning the
feasibility of the Offer and the Merger, the Company prepared and furnished
Parent with certain financial projections.
The projections presented in the table below (the "Projections") are
derived or excerpted from information provided by the Company and are based on
numerous assumptions concerning future events. The Projections have not been
adjusted to reflect the effects of the Offer or the Merger or the incurrence of
indebtedness in connection therewith. The Projections have been prepared
utilizing numerous assumptions, including, among others, assumptions relating to
unit volumes for the car, mini-van and light truck models served by the Company
and the achievement of certain sales growth based on new business. The Company's
fiscal year ends on the Friday nearest to June 30 resulting in a 52/53 week
year.
MASLAND CORPORATION
CERTAIN PROJECTIONS OF FUTURE OPERATING RESULTS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
FISCAL YEARS
-----------------------------------------
1996 1997 1998 1999 2000
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenues................................................. 475.3 543.1 624.6 711.1 769.8
Net income............................................... 20.5 35.0 45.0 56.7 66.8
</TABLE>
12
<PAGE> 15
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO COMPLYING WITH PUBLISHED
GUIDELINES OF THE COMMISSION AND ARE INCLUDED HEREIN ONLY BECAUSE SUCH
INFORMATION WAS PROVIDED TO PARENT. THE PROJECTIONS WERE NOT PREPARED WITH A
VIEW TO COMPLIANCE WITH THE GUIDELINES ESTABLISHED BY THE COMMISSION OR THE
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS AND
FORECASTS. THE PROJECTIONS REFLECT NUMEROUS ASSUMPTIONS, ALL MADE BY MANAGEMENT
OF THE COMPANY, WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS,
ECONOMIC, MARKET AND FINANCIAL CONDITIONS AND OTHER MATTERS, ALL OF WHICH ARE
DIFFICULT TO PREDICT, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL AND NONE OF
WHICH WERE SUBJECT TO APPROVAL BY PARENT OR THE PURCHASER. ACCORDINGLY, THERE
CAN BE NO ASSURANCE THAT THE ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS WILL
PROVE ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY GREATER OR LESS THAN THOSE
CONTAINED IN THE PROJECTIONS. THE INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT
BE REGARDED AS AN INDICATION THAT ANY OF PARENT, THE PURCHASER, THE COMPANY OR
THEIR RESPECTIVE FINANCIAL ADVISORS CONSIDERED OR CONSIDER THE PROJECTIONS TO BE
A RELIABLE PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS SHOULD NOT BE RELIED
UPON AS SUCH. NEITHER PARENT, THE PURCHASER, THE COMPANY NOR THEIR RESPECTIVE
FINANCIAL ADVISORS ASSUME ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS,
ACCURACY OR COMPLETENESS OF THE PROJECTIONS. NEITHER PARENT, THE PURCHASER, THE
COMPANY NOR ANY OF THEIR FINANCIAL ADVISORS HAS MADE, OR MAKES, ANY
REPRESENTATION TO ANY PERSON REGARDING THE INFORMATION CONTAINED IN EITHER THE
PROJECTIONS AND NONE OF THEM INTENDS TO UPDATE OR OTHERWISE REVISE THE
PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO
REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT THAT ANY OR ALL OF THE
ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE SHOWN TO BE IN ERROR.
Available Information. The Company is subject to the reporting requirements
of the Exchange Act and, in accordance therewith, is required to file reports
and other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is required to be disclosed in
proxy statements distributed to the Company's stockholders and filed with the
Commission. Such reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission located in the Citicorp Center, 500 West Madison
Street (Suite 1400), Chicago, Illinois 60661 and Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies should be obtainable, by mail, upon
payment of the Commission's customary charges, by writing to the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
information should also be available for inspection at the offices of the NASD,
Reports Section, 1735 K Street, N.W., Washington, D.C. 20006.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser, a Delaware corporation and a wholly-owned subsidiary of
Parent, was organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal offices of the Purchaser are
located at 21557 Telegraph Road, Southfield, Michigan 48034. All outstanding
shares of capital stock of the Purchaser are owned by Parent. Parent is a
Delaware corporation with its principal office located at 21557 Telegraph Road,
Southfield, Michigan 48034.
Parent is the largest independent supplier of automotive interior systems
in the estimated $39 billion global automotive interior systems market and the
tenth largest automotive supplier in the world. Parent's principal products
include finished automobile and light truck seat systems, interior trim
products, such as door panels, armrests and headliners, interior component
products such as seat frames and seat covers and various blow molded plastic
parts. Parent's present customers include 24 OEMs, the most significant of which
are General Motors, Ford, Fiat, Chrysler, Volvo, Saab, Volkswagen, Audi and BMW.
As of April 30, 1996, Parent employed approximately 36,000 people in 19
countries and operated 108 manufacturing, research, design, engineering, testing
and administration facilities. Parent's Common Stock is traded on the New York
Stock Exchange (the "NYSE") under the trading symbol "LEA".
13
<PAGE> 16
Set forth below is certain selected historical consolidated financial
information with respect to Parent and its subsidiaries excepted or derived from
Parent's Annual Report on Form 10-K for the fiscal year ended December 31, 1995
(the "Parent Form 10-K") and Parent's Quarterly Report on Form 10-Q for the
three months ended March 30, 1996 (the "Parent Form 10-Q"), which are
incorporated herein by reference, and other documents filed by Parent with the
Commission. More comprehensive financial information is included in such reports
and other documents filed by Parent with the Commission, and the following
summary is qualified in its entirety by reference to such reports and other
documents and all the financial information (including any related notes)
contained therein. Such reports and other documents should be available for
inspection and copies thereof should be obtainable in the manner set forth below
under "Available Information."
LEAR CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
---------------------- --------------------------------------------
MARCH 30, APRIL 1, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1995 1994 1993
---------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales........................... $1,405.8 $1,043.5 $4,714.4 $3,147.5 $1,950.3
Operating income.................... 70.0 47.7 244.8 169.6 79.6
Interest expense, net............... 24.4 14.2 75.5 46.7 45.6
Income (loss) before income taxes
and extraordinary items........... 42.5 31.4 157.3 114.8 24.8
Extraordinary items(1).............. -- -- (2.6) -- (11.7)
Net income (loss)................... 25.8 17.0 91.6 59.8 (13.8)
Net income (loss) per share before
extraordinary items............... .43 .34 1.79 1.26 (.06)
Net income (loss) per share......... .43 .34 1.74 1.26 (.39)
BALANCE SHEET DATA (AT END OF
PERIOD):
Current assets...................... $1,257.9 $ 904.3 $1,207.2 $ 818.3 $ 433.6
Total assets........................ 3,122.2 1,797.9 3,061.3 1,715.1 1,114.3
Current liabilities................. 1,306.0 956.8 1,276.0 981.2 505.8
Long-term debt...................... 1,033.3 519.9 1,038.0 418.7 498.3
Stockholders' equity................ 612.5 217.1 580.0 213.6 43.2
</TABLE>
- -------------------------
(1) The extraordinary items resulted from the prepayment of debt.
Except as described in this Offer to Purchase, neither the Purchaser nor
Parent (together, the "Corporate Entities") or, to the best knowledge of the
Corporate Entities, any of the persons listed in Schedule I or any associate or
majority-owned subsidiary of the Corporate Entities or any of the persons so
listed, beneficially owns any equity security of the Company, and none of the
Corporate Entities or, to the best knowledge of the Corporate Entities, any of
the other persons referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase, (1) there have not been any
contacts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I, on the one hand, and the
Company or any of its directors, officers or affiliates, on the other hand, that
are required to be disclosed pursuant to the rules and regulations of the
Commission and (2) none of the Corporate Entities or, to the best knowledge of
the Corporate Entities, any of the persons listed in Schedule I has any
contract, arrangement, understanding or relationship with any person with
respect to any securities of the Company.
14
<PAGE> 17
From time to time Parent and certain of its subsidiaries have engaged in
ordinary course business transactions with the Company and expect to engage in
such transactions with the Company in the future.
Available Information. Parent is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning Parent's directors and officers, their remuneration, options granted
to them, the principal holders of Parent's securities and any material interest
of such persons in transactions with Parent is disclosed in proxy statements
distributed to Parent's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the Commission, and copies thereof should be obtainable from the
Commission, in the same manner as set forth with respect to information
concerning the Company in Section 8. Such material should also be available for
inspection at the library of the NYSE, 20 Broad Street, New York, New York
10005.
10. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that approximately $395 million will be required to
acquire all of the Shares pursuant to the Offer and the Merger and to pay fees
and expenses related to the Offer and the Merger. The Purchaser expects to
obtain these funds from capital contributions and/or loans from Parent. Such
funds, in turn, are expected to be obtained from borrowings under Parent's
existing $1.475 billion Credit Agreement, dated August 17, 1995, as amended (the
"Credit Agreement"), with Chemical Bank and a syndicate of financial
institutions (such financial institutions, including Chemical Bank, the
"Lenders").
The Credit Agreement currently prohibits the consummation of the Offer and
the Merger. Parent has negotiated with Chemical Bank a form of amendment and
consent (the "Credit Agreement Amendment") to the Credit Agreement that would
permit the Offer and the Merger. The Credit Agreement Amendment will require the
written consent of Lenders holding more than 50% of the aggregate outstanding
indebtedness under the Credit Agreement, which consent is currently being
sought. The consummation of the Offer is conditioned upon, among other things,
the execution of the Credit Agreement Amendment by the requisite Banks.
In addition to the effectiveness of the Credit Agreement Amendment, the
obligation of the Lenders to finance the Offer and the Merger under the Credit
Agreement is subject to customary conditions, including, among other things, (i)
that each of the representations and warranties made by Parent in the Credit
Agreement is true and correct in all material respects on each funding date,
(ii) that there is no default or event of default under the Credit Agreement on
each such date and (iii) there has been no material adverse change in the
business, operations, assets or financial condition of Parent and its
subsidiaries taken as a whole since the closing date of the Credit Agreement.
Generally, amounts available to be borrowed under the Credit Agreement may
be borrowed, repaid and reborrowed. Amounts available to be borrowed under the
Credit Agreement will be reduced by $25 million on September 30, 1996, $100
million in the aggregate during 1997, $125 million in the aggregate during 1998,
$125 million in the aggregate during 1999, $150 million in the aggregate during
2000 and $100 million on March 30, 2001. The entire unpaid balance under the
Credit Agreement will be payable on September 30, 2001.
The Credit Agreement is guaranteed by most of Parent's direct and indirect
domestic wholly-owned subsidiaries and secured by (i) a pledge of all of the
capital stock of most of Parent's domestic subsidiaries, and a pledge of certain
stock of Parent's foreign subsidiaries; (ii) a grant of a security interest in
substantially all of the assets of Parent and its domestic subsidiaries, other
than certain recently acquired subsidiaries; and (iii) mortgages on certain real
property owned by Parent and its domestic subsidiaries. Parent anticipates that
upon consummation of the Offer, the capital stock of the Company owned by the
Purchaser will be pledged to secure the Credit Agreement. Further, upon
consummation of the Merger, Parent anticipates that the Company and each of the
Company's material domestic subsidiaries shall guarantee the Credit Agreement
and the capital stock of each of the Company's material domestic subsidiaries
will be pledged to secure the Credit Agreement.
Borrowings under the Credit Agreement bear interest, at the election of
Parent, at (i) the higher of (a) Chemical Bank's prime lending rate and (b) the
federal funds rate plus .5% and (ii) the Eurodollar Rate
15
<PAGE> 18
for eurodollar deposits, plus a margin between .5% and 1.0% depending on the
level of a specified financial ratio.
The Credit Agreement contains financial covenants relating to the
maintenance of consolidated net worth and consolidated operating profit and
ratios of consolidated operating profit to consolidated interest expense. The
Credit Agreement also contains restrictive covenants pertaining to the
management and operation of Parent and its subsidiaries. The covenants include,
among others, significant limitations on indebtedness, guarantees, mergers,
acquisitions, fundamental corporate changes, capital expenditures, asset sales,
leases, investments, loans, liens, dividends and other stock payments,
transactions with affiliates and modifications of debt instruments.
The Credit Agreement provides for events of default customary in facilities
of this type, including, among others, (i) failure to make a payment when due;
(ii) breach of covenants; (iii) breach of representations or warranties in any
material respect when made; (iv) default under any agreement relating to debt
for borrowed money in excess of $20.0 million in the aggregate; (v) bankruptcy
defaults; (vi) judgments in excess of $5.0 million; and (vii) any loan document
ceasing to be in full force and effect.
Parent has agreed to pay Chemical Bank certain financing, agent
administration and other fees in connection with the Credit Agreement, which
Parent believes to be customary. In addition, the Credit Agreement provides for
a commitment fee of 1/5% to 3/8% per annum, depending on the level of a
specified financial ratio, on the unused portion of the aggregate commitment
under the Credit Agreement.
The foregoing summary description of the Credit Agreement is qualified in
its entirety by reference to the copy of the Credit Agreement filed as an
exhibit to the Schedule 14D-1, a copy of which may be obtained from the offices
of the Commission in the manner set forth with respect to information concerning
the Company in Section 8 (except that such information will not be available at
the regional offices of the Commission).
It is anticipated that the indebtedness incurred through borrowings under
the Credit Agreement will be repaid from funds generated internally by Parent
and its subsidiaries, including the Company, and from other sources which may
include the proceeds of the private or public sale of debt or equity securities
and/or asset dispositions. In addition, Parent has had discussions with certain
lenders regarding the establishment of an additional credit facility, under
which borrowings would be used to repay indebtedness under the Credit Agreement.
The margin regulations promulgated by the Federal Reserve Board place
restrictions on the amount of credit that may be extended for the purposes of
purchasing margin stock (including the Shares) if such credit is secured
directly or indirectly by margin stock. The Purchaser believes that the
financing of the acquisition of the Shares will be in full compliance with the
margin regulations.
11. BACKGROUND OF THE OFFER
On January 18, 1996 Kenneth L. Way, the Chairman of the Board and Chief
Executive Officer of Parent, met with William J. Branch, the Chairman of the
Board of the Company, to discuss a donation to a charitable organization. At
that meeting the business and prospects of Parent and the Company were discussed
generally as well as the possibility of Parent and the Company working together.
As a result of that meeting, in February of 1996, Mr. Branch and Mr. Way agreed
to meet on March 1, 1996. At the March 1 meeting, Parent proposed commencing
negotiations to acquire the Company. As a result of this meeting, Parent and the
Company entered into a Confidentiality and Standstill Agreement dated March 14,
1996 (the "Confidentiality Agreement") pursuant to which the Company agreed to
provide Parent with certain information concerning the Company. Parent and the
Purchaser have received certain non-public information from the Company under
the terms of the Confidentiality Agreement. See Section 8.
On March 27, 1996 Parent informed the Company that based on publicly
available information it would value the Company at $20 to $22 per Share. On
April 4, 1996 certain members of management of Parent met with certain members
of management of the Company to discuss this valuation and related matters. As a
result of this meeting and a review of other non-public information concerning
the Company, Parent provided the Company with an increased valuation on April
17, 1996 of $22 to $24 per Share.
16
<PAGE> 19
On April 29 and 30, 1996 certain members of management of Parent and the
Company and their respective financial advisors met in New York to further
discuss the acquisition of the Company by Parent. At these meetings the Company
discussed with Parent the Company's future prospects and potential synergistic
benefits of a combination of its operations with those of Parent. After these
discussions, Parent indicated that, assuming satisfactory completion of due
diligence and approval by Parent's Board of Directors, Parent would be willing
to offer from $25.00 to $25.50 per Share for the Company. As a result of these
meetings, the Company entered into an agreement with Parent on May 2, 1996
pursuant to which, subject to fiduciary duties to stockholders, the Company
agreed to negotiate exclusively with Parent for the acquisition of the Company
until May 24, 1996. Following the execution of this agreement, Parent initiated
a comprehensive due diligence review of the Company that included reviews of
accounting, financial, environmental and other legal matters, plant tours and
further management meetings.
On Friday, May 3, 1996 the Company provided Parent with a proposed form of
the Merger Agreement. From May 3 through May 23, 1996, Parent, the Company and
their respective representatives negotiated the Merger Agreement and Parent and
its representatives conducted and completed their due diligence review of the
Company.
On May 23, 1996 the Board of Directors of the Company and the Board of
Directors of Parent each met to consider the Merger Agreement and the
transactions contemplated thereby. After the commencement of the meeting of the
Board of Directors of the Company, but prior to the commencement of the meeting
of the Board of Directors of Parent, Mr. Branch spoke to Mr. Way and indicated
that, because the Company had received a competing offer, if Parent would be
willing to increase its offer to $26.00 per Share, he believed that the Board of
Directors of the Company would approve the transaction. Thereafter, the Board of
Directors of the Company and the Board of Directors of Parent approved the
Merger Agreement and the transactions contemplated thereby.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT; THE STOCKHOLDERS AGREEMENT; THE TERMINATION, CONSULTING AND
NONCOMPETE AGREEMENT; THE EMPLOYMENT AGREEMENT
Purpose of the Offer and the Merger
The purpose of the Offer and the Merger is to enable Parent, through the
Purchaser, to acquire control of, and the entire equity interest in, the
Company. The Offer is intended to facilitate the acquisition of all of the
Shares. The purpose of Merger is to acquire all Shares not tendered and
purchased pursuant to the Offer, the Stockholders Agreement or otherwise. Parent
regards the acquisition of the Company as a strategic opportunity to further
expand its product offerings in the global automotive interior market and to
create additional growth opportunities.
Plans for the Company
If the Purchaser acquires control of the Company, Parent and the Purchaser
intend to conduct a detailed review of the Company and its assets, operations,
properties, policies, management and personnel and consider and determine what,
if any, changes would be desirable in light of the circumstances which then
exist.
Except as noted in this Offer to Purchase, the Purchaser and Parent have no
present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, relocation of
operations, or sale or transfer of a material amount of assets, involving the
Company or any subsidiary of the Company or any other material changes in the
Company's capitalization, dividend policy, corporate structure, business or
composition of its management, personnel or Board of Directors.
The Merger Agreement
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the full text thereof, which is
incorporated herein by reference and a copy of which has been filed with the
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Commission as an exhibit to the Schedule 14D-1. The Merger Agreement may be
examined, and copies thereof may be obtained, as set forth in Section 8 above.
The Offer. The Merger Agreement provides for the commencement of the Offer,
in connection with which Parent and the Purchaser have expressly reserved the
right to waive certain conditions of the Offer, but without the prior written
consent of the Company, Parent and the Purchaser have agreed not to (i) decrease
the Offer Price or change the form of consideration payable in the Offer, (ii)
decrease the number of Shares sought pursuant to the Offer, (iii) amend or waive
satisfaction of the Minimum Condition, (iv) impose additional conditions to the
Offer or amend any other term of the Offer in a manner adverse to the holders of
Shares, or (v) extend the expiration date of the Offer (except as required by
law and except that the Purchaser may extend the expiration date of the Offer
for up to ten (10) business days after the initial expiration date or for longer
periods in the event that any condition to the Offer is not satisfied or earlier
waived); provided, however, that, except as set forth above, the Purchaser may
waive any other condition to the Offer in its sole discretion; and provided,
further, that the Offer may be extended in connection with an increase in the
consideration to be paid pursuant to the Offer so as to comply with the
applicable rules and regulations of the Commission.
Board Representation. The Merger Agreement provides that promptly upon the
purchase by the Purchaser of Shares pursuant to the Offer, and from time to time
thereafter, Parent or the Purchaser shall be entitled to designate such number
of directors, rounded up to the next whole number (but in no event more than one
less than the total number of directors on the Board of Directors of the Company
(the "Board")) as will give Parent, subject to compliance with Section 14(f) of
the Exchange Act, representation on the Board equal to the product of (x) the
number of directors on the Board (giving effect to any increase in the number of
directors pursuant to the Merger Agreement) and (y) the percentage that such
number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being the "Board Percentage"). The Company has agreed,
upon request of Parent, to promptly satisfy the Board Percentage by (i)
increasing the size of the Board or (ii) using its best efforts to secure the
resignations of such number of directors as is necessary to enable Parent's
designees to be elected to the Board and to cause Parent's designees promptly to
be so elected. Following the election or appointment of Parent's designees
pursuant to the Merger Agreement and prior to the Effective Time of the Merger,
any amendment or termination of the Merger Agreement, extension for the
performance or waiver of the obligations or other acts of Parent or the
Purchaser or waiver of the Company's rights thereunder, shall require the
concurrence of a majority of the directors of the Company then in office who
were directors on the date of the Merger Agreement and who voted to approve the
Merger Agreement.
Consideration to be Paid in the Merger. The Merger Agreement provides that
subject to the terms and conditions set forth in the Merger Agreement, the
Purchaser will be merged with and into the Company, the separate existence of
the Purchaser shall cease and the Company shall continue as the surviving
corporation in the Merger (the "Surviving Corporation") under the name "Masland
Corporation." Notwithstanding anything to the contrary in the Merger Agreement,
the parties to the Merger Agreement may, by mutual consent prior to the date and
time of filing of the appropriate certificate of merger (the "Certificate of
Merger") with the Secretary of State of Delaware (the "Effective Time"), elect,
instead of merging the Purchaser into the Company as hereinabove provided, to
merge the Company into the Purchaser. In such event, the parties have agreed to
execute an appropriate amendment to the Merger Agreement in order to reflect the
foregoing change. In the Merger at the Effective Time, each Share then issued
and outstanding, other than Shares then held, directly or indirectly, by Parent,
the Purchaser or any subsidiary of Parent, the Purchaser or any subsidiary of
Parent, the Purchaser or the Company or held in the Company's treasury and
holders who have not voted in favor of the Merger and who have demanded
appraisals for such Shares in accordance with the Delaware Law shall be
converted into and represent the right to receive the Merger Consideration in
cash, without any interest thereon. Each share of the capital stock of the
Purchaser issued and outstanding immediately prior to the Effective Time shall
be converted into and become one validly issued, fully paid and nonassessable
share of Common Stock, par value $.01 per share, of the Company. After the
Effective Time, Parent shall be the holder of all outstanding shares of Common
Stock of the Company. The Merger Agreement provides that the closing of the
Merger shall occur on the later of (x) the day of the
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Special Meeting (as such term is defined below), if such Special Meeting is
required to be held or (y) the first business day after the day on which the
last of the conditions to the Merger set forth in the Merger Agreement is
fulfilled or waived (subject to applicable law) or (z) on such other date as
Parent and the Company shall agree.
Stock Options. The Merger Agreement provides that, at the Effective Time,
each stock option and warrant to acquire Common Stock ("Company Stock Option")
issued under the Company's 1991 Stock Purchase and Option Plan, whether or not
then exercisable and whether or not then vested, at the election of the
optionee, shall be either canceled or assumed and converted by Parent. The
Merger Agreement provides that if canceled, then each holder of a canceled
option shall be entitled to receive, in consideration for the cancellation of
such option, an amount in cash equal to the product of (x) the number of Shares
previously subject to such option and (y) the excess, if any, of the Merger
Consideration over the exercise price per Share previously subject to such
options. The Merger Agreement provides that if assumed, each option shall be
amended to be exercisable into Parent's Common Stock (a "Substitute Option");
provided, however, that the excess aggregate value of each option following the
substitution and assumption shall be the same as the excess aggregate value of
such outstanding option before the substitution and assumption. The Merger
Agreement provides that the number of shares of Parent's Common Stock subject to
such Substitute Option and the exercise price thereunder shall be computed in
compliance with the requirements of Section 424(a) of the Code, except as agreed
in writing by Parent and the Company, and such Substitute Option shall not
confer any additional rights upon the optionee and shall be subject to
substantially all of the other terms and conditions of the original option
granted by the Company to which it relates except in the case of an optionee
whose employment with the Company or its successor is terminated, other than for
cause, within one year following the Effective Time, for whom the exercise
period of the vested Substitute Option will be extended to a period of two
years. The Merger Agreement provides that at the Effective Time, each Company
Stock Option issued under the Company's Non-Employee Directors Stock Option Plan
shall be canceled in the manner provided above, and each Company Stock Option
issued under the Company's 1993 Stock Option Incentive Plan shall be assumed and
converted into a Substitute Option in the manner provided above. The Merger
Agreement provides that prior to the Effective Time, the Company shall obtain
any consents or elections required or deemed necessary and the original Company
Stock Option agreements (i) for cancellation from holders of outstanding Company
Stock Options or (ii) to make any amendments to the terms of the Stock Option
Plans or Company Stock Option Agreements that are necessary to give effect to
the transactions contemplated by the Merger Agreement.
Stockholder Meeting. The Merger Agreement provides that promptly after
expiration of the Offer, the Company shall take all action necessary, in
accordance with the Delaware Law and its Certificate of Incorporation and
By-Laws, to convene a meeting of its Stockholders (the "Special Meeting") as
promptly as possible to consider and vote on the Merger Agreement and the
Merger. At the Special Meeting, Parent shall vote, or cause to be voted, all of
the Shares then owned by Parent (or any subsidiary of Parent) in favor of the
Merger Agreement and the Merger.
In the event that Parent and the Purchaser or any other wholly-owned
subsidiary of Parent shall acquire in the aggregate at least 90% of the
outstanding Shares, the parties to the Merger Agreement agree, at the request of
Parent, to take all necessary and appropriate action to cause a merger of the
Company and the Purchaser to become effective without a meeting of the
stockholders of the Company, in accordance with Section 253 of the Delaware Law.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to (i) due
incorporation, existence, good standing, corporate power and authority or
qualifications of the Company and subsidiaries of the Company; (ii)
capitalization of the Company, including the number of shares of capital stock
of the Company outstanding, the number of shares reserved for issuance on the
exercise of options and similar rights to purchase shares; (iii) the only
corporation, partnership, joint venture or other entity in which the Company,
directly or indirectly, has an equity or other interest of 50% or greater or
otherwise controls (the "Subsidiaries") are those named in the Company Form
10-K; (iv) the authorization, execution, delivery and performance of the Merger
Agreement and the consummation of transactions contemplated thereby, and the
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validity and enforceability thereof; (v) subject to certain exceptions, the
absence of consents and approvals necessary for consummation by the Company of
the Merger, and the absence, except as disclosed, of any violations, breaches or
defaults which would result from compliance by the Company with any provision of
the Merger Agreement; (vi) except as set forth in the Company Form 10-K, the
absence of pending litigation or violation of any law by the Company which is
reasonably likely to have a material adverse effect on the condition (financial
or otherwise), results of operations, business, assets or liabilities of the
Company and its subsidiaries taken as a whole (a "Company Material Adverse
Effect") or which seeks to, or is reasonably likely to delay or prevent the
consummation of the Offer or the Merger or any other transactions contemplated
by the Merger Agreement; (vii) compliance in all material respects with the
Securities Act and the Exchange Act, in connection with the Commission Filings
(as defined in the Merger Agreement) filed by the Company with the Commission;
(viii) compliance with respect to matters by which the Company or any Subsidiary
or any property or asset of the Company or any Subsidiary is bound or affected;
(ix) the absence of certain changes and events which would constitute a Company
Material Adverse Effect and the Company's conduct of business in the ordinary
course of business consistent with past practices; (x) certain employee benefit
and ERISA matters; (xi) certain labor matters; (xii) certain matters related to
real property; (xiii) certain intellectual property matters; (xiv) certain tax
matters; (xv) certain environmental matters; (xvi) each of the Company's
Material Contracts (as defined in the Merger Agreement) is in full force and
effect and that the Company or each applicable Subsidiary has duly complied in
all material respects with the provision of each Material Contract to which it
is a party; (xvii) that neither the Company nor any Subsidiary has any
liabilities or other obligations which would have been required to be recorded
on a balance sheet as of April 30, 1996, or as disclosed in the notes thereto,
in accordance with generally accepted accounting principles consistently
applied, except for liabilities, obligations or contingencies previously
disclosed to Parent and the Purchaser; (xviii) certain matters related to
insurance; (xix) receipt of a fairness opinion of Goldman Sachs & Co.; (xx)
certain matters relating to affiliate transactions; and (xxi) that the Company
has the legal right to use the name "Masland" and each derivative thereof in
each jurisdiction where the Company and each Subsidiary conduct business.
Parent and the Purchaser have also made certain representations and
warranties, including with respect to (i) due incorporation, existence, good
standing, corporate power and authority or qualifications of Parent and the
Purchaser; (ii) the authorization, execution, and delivery of the Merger
Agreement and the consummation of transactions contemplated thereby, and the
validity and enforceability thereof and (iii) assuming that the Credit Agreement
Waiver Condition is satisfied, Parent has or will have, prior to the expiration
of the Offer, sufficient funds available to purchase all of the Shares
outstanding and to pay all related fees and expenses on a fully diluted basis
pursuant to the Offer and the Merger Agreement.
Interim Operations. The Company has agreed that during the period from the
date of the Merger Agreement to the earlier of the Effective Time or until
Parent's designees constitute a majority of the Board under the terms of the
Merger Agreement, except as specifically contemplated in the Merger Agreement or
otherwise as consented to or approved in writing by Parent, (a) the businesses
of the Company and each of the Subsidiaries shall be conducted only in, and the
Company and each of the Subsidiaries shall not take any action, except in the
ordinary and usual course of business and consistent with past practice; (b)
neither the Company nor any of the Subsidiaries shall make or propose any change
or amendment in its charter or By-Laws or the Rights Agreement; (c) neither the
Company nor any of the Subsidiaries shall (i) issue or sell, or authorize the
issuance or sale of, any shares of its capital stock or any of its other
securities or issue any securities convertible into or exchangeable for, or
options, warrants to purchase, scrip, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or enter into any contract,
understanding or arrangement with respect to the issuance of, any shares of its
capital stock or any of its other securities, or enter into any arrangement or
contract with respect to the purchase or voting of shares of its capital stock
or adjust, split, combine or reclassify any of its securities, or make any other
changes in its capital structure; provided that the Company may issue shares of
its Common Stock pursuant to the terms of vested and currently exercisable
Company Stock Options upon the exercise of such Common Stock Options or (ii)
except as contemplated elsewhere in the Merger Agreement, amend, waive or
otherwise modify any of the terms of any Stock Option Plan or Company Stock
Option; (d) the Company shall not declare, pay or make any dividend or other
distribution or payment with respect to, or purchase, redeem or otherwise
acquire any
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shares of its capital stock or otherwise make any payments to stockholders in
their capacity as stockholders, except for the regular quarterly dividend of
$.05 per share declared on May 9, 1996; (e) the Company shall, and shall cause
the Subsidiaries to, use all reasonable efforts to preserve intact the business
organization of the Company and each of the Subsidiaries, to keep available the
services of its and their present officers and key employees, and to preserve
the good will of those having business relationships with it and the
Subsidiaries; (f) neither the Company nor any of the Subsidiaries shall take any
action with respect to the grant of any severance or termination pay (otherwise
than pursuant to written plans of the Company or any of the Subsidiaries in
effect on the date hereof) or with respect to any increase of benefits payable
under its written plans providing for severance or termination pay in effect on
the date hereof; (g) neither the Company nor any of the Subsidiaries shall
(except for salary increases or other employee benefit arrangements in the
ordinary course of business consistent with past practice that do not result in
a material increase in benefits or compensation expense to the Company or any
Subsidiary or pursuant to collective bargaining agreements as presently in
effect) adopt or amend any bonus, profit sharing, compensation, stock option,
pension, retirement, deferred compensation, employment or other employee benefit
plan, agreement, trust, plan, fund or other arrangement for the benefit or
welfare of any Employee (as defined in the Merger Agreement) or increase in any
manner the compensation or fringe benefits of any Employee or pay or grant any
benefit not required by any existing plan or arrangement; (h) except with
respect to transactions between and among the Company and any of the
Subsidiaries or the endorsement of negotiable instruments in the ordinary course
of its business, neither the Company nor any of the Subsidiaries shall incur or
assume any indebtedness for money borrowed (other than borrowings in the
ordinary course of business) or guarantee any such indebtedness (other than any
guaranty of subsidiary indebtedness in the ordinary course of business) or the
obligations of any person; (i) the Company shall not and shall not permit any
Subsidiary to pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted, unasserted, contingent or otherwise),
other than payment, discharge or satisfaction in the ordinary course of business
and consistent with past practices, pursuant to existing contractual
arrangements or as required by law; (j) except in the ordinary course of
business consistent with past practice or in the case of obsolete or redundant
assets, or those requiring replacement, the Company shall not and shall not
permit any Subsidiary to sell, lease or otherwise dispose of any of its assets;
(k) the Company shall not and shall not permit any Subsidiary to acquire (for
cash, shares of stock or other consideration) (including, without limitation, by
merger, consolidation, or acquisition of stock or assets) any corporation,
partnership, other business organization or any division thereof or the assets
thereof or any other assets; (l) the Company shall not and shall not permit any
Subsidiary to take any action, other than reasonable actions in the ordinary
course of business and consistent with past practice, with respect to accounting
policies or procedures; (m) the Company shall not and shall not permit any
Subsidiary to authorize, recommend, propose or announce an intention to adopt a
plan of complete or partial liquidation or dissolution of the Company or any of
the Subsidiaries; (n) the Company shall not and shall not permit any Subsidiary
to make any material tax elections or settle or compromise any material income
tax liability; (o) other than in the ordinary course of business and consistent
with past practice, the Company shall not and shall not permit any Subsidiary to
waive any material rights or make any payment, direct or indirect, of any
material liability of the Company or any of the Subsidiaries before the same
comes due in accordance with its terms; (p) the Company shall not and shall not
permit any Subsidiary to fail to maintain its existing material insurance
coverage in effect or, in the event any such coverage shall be terminated or
lapse, to the extent available at reasonable cost, procure substantially similar
substitute insurance policies which in all material respects are in at least
such amounts and against such risks as are currently covered by such policies;
(q) the Company shall not and shall not permit any Subsidiary to enter into any
new collective bargaining agreement or any successor collective bargaining
agreement; and (r) the Company shall not and shall not permit any Subsidiary to
enter into any contract, agreement, commitment or arrangement to do any of the
foregoing.
Additional Agreements. The Merger Agreement provides that upon reasonable
notice the Company shall, and shall cause each of the Subsidiaries to, afford
Parent and the Purchaser and their respective officers, employees and authorized
representatives reasonable access during normal business hours throughout the
period prior to the Effective Time to all of its properties, books, contracts,
commitments, records, tax records and accountants' working papers. Subject to
the terms and conditions of the Merger Agreement, the Company, Parent and the
Purchaser each have agreed, subject to legal obligations, to use all reasonable
efforts
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to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate the transactions
contemplated by the Merger Agreement.
No Solicitation. The Merger Agreement provides that from and after the date
of the Merger Agreement until the termination thereof the Company shall not, and
shall cause each of its Subsidiaries and its and their respective officers,
directors, employees, representatives, agents and affiliates (including, without
limitation, any investment banker, attorney or accountant retained by the
Company or any of its Subsidiaries) not to (i) directly or indirectly, invite,
initiate, solicit or knowingly encourage (including by way of furnishing
nonpublic information or assistance), any inquiries with respect to or the
making of any proposal that constitutes, or may reasonably be expected to lead
to any Acquisition Proposal (as defined below), or (ii) enter into or maintain
or continue discussions or negotiations with any person or entity in furtherance
of such inquires or to obtain an Acquisition Proposal or (iii) agree to endorse
any Acquisition Proposal. Notwithstanding the foregoing, nothing contained
therein shall prohibit the Board from furnishing information to, or entering
into discussions or negotiations with, any person or entity that makes an
unsolicited written, bona fide Acquisition Proposal or, after payment of the
Termination Fee (as defined below), endorsing such an Acquisition Proposal, if
and only to the extent that, (A) the Board, after consultation with and based
upon the advice of independent legal counsel (who may be the Company's regularly
engaged independent legal counsel), determines in good faith that such action is
necessary for the Board to comply with its fiduciary duties to its stockholders
under applicable law, and (B) prior to taking such action, the Company receives
from such person or entity an executed confidentiality agreement on terms no
less favorable to the Company than the Confidentiality Agreement (excluding the
standstill provisions thereof). For purposes of the Merger Agreement,
"Acquisition Proposal" shall mean any of the foregoing (other than the
transactions between the Company and Parent and the Purchaser contemplated by
the Merger Agreement): (i) any merger, consolidation, share exchange,
recapitalization, business combination, or other similar transaction involving
the Company or its Subsidiaries (other than business combinations or similar
transactions involving only foreign Subsidiaries); (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 20% or more of the
assets of the Company and its Subsidiaries, taken as a whole, in a single
transaction or series of transactions; (iii) any tender offer or exchange offer
for 20% or more of the outstanding shares of capital stock of the Company or the
filing of a registration statement under the Securities Act in connection
therewith or (iv) any public announcement of a proposal, plan or intention to do
any of the foregoing or any agreement to engage in any of the foregoing. In the
event that the Company receives or becomes aware of any Acquisition Proposal,
the Company will promptly notify Parent in writing of such communication, of the
identity of the person or entity making such Acquisition Proposal and of the
terms and conditions of such Acquisition Proposal; provided, however, that the
Company shall not be required to disclose the identity of the person or entity
making the Acquisition Proposal or the terms and conditions of such Acquisition
Proposal if the Board, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent legal counsel) determines in good faith that nondisclosure would be
necessary for the Board to comply with its fiduciary duties to its stockholders
under applicable law.
Fees and Expenses. The Merger Agreement provides if (i) an Acquisition
Proposal is made prior to the termination of the Merger Agreement (other than a
termination (a) by Parent if the Company has failed to mail the Schedule 14D-9
to its stockholders on or prior to the date on which the Offer has been
commenced or failed to include in such Schedule 14D-9 when first mailed to
stockholders the approval and recommendations of the Board of the Offer and the
Merger required by the Merger Agreement to be included in the Schedule 14D-9 (a
"Failure to Mail"); (b) by the Company, if the Board modifies, in a manner
adverse to Parent, or withdraws its approval or recommendation of, the Offer or
the Merger referred to in the Merger Agreement, so long as the Board, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent legal counsel), determines in
good faith that such action is necessary for the Board to comply with its
fiduciary duties to stockholders under applicable law (a "Board Modification");
or (c) by Parent if (I) the Board modifies, in a manner adverse to Parent, or
withdraws its approval or recommendation of, the Offer or the Merger referred to
in the Merger Agreement; (II) the Board shall have recommended or accepted any
Acquisition Proposal; (III) the Board shall have resolved to do any of the acts
referred to in (I) or (II); (IV) Parent shall request that the Board reaffirm
its approval or recommendation of the Offer or the Merger and the Board shall
fail to do so within ten business
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days after such request; or (V) any corporation, partnership, person, other
entity or group (as defined in Section 13(d)(3) of the Exchange Act) other than
Parent or the Purchaser or any of their respective subsidiaries shall have
become the beneficial owner of more than 20% of the outstanding shares other
than for purposes of arbitrage, but provided that such termination under (I) and
(IV) (or under (III) as it relates to (I) only) above relates to actions of the
Board which, after consultation with and based upon the advice of independent
legal counsel (who may be the Company's regularly engaged independent legal
counsel), it has determined in good faith are necessary for the Board to comply
with its fiduciary duties to stockholders under applicable law, in which case
the effectiveness of such termination may not be prior to the later of (x) the
close of business immediately preceding the then scheduled termination date of
the Offer or (y) ten days following such modification or withdrawal, and then
only if the Board has not reinstated its affirmative recommendation or approval
of the Purchaser's Offer or the Merger within such period of time (a "Failure to
Reaffirm")), and within nine months of such termination the Company shall have
entered into an agreement with respect to, approved, recommended or taken any
affirmative action to facilitate, an Acquisition Proposal, or any transaction
constituting an Acquisition Proposal is consummated, (ii) the Merger Agreement
is terminated pursuant to a Failure to Mail and an Acquisition Proposal exists,
or (iii) the Merger Agreement is terminated pursuant to a Board Modification or
a Failure to Reaffirm, then the Company shall pay to Purchaser a fee equal to
$10,000,000 in cash (the "Termination Fee"). The Termination Fee shall be
payable (x) in the case of entering into an agreement with respect to an
Acquisition Proposal or the consummation of a transaction constituting an
Acquisition Proposal as described in clause (i) above, upon the signing of a
definitive agreement relating to such Acquisition Proposal or, if no such
agreement is executed, then at the closing (and as a condition to the closing)
of such transaction constituting an Acquisition Proposal, (y) upon the
occurrence of any other event described in clause (i) above, and (z) within one
business day of the termination of this Agreement upon any termination of this
Agreement pursuant to a Failure to Mail, a Failure to Reaffirm or a Board
Modification.
Except as specifically provided above, the Merger Agreement provides that
each party shall bear all expenses incurred by it in connection with the Merger
Agreement and the transactions contemplated hereby, including those incident to
the negotiation and preparation of the Merger Agreement and to its performance
of and compliance with all agreements and conditions contained herein to be
performed or complied with by it.
Pursuant to the Merger Agreement, except for the Company's fee engagement
letter with Goldman Sachs & Co. dated April 25, 1996, or as previously disclosed
by a party to the Merger Agreement in writing to the other parties thereto, no
broker, finder or investment banker is entitled to a brokerage, finder's or
other fee or commission in connection with the Offer or the Merger or the
transactions contemplated by the Merger Agreement. Such fees or other
commissions payable by the Company and its Subsidiaries shall not exceed the
amount previously disclosed to Parent.
Conditions to the Merger. Pursuant to the Merger Agreement, the obligations
of each party to the Merger Agreement to consummate the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions: (i) the approval of the stockholders of the Company as referred to
in the Merger Agreement shall have been obtained, if required by applicable law;
(ii) any applicable waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have expired or been terminated and any approvals
under any applicable Foreign Antitrust Laws shall have been granted; and (iii)
no preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction in the United States or by a Governmental
Entity (as defined in the Merger Agreement) nor any statute, rule, regulation or
executive order promulgated or enacted by any Governmental Entity shall be in
effect, which would prevent the consummation of the Merger.
Termination. The Merger Agreement provides that it may be terminated at any
time prior to the Effective Time, whether or not it has been approved by the
stockholders of the Company, (a) by the mutual written consent of the respective
Boards of Directors of the Company and Parent; (b) by Parent or the Company, if
the Offer expires or is terminated or withdrawn pursuant to its terms without
any Shares being purchased thereunder; provided however, that Parent may not
terminate the Merger Agreement pursuant to this section of the Merger Agreement
if Parent's termination of, or failure to accept for payment or pay for any
Shares tendered pursuant to, the Offer does not follow the failure of one or
more of the conditions set forth in
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Exhibit A to the Merger Agreement to be satisfied or is otherwise in violation
of the terms of the Offer or the Merger Agreement; (c)(i) by Parent prior to the
purchase of and payment for any Shares pursuant to the Offer if there has been a
material breach of any representation or warranty set forth in the Merger
Agreement on the part of the Company and (ii) by the Company prior to the
purchase of and payment for any Shares pursuant to the Offer if there has been a
material breach of any representation or warranty set forth in the Merger
Agreement on the part of Parent or the Purchaser; (d)(i) by Parent if there has
been a material breach of any covenant or agreement set forth in the Merger
Agreement on the part of the Company, which is incapable of being, or is not,
cured (other than by mere disclosure of the breach) within five days after
written notice from Parent to the Company, and (ii) by the Company if there has
been a material breach of any covenant or agreement set forth in the Merger
Agreement on the part of Parent or the Purchaser, which is incapable of being,
or is not, cured (other than by mere disclosure of the breach) within five days
after written notice from the Company to Parent of such breach; (e) by either
Parent or the Company if the Merger has not been consummated on or before
October 31, 1996, which date may be extended by the mutual written consent of
the Board of Directors of the Company and the Board of Directors of Parent;
(f)(i) by the Company if the Offer has not been commenced within the period of
time required under the Exchange Act following the date hereof and (ii) by
Parent if the Company has failed to mail the Schedule 14D-9 to its stockholders
on or prior to the date on which the Offer has been commenced or failed to
include in such Schedule 14D-9 when first mailed to stockholders the approval
and recommendations of the Board of the Offer and the Merger required by the
Merger Agreement to be included in the Schedule 14D-9; (g) by the Company or
Parent if any permanent injunction or final nonappealable order, decree or
ruling issued by a court of competent jurisdiction within the United States or
Governmental Entity is in effect which would prevent the consummation of the
Merger; (h) by the Company, if the Board modifies, in a manner adverse to
Parent, or withdraws its approval or recommendation of, the Offer or the Merger
referred to in the Merger Agreement, so long as the Board, after consultation
with and based upon the advice of independent legal counsel (who may be the
Company's regularly engaged independent legal counsel), determines in good faith
that such action is necessary for the Board to comply with its fiduciary duties
to stockholders under applicable law; or (i) by Parent if (i) the Board
modifies, in a manner adverse to Parent, or withdraws its approval or
recommendation of, the Offer or the Merger referred to in the Merger Agreement;
(ii) the Board shall have recommended or accepted any Acquisition Proposal;
(iii) the Board shall have resolved to do any of the acts referred to in (i) or
(ii); (iv) Parent shall request that the Board reaffirm its approval or
recommendation of the Offer or the Merger and the Board shall fail to do so
within ten business days after such request; or (v) any corporation,
partnership, person, other entity or group (as defined in Section 13(d)(3) of
the Exchange Act) other than Parent or the Purchaser or any of their respective
subsidiaries shall have become the beneficial owner of more than 20% of the
outstanding shares other than for purposes of arbitrage, but provided that such
termination under (i) or (iv) (or under (iii) as it relates to (i) only) above
relates to actions of the Board which, after consultation with and based upon
the advice of independent legal counsel (who may be the Company's regularly
engaged independent legal counsel), it has determined in good faith are
necessary for the Board to comply with its fiduciary duties to stockholders
under applicable law, in which case the effectiveness of such termination may
not be prior to the later of (x) the close of business immediately preceding the
then scheduled termination date of the Offer or (y) ten days following such
modification or withdrawal, and then only if the Board has not reinstated its
affirmative recommendation or approval of the Parent's Offer or the Merger
within such period of time.
Indemnification. The Merger Agreement provides that after the Effective
Time, or such earlier date as Parent acquires control of the Company, Parent
shall cause the Surviving Corporation to (i) maintain the Company's current
directors' and officers' insurance and indemnification policy or an equivalent
policy, subject to terms and conditions no less advantageous, for all directors
and officers of the Company on the date of the Merger Agreement, for six years
after the Effective Time to cover acts and omissions of directors and officers
of the Company occurring at or prior to the Effective Time; provided that Parent
shall not be required to pay an annual premium for such insurance in excess of
300% of the last annual premium paid by the Company prior to the date of the
Merger Agreement, but in such case Purchaser shall purchase as much coverage as
possible for such amount and (ii) maintain in effect for six years after the
Effective Time provisions no less favorable to the indemnified parties than
those contained in the Certificate of Incorporation
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of the Company on the date of the Merger Agreement (which shall be contained in
the Certificate of Incorporation of the Surviving Corporation) relating to the
rights to indemnification of officers and directors with respect to
indemnification for acts and omissions occurring at or prior to the Effective
Time.
Waiver and Amendment. The Merger Agreement provides that any of its
provisions may be waived at any time by the party which is, or whose
stockholders are, entitled to the benefits thereof. The Merger Agreement may not
be amended or supplemented at any time, except by an instrument in writing
signed on behalf of each party thereto; provided, that after the Merger
Agreement has been approved by the stockholders of the Company no such amendment
shall reduce the amount or change the form of consideration to be paid to the
stockholders of the Company in the Merger or later or change any of the terms or
conditions of the Merger Agreement if such alteration or change would adversely
affect the stockholders of the Company.
Timing. The exact timing and details of the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by the Purchaser pursuant to the Offer. Although Parent has agreed to
cause the Merger to be consummated on the terms set forth above, there can be no
assurance as to the timing of the Merger.
The Stockholders Agreement
The following is a summary of the material terms of the Stockholders
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated herein by reference and a copy of each of
which has been filed with the Commission as an exhibit to the Schedule 14D-1.
The Stockholders Agreement may be examined, and copies thereof may be obtained,
as set forth in Section 8 above.
Tender of Shares. Simultaneously with the execution of the Merger
Agreement, Parent, the Purchaser and the Stockholders entered into the
Stockholders Agreement. Upon the terms and subject to the conditions of such
agreement, the Stockholders have severally agreed to validly tender and not to
withdraw pursuant to and in accordance with the terms of the Offer, not later
than the fifth business day after commencement of the Offer, the respective
number of Shares owned beneficially by them as of the date of the Stockholders
Agreement as well as Shares acquired thereafter. Each Stockholder further agreed
that through the transfer to the Purchaser in the Offer of his or its Shares the
Purchaser will acquire good and marketable title to such Shares. The
Stockholders Agreement provides that, notwithstanding another provision of the
Stockholders Agreement to the contrary, if (x) the Merger Agreement is
terminated; (y) the Offer is terminated without the purchase of Shares
thereunder or (z) the Minimum Condition is not satisfied (other than by waiver)
upon termination of the Offer, within two business days thereof the Shares
tendered under the Offer pursuant to the Stockholders Agreement by each
Stockholder shall be returned to such Stockholder.
Voting. Each Stockholder has agreed to constitute and appoint Parent, or
any nominee of Parent, with full power of substitution, as his or its true and
lawful attorney and proxy, for and in his or its name, place and stead, to vote
as his or its proxy, at any meeting of the Company's stockholders and to sign
such stockholder's name to any written consent of the Company's stockholders
with respect to the Shares held of record or beneficially by such stockholder
(whether acquired before or after the date of the Stockholders Agreement) (i) in
favor of the Merger, the execution and delivery by the Company of the Merger
Agreement and the approval of the terms thereof and each of the other actions
contemplated by the Merger Agreement and the Stockholders Agreement and any
actions reasonably required in furtherance thereof; (ii) against any action or
agreement that would reasonably be expected to result in a breach in any respect
of any covenant, representation or warranty or any other obligation or agreement
of the Company under the Merger Agreement or the Stockholders Agreement; and
(iii) against the following actions (other than the Merger and the transactions
contemplated by the Merger Agreement): (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or its subsidiaries; (B) a sale, lease or transfer of a
material amount of assets of the Company or its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (C)(1) any change in a majority of the persons who constitute
the Board of Directors of the Company; (2) any change in the present
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capitalization of the Company or any amendment of the Company's Certificate of
Incorporation or Bylaws; (3) any other material change in the Company's
corporate structure or business; or (4) any other action which, in the case of
each of the matters referred to in clauses (C)(1), (2), (3) or (4), is intended,
or could reasonably be expected, to impede, interfere with, delay, postpone,
discourage or adversely affect the Merger and the transactions contemplated by
the Stockholders Agreement and the Merger Agreement. The Stockholders further
agreed to cause his or its Shares to be voted in accordance with the foregoing.
Representations, Warranties, Covenants and Other Agreements. In connection
with the Stockholders Agreement, the Stockholders have made certain customary
representations, warranties and covenants, including with respect to (i) their
ownership of the Shares, (ii) their authority to enter into and perform their
obligations under the Stockholders Agreement, (iii) the receipt of requisite
governmental consents and approvals, (iv) the absence of liens and encumbrances
on and in respect of their Shares, (v) restrictions on the transfer of their
Shares, (vi) the solicitation of Acquisition Proposals, and (vii) the waiver of
their appraisal rights.
Termination. Other than as provided therein, the Stockholders Agreement
terminates by its terms upon the termination of the Merger Agreement in
accordance with its terms.
The Termination, Consulting and Noncompete Agreement
Parent, the Company and William J. Branch (the "Covenantor") have entered
into a Termination, Consulting and Noncompete Agreement dated May 29 1996 (the
"Noncompete Agreement") pursuant to which the Covenantor has agreed to terminate
his employment with the Company effective upon consummation of the Offer, and
for a period of two years thereafter, subject to earlier termination for cause
(as defined in the Noncompete Agreement), to serve as a consultant for 20 days
per year to, and not compete with, the Company. Pursuant to the Noncompete
Agreement, the Covenantor shall be paid $175,000 per year and will be provided
with health and medical benefits during the term of the Noncompete Agreement.
The foregoing is not a complete description of the terms and conditions of
the Noncompete Agreement and is qualified in its entirety by reference to the
full text thereof which is incorporated herein by reference. A copy of the
Noncompete Agreement has been filed with the Commission as an exhibit to the
Schedule 14D-1. The Noncompete Agreement may be examined, and copies thereof may
be obtained, as set forth in Section 8 above.
The Employment Agreement
The Company has entered into an Employment Agreement dated as of May 29,
1996 (the "Employment Agreement") with Dr. Frank J. Preston ("Preston"), the
Company's President and Chief Executive Officer. The Employment Agreement has a
term of four years, effective upon consummation of the Offer (the "Effective
Date"), and is automatically renewed for one additional year on the second
anniversary of the Effective Date and each anniversary of the Effective Date
thereafter. The Employment Agreement provides for an initial base salary of
$275,000 per annum plus certain employee benefits. Pursuant to the Employment
Agreement, the Compensation Committee of the Parent's Board of Directors has
discretion to increase Preston's base salary and award an annual incentive
bonus. In addition, the Employment Agreement provides that, upon consummation of
the Merger, Preston's options to purchase 90,000 Shares, which will be converted
into options to purchase Parent's Common Stock, will become vested and
exercisable.
The Employment Agreement provides that: (i) upon the death of Preston, the
Company will pay to his estate or designated beneficiary his full base salary
for an additional 12 months and any accrued bonus to the date of death; (ii)
upon termination for disability, Preston will receive all compensation payable
under the Company's disability and medical plans and programs plus an additional
payment from the Company so that the aggregate amount of salary continuation
from all sources equals his base salary through the remaining term of the
agreement; and (iii) upon termination by the employee for good reason (as
defined in the Employment Agreement) or by the Company without cause, the
employee will receive his full base salary and bonuses (calculated based on
prior bonuses) to the end of the term of the Employment Agreement. If the
Employment Agreement is terminated for cause (as defined in the Employment
Agreement), or by Preston
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other than for good reason, Preston is entitled to receive unpaid salary and
benefits, if any, accrued through the effective date of Preston's termination.
The foregoing is not a complete description of the terms and conditions of
the Employment Agreement and is qualified in its entirety by reference to the
full text thereof which is incorporated herein by reference. A copy of the
Employment Agreement has been filed with the Commission as an exhibit to the
Schedule 14D-1. The Employment Agreement may be examined, and copies thereof may
be obtained, as set forth in Section 8 above.
Other Matters
Appraisal Rights. No appraisal rights are available to holders of Shares in
connection with the Offer. However, if the Merger is consummated, holders of
Shares will have certain rights under Section 262 of the Delaware Law to dissent
and demand appraisal of, and payment in cash for the fair value of, their
Shares. Such rights, if the statutory procedures are complied with, could lead
to a judicial determination of the fair value (excluding any element of value
arising from accomplishment or expectation of the Merger) required to be paid in
cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than in addition to the Offer Price and the market value of the Shares,
including asset values and the investment value of the Shares. The value so
determined could be more or less than the Offer Price or the Merger
Consideration.
If any holder of Shares who demands appraisal under Section 262 of the
Delaware Law fails to perfect, or effectively withdraws or loses his right to
appraisal, as provided in the Delaware Law, the shares of such holder will be
converted into the Merger Consideration in accordance with the Merger Agreement.
A stockholder may withdraw his demand for appraisal by delivery to Parent of a
written withdrawal of his demand for appraisal and acceptance of the Merger.
Failure to follow the steps required by Section 262 of the Delaware Law for
perfecting appraisal rights may result in the loss of such rights.
Going Private Transactions. Rule 13e-3 under the Exchange Act is applicable
to certain "going-private" transactions. The Purchaser does not believe that
Rule 13e-3 will be applicable to the Merger unless, among other things, the
Merger is completed more than one year after termination of the Offer. If
applicable, Rule 13e-3 would require, among other things, that certain financial
information regarding the Company and certain information regarding the fairness
of the Merger and the consideration offered to minority stockholders be filed
with the Commission and disclosed to minority stockholders prior to consummation
of the Merger.
13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two immediately succeeding
paragraphs, and nothing herein shall constitute a waiver by the Purchaser or
Parent of any of its rights under the Merger Agreement or a limitation of
remedies available to the Purchaser or Parent for any breach of the Merger
Agreement, including termination thereof.
If on or after the date of the Merger Agreement, the Company should (a)
split, combine, reclassify or otherwise change the Shares or its capitalization,
(b) acquire currently outstanding Shares or otherwise cause a reduction in the
number of outstanding Shares or other capital stock of the Company or (c) issue
or sell additional Shares, shares of any other class of capital stock, other
securities or any securities convertible into or exchangeable for, or rights,
warrants or options, conditional or otherwise, to acquire, any of the foregoing,
other than Shares issued pursuant to the exercise of outstanding Stock Options,
then, subject to the provisions of Section 14 below, the Purchaser, in its sole
discretion, may make such adjustments as it deems appropriate in the Offer Price
and other terms of the Offer, including, without limitation, the number or type
of securities offered to be purchased.
If, on or after the date of the Merger Agreement, the Company should
declare or pay any cash dividend on the Shares (except for the regular quarterly
dividend of $.05 per share of the Common Stock declared by the Company's Board
of Directors on May 9, 1996) or other distribution on the Shares, or issue with
respect to the Shares any additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
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foregoing, payable or distributable to stockholders of record on a date prior to
the transfer of the Shares purchased pursuant to the Offer to the Purchaser or
its nominee or transferee on the Company's stock transfer records, then, subject
to the provisions of Section 14 below, (a) the Offer Price may, in the sole
discretion of the Purchaser, be reduced by the amount of any such cash dividend
or cash distribution and (b) the whole of any such noncash dividend,
distribution or issuance to be received by the tendering stockholders will (i)
be received and held by the tendering stockholders for the account of the
Purchaser and will be required to be promptly remitted and transferred by each
tendering stockholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation of transfer, or (ii) at the direction
of the Purchaser, be exercised for the benefit of the Purchaser, in which case
the proceeds of such exercise will promptly be remitted to the Purchaser.
Pending such remittance and subject to applicable law, the Purchaser will be
entitled to all rights and privileges as owner of any such noncash dividend,
distribution, issuance or proceeds and may withhold the entire Offer Price or
deduct from the Offer Price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), to pay for any Shares
tendered, and may postpone the acceptance for payment or, subject to the
restriction referred to above, payment for any Shares tendered, and, except as
otherwise provided in the Merger Agreement, may amend or terminate the Offer
(whether or not any Shares have theretofore been accepted for payment) if, (i)
prior to the expiration of the Offer, (A) the condition that there shall be
validly tendered and not withdrawn prior to the expiration of the Offer a number
of Shares which represents at least a majority of the number of Shares
outstanding on a fully diluted basis on the date of purchase shall not have been
satisfied (the "Minimum Condition") ("on a fully diluted basis" meaning, as of
any date: the number of Shares outstanding, together with Shares the Company is
then required to issue pursuant to obligations outstanding at that date under
employee stock option or other benefit plans or otherwise (assuming all Stock
Options and other rights to acquire Shares are fully vested and exercisable and
all Shares issuable at any time have been issued), (B) any applicable waiting
period under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer, (C) all material regulatory and related approvals shall
not have been obtained on terms reasonably satisfactory to the Purchaser or (D)
Lenders holding more than 50% of the aggregate outstanding indebtedness under
the Credit Agreement shall have not agreed to amend the Credit Agreement to
permit the consummation of the Offer and the Merger (the "Credit Agreement
Waiver Condition"), or (ii) at any time after the date of the Merger Agreement
and before the time of payment for any such Shares (whether or not any Shares
have theretofore been accepted for payment), any of the following conditions
exists:
(a) the Purchaser and the Company shall have reached a written
agreement that the Purchaser shall amend the Offer to terminate the Offer
or postpone payment for Shares pursuant thereto;
(b) there shall be instituted or pending any action or proceeding by
any Governmental Entity or before any court or Governmental Entity, (1)
challenging the acquisition by Parent or the Purchaser of Shares or
otherwise seeking to restrain or prohibit the consummation of the Offer,
the Merger or the transactions contemplated by the Merger Agreement, (2)
seeking to materially restrict or prohibit Parent's or the Purchaser's
ownership or operation of all or a material portion of its or the Company's
business or assets, or to compel Parent or the Purchaser to dispose of or
hold separate all or a material portion of its or the Company's business or
assets, as a result of the Offer or the Merger, which in either case, in
the sole judgment of Parent and the Purchaser, might, directly or
indirectly, result in the relief sought being obtained or (3) which might
result, directly or indirectly, in any of the consequences set forth in
clauses (2) through (5) of paragraph (c) below;
(c) there shall have been any statute, rule, executive order, decree,
injunction, regulation or other order (whether temporary, preliminary or
permanent) enacted, promulgated, entered or issued or deemed
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applicable to the Offer or the Merger, by any Governmental Entity or court,
which, in the sole judgment of Parent and the Purchaser would, directly or
indirectly, (1) materially restrict or prohibit Parent's or the Purchaser's
ownership or operation of all or a material portion of its or the Company's
business or assets or compel Parent or the Purchaser to dispose of or hold
separate all or a material portion of its or the Company's business or
assets as a result of the Offer or the Merger, (2) render Parent or the
Purchaser unable to purchase or pay for some or all of the Shares pursuant
to the Offer or to consummate the Merger, or otherwise prevent consummation
of the Offer or the Merger, except for the waiting period provisions of the
HSR Act, (3) make such purchase, payment or consummation illegal, (4)
impose or confirm material limitations on the ability of Parent or the
Purchaser effectively to acquire or hold, or to exercise full rights of
ownership of, any Shares purchased by it, including, without limitation,
the right to vote any Shares purchased by it on all matters (including the
Merger and the Merger Agreement) properly presented to the Company's
stockholders, or (5) otherwise result in a Company Material Adverse Effect
(as defined in Section 12 under "The Merger Agreement");
(d) there shall have occurred (1) any general suspension of, or
limitation on prices for, or trading in, securities on the NYSE, any
national securities exchange or in the over-the-counter market, (2) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (3) a commencement of a war, armed
hostilities or other international or national calamity directly or
indirectly involving the United States, (4) from the date of the Merger
Agreement through the date of termination or expiration of the Offer, a
decline of at least 25% in the Standard & Poor's 500 Index, or (5) in the
case of any of the foregoing existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof;
(e) there shall have occurred a Company Material Adverse Effect, or
the Merger Agreement shall have been terminated in accordance with its
terms;
(f) beneficial ownership of 20% or more of the outstanding Shares
shall have been acquired by another person or by a "group" as defined in
Section 13(d)(3) of the Exchange Act other than for purposes of arbitrage;
(g) any of the representations and warranties of the Company contained
in the Merger Agreement shall not be true and correct as of the date of
consummation of the Offer as though made on and as of such date, except (i)
for changes specifically permitted by the Merger Agreement, (ii) that those
representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date, and (iii)
with respect to those representations and warranties which are not
qualified by materiality or a similar qualification, in any case where such
failures to be true and correct would not, individually or in the
aggregate, have a Company Material Adverse Effect; or
(h) the Company shall not have performed or complied in all material
respects with all agreements and covenants required by the Merger Agreement
to be performed or complied with by the Company on or prior to the date of
consummation of the Offer,
which, in the sole judgment of Parent and the Purchaser in any such case and
regardless of the circumstances (including any action by Parent of the
Purchaser) giving rise to any such condition, makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment of or payment for such
Shares.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent and the Purchaser regardless of the
circumstances giving rise to any such conditions or may be waived by Parent and
the Purchaser in whole or in part at any time and from time to time in the sole
discretion of each of Parent and the Purchaser. The failure by Parent or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time. Any determination
by Parent or the Purchaser concerning the events described herein will be final
and binding upon all parties.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, as well as certain representations
made to the Purchaser and Parent in the Merger Agreement by the Company, neither
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the Purchaser nor Parent is aware of any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the Purchaser's
acquisition of Shares (and the indirect acquisition of the stock of the
Company's subsidiaries) as contemplated herein or of any approval or other
action by any Governmental Entity that would be required or desirable for the
acquisition or ownership of Shares by the Purchaser as contemplated herein.
Should any such approval or other action be required or desirable, the Purchaser
and Parent currently contemplate that such approval or other action will be
sought, except as described below under "State Takeover Laws." While, except as
otherwise expressly described in this Section 15, the Purchaser does not
presently intend to delay the acceptance for payment of or payment for Shares
tendered pursuant to the Offer pending the outcome of any such matter, there can
be no assurance that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions or that failure to
obtain any such approval or other action might not result in consequences
adverse to the Company's business or that certain parts of the Company's
business might not have to be disposed of if such approvals were not obtained or
such other actions were not taken or in order to obtain any such approval or
other action. If certain types of adverse action are taken with respect to the
matters discussed below, the Purchaser could decline to accept for payment or
pay for any Shares tendered. See Section 14 for certain conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions. Subsequently, a number of Federal courts ruled
that various state takeover statutes were unconstitutional insofar as they apply
to corporations incorporated outside of the state of enactment.
Section 203 of the Delaware Law. Section 203 of the Delaware Law, in
general, prohibits a Delaware corporation such as the Company from engaging in a
"Business Combination" (defined to include a variety of transactions, including
mergers) with an "Interested Stockholder" (defined generally as a person that is
the beneficial owner of 15% or more of the corporation's outstanding voting
stock) for a period of three years following the date such person became an
Interested Stockholder unless, among other things, prior to the date such person
became an Interested Stockholder, the board of directors of the corporation
approved either the Business Combination or the transaction that resulted in the
stockholder becoming an Interested Stockholder. The Board of Directors of the
Company has unanimously approved the Merger Agreement, the Stockholders
Agreement and the Purchaser's acquisition of Shares pursuant to the Offer and
the Stockholders Agreement. Therefore, Section 203 of the Delaware Law is
inapplicable to the Merger.
Neither the Purchaser nor Parent has currently complied with any state
takeover statute or regulation. The Purchaser reserves the right to challenge
the applicability or validity of any state law purportedly applicable to the
Offer or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any state takeover statute is applicable to the Offer or
the Merger and an appropriate court does not determine that it is inapplicable
or invalid as applied to the Offer or the Merger, the Purchaser might be
required to file certain information with, or to receive approvals from, the
relevant state authorities, and the Purchaser might be unable to accept for
payment or pay for Shares tendered pursuant to the Offer, or be delayed in
consummating the Offer or the Merger. In such case, the Purchaser may not be
obliged to accept for payment or pay for any Shares tendered pursuant to the
Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
acquisition of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Parent of
a Notification and Report Form with respect to the Offer, unless Parent receives
a request for additional information or documentary material from the Antitrust
Division or the FTC or unless early
30
<PAGE> 33
termination of the waiting period is granted. Parent made such filing on May 24,
1996. If, within the initial 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or documentary material from
Parent concerning the Offer, the waiting period will be extended and would
expire at 11:59 p.m., New York City time, on the tenth calendar day after the
date of substantial compliance by Parent with such request. Only one extension
of the waiting period pursuant to a request for additional information is
authorized by the HSR Act. Thereafter, such waiting period may be extended only
by court order or with the consent of Parent. In practice, complying with a
request for additional information or material can take a significant amount of
time. In addition, if the Antitrust Division or the FTC raises substantive
issues in connection with a proposed transaction, the parties frequently engage
in negotiations with the relevant governmental agency concerning possible means
of addressing those issues and may agree to delay consummation of the
transaction while such negotiations continue. Expiration or termination of the
applicable waiting period under the HSR Act is a condition to the Purchaser's
obligation to accept for payment and pay for Shares tendered pursuant to the
Offer.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of the
Company or its subsidiaries or Parent or its subsidiaries. Private parties may
also bring legal action under the antitrust laws under certain circumstances.
There can be no assurance that a challenge to the Offer on antitrust grounds
will not be made or, if such a challenge is made, of the results thereof.
Investment Canada Act. According to the Company Form 10-K, the Company
conducts certain operations in Canada. The Investment Canada Act (the "ICA")
requires that notice of the acquisition of "control" (as defined in the ICA) by
"non-Canadians" (as defined in the ICA) of any "Canadian business" (as defined
in the ICA) be furnished to Investment Canada, a Canadian Governmental Entity.
The acquisition of Shares by the Purchaser pursuant to the Offer may
constitute an indirect acquisition of a "Canadian business" within the meaning
of the ICA. The Purchaser intends to file any notice required under the ICA.
Canadian Pre-Merger Notification Requirements. Certain provisions of
Canada's Competition Act require pre-notification to the Director of
Investigation and Research appointed under the Competition Act (the "Canadian
Director") of significant corporate transactions, such as the acquisition of a
large percentage of the stock of a public company that has Canadian operations,
or a merger or consolidation involving such an entity. Pre-notification is
generally required with respect to transactions in which the parties to the
transactions and their affiliates have assets in Canada, or annual gross
revenues from sales in, from or into Canada, in excess of Cdn. $400 million and
which involve the direct or indirect acquisition of an operating business, the
value of the assets of which, or the gross revenues from sales in, from or into
Canada generated from the assets of which, exceed Cdn. $35 million per year. For
transactions subject to the notification requirements, notice must be given 21
days prior to the completion of the transaction depending on the information
provided to the Canadian Director. The Canadian Director may waive the waiting
period. After the applicable waiting period expires or is waived, the
transaction may be completed. If the Canadian Director determines that the
proposed transaction prevents or lessens, or is reasonably likely to prevent or
lessen, competition substantially in a definable market, the Canadian Director
may apply to the Competition Tribunal, a special purpose Canadian tribunal, to,
among other things, require the disposition of the Canadian assets acquired in
such transaction. The Purchaser intends to file any required notice and
information with respect to its proposed acquisition with the Canadian Director
and, to the extent necessary, observe the applicable waiting period and/or apply
to the Canadian Director for an advance ruling certificate to the effect
31
<PAGE> 34
that the Offer or the Merger would not prevent or lessen, or be likely to
prevent or lessen, competition substantially.
Other Foreign Laws. The Company and certain of its subsidiaries conduct
business in several foreign countries where regulatory filings or approvals may
be required or desirable in connection with the consummation of the Offer,
including the United Kingdom. Certain of such filings or approvals, if required
or desirable, may not be made or obtained prior to the expiration of the Offer.
The Purchaser is seeking further information regarding the applicability of any
such laws and currently intends to take such action as may be required or
desirable. If any foreign governmental entity takes any action prior to the
completion of the Offer that might have certain adverse effects, the Purchaser
will not be obligated to accept for payment or pay for any Shares tendered
pursuant to the Offer.
16. FEES AND EXPENSES
Chase is acting as Dealer Manager in connection with the Offer pursuant to
a Dealer Manager Agreement dated May 29, 1996 (the "Dealer Manager Agreement").
Parent and the Purchaser have agreed to pay the Dealer Manager a fee of
$250,000, payable upon consummation of the Offer, for its services as Dealer
Manager in connection with the Offer. In addition, Parent and the Purchaser have
agreed to reimburse the Dealer Manager for its out-of-pocket expenses, including
the reasonable fees and expenses of its counsel, in connection with the Offer
and to indemnify the Dealer Manager and certain related persons against certain
liabilities and expenses, including certain liabilities under the Federal
securities laws. Parent has also agreed to pay The Cypress Group L.L.C. (the
"Cypress Group") a fee of $1.625 million for financial advisory services in
connection with the Offer and the Merger, payable upon consummation of the
Merger. In addition, Parent has agreed to reimburse the Cypress Group for its
reasonable out-of-pocket expenses incurred in providing such services and to
indemnify the Cypress Group and certain related persons against certain
liabilities and expenses. Two members of the Cypress Group are currently
directors of Parent.
The Purchaser has retained D.F. King & Co., Inc. to act as the Information
Agent and Bankers Trust Company to serve as the Depositary in connection with
the Offer. The Information Agent and the Depositary each will receive reasonable
and customary compensation for their services, be reimbursed for certain
reasonable out-of-pocket expenses and be indemnified against certain liabilities
and expenses in connection therewith, including certain liabilities under the
Federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and the
Information Agent) in connection with the solicitation of tenders of Shares
pursuant to the Offer. Brokers, dealers, banks and trust companies will be
reimbursed by the Purchaser upon request for customary mailing and handling
expenses incurred by them in forwarding material to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither the Purchaser nor Parent is aware of any jurisdiction in
which the making of the Offer or the tender of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction. If the Purchaser
or Parent becomes aware of any state law prohibiting the making of the Offer or
the acceptance of Shares pursuant thereto in such state, the Purchaser will make
a good faith effort to comply with any such state statute or seek to have such
state statute declared inapplicable to the Offer. If, after such good faith
effort, the Purchaser cannot comply with any such state statute or have such
state statute declared inapplicable to the Offer, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) the holders of Shares in
such state. In any jurisdiction the securities, blue sky or other laws of which
require the Offer to be made by a licensed broker or dealer, the Offer is being
made on behalf of the Purchaser by the Dealer Manager or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
32
<PAGE> 35
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer, and may
file amendments thereto. In addition, the Company has filed with the Commission
the Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act, together with
exhibits, setting forth its recommendation with respect to the Offer and the
reasons for such recommendation and furnishing certain additional related
information. Such Schedules and any amendments thereto, including exhibits,
should be available for inspection and copies should be obtainable in the manner
set forth in Sections 8 and 9 (except that such material will not be available
at the regional offices of the Commission).
PA ACQUISITION CORP.
May 30, 1996
33
<PAGE> 36
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND THE PURCHASER
The following table sets forth the name, age, business address, citizenship
and principal occupation or employment at the present time and during the past
five years of each director and executive officer of Parent and the Purchaser.
Unless otherwise noted, each such person is a citizen of the United States. In
addition, unless otherwise noted, each such person's business address is Lear
Corporation, 21557 Telegraph Road, Southfield, Michigan 48034. Directors are
indicated with an asterisk.
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, MATERIAL
OCCUPATIONS, OFFICES
NAME OR EMPLOYMENTS HELD DURING PAST FIVE YEARS AND AGE.
- ------------------------------ ------------------------------------------------------------
<S> <C>
Kenneth L. Way*............... Mr. Way was elected to and has held the position of Chairman
of the Board and Chief Executive Officer of Parent since
1988. Prior to this time he served as Corporate Vice
President, Automotive Group for Lear Siegler, Inc. ("LSI")
since October 1984. During the previous six years, Mr. Way
was President of LSI's General Seating Division. Before this
position, he was President of LSI's Metal Products Division
in Detroit for three years. Other positions held by Mr. Way
during his 30 years with LSI include Manufacturing Manager
of the Metal Products Division and Manager of Production
Control for the Automotive Division in Detroit. Mr. Way also
serves as a director of Hayes Wheels International, Inc. Mr.
Way is 56 years old.
Robert E. Rossiter*........... Mr. Rossiter became President of Parent in 1984 and a
Director and the Chief Operating Officer of Parent in 1988.
He joined LSI in 1971 in the Material Control Department of
the Automotive Division, then joined the Metal Products
Division of LSI as Production Control Manager, and
subsequently moved into sales and sales management. In 1979,
he joined the General Seating Division as Vice President of
Sales and worked in that position, as well as Vice President
of Operations, until 1984. Mr. Rossiter is 50 years old.
James H. Vandenberghe*........ Mr. Vandenberghe is Executive Vice President, Chief
Financial Officer and a Director of Parent. He was appointed
Executive Vice President of Parent in 1993 and became a
Director in November 1995. Mr. Vandenberghe also served as a
Director of Parent from 1988 until the consummation of the
merger of Lear Holdings Corporation ("Holdings") into Parent
(the "Holdings Merger"). Mr. Vandenberghe previously served
as Senior Vice President -- Finance, Secretary and Chief
Financial Officer of Parent since 1988. He joined the
Automotive Division of LSI in 1973 as a financial analyst
and was promoted to positions at the Metal Products Division
and the Automotive Group office, and in 1978 was named the
Vice President -- Finance for the Plastics Division. In
1983, Mr. Vandenberghe was appointed Vice President --
Finance for the General Seating Division. Prior to 1988, Mr.
Vandenberghe had been responsible for project management,
United States operations, and international operations of
Parent. Mr. Vandenberghe is 46 years old.
</TABLE>
I-1
<PAGE> 37
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, MATERIAL
OCCUPATIONS, OFFICES
NAME OR EMPLOYMENTS HELD DURING PAST FIVE YEARS AND AGE.
- ------------------------------ ------------------------------------------------------------
<S> <C>
James A. Hollars.............. Mr. Hollars is Senior Vice President and President -- BMW
Division of Parent. Previously, he served as Senior Vice
President and President -- International Operations since
November 1994. He was promoted to this position in November
1995. Prior to serving in that position, he was Senior Vice
President -- International Operations of Parent since 1993.
He was previously promoted to Vice President --
International upon the sale of LSI's Power Equipment
Division to Lucas Industries in 1988. Mr. Hollars joined
LSI's Metal Products Division in 1973 as the Manufacturing
Manager and later served as Vice President -- Manufacturing
for its No-Sag Spring Division. In 1979, he was named
President of the Foam Products Division and was subsequently
promoted to President at the Anchorlok Division in 1985 and
the Power Equipment Division in 1986. Mr. Hollars is 51
years old.
Roger Alan Jackson............ Mr. Jackson was elected as Senior Vice President -- Human
Resources and Corporate Relations of Parent in October 1995.
Previously he served as Vice President -- Human Resources
for Allen Bradley, a wholly-owned subsidiary of Rockwell
International. Mr. Jackson was employed by Rockwell
International or its subsidiaries from December 1977 to
September 1995. Mr. Jackson is 50 years old.
Frederick F. Sommer........... Mr. Sommer was elected Senior Vice President and President
-- Automotive Industries Division of Parent in August 1995.
Previously he served as President of Automotive Industries
Holding, Inc. ("AIH") since November 1991 and Chief
Executive Officer of AIH. Mr. Sommer also served as
Executive Vice President of AIH from October 1990 until
November 1991. Prior thereto, he served as Vice President --
Manufacturing and Purchasing of the U.S. subsidiary of
Nissan from January 1987 to October 1990. Mr. Sommer is 52
years old.
Gerald G. Harris.............. Mr. Harris is Vice President and President -- GM Division of
Parent. He was promoted to this position in November 1994.
Prior to serving in this position, he was Vice President and
General Manager -- GM Operations since March 1994.
Previously, Mr. Harris served as Director -- Ford Business
Unit from March 1992 to March 1994, Director of Sales from
August 1990 to March 1992 and Sales Manager from January
1989 to August 1990. Mr. Harris has held a variety of
managerial positions with Parent and LSI since 1962. Mr.
Harris is 62 years old.
Terrance E. O'Rourke.......... Mr. O'Rourke is Vice President and President -- Ford
Division of Parent. He was promoted to this position in
November 1995. Previously he served as Vice President and
President -- Chrysler Division since November 1994. Prior to
serving in this position, he was Director -- Strategic
Planning since October 1994. Prior to joining Parent, Mr.
O'Rourke was employed by Ford Motor Company as Supply
Manager -- Climate Control Department from 1992 and
Procurement Operations Manager from 1988. Mr. O'Rourke is 49
years old.
</TABLE>
I-2
<PAGE> 38
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, MATERIAL
OCCUPATIONS, OFFICES
NAME OR EMPLOYMENTS HELD DURING PAST FIVE YEARS AND AGE.
- ------------------------------ ------------------------------------------------------------
<S> <C>
Joseph F. McCarthy............ Mr. McCarthy was elected Vice President, Secretary and
General Counsel of Parent in April 1994. Prior to joining
Parent, Mr. McCarthy served as Vice President -- Legal and
Secretary for both Hayes Wheels International, Inc. and
Kelsey-Hayes Company. Prior to joining Hayes Wheels
International, Inc. and Kelsey-Hayes Company, Mr. McCarthy
was a partner in the law firm of Kreckman & McCarthy from
1973 to 1983. Mr. McCarthy is 52 years old.
Donald J. Stebbins............ Mr. Stebbins is Vice President, Treasurer and Assistant
Secretary of Parent. He joined Parent in June 1992 from
Bankers Trust Company, New York, where he was Vice President
for four years. Prior to his tenure at Bankers Trust
Company, Mr. Stebbins held positions at Citibank, N.A. and
The First National Bank of Chicago. Mr. Stebbins is 38 years
old.
Gian Andrea Botta*............ Mr. Botta became a Director of Parent on December 31, 1993
upon consummation of the Holdings Merger. Prior to the
Holdings Merger, Mr. Botta was a Director of Holdings since
1993. Mr. Botta has been President of EXOR America Inc., an
affiliate of FIMA Finance Management Inc. ("FIMA"), since
February 1994 and previously was President of IFINT-USA
Inc., an affiliate of FIMA, since 1993 and was Vice
President of Acquisitions of IFINT-USA Inc. for more than
five years prior thereto. Mr. Botta also serves as a
director of ICF Kaiser International, Inc., Constitution Re
Inc. and Western Industries Inc., and as a trustee of
Corporate Property Investors. Mr. Botta is 43 years old and
is a citizen of the Republic of Italy.
Larry W. McCurdy*............. Mr. McCurdy became a Director of Parent in 1988. Mr. McCurdy
was named Executive Vice President, Operations of Cooper
Industries in April 1994. Prior to this time, Mr. McCurdy
was the President and Chief Executive Officer of Moog
Automotive, Inc. since November 1985, and prior thereto
President and Chief Operating Officer of Echlin, Inc.
("Echlin"), since August 1983, after serving as Vice
President of Finance from February 1983. Prior to joining
Echlin, he served in various managerial positions with
Tenneco, Inc. He was formerly Chairman of the Board of
Directors of the Motor and Equipment Manufacturing
Association (MEMA). Mr. McCurdy also serves as a director of
Mohawk Industries, Inc., Breed Technologies, Inc. and as a
trustee of Millikin University. Mr. McCurdy is 60 years old.
</TABLE>
I-3
<PAGE> 39
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, MATERIAL
OCCUPATIONS, OFFICES
NAME OR EMPLOYMENTS HELD DURING PAST FIVE YEARS AND AGE.
- ------------------------------ ------------------------------------------------------------
<S> <C>
Robert W. Shower*............. Mr. Shower became a Director of Parent on December 31, 1993
upon consummation of the Holdings Merger. From November 1991
until the Holdings Merger, Mr. Shower was a Director of
Holdings. Mr. Shower was appointed Senior Vice President and
Chief Financial Officer of Seagull Energy Corporation in
March 1992, elected a director in May 1992 and named
Executive Vice President in 1994. Prior thereto, he served
as Senior Vice President of Finance and Chief Financial
Officer at AmeriServ in 1990 and 1991 and as a Managing
Director of Corporate Finance with Lehman Brothers Inc. from
1986 to 1990. From 1964 to 1986, Mr. Shower served in a
variety of financial executive positions with The Williams
Companies, where he was a member of the Board of Directors
and Executive Vice President of Finance and Administration
from 1977 to 1986. Mr. Shower also serves as a director of
Highlands Insurance Group, Inc. Mr. Shower is 58 years old.
David P. Spalding*............ Mr. Spalding became a Director of Parent in September 1991.
Mr. Spalding left Lehman Brothers Inc. to become Vice
Chairman of The Cypress Group L.L.C. in 1994. Prior to this
time, he was a Managing Director of Lehman Brothers Inc.
from February 1991. Previously, he held the position of
Senior Vice President of Lehman Brothers Inc. from September
1988 to February 1991. From April 1987 to September 1988, he
was Senior Vice President of General Electric Capital
Corporation Corporate Finance Group, Inc. Prior to 1987 he
was a Vice President of The First National Bank of Chicago.
Mr. Spalding is also a director of Parisian, Inc. Mr.
Spalding is 42 years old.
James A. Stern*............... Mr. Stern became a Director of Parent on December 31, 1993
upon consummation of the Holdings Merger. From September
1991 until the Holdings Merger, Mr. Stern was a Director of
Holdings. Mr. Stern left Lehman Brothers Inc. to become
Chairman of The Cypress Group L.L.C. in 1994. Prior to this
time, he was a Managing Director of Lehman Brothers Inc. for
more than five years. He is also a director of K&F
Industries Inc., Infinity Broadcasting Corporation, R.P.
Scherer Corporation and Noel Group, Inc. Mr. Stern is 45
years old.
Alan H. Washkowitz*........... Mr. Washkowitz became a Director of Parent in 1994. Mr.
Washkowitz has been a Managing Director of Lehman Brothers
Inc. or its predecessors since 1978. Mr. Washkowitz also
serves as a director of K & F Industries, Inc., Illinois
Central Corporation and McBrides, Ltd. Mr. Washkowitz is 55
years old.
</TABLE>
I-4
<PAGE> 40
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT, MATERIAL
OCCUPATIONS,
NAME OFFICES OR EMPLOYMENTS HELD DURING PAST FIVE YEARS AND AGE.
- ------------------------------ ------------------------------------------------------------
<S> <C>
Kenneth L. Way................ Mr. Way has been Chairman and Chief Executive Officer of the
Purchaser since May 1996. Mr. Way was elected to and has
held the position of Chairman of the Board and Chief
Executive Officer of Parent since 1988. Prior to this time
he served as Corporate Vice President, Automotive Group for
LSI since October 1984. During the previous six years, Mr.
Way was President of LSI's General Seating Division. Before
this position, he was President of LSI's Metal Products
Division in Detroit for three years. Other positions held by
Mr. Way during his 30 years with LSI include Manufacturing
Manager of the Metal Products Division and Manager of
Production Control for the Automotive Division in Detroit.
Mr. Way also serves as a director of Hayes Wheels
International, Inc. Mr. Way is 56 years old.
James H. Vandenberghe......... Mr. Vandenberghe has been a President, Executive Vice
President and Chief Financial Officer of the Purchaser since
May 1996. Mr. Vandenberghe is Executive Vice President,
Chief Financial Officer and a Director of Parent. He was
appointed Executive Vice President of Parent in 1993 and
became a Director in November 1995. Mr. Vandenberghe also
served as a Director of Parent from 1988 until the Holdings
Merger. Mr. Vandenberghe previously served as Senior Vice
President -- Finance, Secretary and Chief Financial Officer
of Parent since 1988. He joined the Automotive Division of
LSI in 1973 as a financial analyst and was promoted to
positions at the Metal Products Division and the Automotive
Group office, and in 1978 was named the Vice President --
Finance for the Plastics Division. In 1983, Mr. Vandenberghe
was appointed Vice President -- Finance for the General
Seating Division. Prior to 1988, Mr. Vandenberghe had been
responsible for project management, United States
operations, and international operations of Parent. Mr.
Vandenberghe is 46 years old.
Joseph F. McCarthy*........... Mr. McCarthy has been a Director and Vice President,
Secretary and General Counsel of the Purchaser since May
1996. Mr. McCarthy was elected Vice President, Secretary and
General Counsel of Parent in April 1994. Prior to joining
Parent, Mr. McCarthy served as Vice President -- Legal and
Secretary for both Hayes Wheels International, Inc. and
Kelsey-Hayes Company. Prior to joining Hayes Wheels
International, Inc. and Kelsey-Hayes Company, Mr. McCarthy
was a partner in the law firm of Kreckman & McCarthy from
1973 to 1983. Mr. McCarthy is 52 years old.
Donald J. Stebbins............ Mr. Stebbins has been a Vice President, Treasurer and
Assistant Secretary of the Purchaser since May 1996. Mr.
Stebbins is Vice President, Treasurer and Assistant
Secretary of Parent. He joined Parent in June 1992 from
Bankers Trust Company, New York, where he was Vice President
for four years. Prior to his tenure at Bankers Trust
Company, Mr. Stebbins held positions at Citibank, N.A. and
The First National Bank of Chicago. Mr. Stebbins is 38 years
old.
</TABLE>
I-5
<PAGE> 41
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
BANKERS TRUST COMPANY
<TABLE>
<S> <C>
By Hand/Overnight Courier: By Mail:
Bankers Trust Company Bankers Trust Company
Corporate Trust & Agency Group Corporate Trust & Agency Group
Reorganization Department Reorganization Department
Receipt & Delivery Window P.O. Box 1458
123 Washington Street, 1st Floor Church Street Station
New York, NY 10006 New York, NY 10008-1458
</TABLE>
Facsimile Transmission
(for Eligible Institutions only):
(212) 250-6037
Confirm Receipt of Notice of Guaranteed Delivery by Telephone:
(212) 250-6270
------------------------------
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. You may also contact
your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 WATER STREET
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT: (212) 269-5550
ALL OTHERS CALL TOLL-FREE: (800) 848-3094
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(212) 270-3862
(CALL COLLECT)
<PAGE> 1
EXHIBIT 99.2(a)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
MASLAND CORPORATION
AT
$26.00 NET PER SHARE
PURSUANT TO THE OFFER TO PURCHASE
DATED MAY 30, 1996
BY
PA ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
LEAR CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK
CITY TIME, ON WEDNESDAY, JUNE 26, 1996, UNLESS THE OFFER IS
EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
BANKERS TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
Bankers Trust Company (For Eligible Institutions Only) Bankers Trust Company
Corporate Trust & Agency Group (212) 250-6037 Corporate Trust & Agency Group
Reorganization Dept. Reorganization Dept.
P.O. Box 1458 Confirm by Telephone to: Receipt & Delivery Window
Church Street Station (212) 250-6270 123 Washington Street, 1st Floor
New York, NY 10008-1458 New York, NY 10006
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU
MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED
BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) of Masland Corporation (the "Tendering Stockholders") if
certificates evidencing Shares ("Certificates") are to be forwarded herewith or,
unless an Agent's Message (as defined in the Offer to Purchase (as defined
below)) is used, if delivery of Shares is to be made by book-entry transfer to
an account maintained by Bankers Trust Company (the "Depositary") at The
Depository Trust Company ("DTC") or the Philadelphia Depository Trust Company
("PDTC") (each a "Book-Entry Transfer Facility") pursuant to the procedures set
forth in Section 3 of the Offer to Purchase (as defined below).
Tendering Stockholders whose Certificates are not immediately available or
who cannot deliver either their Certificates for, or a Book-Entry Confirmation
(as defined in Section 2 of the Offer to Purchase) with respect to, their Shares
and all other required documents to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) may tender their Shares
according to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase. See Instruction 2 hereof. Delivery of documents to a
Book-Entry Transfer Facility does not constitute delivery to the Depositary.
<PAGE> 2
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------------------
NUMBER OF
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE SHARES NUMBER OF
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) CERTIFICATE REPRESENTED BY SHARES
ON THE CERTIFICATE(S)) NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
- ----------------------------------------------------------------------------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
TOTAL SHARES
- ----------------------------------------------------------------------------------------------------------------
(1) Need not be completed by holders of Shares delivering Shares by Book-Entry Transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares represented by Certificates delivered to
the Depositary are
being tendered. See Instruction 4.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER).
Name of Tendering Institution:
-------------------------------------------------
Check Box of Book-Entry Transfer Facility:
/ / DTC / / PDTC
Account Number: Transaction Code Number:
------------------ ---------------------
/ / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
-----------------------------------------------
Window Ticket Number (if any):
-----------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------------
Name of Institution which Guaranteed Delivery:
---------------------------------
If delivered by book-entry transfer, check box of Applicable Book-Entry Transfer
Facility:
/ / DTC / / PDTC
Account Number: Transaction Code Number:
------------------ ----------------------
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to PA Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of Lear Corporation
("Parent"), a Delaware corporation, the above-described shares of Common Stock,
par value $.01 per share (together with the associated rights to purchase Series
A Junior Participating Preferred Stock, par value $.01 per share, the "Shares"),
of Masland Corporation, a Delaware corporation (the "Company"), at a price of
$26.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
May 30, 1996 (the "Offer to Purchase"), receipt of which is hereby acknowledged,
and in this Letter of Transmittal (which together with the Offer to Purchase
(and any amendments or supplements hereto or thereto, collectively) constitute
the "Offer"). The undersigned understands that the Purchaser reserves the right
to transfer or assign, in whole or from time to time in part, to Parent, or to
one or more direct or indirect wholly-owned subsidiaries of Parent, the right to
purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
holders of the Shares ("Tendering Stockholders") to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms or conditions of any such extension or amendment), the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Purchaser all right,
title and interest in and to all of the Shares that are being tendered hereby
and any and all other Shares or other securities issued or issuable in respect
of such Shares on or after May 23, 1996 (a "Distribution") and irrevocably
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (and any
Distributions), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Certificates evidencing such Shares (and any Distributions), or transfer
ownership of such Shares (and any Distributions) on the account books maintained
by a Book-Entry Transfer Facility together, in any such case, with all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Purchaser, upon receipt by the Depositary as the undersigned's agent, of the
purchase price with respect to such Shares, (ii) present such Shares (and any
Distributions) for transfer on the books of the Company and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any Distributions), all in accordance with the terms and subject to
the conditions of the Offer.
The undersigned hereby irrevocably appoints each designee of the Purchaser
as the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights with respect to all
Shares tendered hereby and accepted for payment and paid for by the Purchaser
(and any Distributions), including, without limitation, the right to vote such
Shares (and any Distributions) in such manner as each such attorney and proxy or
his substitute shall, in his sole discretion, deem proper. All such powers of
attorney and proxies, being deemed to be irrevocable, shall be considered
coupled with an interest in the Shares tendered herewith. Such appointment will
be effective when, and only to the extent that, the Purchaser accepts such
Shares for payment. Upon such acceptance for payment, all prior powers of
attorney and proxies given by the undersigned with respect to such Shares (and
any Distributions) will, without further action, be revoked and no subsequent
powers of attorneys and proxies may be given with respect thereto (and, if
given, will be deemed ineffective). The designees of the Purchaser will, with
respect to the Shares (and any Distributions) for which such appointment is
effective, be empowered to exercise all voting and other rights of the
undersigned with respect to such Shares (and any Distributions) as they in their
sole discretion may deem proper. The Purchaser reserves the absolute right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the acceptance for payment of such Shares, the Purchaser or its designees
are able to exercise full voting rights and all other rights which inure to a
record and beneficial holder with respect to such Shares (and any Distributions)
including voting at any meeting of stockholders then scheduled.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators, trustee in bankruptcy, personal and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. Except as stated in the Offer to
<PAGE> 4
Purchase, this tender is irrevocable, provided that the Shares tendered pursuant
to the Offer may be withdrawn prior to their acceptance for payment.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any Distributions) and that, when the same are accepted for
payment and paid for by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances, and that the Shares tendered hereby (and
any Distributions) will not be subject to any adverse claim. The undersigned,
upon request, will execute and deliver any additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of Shares tendered hereby (and any Distributions). In
addition, the undersigned shall promptly remit and transfer to the Depositary
for the account of the Purchaser any and all Distributions issued to the
undersigned on or after May 23, 1996 in respect of the Shares tendered hereby,
accompanied by appropriate documentation of transfer, and, pending such
remittance and transfer or appropriate assurance thereof, the Purchaser shall be
entitled to all rights and privileges as owner of any such Distributions and may
withhold the entire purchase price or deduct from the purchase price the amount
of value thereof, as determined by the Purchaser in its sole discretion.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser with respect to such Shares upon the terms and subject to the
conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Purchaser may not be required to accept for payment
any of the Shares tendered hereby or may accept for payment fewer than all of
the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing under "Description of Shares Tendered." In the event that both the
"Special Payment Instructions" and the "Special Delivery Instructions" are
completed, please issue the check for the purchase price and/or return any such
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and/or return such certificates (and accompanying documents, as
appropriate) to, the person(s) so indicated. Unless otherwise indicated herein
under "Special Payment Instructions," in the case of a book-entry delivery of
Shares, please credit the account maintained at the Book-Entry Transfer Facility
indicated above with respect to any Shares not accepted for payment. The
undersigned recognizes that the Purchaser has no obligation pursuant to the
"Special Payment Instructions" to transfer any Shares from the name of the
registered holder thereof if the Purchaser does not accept for payment any of
the Shares tendered hereby.
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares accepted
for payment are to be issued in the name of someone other than the undersigned,
or if Shares delivered by book-entry transfer that are not accepted for payment
are to be returned by credit to an account maintained at a Book-Entry Transfer
Facility, other than to the account indicated above.
Issue (check appropriate box(es)):
/ / Check to:
/ / Certificate(s) to:
Name
---------------------------------------------------------------------------
Address
------------------------------------------------------------------------
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- -------------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
/ / Credit unpurchased Shares delivered by book-entry transfer to the Book-Entry
Transfer Facility account set forth below:
/ / DTC / / PDTC
(check one)
---------------------------------------------------------
(DTC/PDTC Account Number)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Certificates for Shares not tendered or not
accepted for payment and/or the check of the purchase price of Shares accepted
for payment are to be sent to someone other than the undersigned or to the
undersigned at an address other than that shown above.
Mail (check appropriate box(es)):
/ / Check to:
/ / Certificate(s) to:
Name
---------------------------------------------------------------------------
Address
------------------------------------------------------------------------
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- -------------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, signatures
on this Letter of Transmittal must be guaranteed by a member firm of a
registered national securities exchange (registered under Section 6 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), by a member
firm of the National Association of Securities Dealers, Inc. (the "NASD"), by a
commercial bank or trust company having an office or correspondent in the United
States or by any other "Eligible Guarantor Institution" (bank, broker, dealer,
credit union, savings association or other entity that is a member in good
standing of a recognized Medallion Program approved by the Securities Transfer
Association, Inc. (each of the foregoing constituting an "Eligible
Institution"), unless the Shares tendered hereby are tendered (i) by the
registered holder (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Shares) of such Shares who has completed
neither the box entitled "Special Payment Instructions" nor the box entitled
"Special Delivery Instructions" herein or (ii) for the account of an Eligible
Institution. See Instruction 5. If the Certificates are registered in the name
of a person other than the signer of this Letter of Transmittal, or if payment
is to be made or delivered to, or Certificates evidencing unpurchased Shares are
to be issued or returned to, a person other than the registered owner, then the
tendered Certificates must be endorsed or accompanied by duly executed stock
powers, in either case signed exactly as the name or names of the registered
owner or owners appear on the Certificates, with the signatures on the
Certificates or stock powers guaranteed by an Eligible Institution as provided
herein. See Instruction 5.
2. Requirements of Tender. This Letter of Transmittal is to be completed by
Tendering Stockholders if Certificates evidencing Shares are to be forwarded
herewith or if delivery of Shares is to be made pursuant to the procedures for
book-entry transfer set forth in Section 3 of the Offer to Purchase. For a
Tendering Stockholder to validly tender Shares pursuant to the Offer, either (a)
a properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof), with any required signature guarantees or an Agent's
Message (as defined in the Offer to Purchase) in the case of a book-entry
delivery of Shares, and any other required documents, must be received by the
Depositary at one of its addresses set forth herein on or prior to the
Expiration Date and either (i) Certificates for tendered Shares must be received
by the Depositary at one of such addresses on or prior to the Expiration Date or
(ii) Shares must be delivered pursuant to the procedures for book-entry transfer
set forth in Section 3 of the Offer to Purchase and a Book-Entry Confirmation
must be received by the Depositary on or prior to the Expiration Date or (b) the
Tendering Stockholder must comply with the guaranteed delivery procedures set
forth below and in Section 3 of the Offer to Purchase.
Tendering Stockholders whose Certificates are not immediately available or
who cannot deliver their Certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer on or prior to the
Expiration Date may tender their Shares by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedure: (i) such tender must be made by or through an Eligible Institution,
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Purchaser, must be received by
the Depositary prior to the Expiration Date, and (iii) the Certificates
representing all tendered Shares in proper form for transfer, or a Book-Entry
Confirmation with respect to all tendered Shares, together with a Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees (or in the case of a
book-entry transfer, an Agent's Message) and any other documents required by
this Letter of Transmittal, must be received by the Depositary within three
Nasdaq National Market trading days after the date of such Notice of Guaranteed
Delivery. A "trading day" is any day on which the Nasdaq National Market
operated by the NASD is open for business. If Certificates are forwarded
separately to the Depositary, a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) must accompany each such
delivery.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING
STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
<PAGE> 7
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All Tendering Stockholders, by execution of
this Letter of Transmittal (or a facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
information required under "Description of Shares Tendered" should be listed on
a separate signed schedule attached hereto.
4. Partial Tenders. If fewer than all of the Shares represented by any
Certificates delivered to the Depositary herewith are to be tendered hereby,
fill in the number of Shares which are to be tendered in the box entitled
"Number of Shares Tendered." In such case, a new Certificate for the remainder
of the Shares that were evidenced by your old certificate(s) will be sent,
without expense, to the person(s) signing this Letter of Transmittal, unless
otherwise provided in the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal, as soon
as practicable after the Expiration Date. All Shares represented by
Certificate(s) delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. Signatures on Letter of Transmittal, Instruments of Transfer and
Endorsements. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or instruments of
transfer are signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Purchaser of such person's authority to so
act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Certificates or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on such Certificates or
instruments of transfer must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificate(s) must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Certificate(s). Signatures on
such Certificate(s) or instruments of transfer must be guaranteed by an Eligible
Institution.
6. Transfer Taxes. Except as set forth in this Instruction 6, the Purchaser
will pay or cause to be paid any transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price is to be made to, or (in the circumstances permitted hereby)
if Certificates for Shares not tendered or not purchased are to be registered in
the name of, any person other than the registered holder(s), or if tendered
Certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any transfer taxes (whether
imposed on the registered holder(s) or such persons) payable on account of the
transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Certificate(s) listed in this Letter of
Transmittal.
7. Special Payment and Delivery Instructions. If a check and/or
Certificates for unpurchased Shares are to be issued in the name of a person
other than the signer of this Letter of Transmittal or if a check is to be sent
and/or such Certificates are to be returned to someone other than the signer of
this Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed. If any
tendered Shares are not purchased for any reason and such Shares are delivered
by Book Entry Transfer Facility, such Shares will be credited to an account
maintained at the appropriate Book Entry Transfer Facility.
<PAGE> 8
8. Requests for Assistance or Additional Copies. Questions and requests for
assistance may be directed to the Information Agent or the Dealer Manager at
their respective addresses or telephone numbers set forth below and requests for
additional copies of the Offer to Purchase, this Letter of Transmittal and the
Notice of Guaranteed Delivery may be directed to the Information Agent or
brokers, dealers, commercial banks and trust companies and such materials will
be furnished at the Purchaser's expense.
9. Waiver of Conditions. The conditions of the Offer may be waived by the
Purchaser, in whole or in part, at any time or from time to time, in the
Purchaser's sole discretion.
10. Backup of Withholding Tax. Each Tendering Stockholder is required,
unless an exemption applies, to provide the Depositary with a correct Taxpayer
Identification Number ("TIN") on Substitute Form W-9, which is provided under
"Important Tax Information" below and to certify that the stockholder is not
subject to backup withholding. Failure to provide the information on the
Substitute Form W-9 may subject the Tendering Stockholder to 31% federal income
tax backup withholding on the payment of the purchase price for the Shares. The
Tendering Stockholder should indicate in the box in Part III of the Substitute
Form W-9 if the Tendering Stockholder has not been issued a TIN and has applied
for a TIN or intends to apply for a TIN in the near future. If the Tendering
Stockholder has indicated in the box in Part III that a TIN has been applied for
and the Depositary is not provided with a TIN by the time of payment, the
Depositary will withhold 31% of all payments of the purchase price, if any, made
thereafter pursuant to the Offer until a TIN is provided by the Depositary.
11. Lost or Destroyed Certificates. If any Certificate(s) representing
Shares has been lost or destroyed, the holders should promptly notify the
Company's transfer agent, Chemical Mellon Shareholder Services. The holders will
then be instructed as to the procedure to be followed in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed Certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
THEREOF (TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND
ANY OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY, OR A NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under current federal income tax law, a Tendering Stockholder whose
tendered Shares are accepted for payment is required to provide the Depositary
(as payor) with such Tendering Stockholder's correct TIN on Substitute Form W-9
below. If such Tendering Stockholder is an individual, the TIN is his Social
Security number. If the Tendering Stockholder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future, such
Tendering Stockholder should so indicate on the Substitute Form W-9. See
Instruction 10. If the Depositary is not provided with the correct TIN, the
Tendering Stockholder may be subject to a $50 penalty imposed by the Internal
Revenue Service. Moreover, if the Tendering Stockholder makes a false statement
with no reasonable basis that results in no back-up withholding the Tendering
Shareholder is subject to a $500 Civil Penalty. Criminal penalties may apply for
willfully falsifying certifications. In addition, payments that are made to such
Tendering Stockholders with respect to Shares purchased pursuant to the Offer
may be subject to backup federal income tax withholding.
Certain Tendering Stockholders (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that Tendering Stockholder must submit a statement, signed
under penalties of perjury, attesting to that individual's exempt status. Forms
for such statements can be obtained from the Depositary. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the Tendering Stockholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
<PAGE> 9
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, a Tendering
Stockholder must provide the Depositary with his correct TIN by completing the
Substitute Form W-9 below, certifying that the TIN provided on Substitute Form
W-9 is correct (or that such Tendering Stockholder is awaiting a TIN) and that
(1) such Tendering Stockholder has not been notified by the Internal Revenue
Service that he is subject to backup withholding as a result of failure to
report all interest or dividends or (2) the Internal Revenue Service has
notified the Tendering Stockholder that he is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Tendering Stockholder is required to give the Depositary the Social
Security number or employer identification number of the record holder of the
Shares tendered hereby. If the Shares are registered in more than one name or
are not in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report. If the tendering shareholder has
not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, he or she should write "Applied For" in the space
provided for in the TIN in Part III, and sign and date the Substitute Form W-9.
If "Applied For" is written in Part III and the Depositary is not provided with
a TIN within 60 days, the Depositary will withhold 31% on all payments of the
purchase price made thereafter until a TIN is provided to the Depositary.
<PAGE> 10
- --------------------------------------------------------------------------------
IMPORTANT
TENDERING SHAREHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE
FORM W-9 ON REVERSE
- --------------------------------------------------------------------------------
(Signature(s) of Tendering Stockholder(s))
Dated: , 1996
------------------------
(Must be signed by the registered holder(s) exactly as name(s) appear(s)
on the Certificates or on a security position listing or by person(s)
authorized to become registered holder(s) by Certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, agents, officers of corporations or others
acting in a fiduciary or representative capacity, please provide the following
information. See Instruction 5.)
Name(s):
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Capacity (full title):
--------------------------------------------------------
- --------------------------------------------------------------------------------
(See Instruction 5)
Address:
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Codes and Telephone No.:
--------------------------------------------------
(Home)
- --------------------------------------------------------------------------------
(Business)
Taxpayer Identification or Social Security No.:
--------------------------------
(Complete Substitute Form W-9 on Reverse)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
Authorized Signature(s):
-------------------------------------------------------
Name:
--------------------------------------------------------------------------
Name of Firm:
------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.:
---------------------------------------------------
Dated: , 1996
------------------------------------------------------------------
<PAGE> 11
<TABLE>
<S><C>
- ------------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: BANKERS TRUST COMPANY
- ------------------------------------------------------------------------------------------------------------------------------
PART I--PLEASE PROVIDE YOUR TIN IN THE BOX PART III--Social Security Number
SUBSTITUTE AT RIGHT AND CERTIFY BY SIGNING AND OR Employer Identification Number
FORMW-9 DATING BELOW.
DEPARTMENT OF THE TREASURY ------------------------------------
INTERNAL REVENUE SERVICE (If awaiting TIN write "Applied For")
-------------------------------------------------------------------------------------
Payer's Request for Taxpayer
Identification Number ("TIN") PART II--For Payees Exempt Backup Withholding, see the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 and complete
as instructed therein.
- ------------------------------------------------------------------------------------------------------------------------------
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The Number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to
me); and
(2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service (IRS) that I
am subject to backup withholding as a result of a failure to report all interest or dividends, or the IRS has notified me
that I am no longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are subject to backup
withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that
you were subject to backup withholding, you received another notification from the IRS that you were no longer subject to backup
withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.)
- ------------------------------------------------------------------------------------------------------------------------------
NAME
--------------------------------------------------------------------------------
(Please Print)
SIGNATURE DATE
-------------------------------------------------------------------------- ------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING A TIN.
<TABLE>
<S><C>
- ------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have
mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within sixty (60) days, 31% of all payments of the Offer
Price made to me thereafter will be withheld until I provide a number.
SIGNATURE DATE
--------------------------------------------------------------------------- -----------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 12
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll-Free: (800) 848-3094
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
(212) 270-3862
(Call Collect)
May 30, 1996
<PAGE> 1
EXHIBIT 99.3(a)
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
MASLAND CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JUNE 26, 1996, UNLESS THE OFFER IS EXTENDED.
May 30, 1996
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates representing
the Common Stock, par value $.01 per share (together with the associated rights
to purchase Series A Junior Participating Preferred Stock, par value $.01 per
share, the "Shares"), of Masland Corporation, a Delaware corporation, are not
immediately available or the procedures for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach Bankers Trust Company (the "Depositary") prior to the Expiration Date (as
defined in the Offer to Purchase (as defined below)). This Notice of Guaranteed
Delivery may be delivered by hand or transmitted by facsimile transmission or
mail to the Depositary. See Section 3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
BANKERS TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
Bankers Trust Company (For Eligible Institutions Only) Bankers Trust Company
Corporate Trust & Agency Group (212) 250-6037 Corporate Trust & Agency Group
Reorganization Dept. Reorganization Department
P.O. Box 1458 Confirm by Telephone to: Receipt & Delivery Window
Church Street Station (212) 250-6270 123 Washington Street, 1st Floor
New York, NY 10008-1458 New York, NY 10006
</TABLE>
----------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to PA Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of Lear Corporation,
a Delaware corporation ("Parent"), upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated May 30, 1996 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which together with the
Offer to Purchase (and any amendments or supplements thereto, collectively)
constitute the "Offer"), receipt of each of which is hereby acknowledged, the
number of Shares indicated below pursuant to the guaranteed delivery procedures
set forth in Section 3 of the Offer to Purchase.
Number of Shares:
Certificate Nos. (if available):
- ------------------------------------------------------------
Check ONE box if Shares will be tendered by
book-entry transfer:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
Account Number:
Dated: , 1996
-------------------------------------------------
Name(s) of Record Holder(s):
- ------------------------------------------------------------
- ------------------------------------------------------------
(Please Print)
Address(es):
------------------------------------------------
- ------------------------------------------------------------
(Zip Code)
Area Code and Tel. No.:
------------------------------------
Signature(s):
----------------------------------------------
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, as Eligible Institution (as such term is defined in
Section 3 of the Offer to Purchase), hereby (a) represents that the tender of
shares effected hereby complies with Rule 14e-4 under the Securities Exchange
Act of 1934, as amended, and (b) guarantees to deliver to the Depositary the
certificates representing the Shares tendered hereby, in proper form for
transfer, or a Book-Entry Confirmation (as defined in Section 2 of the Offer to
Purchase) with respect to transfer of such Shares into the Depositary's account
at The Depository Trust Company or the Philadelphia Depository Trust Company, in
each case, together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with any required signature
guarantees or an Agent's Message (as defined in Section 2 of the Offer to
Purchase) in the case of a book-entry delivery of Shares, and any other
documents required by the Letter of Transmittal, all within three Nasdaq
National Market trading days after the date hereof. A "trading day" is any day
on which the Nasdaq National Market operated by the National Association of
Securities Dealers, Inc. is open for business.
Name of Firm:
Address:
---------------------------------------------------
(Zip Code)
Area Code and Tel. No.:
------------------------------------
- ------------------------------------------------------------
(Authorized Signature)
Name:
-------------------------------------------------------
Title:
------------------------------------------------------
Date:
-------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT ONLY TOGETHER WITH YOUR
LETTER OF TRANSMITTAL.
<PAGE> 1
EXHIBIT 99.4(a)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
MASLAND CORPORATION
AT
$26.00 NET PER SHARE
BY
PA ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
LEAR CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT NEW YORK
CITY TIME, ON WEDNESDAY, JUNE 26, 1996 UNLESS THE OFFER IS EXTENDED.
May 30, 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by PA Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly-owned subsidiary of Lear Corporation, a Delaware
corporation ("Parent"), to act as Dealer Manager in connection with the
Purchaser's offer to purchase for cash all of the outstanding shares of Common
Stock, par value $.01 per share (together with the associated rights to purchase
Series A Junior Participating Preferred Stock, par value $.01 per share, the
"Shares"), of Masland Corporation, a Delaware corporation (the "Company"), for
$26.00 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated May 30, 1996 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which together with the
Offer to Purchase (and any amendments or supplements thereto, collectively)
constitute the "Offer") enclosed herewith.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares in your name or in the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated May 30, 1996.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal may
be used to tender Shares.
3. A letter to stockholders of the Company from William J. Branch, together
with a Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company and mailed to stockholders of
the Company.
4. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if neither of the two procedures for tendering Shares set forth in the
Offer to Purchase can be completed on a timely basis.
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with regard to the
Offer.
6. Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9.
7. A return envelope addressed to Bankers Trust Company, the Depositary.
<PAGE> 2
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 26, 1996, UNLESS THE
OFFER IS EXTENDED.
Please note the following:
1. The tender price is $26.00 per Share, net to the seller in cash.
2. The Offer is subject to there being validly tendered and not withdrawn
prior to the expiration of the Offer a number of Shares which represents at
least a majority of the number of Shares outstanding on a fully diluted basis on
the date of purchase and certain other conditions.
3. The Offer is being made for all of the outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by the Purchaser pursuant
to the Offer. However, federal income tax backup withholding at a rate of 31%
may be required, unless an exemption is provided or unless the required taxpayer
identification information is provided. See Instruction 10 of the Letter of
Transmittal.
5. The board of directors of the Company (the "Board") has unanimously
approved the Offer and the Merger (as defined in the Offer to Purchase) and
determined that the Offer and the Merger are fair to and in the best interests
of the Company's stockholders and recommends that the Company's stockholders
accept the Offer.
6. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only after
timely receipt by the Depositary of (a) Certificates pursuant to the procedures
set forth in Section 3 of the Offer to Purchase or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to such Shares,
(b) the Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, with any required signature guarantees or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares, and (c) any other documents required by the
Letter of Transmittal. Accordingly, payment may not be made to all tendering
stockholders at the same time depending upon when Certificates are actually
received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JUNE 26, 1996 UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof) and any
required signature guarantees or an Agent's Message in connection with a
book-entry transfer and other required documents should be sent to the
Depositary and (ii) Certificates representing the tendered Shares or a timely
Book-Entry Confirmation (as defined in the Offer to Purchase) should be
delivered to the Depositary in accordance with the instructions set forth in the
Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date, a tender may be
effected by following the guaranteed delivery procedures specified in Section 3
of the Offer to Purchase.
The Purchaser will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer (other than
the Dealer Manager as described in the Offer to Purchase). The Purchaser will,
however, upon request, reimburse you for customary mailing and handling expenses
incurred by you in forwarding any of the enclosed materials to your clients. The
Purchaser will pay or cause to be paid any transfer taxes payable on the
transfer of Shares to it, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
<PAGE> 3
Any inquiries you may have with respect to the Offer should be addressed to
D.F. King & Co., Inc., the Information Agent for the Offer, at 77 Water Street,
New York, New York, 10005, telephone number (800) 848-3094, or Chase Securities
Inc., the Dealer Manager, at 270 Park Avenue, New York, New York 10017,
telephone number (212) 270-3862 (call collect).
Requests for copies of the enclosed materials may be directed to the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth on the back cover of the enclosed Offer to Purchase.
Very truly yours,
Chase Securities Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE COMPANY, THE
DEPOSITARY, THE INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
EXHIBIT 99.5(a)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
MASLAND CORPORATION
AT
$26.00 NET PER SHARE
BY
PA ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
LEAR CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT NEW YORK
CITY TIME, ON WEDNESDAY, JUNE 26, 1996 UNLESS THE OFFER IS EXTENDED.
May 30, 1996
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated May 30,
1996, (the "Offer to Purchase"), and the related Letter of Transmittal (which
together with the Offer to Purchase (and any amendments or supplements thereto,
collectively) constitute the "Offer") relating to the offer by PA Acquisition
Corp., a Delaware corporation (the "Purchaser") and a wholly-owned subsidiary of
Lear Corporation, a Delaware corporation ("Parent"), to purchase all the
outstanding shares of Common Stock, par value $.01 per share (together with the
associated rights to purchase Series A Junior Participating Preferred Stock, par
value $.01 per share, the "Shares"), of Masland Corporation, a Delaware
corporation (the "Company"), at a purchase price of $26.00 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer. Holders of Shares whose certificates for such Shares (the "Certificates")
are not immediately available or who cannot deliver their Certificates and all
other required documents to the depositary (the "Depositary") or complete the
procedures for book-entry transfer prior to the Expiration Date (as defined in
the Offer to Purchase) must tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares held by us for your account pursuant to
the terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $26.00 per Share, net to the seller in cash.
2. The Offer is subject to there being validly tendered and not withdrawn
prior to the expiration of the Offer a number of Shares which represents at
least a majority of the number of Shares outstanding on a fully diluted basis on
the date of purchase and certain other conditions.
3. The Offer is being made for all of the outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by the Purchaser pursuant
to the Offer. However, federal income tax backup withholding at a rate of 31%
may be required, unless an exemption is provided or unless the required taxpayer
identification information is provided. See Instruction 10 of the Letter of
Transmittal.
<PAGE> 2
5. The board of directors of the Company (the "Board") has unanimously
approved the Offer and the Merger (as defined in the Offer to Purchase) and
determined that the Offer and the Merger are fair to and in the best interests
of the Company's stockholders and recommends that the Company's stockholders
accept the Offer.
6. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only after
timely receipt by the Depositary of (a) Certificates pursuant to the procedures
set forth in Section 3 of the Offer to Purchase or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to such Shares,
(b) the Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, with any required signature guarantees or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares, and (c) any other documents required by the
Letter of Transmittal. Accordingly, payment may not be made to all tendering
stockholders at the same time depending upon when Certificates are actually
received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JUNE 26, 1996, UNLESS THE OFFER IS EXTENDED.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth below. If you authorize the tender of your
Shares, all such Shares will be tendered unless otherwise specified below. An
envelope to return your instructions to us is enclosed. YOUR INSTRUCTIONS SHOULD
BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF
PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, the Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of the Purchaser by the Dealer Manager or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
MASLAND CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated May 30, 1996, and the related Letter of Transmittal in
connection with the offer by PA Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly-owned subsidiary of Lear Corporation, a Delaware
corporation, to purchase all outstanding shares of Common Stock, par value $.01
per share (together with the associated rights to purchase Series A Junior
Participating Preferred Stock, par value $.01 per share, the "Shares"), of
Masland Corporation, a Delaware corporation.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
SIGN HERE
Number of Shares to be Tendered:*
------------------------------------
------------------------------------
Signature(s)
------------------------------------
------------------------------------
Date: (Print Name(s))
------------------------------------
------------------------------------
(Print Address(es))
------------------------------------
(Area Code and Telephone Number(s))
------------------------------------
(Taxpayer Identification or
Social Security Number(s))
- ---------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE> 1
EXHIBIT 99.6(a)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER --
Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -----------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------
<S> <C>
1. An individual's The individual
account
2. Two or more The actual owner of the
individuals (joint account or, if combined
account) funds, any one of the
individuals (1)
3. Husband and wife The actual owner of the
(joint account) account or, if joint
funds, either person (1)
4. Custodian account of a The minor (2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the minor
(1)
6. Account in the name of The ward, minor, or
guardian or committee incompetent person (3)
for a designated ward,
minor or incompetent
person
7. a. The usual revocable The grantor-trustee (1)
savings trust
account (grantor is
also trustee)
b. So-called trust The actual owner (1)
account that is not
a legal or valid
trust under state
law
8. Sole proprietorship The owner (4)
account
- -----------------------------------------------------
<CAPTION>
- -----------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------
<S> <C>
9. A valid trust, The legal entity (Do not
estate, or pension furnish the
trust identification number of
the personal
representative or trustee
unless the legal entity
itself is not designated
in the account title.)
(5)
10. Corporate account The corporation
11. Religious, The organization
charitable, or
educational
organization account
12. Partnership account The partnership
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or The broker or nominee
registered nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
- -----------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's Social Security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's Social Security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a) of the Code.
- - An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1) of the Code.
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include
the following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- - Payments described in section 6049(b)(5) of the Code to non-resident aliens.
- - Payments on tax-free covenant bonds under section 1451 of the Code.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9
ENCLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE
SUBSTITUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER
IDENTIFICATION NUMBER ON PART III OF THE FORM, WRITE "EXEMPT" ON THE FACE OF THE
FORM AND SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N of the Code and their regulations.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to file
a tax return. Payers must generally withhold 31% of taxable interest, dividends,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
EXHIBIT 99.7(a)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase dated
May 30, 1996 and the related Letter of Transmittal and is being made to all
holders of Shares. The Offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of Shares in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the laws
of such jurisdiction. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of PA Acquisition Corp. by the
Dealer Manager or one or more registered brokers or dealers that are licensed
under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
MASLAND CORPORATION
AT
$26.00 NET PER SHARE
BY
PA ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
LEAR CORPORATION
PA Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of Lear Corporation, a Delaware corporation ("Parent"),
hereby offers to purchase all of the outstanding shares (together with the
associated preferred stock purchase rights issued pursuant to a rights
agreement, the "Shares") of Common Stock, par value $.01 per share, of Masland
Corporation, a Delaware corporation (the "Company"), at a purchase price of
$26.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
May 30, 1996 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JUNE 26, 1996, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE NUMBER OF SHARES
OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE AND (2) LENDERS
HOLDING MORE THAN 50% OF THE AGGREGATE OUTSTANDING INDEBTEDNESS UNDER PARENT'S
EXISTING CREDIT AGREEMENT HAVING AGREED TO AMEND SUCH CREDIT AGREEMENT TO
PERMIT THE CONSUMMATION OF THE OFFER AND THE MERGER (AS HEREINAFTER DEFINED).
<PAGE> 2
The Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of May 23, 1996 (the "Merger Agreement"), among Parent, the Purchaser
and the Company pursuant to which, following the later of the Expiration Date
(as hereinafter defined) and the satisfaction or waiver of certain conditions,
the Purchaser will be merged with and into the Company (the "Merger"). In the
Merger, each outstanding Share (other than Shares then held, directly or
indirectly, by Parent, the Purchaser or any subsidiary of Parent, the Purchaser
or the Company or held in the Company's treasury and other than Shares held by
stockholders, if any, who perfect their appraisal rights under Delaware law)
will be converted into and represent the right to receive $26.00, net in cash,
without any interest thereon, or an amount in cash, without interest, having a
value equal to such greater amount per Share as may be paid (in cash or other
property or a combination thereof) for any Shares validly tendered and not
withdrawn pursuant to the Offer and the Company will become a wholly-owned
subsidiary of Parent.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
OFFER AND THE MERGER AND DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO
AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS
THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER.
Concurrently with the execution of the Merger Agreement, Parent and the
Purchaser entered into agreements, each dated as of May 23, 1996 (collectively,
the "Stockholders Agreement"), with certain members of senior management of the
Company (the "Stockholders") owning, in the aggregate, 230,771 (or approximately
1.7%) of the outstanding Shares. Pursuant to the Stockholders Agreement, the
Stockholders have agreed, among other things, to validly tender pursuant to the
Offer and not withdraw all Shares which are beneficially owned by them.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment (and thereby purchased), Shares validly tendered to the
Purchaser and not withdrawn as, if and when the Purchaser gives oral or written
notice to Bankers Trust Company (the "Depositary") of the Purchaser's
acceptance for payment of such Shares pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Shares so accepted for
payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from the Purchaser and
transmitting such payment to tendering stockholders. Under no circumstances
will interest on the purchase price for Shares be paid by the Purchaser,
regardless of any extension of the Offer or delay in making such payment. In
all cases, payment for Shares tendered and accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of (1)
certificates representing Shares ("Share Certificates"), or timely confirmation
of a book-entry transfer of such Shares, into the Depositary's account at The
Depositary Trust Company or the Philadelphia Depository Trust Company (each a
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
3 of the Offer to Purchase, (2) the Letter of Transmittal (or a facsimile
thereof) properly completed and duly executed, with any required signature
guarantees, or an Agent's Message (as defined in Section 2 of the Offer to
Purchase) in connection with a book-entry transfer, and (3) any other documents
required by the Letter of Transmittal.
Subject to the terms of the Merger Agreement and the applicable rules
of the Securities and Exchange Commission, the Purchaser expressly reserves
the right (but shall not be obligated), in its sole discretion, at any time and
from time to time, and regardless of whether or not any of the events set forth
in Section 14 of the Offer to Purchase shall have occurred or shall have been
determined by the Purchaser to have occurred, (i) to extend the period during
which the Offer is open, and thereby delay acceptance for payment of, or
payment for, any Shares, by giving oral or written notice of such amendment to
the Depositary and (ii) to amend the Offer in any other respect by giving oral
or written notice of such amendment to the Depositary. The Purchaser shall not
have any obligation to pay interest on the purchase price for tendered Shares
whether or not the Purchaser exercises such rights. Any such extension will be
followed as promptly as practicable by public announcement thereof, such
announcement to be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Wednesday, June 26, 1996, unless and until the Purchaser, in its sole
discretion and subject to the terms of the Merger Agreement, shall have
extended the period during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire.
<PAGE> 3
Except as otherwise provided in Section 4 of the Offer to Purchase,
tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time on or prior
to the Expiration Date and, unless theretofore accepted for payment by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after
July 28, 1996 (or such later date as may apply in case the Offer is extended).
In order for a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase. Any
notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder, if different from that of the person who tendered such
Shares. If Share Certificates to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted
to the Depositary and the signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution (as defined in Section 3 of the Offer to
Purchase) unless such Shares have been tendered for the account of any Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and must
otherwise comply with the procedures of such Book-Entry Transfer Facility, in
which case a notice of withdrawal will be effective if delivered to the
Depositary by any method of delivery described in the second sentence of this
paragraph. All questions as to the form and validity (including time of
receipt) of any notice of withdrawal will be determined by the Purchaser, in
its sole discretion, whose determination will be final and binding.
The information required to be disclosed by paragraph (e)(1)(vii) of
Rule 14d-6 under the Securities Exchange Act of 1934, as amended, is contained
in the Offer to Purchase and is incorporated herein by reference.
The Offer to Purchase and the related Letter of Transmittal and, if
required, other relevant materials will be mailed to record holders of Shares
whose names appear on the Company's stockholder list provided by the Company,
and will be furnished to brokers, dealers, commercial banks, trust companies
and similar persons whose names, or the names of whose nominees, appear on the
stockholder list, or who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Dealer
Manager and the Information Agent as set forth below. Requests for copies of
the Offer to Purchase and the related Letter of Transmittal and all other
tender offer materials may be directed to the Information Agent, and copies
will be furnished promptly at the Purchaser's expense. Stockholders may also
contact their broker, dealer, commercial bank or trust company for assistance
concerning the Offer. The Purchaser will not pay any fees or commissions to any
broker or dealer or any other person (other than the Dealer Manager and the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll-Free: (800) 848-3094
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
(212) 270-3862
(Call Collect)
May 30, 1996
<PAGE> 1
EXHIBIT 99.8(a)
News Release
[LEAR CORPORATION LOGO]
LEAR CORPORATION AND MASLAND CORPORATION
ENTER INTO DEFINITIVE MERGER AGREEMENT
SOUTHFIELD, Mich., May 24 /PRNewswire/ -- Lear Corporation (NYSE: LEA)
and Masland Corporation (Nasdaq: MSLD) announced today that they have entered
into a definitive merger agreement. The agreement calls for Lear, the world's
largest independent supplier of automotive interior systems, to acquire
Masland Corporation, a leading supplier in North America of automotive floor
systems, acoustical products and luggage compartment trim. The
combination will significantly enhance Lear's leadership in providing total
interiors for its customers.
Under the merger agreement, PA Acquisition Corp., a wholly-owned
subsidiary of Lear, will promptly commence a cash tender offer for all of the
outstanding shares of Masland Corporation common stock for $26.00 per share.
Any shares not purchased in the tender offer will be acquired for the
same price in cash in a second-step merger. Masland Corporation has
approximately 14.8 million shares outstanding on a fully diluted basis.
Commenting on the acquisition, Kenneth L. Way, Chairman and CEO of Lear
Corporation stated, "With the addition of Masland Corporation, we will
significantly enhance our position as the leading one-stop supplier to the $39
billion global interior systems market. Masland's culture--which is
characterized by its high quality workforce and technological expertise in floor
and acoustic systems, is an excellent fit with Lear. This acquisition
demonstrates the importance of our strategic acquisition program and clearly
solidifies Lear's position as the premier automotive interior supplier in the
world."
Way continued, "Lear's market leadership, experience and established
relationships with the world's automotive manufacturers should allow us to
expand the penetration of Masland's product lines into new world-wide markets.
The combination of Lear and Masland fits with our strategic focus of delivering
fully integrated interior systems."
William Branch, Chairman of Masland Corporation stated, "After an
extensive evaluation of the current consolidation and globalization of the
automotive industry and review of strategic options available to Masland, we
concluded that a merger with Lear represents a very fair return to our
stockholders and the best opportunity for individual growth and security for
our associates, and we believe will be roundly applauded by our customers."
Frank Preston, President and CEO of Masland Corporation added, "Lear and
Masland each have excellent reputations for delivering high-quality, low-cost
automotive interior systems. Together, we will be the premier automotive
supplier powerhouse--a company of nearly 40,000 employees who are able to
provide world class total interior systems to our customers."
The Boards of Directors of both companies have given approval to the
acquisition. Consummation of the acquisition is contingent upon the tender of
the majority of Masland Corporation outstanding shares, the expiration or
termination of any applicable waiting periods under the federal Hart-Scott-
Rodino Antitrust Improvements Act, the obtaining by Lear of approval from its
bank group to utilize its current $1.475 billion credit facility to fund the
acquisition, and other customary conditions. Lear is also considering other
long-term financing alternatives.
Masland Corporation, through its operating subsidiary Masland
Industries, Inc., is a leading designer and manufacturer of interior systems
and components, including floor and acoustic systems to the North American
automotive industry. Additionally, the company supplies interior and other
automotive products in the United Kingdom through a joint venture. Masland
Corporation had revenues and operating income of approximately $497 million and
$47 million, respectively in 1995. The company's products are manufactured by
over 3,200 employees in 15 facilities located in 4 countries.
A Fortune 500 Company, Lear Corporation is the world's largest
independent supplier of automotive interior systems, with 1995 sales of $4.7
billion. In 1995, Lear was the third largest independent automotive supplier
in North America and the tenth largest in the world. The company's world-class
products are manufactured by more than 35,000 employees in 107 facilities
located in 18 countries.
Information about Lear and its products is available on the Internet at
http://www.lear.com.
-0- 5/24/96
/CONTACT: Analysts: Jonathan Peisner, 810-746-1624, or Media: Leslie
Touma, 810-746-1678, both of Lear; or Daniel Perkins of Masland, 717-258-7244/
/Lear's press releases available through Company News On-Call by fax,
800-758-5804, extension 518304, or http://www.prnewswire.com/(LEA MSLD)
-0-
<PAGE> 1
EXHIBIT 99.9(a)
LEAR CORPORATION COMMENCES CASH TENDER OFFER
FOR MASLAND CORPORATION
SOUTHFIELD, MI, MAY 30, 1996 -- Lear Corporation (NYSE: LEA) announced
today that PA Acquisition Corp., its wholly-owned subsidiary, is commencing a
cash tender offer for all outstanding shares of common stock (including the
associated preferred stock purchase rights) of Masland Corporation
(Nasdaq: MSLD) at $26.00 per share.
The offer is being made pursuant to the previously announced merger
agreement between Lear Corporation and Masland Corporation. The offer is
conditioned upon, among other things, the tender of a majority of the shares
outstanding on a fully diluted basis and the receipt by Lear of bank group
approval to utilize its current $1.475 billion credit facility to fund the
acquisition.
The offer and withdrawal rights are scheduled to expire at midnight,
New York City time, on Wednesday, June 26, 1996. Chase Securities Inc. is
acting as the Dealer Manager for the tender offer and D.F. King & Co., Inc. is
serving as the Information Agent for the tender offer.
A Fortune 500 Company, Lear Corporation is the world's largest
independent supplier of automotive interior systems, with 1995 sales of $4.7
billion. In 1995, Lear was the third largest independent automotive supplier in
North America and the tenth largest in the world. The company's world-class
products are manufactured by more than 36,000 employees in 108 facilities
located in 19 countries.
Information about Lear and its products is available on the Internet at
http://www.lear.com.
###
<PAGE> 1
[EXECUTION COPY] EXHIBIT 99.1(b)
================================================================================
LEAR SEATING CORPORATION
_______________________________
$1,500,000,000
CREDIT AGREEMENT
DATED AS OF AUGUST 17, 1995
______________________________
CHEMICAL BANK,
AS ADMINISTRATIVE AGENT
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2. AMOUNT AND TERMS OF LOAN COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.2 Revolving Credit Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.3 Procedure for Revolving Credit Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.4 Swing Line Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.5 Swing Line Loan Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.6 Conversion and Continuation Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.7 Minimum Amounts of Tranches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.8 Termination or Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.9 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.10 Inability to Determine Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.11 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.12 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.13 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.15 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.16 Assignment of Commitments Under Certain
Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.17 Regulation U and Regulation G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.1 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.2 Procedure for Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.3 Participating Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.4 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.5 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.6 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.7 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.8 Letter of Credit Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.9 Purpose of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4. INTEREST RATE PROVISIONS, FEES AND PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.1 Interest Rates and Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.2 Commitment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.3 Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.4 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.5 Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.6 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.7 Failure by Banks to Make Funds Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
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SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.1 Conditions to Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.2 Conditions to Loans to Be Made on the Merger
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.3 Conditions to Each Loan and Each Letter of
Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.3 Corporate Existence; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.4 Corporate Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.5 No Legal Bar; Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.9 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.11 Securities Law, etc. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.13 Investment Company Act; Other Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.14 Subsidiaries, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.15 Accuracy and Completeness of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.16 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.17 Patents, Copyrights, Permits and Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.19 Acquisition Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.20 Regulation H. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 7. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.2 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.3 Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.4 Conduct of Business, Maintenance of Existence
and Compliance with Obligations and Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.5 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.6 Inspection of Property; Books and Records;
Discussions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.8 Maintenance of Liens of the Security
Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.9 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.10 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.11 Pledge Agreement Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.12 Consummation of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.1 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.2 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.3 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.4 Limitation on Guarantee Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
8.5 Limitations on Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
8.6 Limitation on Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
8.7 Limitation on Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
8.8 Limitation on Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
8.9 Limitation on Investments, Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . 77
8.10 Limitation on Optional Payments and
Modification of Debt Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
8.11 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.12 Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.13 Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.14 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.15 Limitation on Restrictions Affecting
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.16 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.17 Special Purpose Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.18 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 9. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 10. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.4 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
10.6 Non-Reliance on Agent and Other Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
10.8 Agent in Its Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
10.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.4 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.6 Successors and Assigns; Participations;
Purchasing Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.7 Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
11.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
11.9 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
11.10 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
11.11 Submission to Jurisdiction; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
11.12 Existing Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
11.13 Release of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
</TABLE>
-iii-
<PAGE> 5
SCHEDULES:
Schedule 1.1(a) Addresses of Banks
Schedule 1.1(b) Security Documents
Schedule 1.1(c) Mortgaged Properties
Schedule 2.1 Commitments
Schedule 3.1 Existing Letters of Credit
Schedule 6.14 Subsidiaries, Divisions, Partnerships and Joint
Ventures
Schedule 6.18 Hazardous Material
Schedule 8.2(s) Existing Indebtedness
Schedule 8.2(t) AIHI Indebtedness
Schedule 8.9 Existing Investments, Loans and Advances
Schedule 8.15 Contractual Obligation Restrictions
EXHIBITS:
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Swing Line Note
Exhibit C Form of Subsidiary Guarantee
Exhibit D Form of Domestic Pledge Agreement
Exhibit E Form of Fair Haven Pledge Agreement
Exhibit F Form of Acquisition Pledge Agreement
Exhibit G Form of Security Agreement
Exhibit H Form of Depositary Agency Agreement
Exhibit I Form of Borrowing Certificate
Exhibit J Form of Swing Line Participation Certificate
Exhibit K Form of Assignment and Acceptance
Exhibit L-1 Matters to be Covered by Opinion of Counsel to Borrower
Exhibit L-2 Matters to be Covered by Opinion of Counsel to Borrower and
Acquisition Corp.
-iv-
<PAGE> 6
CREDIT AGREEMENT, dated as of August 17, 1995, among (i)
LEAR SEATING CORPORATION, a Delaware corporation (the "Borrower"), (ii) the
several financial institutions parties to this Agreement from time to time
(collectively, the "Banks"; individually, a "Bank"), (iii) CHEMICAL BANK, a New
York banking corporation, as administrative agent for the Banks hereunder (in
such capacity, the "Agent"), and (iv) the Managing Agents, Co-Agents and Lead
Managers identified on the signature pages hereof.
W I T N E S S E T H :
WHEREAS, the Borrower is party to the Existing Credit
Agreement (such term and other capitalized terms used in these Recitals being
used as defined in Section 1);
WHEREAS, Acquisition Corp., a wholly owned Subsidiary of
the Borrower, has commenced the Tender Offer for the AIHI Shares of Automotive
Industries Holding, Inc., a Delaware corporation ("AIHI");
WHEREAS, the Borrower contemplates that, as promptly as
practicable following the purchase of the AIHI Shares pursuant to the Tender
Offer, the Borrower will cause the Merger to occur, as a result of which AIHI
will be the surviving corporation of the Merger and a wholly owned Subsidiary
of the Borrower;
WHEREAS, the Borrower has requested that the Banks
establish credit facilities in order to provide funds to the Borrower for the
purposes described herein, including, without limitation, (a) financing the
Tender Offer and the Merger and payment of fees and expenses of the
Acquisition, (b) refinancing certain existing indebtedness of AIHI, (c)
replacing and refinancing the Existing Credit Agreement and (d) providing
financing for general corporate purposes of the Borrower and its Subsidiaries,
including acquisitions permitted hereunder; and
WHEREAS, the Banks are willing, upon and subject to the
terms and conditions hereof, to establish such credit facilities for the
purposes described herein;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the
following terms have the following meanings:
"ABR": for any date, the higher of (a) the rate of
interest publicly announced by Chemical in New York, New
<PAGE> 7
2
York from time to time as its prime rate (the "Prime Rate") and (b)
0.5% per annum above the rate set forth for such date opposite the
caption "Federal Funds (Effective)" in the weekly statistical release
designated as "H.15(519)", or any successor publication, published by
the Federal Reserve Board. The ABR is not intended to be the lowest
rate of interest charged by Chemical in connection with extensions of
credit to borrowers.
"ABR Loans": Loans hereunder at such time as they are made
and/or being maintained at a rate of interest based upon the ABR.
"Acquisition": the acquisition by a Wholly Owned
Subsidiary of the Borrower of AIHI by means of the Tender Offer and
the Merger.
"Acquisition Corp.": AIHI Acquisition Corp., a Delaware
corporation.
"Acquisition Documents": the collective reference to the
Tender Offer Documents and the Merger Agreement and all other
documents and information sent by the Borrower or any of its
Subsidiaries or AIHI to the shareholders of AIHI or filed with the
Securities and Exchange Commission in connection with the Tender Offer
or the Merger.
"Acquisition Pledge Agreement": the Acquisition Pledge
Agreement, substantially in the form of Exhibit F, made by Acquisition
Corp. in favor of the Agent, pursuant to which Acquisition Corp.
pledges the AIHI Shares from time to time owned by it, as the same may
be amended, supplemented or otherwise modified from time to time.
"Adjustment Date": with respect to any fiscal quarter, (a)
the second Business Day following receipt by the Agent of both (i) the
financial statements required to be delivered pursuant to subsection
7.1(a) or (b), as the case may be, for the most recently completed
fiscal period and (ii) the compliance certificate required pursuant to
subsection 7.2(b) with respect to such financial statements or (b) if
such compliance certificate and financial statements have not been
delivered in a timely manner, the date upon which such compliance
certificate and financial statements were due; provided, however, that
(x) in the event that the Adjustment Date is determined in accordance
with the provisions of clause (b) of this definition, then the date
which is two Business Days following the date of receipt of the
financial statements and compliance certificate referenced in clause
(a) of this definition also shall be deemed to constitute an
Adjustment Date and (y) any Equity Closing Date shall also be an
Adjustment Date.
<PAGE> 8
3
"Affiliate": of any Person shall mean (a) any other Person (other than
a Wholly Owned Subsidiary of such Person) which, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person or
(b) any other Person who is a director or officer of (i) such Person, (ii) any
Subsidiary of such Person or (iii) any Person described in clause (a) above.
For purposes of this definition, a Person shall be deemed to be "controlled by"
such other Person if such other Person possesses, directly or indirectly, power
either to (i) vote 5% or more of the securities having ordinary voting power for
the election of directors of such first Person or (ii) direct or cause the
direction of the management and policies of such first Person whether by
contract or otherwise.
"Agent": as defined in the Preamble to this Agreement.
"Agreement": this Credit Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"AIHI": as defined in the Recitals to this Agreement.
"AIHI Shares": the shares of Class A Common Stock, par
value $0.01 per share, of AIHI.
"Applicable Margin": at any time, the rate per annum set
forth below opposite the Level of Coverage Ratio most recently determined:
<TABLE>
<CAPTION>
Level of Applicable
Coverage Ratio Margin
-------------- ----------
<S> <C>
Level I:
Coverage Ratio is
less than 3.25 to 1 1.00%
Level II:
Coverage Ratio is
equal to or greater than 3.25 to 1
but less than 4.0 to 1 0.875%
Level III:
Coverage Ratio is
equal to or greater than 4.0 to 1 but less than 5.0 to 1 0.75%
Level IV
Coverage Ratio is
greater than or equal to 5.0 to 1 0.50%;
</TABLE>
<PAGE> 9
4
provided that (a) the Applicable Margin shall be that set forth above
opposite Level II from the Closing Date until the earlier of (i) the
Adjustment Date occurring after the first full fiscal quarter
following the fiscal quarter in which the Closing Date occurs, and
(ii) any Equity Closing Date, (b) the Applicable Margin determined for
any Adjustment Date shall remain in effect until a subsequent
Adjustment Date for which the Coverage Ratio falls within a different
Level, and (c) if the financial statements and related compliance
certificate for any fiscal period are not delivered by the date due
pursuant to subsections 7.1 and 7.2(b), the Applicable Margin shall be
(i) for the first 5 days subsequent to such due date, that in effect
on the day prior to such due date, and (ii) thereafter, that set forth
above opposite Level I, in either case, until the subsequent
Adjustment Date.
"Assignment and Acceptance": an Assignment and Acceptance,
substantially in the form of Exhibit K.
"Available Commitment": as to any Bank, at a particular time,
any amount equal to the excess, if any, of (a) the amount of such
Bank's Commitment at such time over (b) the sum of (i) the aggregate
unpaid principal amount at such time of all Revolving Credit Loans
made by such Bank pursuant to subsection 2.1 and (ii) such Bank's
Commitment Percentage of the aggregate Letter of Credit Obligations at
such time; collectively, as to all the Banks, the " Available
Commitments".
"Bank" and "Banks": as defined in the Preamble to this
Agreement.
"benefitted Bank": as defined in subsection 11.7.
"Borrower": as defined in the Preamble to this Agreement.
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.3 or 2.4 as a date on which the Borrower
requests the Banks to make Loans hereunder.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close.
"Capital Expenditures": direct or indirect (by way of the
acquisition of securities of a Person or the expenditure of cash or
the incurrence of Indebtedness) expenditures in respect of the
purchase or other acquisition of fixed or capital assets (excluding
any such asset (a) acquired in connection with normal replacement and
maintenance programs and properly charged to current operations, (b)
acquired pursuant to a Financing Lease or other lease, (c) acquired
<PAGE> 10
5
in the Acquisition or (d) otherwise permitted pursuant to subsection
8.5(f)).
"Cash Equivalents": (a) securities issued or directly and
fully guaranteed or insured by the United States Government or any
agency or instrumentality thereof having maturities of not more than
twelve months from the date of acquisition, (b) time deposits and
certificates of deposit having maturities of not more than twelve
months from the date of acquisition, in each case with any Bank or
with any other domestic commercial bank having capital and surplus in
excess of $200,000,000, which has, or the holding company of which
has, a commercial paper rating meeting the requirements specified in
clause (d) below, (c) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in
clauses (a) and (b) entered into with any bank meeting the
qualifications specified in clause (b) above, (d) commercial paper
issued by the parent corporation of any Bank and commercial paper
rated at least A-1 or the equivalent thereof by Standard & Poor's
Ratings Group or P-1 or the equivalent thereof by Moody's Investors
Service, Inc. and in either case maturing within nine months after the
date of acquisition, (e) deposits maintained with money market funds
having total assets in excess of $300,000,000, (f) demand deposit
accounts maintained in the ordinary course of business with banks or
trust companies located near plant locations, in an aggregate amount
not to exceed $750,000 at any one time at any one such bank or trust
company and (g) deposits in mutual funds invested in preferred
equities issued by U.S. corporations rated at least AA (or the
equivalent thereof) by Standard & Poor's Ratings Group.
"Chemical": Chemical Bank, a New York banking corporation, in
its individual capacity.
"CISA": Central de Industrias S.A. de C.V., a corporation
organized under the laws of Mexico.
"Closing Date": the date on which all of the conditions
precedent set forth in subsection 5.1 shall have been met or waived
and the initial Loans are made.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": the collective reference to all collateral in
which the Agent has a security interest pursuant to the Security
Documents and all assets by which the Loans are deemed indirectly
secured within the meaning of Regulation U and Regulation G.
"Commercial Letters of Credit": as defined in subsection
3.1(a).
<PAGE> 11
6
"Commitment": as defined in subsection 2.1.
"Commitment Percentage": as to any Bank, the percentage of
the aggregate Commitments constituted by such Bank's Commitment.
"Commitment Period": the period from and including the date
hereof to but not including the Termination Date.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Consolidated Indebtedness": at a particular date, all
Indebtedness of the Borrower and its Subsidiaries.
"Consolidated Interest Expense": for any fiscal period, the
amount which would, in conformity with GAAP, be set forth opposite the
caption "interest expense" (or any like caption) on a consolidated
income statement of the Borrower and its Subsidiaries for such period,
(a) excluding therefrom, however, fees payable under subsections 4.2,
4.3 or 4.4 and any amortization or write-off of deferred financing
fees during such period and (b) including any interest income during
such period.
"Consolidated Net Income": for any fiscal period, the
consolidated net income (or deficit) of the Borrower and its
Subsidiaries for such period (taken as a cumulative whole), determined
in accordance with GAAP; provided that (a) any provision for
post-retirement medical benefits, to the extent such provision
calculated under FAS 106 exceeds actual cash outlays calculated on the
"pay as you go" basis, shall not to be taken into account, and (b)
there shall be excluded (i) the income (or deficit) of any Person
accrued prior to the date it becomes a Subsidiary or is merged into or
consolidated with the Borrower or any Subsidiary, (ii) the income (or
deficit) of any Person (other than a Subsidiary) in which the Borrower
or any Subsidiary has an ownership interest, except to the extent that
any such income has been actually received by the Borrower or such
Subsidiary in the form of dividends or similar distributions, (iii)
the undistributed earnings of any Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of any
Contractual Obligation or Requirement of Law (other than any
Requirement of Law of Germany) applicable to such Subsidiary, and (iv)
in the case of a successor to the Borrower or any Subsidiary by
consolidation or merger or as a transferee of its assets, any earnings
of the successor corporation prior to such consolidation, merger or
transfer of assets; provided,
<PAGE> 12
7
further that the exclusions in clauses (i) and (iv) of this
definition shall not apply to the mergers or consolidations of the
Borrower or its Subsidiaries with their respective Subsidiaries.
"Consolidated Net Worth": at a particular date, all amounts
which would be included under shareholders' equity on a consolidated
balance sheet of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP as at such date plus the
amount of any redeemable common stock; provided, however, that any
cumulative adjustments made pursuant to FAS 106 shall not be taken
into account; and provided, further, that any stock option expense and
any amortization of goodwill, deferred financing fees and license fees
(including any write-offs of deferred financing fees, license fees and
up to an aggregate of $10,000,000 of goodwill from October 25, 1993)
shall not be taken into account in determining Consolidated Net Worth.
"Consolidated Operating Profit": for any fiscal period,
Consolidated Net Income for such period excluding (a) extraordinary
gains and losses arising from the sale of material assets and other
extraordinary and/or non-recurring gains and losses, (b) charges,
premiums and expenses associated with the discharge of Indebtedness,
(c) charges relating to FAS 106, (d) license fees (and any write- offs
thereof), (e) stock compensation expense, (f) deferred financing fees
(and any write-offs thereof), (g) write-offs up to $5,000,000 of
goodwill, (h) foreign exchange gains and losses, (i) miscellaneous
income and expenses and (j) miscellaneous gains and losses arising
from the sale of assets plus, to the extent deducted in determining
Consolidated Net Income, the excess of (i) the sum of (A) Consolidated
Interest Expense, (B) any expenses for taxes, (C) depreciation and
amortization expense and (D) minority interests in income of
Subsidiaries over (ii) net equity earnings in Affiliates (excluding
Subsidiaries).
"Continuing Directors": the directors of the Borrower on the
Closing Date and each other director, if such other director's
nomination for election to the Board of Directors of the Borrower is
recommended by a majority of the then Continuing Directors.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of
its property is bound.
"Coverage Ratio": for any Adjustment Date the ratio of (a)
Consolidated Operating Profit for the four fiscal quarters most
recently ended to (b) Consolidated Interest Expense for the four
fiscal quarters most recently ended; provided, however, that (x) with
respect to any Adjustment
<PAGE> 13
8
Date occurring during the second, third and fourth full fiscal
quarters following the fiscal quarter in which the Closing Date
occurs, the Coverage Ratio will be calculated for the period of one,
two or three fiscal quarters, as the case may be, beginning with the
first full fiscal quarter following the fiscal quarter in which the
Closing Date occurs and ending with the fiscal quarter immediately
prior to the fiscal quarter during which such Adjustment Date occurs
and (y) if any Equity Closing Date occurs, the Coverage Ratio
calculated on such date and on each subsequent Adjustment Date will be
the Coverage Ratio that would have been applicable if such Equity
Closing Date had occurred on the Closing Date. For purposes of any
calculation of the Coverage Ratio pursuant to clause (y) of the
proviso to the preceding sentence as a result of the occurrence of an
Equity Closing Date prior to the scheduled Adjustment Date occurring
after the first full fiscal quarter following the fiscal quarter in
which the Closing Date occurs, such Coverage Ratio shall be a
fraction, the numerator of which is the combined Consolidated
Operating Profit of the Borrower and AIHI for the four fiscal quarters
ended June 30, 1995 and the denominator of which is projected
Consolidated Interest Expense for the fiscal year 1996 (such
Consolidated Interest Expense being projected to be $103,600,000) less
the amount by which such Consolidated Interest Expense would have been
reduced if such Equity Closing Date had occurred on the Closing Date
and net proceeds thereof used to repay the Loans. For purposes of any
calculation of the Coverage Ratio pursuant to clause (y) of the
proviso to the preceding sentence as a result of the occurrence of an
Equity Closing Date after the scheduled Adjustment Date occurring
after the first full fiscal quarter following the fiscal quarter in
which the Closing Date occurs, such Coverage Ratio shall be calculated
using actual Consolidated Operating Profit and Consolidated Interest
Expense for the period commencing with the first full fiscal quarter
following the fiscal quarter in which the Closing Date occurs,
adjusted to reduce such Consolidated Interest Expense to the amount
that would have been incurred if such Equity Closing Date had occurred
on the Closing Date and net proceeds thereof used to repay the Loans.
"Default": any of the events specified in Section 9, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Dollars" and "$": lawful currency of the United States of
America.
"Domestic Loan Party": each Loan Party that is organized
under the laws of any jurisdiction of the United States.
<PAGE> 14
9
"Environmental Complaint": any complaint, order, citation,
notice or other written communication from any Person with respect to
the existence or alleged existence of a violation of any Environmental
Laws or legal liability resulting from air emissions, water
discharges, noise emissions, Hazardous Material or any other
environmental, health or safety matter.
"Equity Closing Date": the date, on or before the last day of
the fourth full fiscal quarter following the fiscal quarter in which
the Closing Date occurs, on which the Borrower (i) receives cash
proceeds from an issuance and sale by the Borrower of its equity
securities and (ii) applies the net cash proceeds to repay Revolving
Credit Loans.
"Environmental Laws": any and all applicable Federal,
foreign, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, requirements of any Governmental
Authority and any and all common law requirements, rules and bases of
liability regulating, relating to or imposing liability or standards
of conduct concerning pollution or protection of the environment or
the Release or threatened Release of Hazardous Materials, as now or
hereafter in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the average (rounded upwards to the nearest whole multiple of
one sixteenth of one percent) of the respective rates notified to the
Agent by the Reference Banks as the rate at which such Reference Bank
is offered Dollar deposits two Working Days prior to the beginning of
such Interest Period in the interbank eurodollar market where the
eurodollar and foreign currency and exchange operations of such
Reference Bank are then being conducted, at or about 10:00 A.M., New
York City time, for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable
to the amount of the Eurodollar Loan of such Reference Bank to be
outstanding during such Interest Period.
"Eurodollar Loans": Revolving Credit Loans at such time as
they are made and/or are being maintained at a rate of interest based
upon the Eurodollar Rate.
"Eurocurrency Reserve Requirements": with respect to any day
as applied to a Eurodollar Loan, the aggregate (without duplication)
of the rates (expressed as a decimal fraction) of reserve requirements
in effect on such day
<PAGE> 15
10
(including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of
the Federal Reserve System or other Governmental Authority having
jurisdiction with respect thereto), dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board) maintained
by a member bank of such System.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upwards to the nearest whole multiple of 1/100th of one
percent):
Eurodollar Base Rate
---------------------------------------
1.00 - Eurocurrency Reserve Requirement
"Eurodollar Tranche": the collective reference to Eurodollar
Loans whose Interest Periods each begin on the same day and end on the
same other day.
"Event of Default": any of the events specified in Section 9,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, event or act has been
satisfied.
"Exchange Act": the Securities Exchange Act of 1934, as
amended.
"Existing Credit Agreement": the Second Amended and Restated
Credit Agreement, dated as of November 29, 1994, as amended, among the
Borrower, the lenders parties thereto, Chemical Bank, as
administrative agent, and Bankers Trust Company, The Bank of Nova
Scotia, Citicorp USA, Inc. and Lehman Commercial Paper Inc., as
managing agents.
"Existing Letters of Credit": as defined in subsection 3.1(b).
"Extensions of Credit": at any particular time, the sum of
(a) the aggregate principal amount of Revolving Credit Loans and Swing
Line Loans then outstanding and (b) the aggregate Letter of Credit
Obligations then outstanding.
"Federal Reserve Board": the Board of Governors of the
Federal Reserve System or any successor thereto.
"Fiat Seat Business": Sepi S.p.A. and certain related
businesses.
<PAGE> 16
11
"FIMA": FIMA Finance Management Inc., a British Virgin
Islands corporation and any other wholly owned subsidiary of Exor
Group S.A. or any of them.
"Financing Lease": (a) any lease of property, real or
personal, the obligations under which are capitalized on a
consolidated balance sheet of the Borrower and its Subsidiaries and
(b) any other such lease to the extent that the then present value of
the minimum rental commitment thereunder should, in accordance with
GAAP, be capitalized on a balance sheet of the lessee.
"Foreign Letter of Credit": a Standby Letter of Credit whose
beneficiary is a Person which is directly or indirectly extending
credit to a Foreign Subsidiary.
"Foreign Subsidiaries": each of the Subsidiaries so
designated on Schedule 6.14 and any Subsidiaries organized outside the
United States which are created after the effectiveness hereof.
"GAAP": generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee Obligation": as to any Person, any obligation of
such Person guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation
of such Person, whether or not contingent (a) to purchase any such
primary obligation or any property constituting direct or indirect
security therefor, (b) to advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that
the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation shall be deemed to
be an amount equal to the value as of any date of determination of the
stated or determinable amount of the
<PAGE> 17
12
primary obligation in respect of which such Guarantee Obligation is
made (unless such Guarantee Obligation shall be expressly limited to a
lesser amount, in which case such lesser amount shall apply) or, if
not stated or determinable, the value as of any date of determination
of the maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith.
"Guarantor Supplement": a supplement to the Subsidiary
Guarantee, substantially in the form of Annex A to the Subsidiary
Guarantee, whereby a Subsidiary of the Borrower becomes a "Guarantor"
under the Subsidiary Guarantee.
"Hazardous Materials": any solid wastes, toxic or hazardous
substances, materials or wastes, defined, listed, classified or
regulated as such in or under any Environmental Laws, including,
without limitation, asbestos, petroleum or petroleum products
(including gasoline, crude oil or any fraction thereof),
polychlorinated biphenyls, and urea-formaldehyde insulation, and any
other substance the presence of which may give rise to liability under
any Environmental Law.
"Indebtedness": of a Person, at a particular date, the sum
(without duplication) at such date of (a) indebtedness for borrowed
money or for the deferred purchase price of property or services in
respect of which such Person is liable as obligor, (b) indebtedness
secured by any Lien on any property or asset owned or held by such
Person regardless of whether the indebtedness secured thereby shall
have been assumed by or is a primary liability of such Person, (c)
obligations of such Person under Financing Leases, (d) the face amount
of all letters of credit issued for the account of such person and,
without duplication, the unreimbursed amount of all drafts drawn
thereunder and (e) obligations (in the nature of principal or
interest) of such Person in respect of acceptances or similar
obligations issued or created for the account of such Person; but
excluding (i) trade and other accounts payable in the ordinary course
of business in accordance with customary trade terms and which are not
overdue for more than 120 days or, if overdue for more than 120 days,
as to which a dispute exists and adequate reserves in conformity with
GAAP have been established on the books of such Person, (ii) deferred
compensation obligations to employees and (iii) any obligations
otherwise constituting Indebtedness the payment of which such Person
has provided for pursuant to the terms of such Indebtedness or any
agreement or instrument pursuant to which such Indebtedness was
incurred, by the irrevocable deposit in trust of an amount of funds or
a principal amount of securities, which deposit is sufficient, either
by itself or taking into account the accrual of interest thereon, to
pay the principal of and interest on such obligations when due.
<PAGE> 18
13
"Industrial Revenue Bonds": industrial revenue bonds issued
for the benefit of the Borrower or its Subsidiaries and in respect of
which the Borrower or its Subsidiaries will be the source of
repayment, provided that such financings, (including, without
limitation, the indenture related thereto) shall be in form and
substance reasonably satisfactory to the Issuing Bank that issues a
Letter of Credit backing such Industrial Revenue Bonds.
"Insolvency" or "Insolvent": at any particular time, a
Multiemployer Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Interest Payment Date": (a) as to any ABR Loan (including
Swing Line Loans), the last day of each March, June, September and
December, commencing on the first of such days to occur after the
effectiveness of this Agreement and (b) as to any Eurodollar Loan in
respect of which the Borrower has selected an Interest Period of one,
two or three months, the last day of such Interest Period, (c) as to
any Eurodollar Loan in respect of which the Borrower has selected an
Interest Period of longer than three months, each day which is three
months, or a whole multiple thereof, after the making of such
Eurodollar Loan and the last day of such Interest Period and (d) as to
any Loan, the Termination Date.
"Interest Period": with respect to any Eurodollar Loans:
(a) initially, the period commencing on the
borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loans and ending one, two, three or six
months thereafter (or, to the extent available from all Banks,
nine or twelve months thereafter), as selected by the Borrower
in its notice of borrowing as provided in subsection 2.3 or
its notice of conversion as provided in subsection 2.6, as the
case may be; and
(b) thereafter, each period commencing on the last
day of the then current Interest Period applicable to such
Eurodollar Loans and ending one, two, three or six months
thereafter (or, to the extent available from all Banks, nine
or twelve months thereafter), as selected by the Borrower by
irrevocable notice to the Agent not less than three Working
Days prior to the last day of the then current Interest Period
with respect to such Eurodollar Loans;
<PAGE> 19
14
provided that all of the foregoing provisions relating to Interest
Periods are subject to the following:
(i) if any Interest Period would otherwise end on
a day which is not a Working Day, that Interest Period shall
be extended to the next succeeding Working Day unless the
result of such extension would be to carry such Interest
Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Working
Day;
(ii) no Interest Period shall extend beyond the
Termination Date;
(iii) if the Borrower shall fail to give notice as
provided above, the Borrower shall be deemed to have selected
an ABR Loan to replace the affected Eurodollar Loan;
(iv) any Interest Period that begins on the last
Working Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Working
Day of a calendar month; and
(v) the Borrower shall select Interest Periods so
that there shall be no more than twenty Eurodollar Tranches in
existence on any one date; provided if the Borrower shall
select an Interest Period of one month, there shall be no more
than ten Eurodollar Tranches of one month in existence on any
one date.
"Interest Rate Agreement": any interest rate protection
agreement, interest rate swap or other interest rate hedge arrangement
(other than any interest rate cap or other similar agreement or
arrangement pursuant to which the Borrower has no credit exposure), to
or under which the Borrower or any of its Subsidiaries is a party or a
beneficiary.
"Interest Rate Agreement Obligations": all obligations of the
Borrower to any financial institution under any one or more Interest
Rate Agreements.
"Issuing Bank": Chemical, in its capacity as issuer of the
Letters of Credit or, if Chemical is not the Agent hereunder, such
other Bank, which the Borrower and the Required Banks shall have
approved, in its capacity as issuer of the Letters of Credit; provided
that any Bank other than Chemical which agrees to become an Issuing
Bank, and which the Borrower and the Required Banks shall have
approved, may become an Issuing Bank for Standby Letters of
<PAGE> 20
15
Credit to be used for the purposes described in subsection 3.9(b).
"Lear Italia": the collective reference to each direct
Foreign Subsidiary, organized under the laws of Italy, of the Borrower
or any Subsidiary party to the Subsidiary Guarantee.
"Letter of Credit Applications": (a) in the case of Standby
Letters of Credit, a letter of credit application for a Standby Letter
of Credit on the standard form of Chemical for standby letters of
credit, and (b) in the case of Commercial Letters of Credit, a letter
of credit application for a Commercial Letter of Credit on the
standard form of Chemical for commercial letters of credit.
"Letter of Credit Obligations": at any particular time, all
liabilities of the Borrower and any Subsidiary with respect to Letters
of Credit, whether or not any such liability is contingent, including
(without duplication) the sum of (a) the aggregate undrawn face amount
of all Letters of Credit then outstanding plus (b) the aggregate
amount of all unpaid Reimbursement Obligations and Subsidiary
Reimbursement Obligations.
"Letter of Credit Participation Certificate": a participation
certificate in the form customarily used by the Issuing Bank for such
purpose at the time such certificate is issued.
"Letters of Credit": as defined in subsection 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement,
any Financing Lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction in
respect of any of the foregoing).
"Loan" and "Loans": the collective reference to the Revolving
Credit Loans and the Swing Line Loans.
"Loan Documents": the collective reference to this Agreement,
the Notes, the Letters of Credit, the Letter of Credit Applications
and the Security Documents.
"Loan Parties": the collective reference to the Borrower,
each guarantor or grantor party to any Security
<PAGE> 21
16
Document and each issuer of pledged stock under each Pledge Agreement.
"Management Investors": each of the managers, officers and
other employees of the Borrower and its Subsidiaries from time to time
party to the Stockholders Agreement.
"Margin Stock Collateral": as defined in subsection 2.17.
"Material Subsidiary": each Loan Party and any other
Subsidiary which (a) for the most recent fiscal year of the Borrower
accounted for more than 5% of the consolidated revenues of the
Borrower or (b) as of the end of such fiscal year, was the owner of
more than 5% of the consolidated assets of the Borrower all as shown
on the consolidated financial statements of the Borrower for such
fiscal year.
"Merchant Banking Partnerships": Lehman Brothers Merchant
Banking Portfolio Partnership L.P., a Delaware limited partnership,
Lehman Brothers Offshore Investment Partnership - Japan L.P., a
Bermuda limited partnership, Lehman Brothers Offshore Investment
Partnership L.P., a Bermuda limited partnership and Lehman Brothers
Capital Partners II, L.P., a Delaware limited partnership
(collectively, the "Partnerships") or any majority owned direct or
indirect Subsidiary of Lehman Brothers Holdings Inc. or any
partnership the general partner of which is a majority owned direct or
indirect Subsidiary of Lehman Brothers Holdings Inc. (with the
Partnerships, collectively referred to as the "Permitted Lehman
Entities") or a trust the beneficiaries of which include only
investors in the Permitted Lehman Entities, or any of them.
"Merger": the merger of Acquisition Corp. with and into AIHI
pursuant to the Merger Agreement.
"Merger Agreement": the Agreement and Plan of Merger, dated
as of July 16, 1995, by and among the Borrower, Acquisition Corp. and
AIHI, as the same has been or will be amended, supplemented or
otherwise modified from time to time; provided, however, that any
material amendments, supplements or other modifications shall be
approved by the Required Banks.
"Merger Date": the date on which the Merger is consummated in
accordance with the Merger Agreement.
"Mortgaged Properties": the collective reference to the real
properties described on Schedule 1.1(c) and any other properties
mortgaged in favor of the Agent for the ratable benefit of the Banks
pursuant to this Agreement from time to time.
<PAGE> 22
17
"Mortgages": the collective reference to the mortgages listed
in Schedule 1.1(b), and each other mortgage or deed of trust that may
be delivered to the Agent as collateral security for any or all of the
Obligations and the Subsidiary Reimbursement Obligations, in each case
as such mortgages or deeds of trust may be amended, supplemented or
otherwise modified from time to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Proceeds": shall mean the gross proceeds received by the
Borrower or any Subsidiary from a sale or other disposition of any
asset of the Borrower or such Subsidiary less (a) all reasonable fees,
commissions and other out-of-pocket expenses incurred by the Borrower
or such Subsidiary in connection therewith, (b) Federal, state, local
and foreign taxes assessed in connection therewith and (c) the
principal amount, accrued interest and any related prepayment fees of
any Indebtedness (other than the Loans) which is secured by any such
asset and which is required to be repaid in connection with the sale
thereof.
"Notes": the collective reference to the Revolving Credit
Notes and the Swing Line Note.
"Obligations": the unpaid principal amount of, and interest
on, the Notes, the Reimbursement Obligations, the Interest Rate
Agreement Obligations owing to any Bank and all other obligations and
liabilities of the Borrower to the Agent, the Banks and the Issuing
Bank, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with this Agreement, the Notes, the
Letters of Credit, the Letter of Credit Applications, any other Loan
Document or any other document executed and delivered in connection
herewith or therewith, whether on account of principal, interest
(including, without limitation, interest accruing at the rate set
forth in this Agreement and the other Loan Documents after the
commencement of any proceeding of the type described in Section 9(i)
whether or not such interest constitutes an allowed claim in such
proceeding), reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees and disbursements of
counsel to the Agent) or otherwise.
"Offer to Purchase": the Offer to Purchase, dated July 20,
1995, of Acquisition Corp. relating to the Tender Offer, as amended,
supplemented or modified to the date hereof.
"Original Mortgages": as defined in subsection 5.1(h).
"Participants": as defined in subsection 11.6(b).
<PAGE> 23
18
"Participating Bank": any Bank (other than the Issuing Bank)
with respect to its Participating Interest in a Letter of Credit.
"Participating Interest": with respect to any Letter of
Credit (a) in the case of the Issuing Bank with respect thereto its
interest in such Letter of Credit and any Letter of Credit Application
relating thereto after giving effect to the granting of any
participating interests therein pursuant hereto and (b) in the case of
each Participating Bank, its undivided participating interest in such
Letter of Credit and any Letter of Credit Application relating
thereto.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Pledge Agreement Supplement": as defined in subsection 7.11.
"Pledge Agreements": the collective reference to the Pledge
Agreements listed in Schedule 1.1(b) and each other pledge agreement
or similar agreement that may be delivered to the Agent as collateral
security for any or all of the Obligations and the Subsidiary
Reimbursement Obligations, in each case as such Pledge Agreements or
similar agreements may be amended, supplemented or otherwise modified
from time to time.
"Pledged Stock": as defined in each of the Pledge Agreements.
"Proprietary Rights": as defined in subsection 6.17.
"Purchase Agreement": the Agreement, dated as of August 19,
1988, among Lear Siegler Aerospace Products Holdings Corp., Lear
Siegler Commercial Products Holdings Corp., Lear Siegler Automotive
Products Holdings Corp. and LSS Acquisition Corporation, as amended,
supplemented or otherwise modified from time to time.
"Purchasing Banks": as defined in subsection 11.6(c).
<PAGE> 24
19
"Receivable Financing Transaction": any transaction or series
of transactions involving a non-recourse sale for cash of accounts
receivable by the Borrower or any of its Subsidiaries to a Special
Purpose Subsidiary and a subsequent incurrence by such Special Purpose
Subsidiary of unguaranteed Indebtedness secured solely by the accounts
receivable so acquired by such Special Purpose Subsidiary.
"Reference Banks": Chemical and The Bank of Nova Scotia.
"Refunded Swing Line Loans": as defined in subsection 2.4(c).
"Register": as defined in subsection 11.6(d).
"Regulation G": Regulation G of the Federal Reserve Board.
"Regulation T": Regulation T of the Federal Reserve Board.
"Regulation U": Regulation U of the Federal Reserve Board.
"Regulation X": Regulation X of the Federal Reserve Board.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Bank in accordance with the terms of this
Agreement and the related Letter of Credit Application for any payment
made by the Issuing Bank under any Letter of Credit.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, escaping, leaking, dumping,
disposing, spreading, depositing or dispersing of any Hazardous
Materials in, unto or onto the environment.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
such term as used in Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. Section 2615.
"Required Banks": at a particular time, the holders of more
than 50% of the aggregate unpaid principal amount of the Notes and the
Letter of Credit Obligations (after giving effect to participating
interests to the Banks), or, if no
<PAGE> 25
20
amounts are outstanding under the Notes and no Letter of Credit
Obligations are outstanding, Banks having more than 50% of the
aggregate amount of the Commitments.
"Requirement of Law": as to (a) any Person, the certificate
of incorporation and by-laws or the partnership or limited partnership
agreement or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject, (b) any property,
any law, treaty, rule, regulation, requirement, judgment, decree or
determination of any Governmental Authority applicable to or binding
upon such property or to which such property is subject, including,
without limitation, any Environmental Laws and (c) any of the
Mortgaged Properties, all Restrictive Agreements.
"Responsible Officer": with respect to any Loan Party, the
chief executive officer, the president, the chief financial officer,
any vice president, the treasurer or the assistant treasurer of such
Loan Party.
"Restrictive Agreement": any covenants, conditions or
restrictions which burden any of the Mortgaged Properties or any part
thereof for the benefit of other real property, including, without
limitation, the terms of any reciprocal easement agreement, any
agreement limiting the use of the Mortgaged Properties and any
agreements which must be performed as a condition to the continuance
of any easement included in the Mortgaged Properties.
"Revolving Credit Loan" and "Revolving Credit Loans": as
defined in subsection 2.1.
"Revolving Credit Note" and "Revolving Credit Notes": as
defined in subsection 2.2.
"Security Agreements": the collective reference to the
Security Agreement listed in Schedule 1.1(b), and each other security
agreement or similar agreement that may be delivered to the Agent as
collateral security for any or all of the Obligations and the
Subsidiary Reimbursement Obligations, in each case as such Security
Agreement or similar agreements may be amended, supplemented or
otherwise modified from time to time.
"Security Documents": the collective reference to the
Security Agreements, the Pledge Agreements, the Mortgages and the
Subsidiary Guarantee.
<PAGE> 26
21
"Senior Subordinated Note Indenture": the Indenture, dated as
of July 15, 1992, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with subsection
8.10.
"Senior Subordinated Notes": the 11 1/4% Senior Subordinated
Notes of the Borrower due 2000, issued pursuant to the Senior
Subordinated Note Indenture.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Special Affiliate": any Affiliate of the Borrower which (a)
the Borrower possesses, directly or indirectly, (i) power to vote 20%
or more of the securities having ordinary voting power for the
election of directors of such Affiliate or (ii) a 20% ownership
interest in such Affiliate and (b) is engaged in business of the same
or related general type as now being conducted by the Borrower and its
Subsidiaries.
"Special Entity": any Person which is engaged in business of
the same or related general type as now being conducted by the
Borrower and its Subsidiaries.
"Special Purpose Subsidiary": any Wholly Owned Subsidiary of
the Borrower created by the Borrower for the sole purpose of
facilitating a Receivable Financing Transaction.
"Standby Letters of Credit": as defined in subsection 3.1(a).
"Stockholders Agreement": the Amended and Restated
Stockholders and Registration Rights Agreement, dated as of September
27, 1991 among the Borrower, FIMA, the Merchant Banking Partnerships
and the several other parties thereto, as the same has been and may be
amended, supplemented or otherwise modified from time to time.
"Subordinated Debt": any obligations (for principal, interest
or otherwise) evidenced by or arising under or in respect of the
Subordinated Notes, the Subordinated Note Indenture, the Senior
Subordinated Notes and the Senior Subordinated Note Indenture and any
other covenant, instrument or agreement of subordinated Indebtedness
issued or entered into pursuant to subsection 8.10.
"Subordinated Note Indenture": the Indenture dated as of
February 1, 1994, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with subsection
8.10.
<PAGE> 27
22
"Subordinated Notes": the 8-1/4% Subordinated Notes of the
Borrower due 2002, issued pursuant to the Subordinated Note Indenture.
"Subscription Agreements": the collective reference to the
Subscription Agreements, dated as of September 29, 1988, between Lear
Holdings Corporation and each of the Management Investors, as each of
the same may be amended, supplemented or otherwise modified from time
to time.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly, through one or more intermediaries, or both,
by such Person (exclusive of any Affiliate in which such Person has a
minority ownership interest). Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement
shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantee": the Subsidiary Guarantee, dated as of
the date hereof, made by LS Acquisition Corp. No. 14, Lear Seating
Holdings Corp. No. 50, Progress Pattern Corp., Lear Plastics Corp., LS
Acquisition Corporation No. 24, Fair Haven Industries, Inc. and
Acquisition Corp. in favor of the Agent, substantially in the form of
Exhibit C, as the same may be amended, supplemented or otherwise
modified from time to time.
"Subsidiary Reimbursement Obligation": the obligation of any
Subsidiary to reimburse the Issuing Bank in accordance with the terms
of this Agreement and the related Letter of Credit Application for any
payment made by the Issuing Bank under any Letter of Credit.
"Surviving Corporation": AIHI, as the surviving corporation
of the Merger.
"Swing Line Loan" and "Swing Line Loans": as defined in
subsection 2.4(a).
"Swing Line Note": as defined in subsection 2.4(b).
"Swing Line Participation Certificate": a certificate
substantially in the form of Exhibit J to this Agreement.
"Taxes": as defined in subsection 2.14.
<PAGE> 28
23
"Tender Offer": the tender offer made by Acquisition Corp.
for all of the AIHI Shares pursuant to the Offer to Purchase.
"Tender Offer Documents": collectively, (a) the tender offer
statement on Schedule 14D-1, dated July 20, 1995, filed by Acquisition
Corp. with the Securities and Exchange Commission pursuant to Section
14(d)(1) of the Exchange Act, together with all exhibits thereto,
including the Offer to Purchase and (b) the
solicitation/recommendation statement on Schedule 14D-9, dated July
20, 1995, filed by AIHI pursuant to Section 14(d)(4) of the Exchange
Act, in each case, as amended, supplemented or otherwise modified from
time to time.
"Termination Date": September 30, 2001 or such earlier date
on which the Commitments are terminated pursuant to this Agreement.
"Transfer Effective Date": as defined in each Assignment and
Acceptance.
"Transferee": as defined in subsection 11.6(f).
"Type": as to any Loan, its nature as an ABR Loan or
Eurodollar Loan.
"Wholly Owned Subsidiary": as to any Person, a corporation,
partnership or other entity of which (a) 100% of the common capital
stock or other ownership interests of such corporation, partnership or
other entity or (b) more than 95% of the common capital stock or other
ownership interests of such corporation, partnership or other entity
where the portion of the common capital stock or other ownership
interests not held by such Person is held by other Persons to satisfy
applicable legal requirements, is owned, directly or indirectly, by
such Person; provided, however, that so long as the Borrower owns,
directly or indirectly, more than 95% of the capital stock of Lear
Italia, Lear Italia shall be deemed a Wholly Owned Subsidiary of the
Borrower, and provided, further, that until the Merger Date, so long
as AIHI is a Subsidiary of the Borrower, AIHI and its Wholly Owned
Subsidiaries shall be deemed Wholly Owned Subsidiaries of the
Borrower.
"Working Day": any Business Day on which dealings in foreign
currencies and exchange between banks may be carried on in London,
England.
"Y Credit" and "Y Credits": as defined in subsection 2.17(a).
"Z Credit" and "Z Credits": as defined in subsection 2.17(a).
<PAGE> 29
24
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto, accounting
terms relating to the Borrower and its Subsidiaries not defined in subsection
1.1 and accounting terms partly defined in subsection 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF LOAN COMMITMENTS
2.1 Commitments. Subject to the terms and conditions hereof,
each Bank, severally and not jointly, agrees to make revolving credit loans
(individually, a "Revolving Credit Loan"; collectively, the "Revolving Credit
Loans") to the Borrower from time to time during the Commitment Period in an
aggregate principal amount, together with the other Extensions of Credit (after
giving effect to participating interests to the Banks) of such Bank, not to
exceed at any one time outstanding the amount set forth under the heading
"Commitment" opposite the name of such Bank on Schedule 2.1, as such amount may
be reduced from time to time pursuant to subsection 2.8 (collectively, the
"Commitments"). During the Commitment Period, the Borrower may use the
Commitments by borrowing, repaying the Revolving Credit Loans in whole or in
part and reborrowing, all in accordance with the terms and conditions hereof;
provided that on the date of the making of any Revolving Credit Loans, and
after giving effect to the making of such Revolving Credit Loans, the
Extensions of Credit at such time shall not exceed the aggregate Commitments at
such time. The Revolving Credit Loans may from time to time be ABR Loans,
Eurodollar Loans or a combination thereof.
2.2 Revolving Credit Notes. The Revolving Credit Loans made
by each Bank shall be evidenced by a promissory note of the Borrower,
substantially in the form of Exhibit A (individually, a "Revolving Credit
Note"; collectively, the "Revolving Credit Notes"), with appropriate insertions
as to principal amount, payable to the order of such Bank and evidencing the
obligation of the Borrower to pay a principal
<PAGE> 30
25
amount equal to the lesser of (a) the amount of the Commitment of such Bank and
(b) the aggregate unpaid principal amount of all Revolving Credit Loans made by
such Bank. Each Bank is hereby authorized to record the date and amount of
each Revolving Credit Loan made by such Bank, and the date and amount of each
payment or prepayment of principal thereof, on the schedule annexed to and
constituting a part of its Revolving Credit Note, and any such recordation
shall constitute prima facie evidence of the accuracy of the information so
recorded; provided that the failure by any Bank to make any such recordation on
its Revolving Credit Note shall not affect any of the obligations of the
Borrower under such Revolving Credit Note or this Agreement. Each Revolving
Credit Note shall (i) be dated the Closing Date, (ii) be stated to mature on
the Termination Date and (iii) bear interest, payable on the dates specified in
subsection 4.1, for the period from the date thereof on the unpaid principal
amount thereof from time to time outstanding at the interest rate per annum
specified in subsection 4.1.
2.3 Procedure for Revolving Credit Borrowings. The Borrower
may borrow under the Commitments during the Commitment Period on any Business
Day by giving the Agent irrevocable written notice (which notice must be
received by the Agent prior to 12:00 P.M., New York City time) one Business Day
prior to the requested Borrowing Date of ABR Loans and three Working Days prior
to the requested Borrowing Date of Eurodollar Loans, specifying (a) the amount
to be borrowed, (b) the requested Borrowing Date and (c) whether the borrowing
is to be of ABR Loans, Eurodollar Loans or a combination thereof and (d) if the
borrowing is to be entirely or partly Eurodollar Loans, the amount of such
Loans and the length of initial Interest Period therefor. Upon receipt of such
notice from the Borrower, the Agent shall promptly notify each Bank thereof.
Not later than 12:00 P.M., New York City time, on the Borrowing Date specified
in such notice, each Bank shall make available to the Agent in immediately
available funds the amount equal to the Revolving Credit Loan to be made by
such Bank. The Agent shall make the amount of such borrowing available to the
Borrower by depositing the proceeds thereof in like funds as received by the
Agent in the account of the Borrower with the Agent on the date the Revolving
Credit Loans are made for transmittal by the Agent upon the Borrower's request.
Each borrowing pursuant to the Commitments, except any Revolving Credit Loan to
be used solely to pay a like amount of Reimbursement Obligations or Swing Line
Loans, shall be in an aggregate principal amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof.
2.4 Swing Line Commitments. (a) Subject to the terms and
conditions hereof, Chemical agrees to make swing line loans (individually, a
"Swing Line Loan"; collectively, the "Swing Line Loans") to the Borrower from
time to time during the Commitment Period in an aggregate principal amount at
any one time outstanding not to exceed $65,000,000; provided that on the date
of the making of any Swing Line Loan, and after giving effect to
<PAGE> 31
26
the making of such Swing Line Loan, the Extensions of Credit at such time shall
not exceed the Commitments. Amounts borrowed by the Borrower under this
subsection 2.4 may be repaid and, through but excluding the Termination Date,
reborrowed. All Swing Line Loans shall be made as ABR Loans and shall not be
entitled to be converted into Eurodollar Loans. The Borrower shall give
Chemical irrevocable notice (which notice must be received by Chemical prior to
12:00 P.M., New York City time) on the requested Borrowing Date specifying the
amount of the requested Swing Line Loan which shall be in an aggregate minimum
amount of $100,000 or whole multiples thereof. The proceeds of the Swing Line
Loan will be made available by Chemical to the Borrower at the office of
Chemical by crediting the account of the Borrower at such office with such
proceeds.
(b) The Swing Line Loans shall be evidenced by a promissory
note of the Borrower, substantially in the form of Exhibit B (the "Swing Line
Note"), with appropriate insertions, payable to the order of Chemical and
representing the obligation of the Borrower to pay the unpaid principal amount
of the Swing Line Loans, with interest thereon as prescribed in subsection 4.1.
Chemical is hereby authorized to record the Borrowing Date, the amount of each
Swing Line Loan and the date and amount of each payment or prepayment of
principal thereof on the schedule annexed to and constituting a part of the
Swing Line Note, and any such recordation shall constitute prima facie evidence
of the accuracy of the information so recorded; provided that the failure by
Chemical to make any such recordation on the Swing Line Note shall not affect
any of the obligations of the Borrower under such Swing Line Note or this
Agreement. The Swing Line Note shall (i) be dated the Closing Date, (ii) be
stated to mature on the Termination Date and (iii) bear interest, payable on
the dates specified in 4.1, for the period from the date thereof to the
Termination Date on the unpaid principal amount thereof from time to time
outstanding at the applicable interest rate per annum specified in subsection
4.1.
(c) Chemical, at any time in its sole and absolute
discretion, may on behalf of the Borrower (which hereby irrevocably directs
Chemical to act on its behalf) request each Bank, including Chemical, to make a
Revolving Credit Loan in an amount equal to such Bank's Commitment Percentage
of the amount of the Swing Line Loans (the "Refunded Swing Line Loans")
outstanding on the date such notice is given. Unless any of the events
described in Section 9(i) shall have occurred (in which event the procedures of
subsection 2.4(d) shall apply) each Bank shall, not later than 12:00 P.M., New
York City time, on the Business Day next succeeding the date on which such
notice is given, make available to Chemical in immediately available funds the
amount equal to the Revolving Credit Loan to be made by such Bank. The
proceeds of such Revolving Credit Loans shall be immediately applied to repay
the Refunded Swing Line Loans. Upon any request by Chemical to the Banks
pursuant to this subsection
<PAGE> 32
27
2.4(c), the Agent shall promptly give notice to the Borrower of such request.
(d) If prior to the making of a Revolving Credit Loan
pursuant to subsection 2.4(c) one of the events described in Section 9(i) shall
have occurred, each Bank will, on the date such Loan was to have been made,
purchase an undivided participating interest in the Swing Line Loans in an
amount equal to its Commitment Percentage of such Swing Line Loans. Each Bank
will immediately transfer to Chemical, in immediately available funds, the
amount of its participation, and upon receipt thereof Chemical will deliver to
such Bank a Swing Line Participation Certificate dated the date of receipt of
such funds and in the amount of such Bank's participation.
(e) Whenever, at any time after Chemical has received from
any Bank such Bank's participating interest in a Swing Line Loan, Chemical
receives any payment on account thereof, Chemical will distribute to such Bank
its participating interest in such amount (appropriately adjusted, in the case
of interest payments, to reflect the period of time during which such Bank's
participating interest was outstanding and funded); provided, however, that in
the event that such payment received by Chemical is required to be returned,
such Bank will return to Chemical any portion thereof previously distributed by
Chemical to it.
2.5 Swing Line Loan Participations. Each Bank's obligation
to purchase participating interests pursuant to subsection 2.4(d) shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (a) any set-off, counterclaim, recoupment,
defense or other right which such Bank or any Loan Party may have against
Chemical, any Loan Party or anyone else for any reason whatsoever; (b) the
occurrence or continuance of any Default or Event of Default; (c) any adverse
change in the condition (financial or otherwise) of any Loan Party; (d) any
breach of this Agreement by any Loan Party or any other Bank; or (e) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
2.6 Conversion and Continuation Options. (a) The Borrower
may elect from time to time to convert Revolving Credit Loans outstanding as
Eurodollar Loans to ABR Loans by giving the Agent at least one Business Day's
prior irrevocable notice of such election; provided that any such conversion of
Eurodollar Loans shall only be made on the last day of an Interest Period with
respect thereto. The Borrower may elect from time to time to convert Revolving
Credit Loans outstanding as ABR Loans to Eurodollar Loans by giving the Agent
at least three Working Days' prior irrevocable notice of such election. Upon
receipt of such notice, the Agent shall promptly notify each Bank thereof. All
or any part of the Revolving Credit Loans outstanding as Eurodollar Loans or
ABR Loans may be converted as provided herein; provided that (i) no ABR Loan
may be converted into a
<PAGE> 33
28
Eurodollar Loan when any Default or Event of Default has occurred and is
continuing, (ii) partial conversions shall be in an aggregate principal amount
of $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (iii) any
such conversion may only be made if, after giving effect thereto, subsection
2.7 shall not have been contravened.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance by the
Borrower with the notice provisions contained in the definition of "Interest
Period"; provided that no Eurodollar Loan may be continued as such when any
Default or Event of Default has occurred and is continuing but in such
circumstances shall be automatically converted to an ABR Loan on the last day
of the then current Interest Period with respect thereto.
2.7 Minimum Amounts of Tranches. Notwithstanding anything to
the contrary in this Agreement, all borrowings, conversions, payments,
prepayments and selection of Interest Periods hereunder in respect of the
Revolving Credit Loans shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of any one Eurodollar Tranche shall not be less than $5,000,000.
2.8 Termination or Reduction of Commitments. (a) The
Commitments shall automatically reduce on each March 31 and September 30 in
each calendar year during the Commitment Period, commencing March 31, 1996, by
an amount set forth opposite such year below:
<TABLE>
<CAPTION>
Year Semi-annual amount
---- ------------------
<S> <C>
1996 $ 25,000,000
1997 50,000,000
1998 62,500,000
1999 62,500,000
2000 75,000,000
2001 100,000,000
</TABLE>
(b) The Borrower shall have the right, upon not less than
five Business Days' notice to the Agent, to terminate the Commitments or to
reduce the amount of the Commitments; provided that any such reduction shall be
in an amount of $2,500,000 or a whole multiple of $500,000 in excess thereof
and shall reduce permanently the amount of the Commitments then in effect. No
reduction pursuant to this subsection 2.8(b) shall in any way affect the amount
of the reductions required to be made pursuant to subsection 2.8(a).
(c) The Commitments shall automatically terminate on the
Termination Date.
<PAGE> 34
29
2.9 Mandatory Prepayments. Any termination or reduction of
Commitments pursuant to subsections 2.8(a), 2.8(b), 2.8(c), 8.6(e) or otherwise
shall be accompanied by prepayment of the Loans (together in each case with
accrued interest on the amount so prepaid to the date of such prepayment and
any additional amounts owing under subsection 2.13), to the extent, if any,
that the amount of the Extensions of Credit then outstanding exceeds the amount
of the Commitments as so reduced (provided that if the aggregate principal
amount of Loans then outstanding is less than the amount of such excess because
Letter of Credit Obligations constitute a portion thereof, the Borrower shall,
to the extent of the balance of such excess, replace outstanding Letters of
Credit with new letters of credit or deposit an amount equal to such excess in
a cash collateral account with the Agent on terms and conditions reasonably
satisfactory to the Agent).
2.10 Inability to Determine Interest Rate. In the event that:
(a) the Agent shall have determined (which determination
shall be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the interbank eurodollar market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
any requested Interest Period; or
(b) the Agent shall have received notice prior to the first
day of such Interest Period from Banks constituting the Required Banks
that the interest rate determined pursuant to subsection 4.1 for such
Interest Period does not accurately reflect the cost to such Banks (as
conclusively certified by such Banks) of making or maintaining their
affected Loans during such Interest Period,
with respect to (i) proposed Loans that the Borrower has requested be made as
Eurodollar Loans, (ii) Eurodollar Loans that will result from the requested
conversion of ABR Loans into Eurodollar Loans or (iii) the continuation of
Eurodollar Loans beyond the expiration of the then current Interest Period with
respect thereto, the Agent shall give telex or telephonic notice of such
determination to the Borrower and the Banks as soon as reasonably practicable
after it becomes aware of such determination. If such notice is given (x) any
requested Eurodollar Loans shall be made as ABR Loans, (y) any ABR Loans that
were to have been converted to Eurodollar Loans shall be continued as ABR Loans
and (z) any outstanding Eurodollar Loans shall be converted, on the last day of
the then current Interest Period with respect thereto, to ABR Loans. Until
such notice has been withdrawn by the Agent, no further Eurodollar Loans shall
be made, nor shall the Borrower have the right to convert ABR Loans to
Eurodollar Loans.
<PAGE> 35
30
2.11 Illegality. Notwithstanding any other provisions
herein, if any Requirement of Law or any change therein or in the
interpretation or application thereof shall make it unlawful for any Bank to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Bank hereunder to make Eurodollar Loans or convert ABR Loans
to Eurodollar Loans shall forthwith be cancelled and (b) such Bank's Loans then
outstanding as Eurodollar Loans, if any, shall be converted automatically to
ABR Loans on the respective last days of the then current Interest Periods for
such Loans or within such earlier period as required by law. If any such
prepayment or conversion of a Eurodollar Loan occurs on a day which is not the
last day of the current Interest Period with respect thereto, the Borrower
shall pay to such Bank such amounts, if any, as may be required pursuant to
subsection 2.13.
2.12 Requirements of Law. (a) In the event that any
Requirement of Law (or any change therein or in the interpretation or
application thereof) or compliance by any Bank with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority:
(i) does or shall subject any Bank to any tax of any kind
whatsoever with respect to this Agreement, any Note or any Eurodollar
Loans made by it, or change the basis of taxation of payments to such
Bank of principal, commitment fee, interest or any other amount
payable hereunder (except for changes in the rate of tax on the
overall net income of such Bank);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Bank which are not
otherwise included in the determination of the Eurodollar Rate; or
(iii) does or shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such Bank, by
any amount which such Bank deems to be material, of making, renewing or
maintaining advances or extensions of credit or to reduce any amount receivable
hereunder, in each case in respect of its Eurodollar Loans, then, in any such
case, the Borrower shall promptly pay such Bank, upon receipt of its demand
setting forth in reasonable detail any additional amounts necessary to
compensate such Bank for such additional cost or reduced amount receivable,
such additional amounts together with interest on each such amount from the
date two Business Days after the date demanded until payment in full thereof at
the ABR. A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by such Bank, through the Agent,
<PAGE> 36
31
to the Borrower shall be conclusive in the absence of manifest error. This
covenant shall survive the termination of this Agreement and payment of the
outstanding Notes.
(b) In the event that any Bank shall have determined that the
adoption of any law, rule, regulation or guideline regarding capital adequacy
(or any change therein or in the interpretation or application thereof) or
compliance by any Bank or any corporation controlling such Bank with any
request or directive regarding capital adequacy (whether or not having the
force of law) from any central bank or Governmental Authority, including,
without limitation, the issuance of any final rule, regulation or guideline,
does or shall have the effect of reducing the rate of return on such Bank's or
such corporation's capital as a consequence of its obligations hereunder to a
level below that which such Bank or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Bank's
or such corporation's policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, after submission by
such Bank to the Borrower (with a copy to the Agent) of a written request
therefor, the Borrower shall promptly pay to such Bank such additional amount
or amounts as will compensate such Bank for such reduction.
(c) If the obligation of any Bank to make Eurodollar Rate
Loans has been suspended pursuant to subsection 2.10 or 2.11 for more than
three consecutive months or any Bank has demanded compensation under subsection
2.12(a) or 2.12(b), the Borrower shall have the right to substitute a financial
institution or financial institutions (which may be one or more of the Banks)
reasonably satisfactory to the Agent by causing such financial institution or
financial institutions to purchase the rights (by paying to such Bank the
principal amount of its outstanding Loans together with accrued interest
thereon and all other amounts accrued for its account or owed to it hereunder
and executing an Assignment and Acceptance) and to assume the obligations of
such Bank under the Loan Documents. Upon such purchase and assumption by such
substituted financial institution or financial institutions, the obligations of
such Bank hereunder shall be discharged; provided such Bank shall retain its
rights hereunder with respect to periods prior to such substitution including,
without limitation, its rights to compensation under this subsection 2.12.
2.13 Indemnity. The Borrower agrees to indemnify each Bank
and to hold each Bank harmless from any loss or expense which such Bank may
sustain or incur as a consequence of (a) default by the Borrower in payment
when due of the principal amount of or interest on any Eurodollar Loans of such
Bank, (b) default by the Borrower in making a borrowing or conversion after the
Borrower has given a notice of borrowing in accordance with subsection 2.3 or a
notice of conversion pursuant to subsection 2.6, (c) default by the Borrower in
making any prepayment after
<PAGE> 37
32
the Borrower has given a notice in accordance with subsection 2.8 or (d) the
making of a prepayment of a Eurodollar Loan on a day which is not the last day
of an Interest Period with respect thereto, including, without limitation, in
each case, any such loss or expense arising from the reemployment of funds
obtained by it to maintain its Eurodollar Loans hereunder or from fees payable
to terminate the deposits from which such funds were obtained. This covenant
shall survive termination of this Agreement and payment of the outstanding
Notes.
2.14 Taxes. (a) All payments made by the Borrower under
this Agreement shall be made free and clear of, and without reduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority excluding, in the case of the Agent and each Bank,
income or franchise taxes imposed on the Agent or such Bank by the jurisdiction
under the laws of which the Agent or such Bank is organized or any political
subdivision or taxing authority thereof or therein or by any jurisdiction in
which such Bank's lending office is located or any political subdivision or
taxing authority thereof or therein or as a result of a connection between such
Bank and any jurisdiction other than a connection resulting solely from
entering into this Agreement (all such non-excluded taxes, levies, imposts,
deductions, charges or withholdings being thereinafter called "Taxes").
Subject to the provisions of subsection 2.14(c), if any Taxes are required to
be withheld from any amounts payable to the Agent or any Bank hereunder or
under the Notes or the Letters of Credit, the amounts so payable to the Agent
or such Bank shall be increased to the extent necessary to yield to the Agent
or such Bank (after payment of all Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement
and the Notes. Whenever any Taxes are paid by the Borrower with respect to
payments made in connection with this Agreement, as promptly as possible
thereafter, the Borrower shall send to the Agent for its own account or for the
account of such Bank, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. Subject to
the provisions of subsection 2.14(c), if the Borrower fails to pay any Taxes
when due to the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the Banks for any incremental taxes, interest or
penalties that may become payable by the Agent or any Banks as a result of any
such failure.
(b) Each Bank that is not incorporated or organized under the
laws of the United States of America or a state thereof agrees that, prior to
the first date any payment is due to be made to it hereunder or under any Note
or Letter of Credit, it will deliver to the Borrower and the Agent (i) two
valid, duly
<PAGE> 38
33
completed copies of United States Internal Revenue Service Form 1001 or 4224 or
successor applicable form, as the case may be, certifying in each case that
such Bank is entitled to receive payments under this Agreement, the Notes
payable to it and the Letters of Credit, without deduction or withholding of
any United States federal income taxes, and (ii) a valid, duly completed
Internal Revenue Service Form W-8 or W-9 or successor applicable form, as the
case may be, to establish an exemption from United States backup withholding
tax. Each Bank which delivers to the Borrower and the Agent a Form 1001 or
4224 and Form W-8 or W-9 pursuant to the next preceding sentence further
undertakes to deliver to the Borrower and the Agent two further copies of the
said Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms, or
other manner or certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or otherwise is required to be
resubmitted as a condition to obtaining an exemption from withholding tax, or
after the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower, and such extensions or renewals
thereof as may reasonably be requested by the Borrower, certifying in the case
of a Form 1001 or 4224 that such Bank is entitled to receive payments under
this Agreement without deduction or withholding of any United States federal
income taxes, unless any change in treaty, law or regulation or official
interpretation thereof has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Bank from duly completing and delivering any such
letter or form with respect to it and such Bank advises the Borrower that it is
not capable of receiving payments without any deduction or withholding of
United States federal income tax, and in the case of a Form W-8 or W-9,
establishing an exemption from United States backup withholding tax.
(c) The Borrower shall not be required to pay any additional
amounts to the Agent or any Bank (or Purchasing Bank) in respect of United
States withholding tax pursuant to subsection 2.14(a) if (i) the obligation to
pay such additional amounts would not have arisen but for a failure by the
Agent or such Bank (or Purchasing Bank) to comply with the requirements of
subsection 2.14(b) (or in the case of a Purchasing Bank, the requirements of
subsection 11.6(g)) or (ii) the Agent or such Bank (or Purchasing Bank) shall
not have furnished the Borrower with such forms and shall not have taken such
other steps as reasonably may be available to it (provided, however, that such
steps shall not impose on the Agent or such Bank any additional costs or legal
or regulatory burdens deemed by the Agent or such Bank in its sole judgment to
be material) under applicable tax laws and any applicable tax treaty or
convention to obtain an exemption from, or reduction (to the lowest applicable
rate) of, such United States withholding tax.
(d) Each Bank agrees to use reasonable efforts (including
reasonable efforts to change its lending office) to
<PAGE> 39
34
avoid or to minimize any amounts which might otherwise be payable pursuant to
this subsection 2.14; provided, however, that such efforts shall not impose on
such Bank any additional costs or legal or regulatory burdens deemed by such
Bank in its sole judgment to be material.
(e) The agreements in subsection 2.14(a) shall survive the
termination of this Agreement and the payment of the Notes and all other
amounts payable hereunder until the expiration of the applicable statute of
limitations for such taxes.
2.15 Use of Proceeds. The proceeds of the Revolving Credit
Loans shall be used (a) to finance the Acquisition, including payment for the
AIHI Shares in the Tender Offer and the Merger, (b) to pay fees and expenses of
the Acquisition, (c) to refinance certain existing indebtedness of AIHI, (d) to
refinance indebtedness under the Existing Credit Agreement and (e) for other
general corporate purposes, including acquisitions permitted hereunder,
provided that such acquisitions are not hostile. The proceeds of the Swing
Line Loans shall be used solely to finance the short-term working capital needs
of the Borrower and its Subsidiaries in the ordinary course of business.
2.16 Assignment of Commitments Under Certain Circumstances.
In the event that any Bank shall have delivered a notice or certificate
pursuant to subsection 2.12, the Borrower shall have the right, at its own
expense, upon notice to such Bank and the Agent, to require such Bank to
transfer and assign without recourse (in accordance with and subject to the
restrictions contained in subsection 11.6) all its interests, rights and
obligations under this Agreement to another bank or financial institution
identified by the Borrower reasonably acceptable to the Agent (subject to the
restrictions contained in subsection 11.6) which shall assume such obligations;
provided that (a) no such assignment shall conflict with any law, rule or
regulation or order of any Governmental Authority and (b) the Borrower or the
assignee, as the case may be, shall pay to the transferor Bank in immediately
available funds on the date of such assignment the principal of and interest
accrued to the date of payment on the Loans made by it hereunder and all other
amounts accrued for its account or owed to it hereunder, including, without
limitation, amounts payable pursuant to subsection 2.12.
2.17 Regulation U and Regulation G. (a) The Loans made by
each Bank shall at all times prior to the Merger be treated for purposes of
Regulation U and Regulation G, as applicable, as two separate extensions of
credit (the "Y Credit" and the "Z Credit" of such Bank and, collectively, the
"Y Credits" and the "Z Credits"), as follows:
(i) the aggregate amount of the Y Credit of such Bank
shall be an amount equal to such Bank's pro rata share (based on the
amount of its Commitment Percentage) of the
<PAGE> 40
35
maximum loan value (as determined in accordance with Regulation U and
Regulation G, as applicable), of the AIHI Shares pledged pursuant to
the Acquisition Pledge Agreement (such AIHI Shares, the " Margin Stock
Collateral"); and
(ii) the aggregate amount of the Z Credit of such Bank
shall be an amount equal to such Bank's pro rata share (based on the
amount of its Commitment Percentage) of all Loans outstanding
hereunder minus such Bank's Y Credit.
In the event that any Margin Stock Collateral is acquired or sold, the amount
of the Y Credit of such Bank shall be adjusted (if necessary), to the extent
necessary by prepayment, to an amount equal to such Bank's pro rata share
(based on the amount of its Commitment Percentage) of the maximum loan value
(determined in accordance with Regulation U and Regulation G, as applicable, as
of the date of such acquisition or sale) of the Margin Stock Collateral
immediately after giving effect to such acquisition or sale. Nothing contained
in this subsection 2.17 shall be deemed to permit any sale of Margin Stock
Collateral in violation of subsection 8.5 or 8.6.
(b) Each Bank will maintain its records to identify the Y
Credit of such Bank and the Z Credit of such Bank, and, solely for the purposes
of complying with Regulation U and Regulation G, as applicable, the Y and Z
Credits shall be treated as separate extensions of credit. Each Bank hereby
represents and warrants that the loan value of the Collateral (other than the
Margin Stock Collateral) is sufficient for such Bank to lend its pro rata share
of the Z Credit.
(c) The benefits of the security in the Margin Stock
Collateral created by the Acquisition Pledge Agreement, shall be allocated
first to the benefit and security of the payment of the principal of and
interest on the Y Credits of the Banks and of all other amounts payable by the
Borrower under this Agreement in connection with the Y Credits (collectively,
the "Y Credit Amounts") and second, only after the payment in full of the Y
Credit Amounts, to the benefit and security of the payment of the principal of
and interest on the Z Credits of the Banks and of all other amounts payable by
the Borrower under this Agreement in connection with the Z Credits
(collectively, the "Z Credit Amounts"). The benefits of the security in the
Collateral other than Margin Stock Collateral created by the Security Documents
and the benefits of the indirect security in Collateral other than Margin Stock
Collateral created by this Agreement, shall be allocated first to the benefit
and security of the Z Credit Amounts and second, only after the payment in full
of the Z Credit Amounts, to the benefit and security of the Y Credit Amounts.
(d) The Borrower shall furnish to each Bank at the time of
each acquisition and sale of Margin Stock Collateral such information and
documents as the Agent or such Bank may require
<PAGE> 41
36
to determine the Y and Z Credits, and at any time and from time to time, such
other information and documents as the Agent or such Bank may reasonably
require to determine compliance with Regulation U or Regulation G, as
applicable.
(e) Each Bank shall be responsible for its own compliance
with and administration of the provisions of this subsection 2.17 and
Regulation U or Regulation G, as applicable, and the Agent shall have no
responsibility for any determinations or allocations made or to be made by any
Bank as required by such provisions. The Agent shall transmit to the Borrower
on behalf of a Bank any requests made by such Bank pursuant to subsection
2.17(d) and shall transmit from the Borrower to such Bank or the Banks any
information provided by the Borrower in response to inquiries made under
subsection 2.17(d) or otherwise required to be delivered by the Borrower to the
Banks pursuant to this subsection 2.17.
SECTION 3. LETTERS OF CREDIT
3.1 Letters of Credit. (a) Subject to the terms and
conditions of this Agreement, Chemical (or such other Bank which succeeds
Chemical as Agent), as Issuing Bank, agrees, and any other Issuing Bank may, as
agreed between the Borrower and such Issuing Bank, agree, on behalf of the
Banks, and in reliance on the agreement of the Banks set forth in subsection
3.3, to issue for the account of the Borrower (or in connection with any
Foreign Letter of Credit, for the joint and several accounts of the Borrower
and such applicable Foreign Subsidiary) letters of credit in an aggregate face
amount not to exceed $175,000,000 at any time outstanding, as follows:
(i) standby letters of credit (collectively, the "Standby
Letters of Credit") in the form of either (A) in the case of standby
letters of credit to be used for the purposes described in subsection
3.9(a) or (c), the Issuing Bank's standard standby letter of credit or
(B) in the case of standby letters of credit to be used for the
purposes described in subsection 3.9(b), a letter of credit reasonably
satisfactory to the Issuing Bank, and in either case, in favor of such
beneficiaries as the Borrower shall specify from time to time (which
shall be reasonably satisfactory to the Issuing Bank); and
(ii) commercial letters of credit in the form of the
Issuing Bank's standard commercial letters of credit ("Commercial
Letters of Credit") in favor of sellers of goods or services to the
Borrower or its Subsidiaries (the Standby Letters of Credit and
Commercial Letters of Credit being referred to collectively as the
"Letters of Credit");
provided that on the date of the issuance of any Letter of Credit, and after
giving effect to such issuance, the Extensions
<PAGE> 42
37
of Credit shall not exceed the Commitments at such time. Each Standby Letter
of Credit shall (i) have an expiry date no later than (A) with respect to any
Standby Letter of Credit to be used for the purposes described in subsection
3.9(a) or (c), one year from the date of issuance thereof or, if earlier, the
Termination Date or (B) with respect to any Standby Letter of Credit to be used
for the purposes described in subsection 3.9(b), the Termination Date, (ii) be
denominated in Dollars and (iii) be in a minimum face amount of $500,000. Each
Commercial Letter of Credit shall (i) provide for the payment of sight drafts
when presented for honor thereunder, or of time drafts, in each case in
accordance with the terms thereof and when accompanied by the documents
described or when such documents are presented, as the case may be, (ii) be
denominated in Dollars and (iii) have an expiry date no later than six months
from the date of issuance thereof or, if earlier, five Business Days prior to
the Termination Date.
(b) Pursuant to the Existing Credit Agreement, Chemical, as
Issuing Bank, has issued the Letters of Credit described in Schedule 3.1 (the
"Existing Letters of Credit"). From and after the Closing Date, the Existing
Letters of Credit shall for all purposes be deemed to be Letters of Credit
outstanding under this Agreement.
3.2 Procedure for Issuance of Letters of Credit. The
Borrower may from time to time request, upon at least three Business Days'
notice, Chemical, as Issuing Bank, to issue a Letter of Credit by delivering to
such Issuing Bank at its address specified in subsection 11.2 a Letter of
Credit Application, completed to the satisfaction of such Issuing Bank,
together with such other certificates, documents and other papers and
information as such Issuing Bank may reasonably request. Upon receipt of any
Letter of Credit Application from the Borrower, or, in the case of a Foreign
Letter of Credit, from the Borrower and the Foreign Subsidiary that is an
account party on such Letter of Credit, such Issuing Bank will promptly, but in
no event later than five Business Days following receipt of such Letter of
Credit Application, notify each Bank thereof. Upon receipt of any Letter of
Credit Application, Chemical, as Issuing Bank, will process such Letter of
Credit Application, and the other certificates, documents and other papers
delivered in connection therewith, in accordance with its customary procedures
and shall promptly issue such Letter of Credit (but in no event earlier than
three Business Days after receipt by such Issuing Bank of the Letter of Credit
Application relating thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof and by furnishing a copy thereof to the Borrower and
the Participating Banks. In addition, the Borrower may from time to time agree
with Issuing Banks other than Chemical upon procedures for issuance by such
Issuing Banks of Letters of Credit and cause Letters of Credit to be issued by
following such procedures. Such procedures shall be reasonably satisfactory to
the Agent. Prior to the issuance of any Letter of Credit, the Issuing Bank
<PAGE> 43
38
will confirm with the Agent that the issuance of such Letter of Credit is
permitted pursuant to Section 3 and subsection 5.3. Additionally, each Issuing
Bank and the Borrower shall inform the Agent of any modifications made to
outstanding Letters of Credit, of any payments made with respect to such
Letters of Credit, and of any other information regarding such Letters of
Credit as may be reasonably requested by the Agent, in each case pursuant to
procedures established by the Agent.
3.3 Participating Interests. In the case of each Existing
Letter of Credit, effective on the Closing Date, and in the case of each Letter
of Credit issued in accordance with the terms hereof on or after the Closing
Date, effective as of the date of the issuance thereof, the Issuing Bank in
respect of such Letter of Credit agrees to allot, and does allot, to each other
Bank, and each such Bank severally and irrevocably agrees to take and does
take, a Participating Interest in such Letter of Credit and the related Letter
of Credit Application in a percentage equal to such Bank's Commitment
Percentage. On the date that any Purchasing Bank becomes a party to this
Agreement in accordance with subsection 11.6, Participating Interests in any
outstanding Letter of Credit held by the Bank from which such Purchasing Bank
acquired its interest hereunder shall be proportionately reallotted between
such Purchasing Bank and such transferor Bank. Each Participating Bank hereby
agrees that its obligation to participate in each Letter of Credit issued in
accordance with the terms hereof and to pay or to reimburse the Issuing Bank in
respect of such Letter of Credit for its participating share of the drafts
drawn thereunder shall be irrevocable and unconditional; provided that no
Participating Bank shall be liable for the payment of any amount under
subsection 3.4(b) resulting solely from such Issuing Bank's gross negligence or
willful misconduct.
3.4 Payments. (a) The Borrower agrees (and in the case of a
Foreign Letter of Credit, such Foreign Subsidiary for whose account such Letter
of Credit was issued shall also agree, jointly and severally) (i) to reimburse
the Agent for the account of the relevant Issuing Bank, forthwith upon its
demand and otherwise in accordance with the terms of the Letter of Credit
Application, if any, relating thereto, for any payment made by such Issuing
Bank under any Letter of Credit issued by such Issuing Bank for its account and
(ii) to pay to the Agent for the account of such Issuing Bank, interest on any
unreimbursed portion of any such payment from the date of such payment until
reimbursement in full thereof at a fluctuating rate per annum equal to the rate
then borne by ABR Loans pursuant to subsection 4.1(a) plus 2%.
(b) In the event that an Issuing Bank makes a payment under
any Letter of Credit and is not reimbursed in full therefor, forthwith upon
demand of such Issuing Bank, and otherwise in accordance with the terms hereof
or of the Letter of Credit Application, if any, relating to such Letter of
Credit,
<PAGE> 44
39
such Issuing Bank will promptly through the Agent notify each Participating
Bank that acquired its Participating Interest in such Letter of Credit from
such Issuing Bank. No later than the close of business on the date such notice
is given, each such Participating Bank will transfer to the Agent, for the
account of such Issuing Bank, in immediately available funds, an amount equal
to such Participating Bank's pro rata share of the unreimbursed portion of such
payment. Upon its receipt from such Participating Bank of such amount, such
Issuing Bank will, if so requested by such Participating Bank, complete,
execute and deliver to such Participating Bank a Letter of Credit Participation
Certificate dated the date of such receipt and in such amount.
(c) Whenever, at any time, after an Issuing Bank has made
payment under a Letter of Credit and has received from any Participating Bank
such Participating Bank's pro rata share of the unreimbursed portion of such
payment, such Issuing Bank receives any reimbursement on account of such
unreimbursed portion or any payment of interest on account thereof, such
Issuing Bank will distribute to the Agent, for the account of such
Participating Bank, its pro rata share thereof; provided, however, that in the
event that the receipt by such Issuing Bank of such reimbursement or such
payment of interest (as the case may be) is required to be returned, such
Participating Bank will promptly return to the Agent, for the account of such
Issuing Bank, any portion thereof previously distributed by such Issuing Bank
to it.
3.5 Increased Costs. (a) In the event that any Requirement
of Law (or any change therein or in the interpretation or application thereof)
or compliance by any Bank or any corporation controlling a Bank with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority shall either (i) impose, modify or hold
applicable any reserve, special deposit or similar requirement against letters
of credit issued by an Issuing Bank or participated in by other Banks or (ii)
impose upon an Issuing Bank or on any other Bank (or any corporation
controlling any such Bank) any other condition regarding any Letter of Credit
and the result of any event referred to in clause (i) or (ii) above shall be to
increase the cost to such Issuing Bank or any other Bank (or any corporation
controlling any such Bank) of issuing or maintaining such Letter of Credit (or
its participation therein, as the case may be), or to reduce any amount
receivable in connection therewith then, in any such case the Borrower shall,
without duplication of any amounts paid pursuant to subsection 2.12(a),
promptly pay to such Issuing Bank or such other Bank, as the case may be, upon
receipt of its demand setting forth in reasonable detail any additional amounts
which shall be sufficient to compensate such Issuing Bank or such other Bank
for such increased cost or reduced amount receivable, together with interest on
each such amount from the date two Business Days after the date demanded until
payment in full
<PAGE> 45
40
thereof at the ABR. A certificate as to the fact and amount of such increased
cost incurred by such Issuing Bank or such other Bank or such reduced amount
receivable as a result of any event mentioned in clause (i) or (ii) above,
submitted by such Issuing Bank or any such other Bank (through the Agent) to
the Borrower, shall be conclusive in the absence of manifest error.
(b) In the event that an Issuing Bank shall have determined
that the adoption of any law, rule, regulation or guideline regarding capital
adequacy, or any change therein or in the interpretation or application thereof
or compliance by such Issuing Bank or any corporation controlling such Issuing
Bank with any request or directive regarding capital adequacy (whether or not
having the force of law) from any central bank or Governmental Authority,
including, without limitation, the issuance of any final rule, regulation or
guideline, does or shall have the effect of reducing the rate of return on such
Issuing Bank's or such corporation's capital as a consequence of its
obligations hereunder to a level below that which such Issuing Bank or such
corporation could have achieved but for such adoption, change or compliance
(taking into consideration such Issuing Bank's or such corporation's policies
with respect to capital adequacy) by an amount deemed by such Issuing Bank to
be material, then from time to time, after submission by such Issuing Bank to
the Borrower (with a copy to the Agent) of a written request therefor, the
Borrower shall promptly pay to such Issuing Bank, without duplication of any
amounts paid pursuant to subsection 2.12(b), such additional amount or amounts
as will compensate such Issuing Bank for such reduction.
3.6 Further Assurances. (a) The Borrower hereby agrees,
from time to time, to do and perform any and all acts and to execute any and
all further instruments reasonably requested by an Issuing Bank more fully to
effect the purposes of this Agreement and the issuance of the Letters of Credit
opened hereunder.
(b) It is understood that in connection with Letters of
Credit issued for the purposes described in subsection 3.9(b) it may be
customary for the Issuing Bank in respect of such Letter of Credit to obtain an
opinion of its counsel relating to such Letter of Credit, and each Issuing Bank
that issues such a Letter of Credit agrees to cooperate with the Borrower in
obtaining such customary opinion, which opinion shall be at the Borrower's
expense unless otherwise agreed to by such Issuing Bank.
3.7 Obligations Absolute. The payment obligations of the
Borrower under subsection 3.4 shall be unconditional and irrevocable and shall
be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances:
<PAGE> 46
41
(a) the existence of any claim, set-off, defense or other
right which the Borrower may have at any time against any beneficiary,
or any transferee, of any Letter of Credit (or any Persons for whom
any such beneficiary or any such transferee may be acting), any
Issuing Bank or any Participating Bank, or any other Person, whether
in connection with this Agreement, the transactions contemplated
herein, or any unrelated transaction;
(b) any statement or any other document presented under any
Letter of Credit opened for its account proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(c) payment by an Issuing Bank under any Letter of Credit
against presentation of a draft or certificate which does not comply
with the terms of such Letter of Credit, except payment resulting
solely from the gross negligence or willful misconduct of such Issuing
Bank; or
(d) any other circumstances or happening whatsoever, whether
or not similar to any of the foregoing, except circumstances or
happenings resulting from the gross negligence or willful misconduct
of such Issuing Bank.
3.8 Letter of Credit Application. To the extent not
inconsistent with the terms of this Agreement (in which case the provisions of
this Agreement shall prevail), provisions of any Letter of Credit Application
related to any Letter of Credit are supplemental to, and not in derogation of,
any rights and remedies of the Issuing Banks and the Participating Banks under
this Section 3 and applicable law. The Borrower acknowledges and agrees that
all rights of the Issuing Bank under any Letter of Credit Application shall
inure to the benefit of each Participating Bank to the extent of its Commitment
Percentage as fully as if such Participating Bank was a party to such Letter of
Credit Application.
3.9 Purpose of Letters of Credit. Each Standby Letter of
Credit shall be used by the Borrower solely (a) to provide credit support for
borrowings by the Borrower or its Subsidiaries, (b) to pay or secure the
payment of the principal amount of, and accrued interest on, and other
obligations with respect to, Industrial Revenue Bonds in accordance with the
provisions of the indenture related thereto, or (c) for other working capital
purposes of the Borrower and Subsidiaries in the ordinary course of business.
Each Commercial Letter of Credit will be used by the Borrower and Subsidiaries
solely to provide the primary means of payment in connection with the purchase
of goods or services by the Borrower and Subsidiaries in the ordinary course of
business.
<PAGE> 47
42
SECTION 4. INTEREST RATE PROVISIONS, FEES AND PAYMENTS
4.1 Interest Rates and Payment Dates. (a) Each ABR Loan
shall bear interest for the period from and including the date thereof until
maturity, repayment or conversion on the unpaid principal amount thereof at a
rate per annum equal to the ABR.
(b) Each Eurodollar Loan shall bear interest for each
Interest Period with respect thereto on the unpaid principal amount thereof at
a rate per annum equal to the Eurodollar Rate determined for such Interest
Period plus the Applicable Margin.
(c) If all or a portion of the principal amount of any of the
Loans shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), each Eurodollar Loan shall be converted to an ABR
Loan at the end of the last Interest Period therefor for which the Agent shall
have determined a Eurodollar Rate on or prior to the date such unpaid principal
amount became due. If all or a portion of the principal amount of any of the
Loans shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), all Loans shall bear interest while such principal
amount is in default at a rate per annum equal to the interest rate then borne
by each such Loan under subsection 4.1(a) or 4.1(b), as applicable, plus 2%.
Any overdue fees payable hereunder shall bear interest from the due date
thereof until payment in full thereof (as well after judgment as before
judgment) at a rate per annum equal to the interest rate then borne by ABR
Loans plus 2%.
(d) Interest payable under subsection 4.1(a) or 4.1(b) shall
be payable in arrears on each Interest Payment Date, commencing on the first
such date to occur after the Closing Date. Interest payable under subsection
4.1(c) shall be payable on demand.
4.2 Commitment Fees. The Borrower agrees to pay to the
Agent, for the account of each Bank, a commitment fee for the period from and
including the Closing Date to the Termination Date calculated on the average
daily Available Commitment of such Bank for each day during the period for
which such commitment fee is being paid, at the rate per annum set forth below
opposite the Coverage Ratio most recently determined:
<TABLE>
<CAPTION>
Level of Commitment
Coverage Ratio Fee Rate
-------------- ----------
<S> <C>
Level I:
Coverage Ratio is
less than 3.25 to 1 0 .375%
</TABLE>
<PAGE> 48
43
<TABLE>
<S> <C>
Level II:
Coverage Ratio is
equal to or greater
than 3.25 to 1 but less
than 4.0 to 1 0 .250%
Level III:
Coverage Ratio is equal to
or greater than 4.0 to 1
but less than 5.0 to 1 0 .250%
Level IV
Coverage Ratio is
greater than or equal to 5.0 to 1 0.200%;
</TABLE>
provided that (a) the commitment fee rate shall be that set forth above
opposite Level II from the Closing Date until the earlier of (i) the Adjustment
Date occurring after the first full fiscal quarter following the fiscal quarter
in which the Closing Date occurs and (ii) any Equity Closing Date, (b) the
commitment fee rate determined for any Adjustment Date shall remain in effect
until a subsequent Adjustment Date for which the Coverage Ratio falls within a
different Level and (c) if the financial statements and related compliance
certificate for any fiscal period are not delivered by the date due pursuant to
subsections 7.1 and 7.2(b), the commitment fee rate shall be (i) for the first
5 days subsequent to such due date, that in effect on the day prior to such due
date, and (ii) thereafter, that set forth above opposite Level I, in either
case, until the subsequent Adjustment Date. Such fee shall be payable
quarterly in arrears on the last day of each March, June, September and
December, commencing on September 30, 1995 and on the Termination Date.
4.3 Agent's Fees. The Borrower agrees to pay to the Agent,
for its own account and for the account of Chemical Securities Inc., any fees
as agreed between Chemical and the Borrower in writing from time to time.
4.4 Letter of Credit Fees. (a) In lieu of any letter of
credit commissions and fees provided for in any Letter of Credit Application
(other than any standard issuance, amendment and negotiation fees), the
Borrower will pay the Agent, (i) for the account of the Issuing Bank, a
non-refundable fronting fee equal to 0.25% per annum and (ii) for the account
of the Banks, a non-refundable Letter of Credit fee equal to the Applicable
Margin with respect to Eurodollar Loans less 0.25%, in each case on the amount
available to be drawn under such Letter of Credit. Such fee shall be payable
quarterly in arrears on the last Business Day of each calendar quarter, and
shall be calculated on the average daily amount available to be drawn under the
Letters of Credit.
<PAGE> 49
44
(b) The Borrower agrees to pay the Issuing Bank for its own
account its customary administration, amendment, transfer and negotiation fees
charged by the Issuing Bank in connection with its issuance and administration
of Letters of Credit.
4.5 Computation of Interest and Fees. (a) Interest on the
Loans (other than interest calculated on the basis of the Prime Rate (as
defined in the definition of ABR)) and all fees payable pursuant hereto shall
be calculated on the basis of a 360 day year for the actual days elapsed.
Interest calculated on the basis of the Prime Rate shall be calculated on the
basis of a 365- or 366- (as the case may be) day year for the actual days
elapsed. The Agent shall as soon as practicable notify the Borrower and the
Banks of each determination of a Eurodollar Rate. Any change in the interest
rate on a Loan resulting from a change in the ABR, the Eurocurrency Reserve
Requirements or the Applicable Margin shall become effective as of the opening
of business on the day on which such change in the ABR is announced, such
change in the Eurocurrency Reserve Requirements shall become effective or such
change in the Applicable Margin occurs, as the case may be. The Agent shall as
soon as practicable notify the Borrower and the Banks of the effective date and
the amount of each such change. For purposes of the Interest Act (Canada),
where, in respect of any Loan, (i) a rate of interest is to be calculated on
the basis of a year of 360 days, the yearly rate of interest to which the 360
day rate is equivalent is such rate multiplied by the number of days in the
year for which such calculation is made and divided by 360, or (ii) an annual
rate of interest is to be calculated during a leap year, the yearly rate of
interest to which such rate is equivalent is such rate multiplied by 366 and
divided by 365.
(b) Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Banks in the absence of manifest error. The Agent shall,
at the request of the Borrower, deliver to the Borrower a statement showing the
quotations used by the Agent in determining any interest rate pursuant to
subsection 4.1(b).
(c) If any Reference Bank's Commitments shall terminate
(otherwise than on termination of all the Commitments), or all of its Loans
shall be assigned for any reason whatsoever, such Reference Bank shall
thereupon cease to be a Reference Bank, and if, as a result of the foregoing,
there shall only be one Reference Bank remaining, then the Agent (after
consultation with the Borrower and the Banks) shall, by notice to the Borrower
and the Banks, designate another Bank as a Reference Bank so that there shall
at all times be at least two Reference Banks.
(d) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Agent as contemplated hereby. If any of the
Reference Banks shall be unable or otherwise fails to supply such rates to the
Agent upon its request, the rate of
<PAGE> 50
45
interest shall be determined on the basis of the quotations of the remaining
Reference Banks or Reference Bank.
4.6 Pro Rata Treatment and Payments. Each borrowing by the
Borrower hereunder (other than pursuant to subsection 2.4(a)), each conversion
or continuation of a Loan under subsection 2.6, each payment (including each
prepayment) by the Borrower on account of principal, interest and fees
hereunder (except fees referred to in subsections 4.3, 4.4(a)(i) and 4.4(b) and
except for payments in respect of Swing Line Loans) and any reduction of the
Commitments shall be made pro rata according to the respective Commitment
Percentages of the Banks. All payments (including prepayments) to be made by
the Borrower on account of principal, interest and fees shall be made without
set off or counterclaim and shall be made to the Agent, for the account of the
Banks (except with respect to the fees referred to in subsections 4.3,
4.4(a)(i) and 4.4(b) and except for payments in respect of Swing Line Loans),
at the Agent's office set forth in subsection 11.2, in each case on or prior to
12:00 P.M., New York City time, in lawful money of the United States of America
and in immediately available funds. The Agent shall promptly distribute each
such payment to each Bank. If any payment hereunder (other than payments on
the Eurodollar Loans) becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day, and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension. If any payment on a Eurodollar
Loan becomes due and payable on a day other than a Working Day, the maturity
thereof shall be extended to the next succeeding Working Day unless the result
of such extension would be to extend such payment into another calendar month
in which event such payment shall be made on the immediately preceding Working
Day.
4.7 Failure by Banks to Make Funds Available. Unless the
Agent shall have been notified in writing by any Bank prior to a Borrowing Date
that such Bank will not make the amount which would constitute its Commitment
Percentage of the borrowing on such Borrowing Date available to the Agent, the
Agent may assume that such Bank has made such amount available to the Agent on
such Borrowing Date in accordance with subsection 2.3 or 2.4, as the case may
be, and the Agent may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. If such amount is made available to the Agent
on a date after such Borrowing Date, such Bank shall pay to the Agent on demand
an amount equal to the product of (a) the daily average Federal funds rate
during such period as quoted by the Agent, times (b) the amount of such Bank's
Commitment Percentage of such borrowing, times (c) a fraction the numerator of
which is the number of days that elapse from and including such Borrowing Date
to the date on which such Bank's Commitment Percentage of such borrowing shall
have become immediately available to the Agent and the denominator of which is
360. A certificate of the Agent submitted to any Bank with respect to any
amounts owing under
<PAGE> 51
46
this subsection 4.7 shall be conclusive, absent manifest error. If such Bank's
Commitment Percentage of such borrowing is not in fact made available to the
Agent by such Bank within three Business Days of such Borrowing Date, the Agent
shall be entitled to recover from the Borrower such amount, on demand, with
interest thereon at the rate applicable to the Loans made on such Borrowing
Date. Nothing herein shall be deemed to relieve any Bank from its obligation
to fulfill its Commitment hereunder or to prejudice any rights which the
Borrower may have against such Bank as a result of any default by such Bank
hereunder.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Closing Date. The Closing Date shall occur
on the date of satisfaction of the following conditions precedent:
(a) Agreement; Notes. The Agent shall have received (i)
a counterpart of this Agreement for each Bank, duly executed by a
Responsible Officer of the Borrower and (ii) for each Bank, a
Revolving Credit Note (and, in the case of Chemical, a Swing Line
Note) conforming to the requirements hereof, duly executed by a
Responsible Officer of the Borrower.
(b) Subsidiary Guarantee. The Agent shall have received,
with a counterpart for each Bank, the Subsidiary Guarantee duly
executed by each guarantor party thereto.
(c) Security Agreements. The Agent shall have received, with
a counterpart for each Bank, each of the Security Agreements duly
executed by each grantor party thereto.
(d) Pledge Agreements. The Agent shall have received, with a
counterpart for each Bank, each of the Pledge Agreements duly executed
by each pledgor party thereto.
(e) Pledged Stock; Stock Powers. The Agent shall have
received the certificates representing the shares pledged pursuant to
each of the Pledge Agreements, together with an undated stock power
for each such certificate executed in blank by a duly authorized
officer of the pledgor thereof.
(f) Mortgages. The Agent shall have received, with a
counterpart for each Bank, each of the Mortgages duly executed by each
mortgagor party thereto.
(g) Perfection Actions. The Agent shall have received
evidence in form and substance satisfactory to it that all filings,
recordings, registrations and other actions, including, without
limitation, the filing of duly executed financing statements on form
UCC-1, necessary or, in the
<PAGE> 52
47
opinion of the Agent, desirable to perfect the Liens created by the
Security Documents shall have been completed.
(h) Title Reports. The Agent shall have received in
respect of each parcel covered by each Mortgage a title report from a
Person satisfactory to the Agent demonstrating that after release of
the mortgages (the "Original Mortgages") securing the Existing Credit
Agreement and the recordation of the Mortgages immediately after such
release, the Mortgages will constitute first mortgage liens on the
parcels covered thereby subject only to the exceptions described in
the title insurance policies issued in respect of the Original
Mortgages and others acceptable to the Agent.
(i) Flood Insurance. The Agent shall have received in
respect of each parcel covered by each Mortgage a certificate from
Transamerica Flood Certificate Service certifying that no parcel
covered by a Mortgage is located in an area that has been identified
by the Secretary of Housing and Urban Development as an area having
special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968.
(j) Lien Searches. The Agent shall have received the
results of a recent search by a Person satisfactory to the Agent, of
the Uniform Commercial Code, judgement and tax lien filings which may
have been filed with respect to personal property of the Borrower, and
the results of such search shall be reasonably satisfactory to the
Agent.
(k) Consents. The Agent shall have received, with copies
and executed certificates for each Bank, true and correct copies (in
each case certified as to authenticity on such date by a duly
authorized officer of the Borrower) of all documents and instruments,
including all consents, authorizations and filings, required under any
Requirement of Law or by Contractual Obligation of Borrower or any of
its Subsidiaries, in connection with the execution, delivery,
performance, validity and enforceability of this Agreement and the
other Loan Documents, and such consents, authorizations and filings
shall be satisfactory in form and substance to the Banks and be in
full force and effect.
(l) Incumbency Certificates. The Agent shall have
received, with a counterpart for each Bank, a certificate of the
Secretary or Assistant Secretary of each Domestic Loan Party, dated
the Closing Date, as to the incumbency and signature of their
respective officers executing each Loan Document to be entered into on
the Closing Date to which it is a party, together with satisfactory
evidence of the incumbency of such Secretary or Assistant Secretary.
<PAGE> 53
48
(m) Corporate Proceedings. The Agent shall have
received, with a counterpart for each Bank, a copy of the resolutions
in form and substance satisfactory to the Agent, of the Board of
Directors (or the executive committee thereof) of each Domestic Loan
Party authorizing (i) the execution, delivery and performance of each
Loan Document to be entered into on the Closing Date to which it is a
party, and (ii) the granting by it of the pledge and security
interests, if any, granted by it pursuant to such Loan Document,
certified by their respective Secretary or an Assistant Secretary as
of the Closing Date, which certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded as of the date of such certificate.
(n) Fees. The Agent shall have received all fees
required to be paid to the Agent and/or the Banks pursuant to Section
4 and/or any other written agreement on or prior to the Closing Date.
(o) Legal Opinion of Counsel to Borrower. The Agent shall
have received, with a copy for each Bank, an opinion, dated the
Closing Date, of (i) Winston & Strawn, counsel to the Borrower and its
Subsidiaries, (ii) Michigan counsel to the Borrower and its
Subsidiaries, acceptable to the Agent, (iii) Wisconsin counsel to the
Borrower and its Subsidiaries acceptable to the Agent and (iv)
Tennessee counsel to the Borrower and its Subsidiaries acceptable to
the Agent, in each case in form and substance satisfactory to the
Banks and covering such matters incident to the transactions
contemplated hereby as the Banks may reasonably require.
(p) Legal Opinions of Foreign Counsel. The Agent shall have
received or waived as a condition precedent, with a counterpart for
each Bank, an opinion of Stikeman, Elliott, Canadian counsel to the
Borrower, Blake, Cassels & Graydon, Canadian counsel to the Agent,
Baker & McKenzie, Swedish counsel to the Borrower, Freshfields, French
counsel to the Agent, Peltzer & Riesenkampff, German counsel to the
Borrower, Enriquez, Gonzales, Aguirre y Ochoa, Mexican counsel to the
Borrower, and Clifford Chance, English counsel to the Agent in form
and substance satisfactory to the Agent and covering such matters
incident to the transactions contemplated hereby as the Agent may
reasonably require.
(q) Subordinated Debt Documents; Other Agreements. The Agent
shall have received, with a counterpart for each Bank, a certified
true copy of the Subordinated Note Indenture, the Senior Subordinated
Note Indenture, the Stockholders Agreement, the Subscription
Agreements and the Purchase Agreement.
<PAGE> 54
49
(r) Existing Credit Agreement. The Agent shall have received
evidence that the Existing Credit Agreement shall have been terminated
(other than those obligations which, by their terms, survive
termination) and all amounts payable thereunder shall have been paid
(other than obligations in respect of Existing Letters of Credit,
which become outstanding under this Agreement).
(s) Environmental Report. The Agent shall have received,
with a counterpart for each Bank, complete copies of each of the
written reports obtained by or on behalf of the Borrower from AIHI
and/or its Subsidiaries reasonably satisfactory to the Agent.
(t) Minimum Share Amount. The Agent shall have received
evidence that Acquisition Corp. shall have acquired concurrently with
the initial Loans on the Closing Date not less than a majority, on a
fully diluted basis, of the AIHI Shares and there shall not have been
any material change in the number of AIHI Shares outstanding (on a
fully diluted basis) since July 7, 1995.
(u) Offer to Purchase. The Tender Offer transactions
shall have been consummated (prior to or concurrently with the initial
Loans on the Closing Date) pursuant to the terms and conditions of the
Offer to Purchase, and none of the material terms or conditions of the
Tender Offer shall have been waived or modified (except with the
consent of the Agent and the Required Banks).
(v) Merger Agreement. The Merger Agreement shall be in
full force and effect and the Agent shall have received, in sufficient
copies for each Bank, a certified complete copy of the Merger
Agreement.
(w) Margin Regulations. All Loans made under this Agreement
shall be in full compliance with all applicable requirements of law,
including, without limitation, Regulations G, T, U and X, and the
Agent shall have received, for each Bank, a properly completed and
duly executed Form FR U-1 and Form FR G-3, as applicable.
(x) Acquisition Pledge Agreement; Depositary Agency
Agreement. The Agent shall have received the Acquisition Pledge
Agreement, duly executed by each of the parties thereto and the
Depositary Agency Agreement, duly executed by the Depositary, the
Borrower and Acquisition Corp., and there shall have been delivered to
the Agent or the Depositary:
(i) certificates representing the Initially
Pledged Stock (as such term is defined in the Acquisition
Pledge Agreement) (other than any such Initially Pledged Stock
constituting Book-Entry Shares
<PAGE> 55
50
(as defined in the Acquisition Pledge Agreement) that has been
transferred into an account of Chemical, for the benefit of
the Agent, with the Clearing Corporation (as defined in the
Acquisition Pledge Agreement) in accordance with Section 4(b)
of the Acquisition Pledge Agreement);
(ii) an undated stock power for each such
certificate executed in blank; and
(iii) with respect to Initially Pledged Stock
consisting of Book-Entry Shares, evidence that all actions
described in Section 3(b) of the Acquisition Pledge Agreement
which are necessary to create and perfect the security
interests pursuant to the Acquisition Pledge Agreement in
accordance with Article 8 of the Uniform Commercial Code have
been taken.
The Initially Pledged Stock under the Acquisition Pledge Agreement
shall constitute all of the AIHI Shares acquired in the Tender Offer
or through the Tender Offer Documents or otherwise owned by the
Borrower and its Subsidiaries.
(y) Representations and Warranties. The representations and
warranties made by each of the Loan Parties in or pursuant to the Loan
Documents shall be true and correct in all material respects on and as
of the Closing Date as if made on and as of the Closing Date.
(aa) Additional Matters. All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by the Loan Documents
shall be reasonably satisfactory in form and substance to the Agent.
5.2 Conditions to Loans to Be Made on the Merger Date.
The obligation of each Bank to make any Loan requested to be made by it on the
Merger Date to fund the payment of the Merger Consideration (as defined in the
Merger Agreement) is subject to the satisfaction of the following conditions
precedent:
(a) Subsection 5.1 Conditions Satisfied. Each of the
conditions precedent listed in subsection 5.1 shall have been
satisfied or waived in accordance with this Agreement.
(b) Merger. The Agent shall be reasonably satisfied that all
transactions in connection with the Merger have been consummated under
the terms and conditions of the Merger Agreement and in compliance
with all relevant laws and regulations and that the Merger has become
effective.
(c) Approvals. Prior to or concurrently with the making of
the Loans to be made on the Merger Date, all
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51
conditions set forth in Section 9.01 of the Merger Agreement shall
have been satisfied.
(d) Legal Opinion. The Agent shall have received, in
sufficient copies for each Bank, opinions of counsel to the Borrower
and Acquisition Corp. reasonably satisfactory to the Agent, addressed
to the Agent and the Banks, containing opinions substantially in the
form of Exhibit L-2, with customary assumptions, qualifications and
exceptions.
5.3 Conditions to Each Loan and Each Letter of Credit. The
agreement of each Bank to make any Loan requested to be made by it on any date
(including, without limitation, the Closing Date) and the agreement of the
Issuing Bank to open any Letter of Credit requested to be opened on any date
(including, without limitation, the Closing Date), is subject to the
satisfaction of the following conditions precedent as of the date such Loan or
Letter of Credit is requested to be made or opened:
(a) Representations and Warranties. Each of the
representations and warranties made by each of the Loan Parties in or
pursuant to the Loan Documents shall be true and correct in all
material respects on and as of such date as if made on and as of such
date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Loans or the Letters of Credit requested to be made or opened, as the
case may be, on such date.
(c) No Litigation. No material litigation, investigation or
proceeding before or by any arbitrator or Governmental Authority shall
be continuing or threatened against Borrower, any Subsidiary or any of
the officers or directors of any thereof in connection with any Loan
Document or any of the transactions contemplated hereby or thereby.
(d) No Violations of Law. The Loans and the use of
proceeds thereof shall not contravene, violate or conflict with, nor
involve any Bank in a violation of, any law, rule, injunction, or
regulation or determination of any court of law or other Governmental
Authority.
(e) No Change. Since the Closing Date, there shall have
been no material adverse change in the business, operations, assets or
financial or other condition of the Borrower and its Subsidiaries
taken as a whole.
(f) Borrowing Certificate. The Agent shall have
received, with a copy for each Bank, a certificate of the Borrower,
substantially in the form of Exhibit I, dated such Borrowing Date and
executed and delivered by a Responsible Officer of the Borrower.
<PAGE> 57
52
Each borrowing by the Borrower hereunder and each request for
issuance of a Letter of Credit shall constitute a representation and warranty
by the Borrower as of the date of such borrowing that the conditions contained
in this subsection 5.3 have been satisfied.
SECTION 6. REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement and to make
the Loans, and to induce the Issuing Bank to issue Letters of Credit, the
Borrower hereby represents and warrants to the Agent and to each Bank that:
6.1 Financial Statements. The audited consolidated
balance sheets of the Borrower as of December 31, 1994 and the related
statements of income and cash flow for the period ending on such date,
heretofore furnished to the Agent and the Banks and certified by a Responsible
Officer of the Borrower are complete and correct in all material respects and
fairly present the financial condition of the Borrower on such date in
conformity with GAAP applied on a consistent basis (subject to normal year-end
adjustments). All liabilities, direct and contingent, of the Borrower on such
dates required to be disclosed pursuant to GAAP are disclosed in such financial
statements.
6.2 No Change. There has been no material adverse change
in the business, operations, assets or financial or other condition of the
Borrower and its Subsidiaries taken as a whole from that reflected on the
financial statements dated December 31, 1994 referred to in subsection 6.1.
6.3 Corporate Existence; Compliance with Law. The
Borrower and each of its Material Subsidiaries (a) is duly organized, validly
existing and in good standing (or the functional equivalent thereof in the case
of Foreign Subsidiaries) under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority, and the legal right,
to own and operate its property, to lease the property it operates as lessee
and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign corporation and in good standing (or the functional
equivalent thereof in the case of Foreign Subsidiaries) under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification except where the failure to be so
qualified and in good standing would not, individually or in the aggregate,
have a material adverse effect on the business, operations, property or
financial or other condition of the Borrower and its Subsidiaries taken as a
whole and would not adversely affect the ability of any Loan Party to perform
its respective obligations under the Loan Documents to which it is a party and
(d) is in compliance with all Requirements of Law, except to the extent that
the failure to comply therewith could not, individually or in the
<PAGE> 58
53
aggregate, have a material adverse effect on the business, operations, assets
or financial or other condition of the Borrower and its Subsidiaries taken as a
whole and could not adversely affect the ability of any Loan Party to perform
its obligations under the Loan Documents to which it is a party.
6.4 Corporate Power; Authorization; Enforceable
Obligations. (a) Each Loan Party has the corporate power and authority, and
the legal right, to execute, deliver and perform each of the Loan Documents to
which it is a party or to which this Agreement requires it to become a party.
The Borrower has the corporate power and authority to borrow hereunder and has
taken all necessary corporate action to authorize the borrowings on the terms
and conditions of this Agreement and the Notes. Each Loan Party has taken all
necessary corporate action to authorize the execution, delivery and performance
of each of the Loan Documents to which it is a party or to which this Agreement
requires it to become a party.
(b) No consent or authorization of, filing with or other
act by or in respect of any Person (including, without limitation, any
Governmental Authority) is required in connection with the borrowings hereunder
or with the execution, delivery, performance, validity or enforceability of the
Loan Documents or the consummation of any of the transactions contemplated
hereby or thereby, except for consents, authorizations, or filings which have
been obtained and are in full force and effect.
(c) This Agreement and each other Loan Document to which
any Loan Party is a party has been, and each other Loan Document to be executed
by a Loan Party hereunder will be, duly executed and delivered on behalf of
such Loan Party. This Agreement and each other Loan Document to which any Loan
Party is a party constitutes, and each other Loan Document to be executed by a
Loan Party hereunder will constitute, a legal, valid and binding obligation of
such Loan Party enforceable against such Loan Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
6.5 No Legal Bar; Senior Debt. The execution, delivery
and performance by each Loan Party of the Loan Documents to which it is a
party, the borrowings hereunder and the use of the proceeds thereof, (a) will
not violate any Requirement of Law or any Contractual Obligation of the
Borrower or any other Loan Party (including, without limitation, the Senior
Subordinated Note Indenture and the Subordinated Note Indenture) except for
violations of Requirements of Law and Contractual Obligations (other than such
Indentures) which, individually or in the aggregate will not have a material
adverse effect on the business, operations, property or financial or other
condition of
<PAGE> 59
54
the Borrower and its Subsidiaries taken as a whole and will not adversely
affect the ability of any Loan Party to perform its obligations under any of
the Loan Documents to which it is a party and (b) will not result in, or
require, the creation or imposition of any Lien (other than the Liens created
by the Security Documents) on any of its or their respective properties or
revenues pursuant to any Requirement of Law or Contractual Obligation. The
Obligations constitute "Senior Indebtedness" benefitting from the subordination
provisions contained in the Subordinated Debt, except to the extent that such
Obligations are owed to an Affiliate of the Borrower.
6.6 No Material Litigation. No litigation, investigation
or proceeding of or before any arbitrator or Governmental Authority is pending
or, to the knowledge of the Borrower, threatened by or against the Borrower or
any of its Subsidiaries or against any of its or their respective properties or
revenues (a) with respect to any Loan Document or any of the transactions
contemplated hereby or thereby, (b) which, if adversely determined, would have
a material adverse effect on the business, operations, property or financial or
other condition of the Borrower and its Subsidiaries taken as a whole or (c)
which could adversely affect the ability of any Loan Party to perform its
obligations under any of the Loan Documents to which it is a party.
6.7 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any Contractual Obligation
or any order, award or decree of any Governmental Authority or arbitrator
binding upon it or any of its properties in any respect which would have a
material adverse effect on the business, operations, property or financial or
other condition of the Borrower and its Subsidiaries taken as a whole or which
would adversely affect the ability of any Loan Party to perform its obligations
under any of the Loan Documents to which it is a party. No Default or Event of
Default has occurred and is continuing.
6.8 Ownership of Property; Liens. The Borrower and each
of its Material Subsidiaries has good record and marketable title in fee simple
to, or a valid and subsisting leasehold interest in all its real property, and
good title to all its other property, and none of such property is subject to
any Lien, except as permitted in subsection 8.3.
6.9 No Burdensome Restrictions. No Contractual
Obligation of the Borrower or any of its Subsidiaries and no Requirement of Law
materially adversely affects, or insofar as the Borrower could reasonably
foresee may so affect, the business, operations, property or financial or other
condition of the Borrower and its Subsidiaries taken as a whole.
6.10 Taxes. The Borrower and each of its Material
Subsidiaries has filed or caused to be filed all tax returns
<PAGE> 60
55
which to the knowledge of the Borrower are required to be filed and has paid
all taxes shown to be due and payable on said returns or on any assessments
made against it or any of its property and all other taxes, fees or other
charges imposed on it or any of its property (including, without limitation,
the Mortgaged Properties) by any Governmental Authority (other than those
which, in the aggregate, are not substantial in amount or those the amount or
validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have
been provided on the books of the Borrower or its Subsidiaries, as the case may
be); and no tax lien has been filed and, to the knowledge of the Borrower, no
claim is being asserted with respect to any such tax, fee or other charge.
6.11 Securities Law, etc. Compliance. All transactions
contemplated by this Agreement and the other Loan Documents comply in all
material respects with all applicable laws and any rules and regulations
thereunder, including takeover, disclosure and other federal, state and foreign
securities law and Regulations G, T, U and X of the Federal Reserve Board.
6.12 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred
and no Lien under the Code or ERISA in favor of PBGC or a Single Employer Plan
has arisen during the five-year period prior to the date as of which this
representation is deemed made. The present value of all accrued benefits under
each Single Employer Plan maintained by the Borrower or any Commonly Controlled
Entity (based on those assumptions used to fund the Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits, either individually or in the aggregate with all other
Single Employer Plans under which such accrued benefits exceed such assets, by
more than $20,000,000. Neither the Borrower nor any Commonly Controlled Entity
has had a complete or partial withdrawal from any Multiemployer Plan, and
neither the Borrower nor any Commonly Controlled Entity would become subject to
liability under ERISA in the aggregate which exceeds $20,000,000 if the
Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding
the date hereof, and no such withdrawal is likely to occur. No such
Multiemployer Plan is in Reorganization or Insolvent. The present value
(determined using actuarial and other assumptions which are reasonable in
respect of the benefits provided and the employees participating) of the
liability of the
<PAGE> 61
56
Borrower and each Commonly Controlled Entity for post retirement benefits to be
provided to their current and former employees under Plans which are welfare
benefit plans (as defined in Section 3(1) of ERISA) does not, in the aggregate,
exceed the assets under all such Plans allocable to such benefits by an amount
in excess of $75,000,000.
6.13 Investment Company Act; Other Regulations. The Borrower
is not an "investment company" within the meaning of the Investment Company Act
of 1940, as amended. The Borrower is not subject to regulation under any
federal or state statute or regulation which limits its ability to incur
Indebtedness.
6.14 Subsidiaries, etc. The only Subsidiaries of the
Borrower, and the only partnerships, joint ventures or business trusts in which
the Borrower or any Subsidiary has an interest as of the Closing Date, are
those listed on Schedule 6.14. The Borrower owns, as of the Closing Date, the
percentage of the issued and outstanding capital stock or other evidences of
the ownership of each Subsidiary, partnership or joint venture listed on
Schedule 6.14 as set forth on such Schedule. No such Subsidiary, partnership
or joint venture has issued any securities convertible into shares of its
capital stock (or other evidence of ownership) or any options, warrants or
other rights (other than options, warrants or rights to purchase capital stock
of AIHI which are outstanding on the date hereof and will be redeemed or
otherwise terminated no later than the Merger Date and certain preferred stock
of AIHI which may remain outstanding after the Merger Date and will be redeemed
for an amount not exceeding $8,000,000 in the aggregate), to acquire such
shares or securities convertible into such shares (or other evidence of
ownership), and the outstanding stock and securities (or other evidence of
ownership) of such Subsidiaries, partnerships or joint ventures are owned by
the Borrower and its Subsidiaries free and clear of all Liens, warrants,
options or rights of others of any kind whatsoever except for Liens permitted
by subsection 8.3. All of the divisions of the Borrower and its Subsidiaries
as of the Closing Date are listed on Schedule 6.14.
6.15 Accuracy and Completeness of Information. All
information, reports and other papers and data with respect to the Borrower or
this Agreement or any transaction contemplated hereby furnished to the Banks by
the Borrower or on behalf of the Borrower, were, at the time the same were so
furnished, complete and correct in all material respects, or have been
subsequently supplemented by other information, reports or other papers or
data, to the extent necessary to give the Banks a true and accurate knowledge
of the subject matter in all material respects. All projections with respect
to the Borrower and its Subsidiaries or with respect to the Merger, so
furnished by the Borrower, as supplemented, were prepared and presented in good
faith by the Borrower, it being recognized by the Banks that such projections
as to future events are not to be viewed as facts and that actual results
during the period or periods covered by any
<PAGE> 62
57
such projections may differ from the projected results. No fact is known to
the Borrower which materially and adversely affects or in the future may (so
far as the Borrower can reasonably foresee) materially and adversely affect the
business, assets, liabilities, financial or other condition or prospects of the
Borrower or its Subsidiaries taken as a whole, which has not been set forth in
the financial statements referred to in subsection 6.1 or in such information,
reports, papers and data or otherwise disclosed in writing to the Banks prior
to the Closing Date. No document furnished or statement made in writing to the
Banks by the Borrower in connection with the negotiation, preparation or
execution of this Agreement contains any untrue statement of a material fact,
or, to the knowledge of the Borrower after due inquiry, omits to state any such
material fact necessary in order to make the statements contained therein not
misleading, in either case which has not been corrected, supplemented or
remedied by subsequent documents furnished or statements made in writing to the
Banks.
6.16 Security Documents. (a) Each Security Agreement is
effective to create in favor of the Agent, for the ratable benefit of the
Banks, a legal, valid and enforceable security interest in all right, title and
interest of the Loan Party thereto in the collateral described therein. Such
Security Agreement constitutes a fully perfected first Lien on, and security
interest in, all right, title and interest of such Loan Party in the collateral
described therein.
(b) Each Pledge Agreement is effective to create in favor
of the Agent, for the ratable benefit of the Banks, a legal, valid and
enforceable security interest in the pledged assets described therein. Such
Pledge Agreement constitutes a fully perfected first Lien on, and security
interest in, all right, title and interest of the Loan Party thereto in the
pledged assets described therein.
(c) Each Mortgage is effective to grant to the Agent, for
the ratable benefit of the Banks, a legal, valid and enforceable mortgage lien
on all of the right, title and interest of the Loan Party thereto in the
mortgaged property described therein. Upon recordation of each Mortgage in the
recording office specified therein and the release of the related Original
Mortgage, such Mortgage will constitute a fully perfected lien on and security
interest in, such mortgaged property, subject to the encumbrances and
exceptions to title set forth in the title policies or title reports previously
delivered to the Agent.
6.17 Patents, Copyrights, Permits and Trademarks. Each of
the Borrower and its Subsidiaries owns, or has a valid license or sub-license
in, all domestic and foreign letters patent, patents, patent applications,
patent and know-how licenses, inventions, technology, permits, trademark
registrations and applications, trademarks, trade names, trade secrets, service
marks, copyrights, product designs,
<PAGE> 63
58
applications, formulae, processes and the industrial property rights
("Proprietary Rights") used in the operation of its businesses in the manner in
which they are currently being conducted and which are material to the
business, operations, assets or financial or other condition of the Borrower
and its Subsidiaries taken as a whole. Neither the Borrower nor any of its
Subsidiaries is aware of any existing or threatened infringement or
misappropriation of any Proprietary Rights of others by the Borrower or any of
its Subsidiaries or of any Proprietary Rights of the Borrower or any of its
Subsidiaries by others which is material to the business operations, assets or
financial or other condition of the Borrower and its Subsidiaries taken as a
whole.
6.18 Environmental Matters. Except as disclosed in Schedule
6.18, and other than such exceptions to any of the following that would not
reasonably be expected to give rise to a material adverse effect on the
business, operations, property or financial condition of the Borrower and its
Subsidiaries taken as a whole, (a) with respect to the Mortgaged Properties:
(i) Except for the property referred to in subsection
7.10(c), the Mortgaged Properties constitute all of the real
properties owned in fee by the Borrower and its Subsidiaries in the
United States and required to be mortgaged to the Agent, for the
ratable benefit of the Banks.
(ii) To the best knowledge of the Borrower and its
Subsidiaries, after reasonable investigation consisting of reasonable
environmental compliance, review, monitoring, and remedial activities
conducted at the individual manufacturing, warehouse, or production
facility level, with all information relating to environmental matters
arising at such facilities being sent to the corporate officers of the
Borrower from such manufacturing, warehouse or production facilities
of any Subsidiary, the Mortgaged Properties do not contain, and have
not previously contained, any Hazardous Materials in amounts or
concentrations or under such conditions which (A) constitute a
violation of, or (B) could reasonably give rise to any liability under
any applicable Environmental Laws.
(iii) To the best knowledge of the Borrower and its
Subsidiaries, after reasonable investigation consisting of reasonable
environmental compliance, review, monitoring, and remedial activities
conducted at the individual manufacturing, warehouse, or production
facility level, with all information relating to environmental matters
arising at such facilities being sent to the corporate officers of the
Borrower from such manufacturing, warehouse or production facilities
of any Subsidiary, the Mortgaged Properties and all operations at the
Mortgaged Properties are in compliance, and have been in compliance
for the time period that each of the Mortgaged Properties has been
owned by the
<PAGE> 64
59
Borrower or its Subsidiaries, with all Environmental Laws, and there
is no contamination at, on or under the Mortgaged Properties, or
violation of any Environmental Laws with respect to the Mortgaged
Properties which could interfere with the continued operation of the
Mortgaged Properties or impair the fair saleable value thereof.
Neither the Borrower nor any Subsidiary has knowingly assumed any
liability, by contract or otherwise, of any person under any
Environmental Laws, other than in connection with the Tender Offer and
the Merger.
(iv) Neither the Borrower nor any of its Subsidiaries has
received any Environmental Complaint with regard to any of the
Mortgaged Properties or the operations of the Borrower or any of its
Subsidiaries, nor does the Borrower or any of its Subsidiaries have
knowledge or reason to believe that any such notice will be received
or is being threatened.
(v) To the best knowledge of the Borrower and its
Subsidiaries, based on the Borrower's and the Subsidiaries' customary
practice of contracting only with licensed haulers for removal of
Hazardous Materials from the Mortgaged Properties only to facilities
authorized to receive such Hazardous Materials, Hazardous Materials
have not been transported or disposed of from the Mortgaged Properties
in violation of, or in a manner or to a location which could
reasonably give rise to liability under, Environmental Laws, nor have
any Hazardous Materials been generated, treated, stored or disposed of
at, on or under any of the Mortgaged Properties in violation of, or in
a manner that could reasonably give rise to liability under any
Environmental Laws.
(vi) No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of the Borrower
and its Subsidiaries, threatened, under any Environmental Law to which
the Borrower and its Subsidiaries are or will be named as a party with
respect to the Mortgaged Properties, nor are there any consent decrees
or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding
under any Environmental Law with respect to the Mortgaged Properties.
(vii) To the best knowledge of the Borrower and its
Subsidiaries after reasonable investigation, consisting of reasonable
environmental compliance, review, monitoring, and remedial activities
conducted at the individual manufacturing, warehouse, or production
facility level, with all information relating to environmental matters
arising at such facilities being sent to the corporate officers of the
Borrower from such manufacturing, warehouse or production facilities
of any Subsidiary, there has been no release or
<PAGE> 65
60
threat of release of Hazardous Materials at or from the Mortgaged
Properties, or arising from or related to the operations of the
Borrower or its Subsidiaries in connection with the Mortgaged
Properties in violation of or in amounts or in a manner that could
reasonably give rise to liability under any Environmental Laws.
(b) To the best knowledge of the Borrower and its
Subsidiaries, after reasonable investigation: (i) with respect to each parcel
of real property owned or operated by the Borrower and its Subsidiaries (other
than the Mortgaged Properties), each of the representations and warranties set
forth in subsection 6.18(a)(ii) through (a)(vii) is true and correct; and (ii)
none of the present or former operations or properties of AIHI or any of its
Subsidiaries or Hazardous Materials attributed thereto regardless of where
located, is reasonably likely to give rise to any violation of or liability
under any Environmental Law.
6.19 Acquisition Documents. Each Acquisition Document to
which the Borrower or any of its Subsidiaries is a party has been duly executed
and delivered by the Borrower or such Subsidiary, as the case may be, and to
the best knowledge of the Borrower, each Acquisition Document has been duly
executed and delivered by the parties thereto other than the Borrower and its
Subsidiaries and is in full force and effect. The representations and
warranties of the Borrower and each of its Subsidiaries contained in each
Acquisition Document to which the Borrower or such Subsidiary, as the case may
be, is a party are true and correct in all material respects on the date hereof
and will be true and correct in all material respects on the date hereof, the
Closing Date and the Merger Date, and the Agent and each Bank shall be entitled
to rely upon such representations and warranties with the same force and effect
as if they were incorporated in this Agreement and made to each Bank directly
as of the date hereof, the Closing Date and the Merger Date. To the best
knowledge of the Borrower and each of its Subsidiaries, the representations and
warranties of each other party to each Acquisition Document contained therein
are true and correct in all material respects on the date hereof and on the
Closing Date as if made on and as of the date hereof and the Closing Date, such
knowledge qualification being given only with respect to parties to the
Acquisition Documents other than the Borrower and its Subsidiaries. To the
best knowledge of the Borrower and each of its Subsidiaries, none of the Tender
Offer Documents contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
6.20 Regulation H. No Mortgage encumbers improved real
property which is located in an area that has been identified by the Secretary
of Housing and Urban Development as an area having special flood hazards and in
which flood insurance
<PAGE> 66
61
has been made available under the National Flood Insurance Act of 1968.
SECTION 7. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Note or Letter of Credit remains outstanding or any other
amount is owing to any Bank or the Agent hereunder, the Borrower shall, and
(except in the case of delivery of financial information, reports and notices)
shall cause each of its Subsidiaries to:
7.1 Financial Statements. Furnish to each Bank:
(a) as soon as available, but in any event within 95 days
after the end of each fiscal year of the Borrower a copy of the
audited consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as at the end of such year and the related
consolidated statements of income and cash flows for such year,
setting forth in each case in comparative form the figures for the
previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope
of the audit, by independent certified public accountants of
nationally recognized standing;
(b) as soon as available, but in any event not later than 50
days after the end of each of the first three quarterly periods of
each fiscal year of the Borrower the unaudited consolidated and
consolidating balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of each such quarter and the related
unaudited consolidated and consolidating statements of income and cash
flows of the Borrower and their consolidated Subsidiaries for such
quarter and the portion of the fiscal year through such date, setting
forth in each case in comparative form the figures for the
corresponding quarterly period of the previous year, certified by a
Responsible Officer (subject to normal year-end audit adjustments).
The Borrower covenants and agrees that all such financial statements shall be
complete and correct in all material respects and shall be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein (except as approved by such accountants or
officer, as the case may be, and disclosed therein).
7.2 Certificates; Other Information. Furnish to each Bank:
(a) concurrently with the delivery of the financial
statements referred to in subsection 7.1(a), (i) a certificate of the
independent certified public accountants
<PAGE> 67
62
reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate
and (ii) a certificate of such certified public accountants showing in
detail the calculations supporting such statements in respect of
subsection 8.1;
(b) concurrently with the delivery of the financial
statements referred to in subsection 7.1(a) and (b), a certificate of
a Responsible Officer of the Borrower (i) stating that such
Responsible Officer has obtained no knowledge of any Default or Event
of Default except as specified in such certificate, (ii) stating, to
the best of such Responsible Officer's knowledge, that all such
financial statements are complete and correct in all material respects
(subject, in the case of interim statements, to normal year-end audit
adjustments) and have been prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein (except as disclosed therein) and (iii) showing in
detail the calculations supporting such statements in respect of
subsection 8.1;
(c) concurrently with the delivery of the financial
statements referred to in subsection 7.1(a) and (b), a copy of
management's report on the business, operations, property and
financial and other condition of the Borrower and its Subsidiaries,
including financial results with respect to each of their individual
manufacturing facilities, together with management's discussion
thereof;
(d) concurrently with the delivery of the financial
statements referred to in subsection 7.1(b), until the Merger is
consummated (if such financial statements are required to be filed
with the Securities and Exchange Commission pursuant to the Exchange
Act), the unaudited consolidated financial statements of AIHI and its
Subsidiaries prepared in conformity with GAAP, consisting of a
consolidated balance sheet as at the end of each fiscal quarter and
the related unaudited consolidated statements of income and cash flows
for such quarter and the portion of the fiscal year through such date,
setting forth in each case in comparative form the figures for the
corresponding quarterly period of the previous year.
(e) not later than thirty days after the end of each fiscal
year of the Borrower a copy in detail reasonably acceptable to the
Agent of the projections by the Borrower of the operating budget and
cash flow of the Borrower and its Subsidiaries, in each case for the
next succeeding fiscal year, such projections to be accompanied by a
certificate of a Responsible Officer of the Borrower to the effect
that such projections have been prepared on the basis
<PAGE> 68
63
of sound financial planning practice and that such officer on behalf
of the Borrower has no reason to believe they are incorrect or
misleading in any material respect;
(f) promptly upon receipt thereof, copies of all reports
submitted to the Borrower by independent certified public accountants
in connection with each annual, interim or special audit of the books
of the Borrower made by such accountants, including, without
limitation, any management letter commenting on the Borrower's
internal controls submitted by such accountants to management in
connection with their annual audit;
(g) promptly after the same are sent, copies of all financial
statements and reports which the Borrower sends to its public equity
holders, and within five days after the same are filed, copies of all
financial statements and reports which the Borrower may make to, or
file with, the Securities and Exchange Commission or any successor or
analogous Governmental Authority; and
(h) promptly, such additional financial and other information
as any Bank may from time to time reasonably request.
7.3 Performance of Obligations. Perform in all material
respects all of its obligations under the terms of each mortgage, indenture,
security agreement and other debt instrument by which it is bound or to which
it is a party and pay, discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, all its material obligations
of whatever nature, except when the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP with respect thereto have been provided on the books of
the Borrower or its Subsidiaries, as the case may be.
7.4 Conduct of Business, Maintenance of Existence and
Compliance with Obligations and Laws. Continue to engage in business of the
same general type as now conducted by it and preserve, renew and keep in full
force and effect its corporate existence and take all reasonable action to
maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of its business except as otherwise permitted pursuant to
subsection 8.5; comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith could not reasonably be
expected to have, individually or in the aggregate, a material adverse effect
on the business, operations, property or financial or other condition of the
Borrower and its Subsidiaries taken as a whole and could not reasonably be
expected to adversely affect the ability of the Borrower or any of its
Subsidiaries to perform their respective obligations under any of the Loan
Documents to which they are a party.
<PAGE> 69
64
7.5 Maintenance of Property; Insurance. Keep each Mortgaged
Property and all other property useful and necessary in its business in good
working order and condition; maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business
(including, without limitation, the insurance required pursuant to the Security
Documents); and furnish to the Agent, upon written request, full information as
to the insurance carried.
7.6 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of
all dealings and transactions in relation to its business and activities; and
permit representatives of any Bank to visit and inspect any of its properties
and examine and make abstracts from any of its books and records upon
reasonable notice and at any reasonable time and as often as may reasonably be
desired, and to discuss the business, operations, properties and financial and
other condition of the Borrower and its Subsidiaries with officers and
employees of the Borrower and its Subsidiaries and with its independent
certified public accountants.
7.7 Notices. Promptly give notice to the Agent and each Bank:
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any
Contractual Obligation of the Borrower or any of its Subsidiaries or
(ii) litigation, investigation or proceeding which may exist at any
time between the Borrower or any of its Subsidiaries and any
Governmental Authority, which in the case of either clause (i) or (ii)
above, if not cured or if adversely determined, as the case may be,
could have a material adverse effect on the business, operations,
property or financial condition of the Borrower and its Subsidiaries
taken as a whole or could adversely affect the ability of the Borrower
or any of its Subsidiaries to perform their respective obligations
under any of the Loan Documents to which they are a party;
(c) of any litigation or proceeding affecting the Borrower or
any of its Subsidiaries in which the amount involved is $3,000,000 or
more and not covered by insurance or in which material injunctive or
similar relief is sought;
<PAGE> 70
65
(d) of the following events, as soon as possible and in any
event within 30 days after the Borrower knows or has reason to know
thereof: (i) the occurrence or expected occurrence of any Reportable
Event with respect to any Single Employer Plan, a failure to make any
required contribution to any Single Employer Plan, unless such failure
is cured within such 30 days or does not involve an amount in excess
of $500,000, any Lien under the Code or ERISA in favor of the PBGC or
a Single Employer Plan, or any withdrawal from, or the termination,
Reorganization or Insolvency of any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the
PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Single Employer or
Multiemployer Plan, if such proceedings or other action would
reasonably be expected to cause a material adverse change in the
business, assets, operations or financial condition of the Borrower
and its Subsidiaries taken as a whole;
(e) of any Environmental Complaint materially affecting the
Borrower or any Subsidiary, any Mortgaged Property or the operations
of the Borrower or any Subsidiary, and any notice from any Person of
(i) the occurrence of any release, spill or discharge of any Hazardous
Material that is reportable under any Environmental Law, (ii) the
commencement of any clean up pursuant to or in accordance with any
Environmental Law of any Hazardous Material at, on, under or within
the Mortgaged Property or any part thereof or (iii) any other
condition, circumstance, occurrence or event, any of which could
reasonably be expected to result in a material liability of the
Borrower or any Subsidiary under any Environmental Law;
(f) of (i) the incurrence of any Lien (other than Liens
permitted pursuant to subsection 8.3) on, or claim asserted against
any of the collateral security in the Security Documents or (ii) the
occurrence of any other event which could reasonably be expected to
have a material adverse effect on the aggregate value of the
collateral under any Security Document; and
(g) of a material adverse change in the business, operations,
property or financial or other condition of the Borrower and its
Subsidiaries taken as a whole.
Each notice pursuant to this subsection 7.7 shall be accompanied by a statement
of a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower proposes to
take with respect thereto.
7.8 Maintenance of Liens of the Security Documents.
Promptly, upon the reasonable request of any Bank, at the
<PAGE> 71
66
Borrower's expense, execute, acknowledge and deliver, or cause the execution,
acknowledgement and delivery of, and thereafter register, file or record, or
cause to be registered, filed or recorded, in an appropriate governmental
office, any document or instrument supplemental to or confirmatory of the
Security Documents or otherwise deemed by the Agent necessary or desirable for
the continued validity, perfection and priority of the Liens on the collateral
covered thereby.
7.9 Environmental Matters. (a) Comply in all material
respects with, and use all reasonable efforts to ensure compliance in all
material respects by all tenants and subtenants, if any, with, all
Environmental Laws and all requirements existing thereunder and obtain and
comply in all material respects with and maintain, and use all reasonable
efforts to ensure that all tenants and subtenants obtain, comply in all
material respects with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by Environmental Laws.
(b) Promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws, other than such orders and directives as to which an appeal has been
taken in good faith and the pendency of any and all such appeals does not
materially and adversely affect the Borrower or any Subsidiary, any Mortgaged
Property, or the operations of the Borrower or any Subsidiary.
(c) Defend, indemnify and hold harmless the Agent and the
Banks and their Affiliates, and their respective employees, agents, officers
and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of, noncompliance with or liability under any
Environmental Laws applicable to the Borrower or its Subsidiaries or the
Mortgaged Properties, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, attorney's and
consultant's fees, investigation and laboratory fees, response costs, court
costs and litigation expenses, except to the extent that any of the foregoing
arise solely out of the gross negligence or willful misconduct of the party
seeking indemnification therefor. This indemnity shall continue in full force
and effect regardless of the termination of this Agreement.
(d) Promptly obtain such letters as the Borrower may
reasonably obtain from the Persons preparing the written reports referred to in
Section 5.1(s) hereof, entitling the Agent and each Bank to rely on such
reports.
7.10 Security Documents. (a) Promptly at the request of the
Required Banks (and in any event no later than 45 days after the date of such
request), the Borrower, at its own
<PAGE> 72
67
expense, shall (i) pledge 65% of the capital stock of Lear Italia to the Agent,
for the ratable benefit of the Banks, and (ii) cause the Agent to receive, with
a counterpart for each Bank, a legal opinion of Italian counsel acceptable to
the Agent covering such matters in respect of such pledge agreement as the
Agent shall reasonably request.
(b) As soon as possible and in no event later than 45 days
after the Closing Date, cause (i) the Liens granted pursuant to (A) the 1995
German Pledge Agreement, (B) the Mexican Pledge Agreement and (C) the Pledge
Agreement ("Nantissement") to be perfected and (ii) the Agent to receive, with
a counterpart for each Bank, legal opinions of Peltzer & Riesenkampff, German
counsel to the Borrower, Enriquez, Gonzales, Aguirre y Ochoa, Mexican counsel
to the Borrower, and Freshfields, French counsel to the Agent, covering such
matters in respect of such pledge agreements as the Agent shall reasonably
request.
(c) No later than 45 days after completion of construction of
the Borrower's facility located in Hammond, Indiana, grant to the Agent, for
the ratable benefit of the Banks, a perfected and duly filed first Lien of
record on all real property and fixtures, upon terms substantially the same as
those set forth in the Mortgages, owned by the Borrower, located in Hammond,
Indiana.
(d) As soon as possible and in no event later than 30 days
after the Merger Date, cause (i) each material domestic Subsidiary of the
Surviving Corporation (as determined by the Agent) to execute and deliver a
Guarantor Supplement, (ii) the pledge to the Agent, for the ratable benefit of
the Banks, of all of the common stock of each material domestic Subsidiary of
the Surviving Corporation (as determined by the Agent) owned directly or
indirectly by the Borrower pursuant to pledge agreements in the form and
substance satisfactory to the Agent and (iii) the Agent to receive, in
sufficient copies for each Bank, opinions of counsel to the Borrower reasonably
satisfactory to the Agent, addressed to the Agent and the Banks, containing
opinions substantially in the form of Exhibit L-1, with customary assumptions
qualifications and exceptions.
7.11 Pledge Agreement Supplement. The Borrower shall cause
Acquisition Corp. to deliver to the Agent on the date of purchase an executed
Pledge Agreement Supplement, substantially in the form of Exhibit A to the
Acquisition Pledge Agreement (a "Pledge Agreement Supplement"), covering any
Additional Pledged Stock (as defined in the Acquisition Pledge Agreement)
purchased by Acquisition Corp., and (a) in the case of a transfer to
Acquisition Corp. of any such Pledged Stock effected by delivery of share
certificates representing the capital stock of AIHI, the stock certificates
representing such Pledged Stock, and appropriate undated stock powers duly
executed in blank for each such stock certificate, shall be delivered to the
Agent or the Depositary, as appropriate, or (b) in the case of a transfer to
<PAGE> 73
68
Acquisition Corp. of any such Pledged Shares effected by book entry delivery
thereof, Acquisition Corp. shall authorize and cause all such shares to be
transferred to an account maintained in the name of Chemical, for the benefit
of the Agent, at the Clearing Corporation (as defined in the Acquisition Pledge
Agreement).
7.12 Consummation of Merger. The Borrower shall cause
Acquisition Corp. to consummate the Merger as soon as practicable after the
Closing Date and prior to 180 days after the Closing Date in accordance with
the terms of the Acquisition Documents and applicable Requirements of Law, and
shall comply and cause Acquisition Corp. to comply in all material respects
with the obligations of the Borrower and Acquisition Corp. under the
Acquisition Documents.
SECTION 8. NEGATIVE COVENANTS
The Borrower hereby agrees that, from and after the Closing
Date and so long as the Commitments remain in effect, any Note or Letter of
Credit remains outstanding or any other amount is owing to any Bank or the
Agent hereunder, the Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:
8.1 Financial Covenants.
(a) Consolidated Net Worth. Permit Consolidated Net Worth at
the end of any quarter during any period set forth below to be less than the
amount set forth opposite such period below:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
The Closing Date to but excluding the last day of the
second fiscal quarter of 1996 $255,000,000
The last day of the second fiscal quarter of 1996 to but
excluding the last day of the second fiscal quarter of 1997 270,000,000
The last day of the second fiscal quarter of 1997 to but
excluding the last day of the second fiscal quarter of 1998 285,000,000
The last day of the second fiscal quarter of 1998 and
thereafter. 300,000,000
</TABLE>
(b) Interest Coverage. Permit, (i) at the end of the fourth
fiscal quarter of 1995, the ratio of (I) Consolidated Operating Profit for such
fiscal quarter to (II) Consolidated Interest Expense for such fiscal quarter,
to be less than 2.75 to 1, (ii) at the end of the first fiscal quarter of 1996,
the ratio of (I) Consolidated Operating Profit for two consecutive fiscal
quarters then ended to (II) Consolidated Interest Expense for such two
consecutive fiscal quarters, to be less than 2.75 to 1, (iii) at the end of the
second fiscal quarter of 1996, the ratio
<PAGE> 74
69
of (I) Consolidated Operating Profit for three consecutive fiscal quarters then
ended to (II) Consolidated Interest Expense for such three consecutive fiscal
quarters, to be less than 3.00 to 1 and (iv) at the end of any four consecutive
fiscal quarters ending during any period set forth below, the ratio of (I)
Consolidated Operating Profit for such four consecutive fiscal quarters to (II)
Consolidated Interest Expense for such four consecutive fiscal quarters, to be
less than the ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
The first day of the third fiscal quarter of 1996 through
the last day of the fourth fiscal quarter of 1996 3.00 to 1
The first day of the first fiscal quarter of 1997 and
thereafter 3.50 to 1
</TABLE>
(c) Consolidated Operating Profit. Permit Consolidated
Operating Profit for any fiscal year set forth below to be less than the amount
set forth opposite such fiscal year below:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1995 $200,000,000
1996 315,000,000
1997 330,000,000
1998 340,000,000
1999 - thereafter 360,000,000
</TABLE>
8.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness in respect of the Loans, the Notes, the
Letters of Credit and other obligations arising under this Agreement
and, without duplication, Indebtedness of the Borrower and
Subsidiaries to the extent backed by Letters of Credit;
(b) Indebtedness in respect of (i) the Subordinated Notes (or
any refinancing thereof in accordance with subsection 8.10) in an
aggregate principal amount not exceeding $145,000,000 (plus the amount
of any premiums, costs and expenses incurred in connection with any
refinancing thereof) and (ii) the Senior Subordinated Notes (or any
refinancing thereof in accordance with subsection 8.10) in an
aggregate principal amount not exceeding $125,000,000 (plus the amount
of any premiums, costs and expenses incurred in connection with any
refinancing thereof);
(c) Indebtedness incurred to purchase, or to finance the
purchase of, fixed or capital assets in an aggregate
<PAGE> 75
70
principal amount not exceeding $2,000,000 at any one time outstanding;
(d) Indebtedness in respect of Interest Rate Agreement
Obligations in respect of a notional principal amount of up to
$500,000,000 in the aggregate;
(e) Indebtedness in respect of documentary letters of credit
(other than Letters of Credit) in an aggregate face amount not
exceeding $5,000,000 at any one time;
(f) Indebtedness in respect of letters of credit (other than
Letters of Credit) in an aggregate face amount not exceeding
$10,000,000 at any one time, provided that such letters of credit are
used solely (i) to provide credit support in respect of leased
property or (ii) to provide credit support for the benefit of Foreign
Subsidiaries;
(g) short-term Indebtedness incurred by all Foreign
Subsidiaries organized under the laws of France for working capital
purposes in an aggregate principal amount not to exceed 6,000,000
French Francs at any one time outstanding;
(h) Indebtedness permitted pursuant to subsection 8.9;
(i) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Germany or Austria in an aggregate
principal amount not to exceed $25,000,000 at any one time
outstanding.
(j) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Mexico in an aggregate principal amount
not to exceed $30,000,000 at any one time outstanding;
(k) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Sweden or Finland in an aggregate
principal amount not to exceed $25,000,000 at any one time
outstanding;
(l) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Canada in an aggregate principal amount
not to exceed $25,000,000 at any one time outstanding;
(m) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Italy (i) in connection with the financing
of the Borrower's acquisition of the Fiat Seat Business, in an
aggregate principal amount not to exceed Lira 195,452,040,951 (and any
refinancings thereof) and (ii) in addition to Indebtedness permitted
in clause (i) above, in an aggregate principal amount not to exceed
$30,000,000 at any one time outstanding.
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(n) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Poland in an aggregate principal amount
not to exceed $5,000,000 at any one time outstanding.
(o) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Brazil or Argentina in an aggregate
principal amount not to exceed $30,000,000 at any one time
outstanding;
(p) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of South Africa in an aggregate principal
amount not to exceed $5,000,000 at any one time outstanding;
(q) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of Indonesia, Thailand or Australia in an
aggregate principal amount not to exceed $15,000,000 at any one time
outstanding;
(r) Indebtedness incurred by all Foreign Subsidiaries
organized under the laws of the United Kingdom in an aggregate
principal amount not to exceed $20,000,000 at any one time
outstanding;
(s) existing Indebtedness listed on Schedule 8.2(s) and
refinancings thereof;
(t) until the Merger Date, the Indebtedness of AIHI and its
Subsidiaries existing on the Closing Date and listed on Schedule
8.2(t) or any refinancing of such indebtedness, or any indebtedness of
the Borrower or any Subsidiary incurred in connection with the
refinancing of the Indebtedness of AIHI and its Subsidiaries;
(u) Indebtedness incurred by a Special Purpose Subsidiary
in connection with a Receivables Financing Transaction; and
(v) additional Indebtedness not otherwise permitted by
paragraphs (a) through (u) above, provided that the aggregate amount
of such Indebtedness does not exceed $75,000,000 at any one time
outstanding.
8.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings; provided that adequate
reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP (or, in the case of Foreign Subsidiaries, generally accepted
accounting
<PAGE> 77
72
principles in effect from time to time in their respective
jurisdictions of organization);
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, or other like Liens arising in the ordinary course of
business and not overdue for a period of more than 30 days or which
are bonded or being contested in good faith by appropriate proceedings
in a manner which will not jeopardize or diminish the interest of the
Agent in any of the collateral subject to the Security Documents;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;
(d) Liens (other than any Lien imposed by ERISA) incurred on
deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred which, in the aggregate, are not substantial in
amount and which do not in any case materially detract from the value
of the property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or such Subsidiary;
(f) Liens in favor of the Agent and the Banks created
pursuant to the Security Documents and Liens securing Reimbursement
Obligations and Subsidiary Reimbursement Obligations;
(g) Liens securing Indebtedness of the Borrower and its
Subsidiaries permitted by subsection 8.2(c) in respect of the deferred
purchase price of fixed or capital assets; provided that (i) such
Liens shall be created substantially simultaneously with the purchase
of such fixed or capital assets, (ii) such Liens do not at any time
encumber any property other than the property financed by such
Indebtedness, (iii) the amount of Indebtedness secured thereby is not
increased and (iv) the principal amount of Indebtedness secured by any
such Lien shall at no time exceed 100% of the purchase price of such
property;
(h) Liens securing the Indebtedness permitted by
subsection 8.2(f), (g), (i), (j), (k), (l), (m), (n), (o), (p), (q),
(r), (s), (t), (u) and (v) and Liens securing obligations with respect
to government grants, provided that such Liens permitted by this
subsection 8.3(h) do not at any time encumber any property located in
the United States except for, in the case of Indebtedness permitted by
subsection 8.2(f), Liens that encumber leasehold interests
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73
supported by such Indebtedness, and, provided, further, that Liens
securing the Indebtedness permitted by subsection 8.2(s) shall only be
permitted to the extent such Liens are in existence as of the date of
this Agreement;
(i) Liens securing Indebtedness permitted by subsection
8.2(d), provided that such Liens run in favor of a Bank;
(j) attachment, judgment or other similar Liens arising in
connection with court or arbitration proceedings fully covered by
insurance or involving individually or in the aggregate, no more than
$3,000,000 at any one time, provided that the same are discharged, or
that execution or enforcement thereof is stayed pending appeal, within
30 days or, in the case of any stay of execution or enforcement
pending appeal, within such lesser time during which such appeal may
be taken;
(k) Liens securing reimbursement obligations with respect to
documentary letters of credit permitted by subsection 8.2(e) which
encumber documents and other property relating to such letters of
credit;
(l) Liens on the property or assets of a corporation which
becomes a Subsidiary on or after the date hereof (including AIHI and
its Subsidiaries) securing Indebtedness permitted by subsection 8.2,
provided that (i) such Liens existed at the time such corporation
became a Subsidiary and were not created in anticipation thereof, (ii)
any such Lien does not by its terms cover any property or assets after
the time such corporation becomes a Subsidiary which were not covered
immediately prior thereto and (iii) any such Lien does not by its
terms secure any Indebtedness other than Indebtedness existing
immediately prior to the time such corporation becomes a Subsidiary;
(m) Liens (not otherwise permitted hereunder) on assets
acquired after the date of this Agreement which secure the purchase
price thereof or other obligations related to the acquisition thereof
or on assets not subject to Liens pursuant to any Security Document,
provided that the estimated aggregate book value of the foregoing
assets shall not exceed $50,000,000;
(n) Liens on (i) investments permitted by subsection 8.9(o)
or (ii) cash deposits securing the Guarantee Obligations permitted by
subsection 8.4(f); and
(o) extensions, renewals and replacements of any Lien
described in subsections 8.3(a) through (n) above, provided that the
principal amount of the Indebtedness secured thereby is not increased
and such extension or renewal is limited to the property so
encumbered.
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74
8.4 Limitation on Guarantee Obligations. Create, incur,
assume or suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in respect of the Subsidiary
Guarantee;
(b) Guarantee Obligations in respect of obligations of the
Borrower, Subsidiaries and Special Affiliates in an aggregate
principal amount not to exceed $50,000,000 at any one time;
(c) Guarantee Obligations in respect of obligations
entered into by Foreign Subsidiaries created in the ordinary course of
business, in an aggregate amount not to exceed $70,000,000 at any one
time;
(d) Guarantee Obligations in respect of Section 5.03 of
the Purchase Agreement;
(e) Guarantee Obligations of the Borrower in connection with
a receivables factoring or working capital credit facility for any
Foreign Subsidiary organized under the laws of Italy, in an aggregate
amount not to exceed $20,000,000 at any one time; and
(f) Guarantee Obligations of the Borrower in respect of
Indebtedness permitted to be incurred pursuant to subsection 8.2(m).
8.5 Limitations on Fundamental Changes. Unless expressly
permitted under this Agreement, enter into any transaction of acquisition or
merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease,
assign, transfer or otherwise dispose of, all or substantially all of its
property, business or assets, or acquire by purchase or otherwise all or
substantially all of the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person, or make any material
change in the present method of conducting business and except that, so long as
no Collateral is transferred for less than fair market value to a Person who
has not executed a security agreement in favor of the Agent, and none of the
Liens or guarantees created by any of the Security Documents are impaired
thereby:
(a) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or with or into any
one or more Wholly Owned Subsidiaries of the Borrower that are
organized under any jurisdiction in the United States (provided that a
Wholly Owned Subsidiary shall be the continuing or surviving
corporation);
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75
(b) any Foreign Subsidiary may be merged or consolidated with
or into any one or more Wholly Owned Subsidiaries that are Foreign
Subsidiaries (provided that a Wholly Owned Subsidiary that is a
Foreign Subsidiary shall be the continuing or surviving corporation);
(c) any Wholly Owned Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or another Wholly Owned
Subsidiary of the Borrower that is organized under any jurisdiction in
the United States;
(d) any Wholly Owned Subsidiary that is a Foreign Subsidiary
may sell, lease, transfer or otherwise dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to another Wholly
Owned Subsidiary that is a Foreign Subsidiary;
(e) notwithstanding any other provision of this Agreement or
any Loan Document, the Borrower and its Subsidiaries may consummate
the Acquisition and all transactions contemplated in connection
therewith and, to the extent not already permitted under this
subsection 8.5, the Borrower may consummate the Merger; and
(f) the Borrower and its Subsidiaries may acquire any Special
Entities, provided that the aggregate purchase price of such
acquisitions does not exceed $50,000,000 per year and provided,
further, that up to $25,000,000 of any such permitted amount which is
not expended in any fiscal year may be carried over for such
acquisitions in any subsequent fiscal year.
Notwithstanding the foregoing, the Borrower or any Subsidiary may transfer
assets, including Collateral, to any Wholly Owned Subsidiary, whether or not
the assets so transferred will continue to be subject to the Agent's security
interest, provided, that the aggregate book value of assets so transferred
shall not exceed $50,000,000.
8.6 Limitation on Sale of Assets. Except as permitted by
subsection 8.5, convey, sell, lease, assign, transfer or otherwise dispose of,
any of its property, business or assets (including, without limitation,
receivables and leasehold interests) whether now owned or hereafter acquired
except:
(a) obsolete or worn out property or other property not
necessary for operations disposed of in the ordinary course of
business; provided that (i) the Net Proceeds of each such transaction
are applied to obtain a replacement item or items of property within
90 days of the disposition thereof or (ii) the fair market value of
any property not replaced pursuant to clause (i) above shall not
exceed
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76
$5,000,000 in the aggregate in any one fiscal year of the Borrower;
(b) the sale of inventory in the ordinary course of business;
(c) in a transaction permitted by subsection 8.12;
(d) the sale by any Foreign Subsidiary of its accounts
receivable; provided that the terms of each such sale are satisfactory
in form and substance to the Agent;
(e) the sale by any Domestic Loan Party of its accounts
receivable; provided that (i) the terms of each such sale are
satisfactory in form and substance to the Agent and (ii) the
Commitments are simultaneously reduced by the amount equal to a
percentage to be determined by the Agent of the fair market value (as
determined by the Board of Directors (or executive committee thereof)
of the Borrower) of such accounts receivable sold; and
(f) dispositions of assets not otherwise permitted by clauses
(a) through (e) above; provided that the fair market value thereof
shall not exceed $15,000,000 in the aggregate in any one fiscal year
of the Borrower.
8.7 Limitation on Dividends. Declare any dividend on, or
make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of stock or warrants of the Borrower,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Borrower or any Subsidiary or permit any Subsidiary to make
any payment on account of, or purchase or otherwise acquire, any shares of any
class of stock or warrants of the Borrower from any Person except for (a) (i)
payment by the Borrower of amounts then owing to management personnel of the
Borrower pursuant to the terms of their respective employment contracts, (ii)
mandatory purchases by the Borrower of its common stock from Management
Investors pursuant to the terms of the Subscription Agreements and Stockholders
Agreement and all other expenses required to be incurred by the Borrower
pursuant to the terms of the Stockholders Agreement as in effect on the date
hereof (iii) additional repurchases by the Borrower of its common stock from
Management Investors, and other officers or employees of the Borrower in an
amount not to exceed $35,000,000 in the aggregate and (iv) the purchase,
redemption or retirement of any shares of any capital stock of the Borrower or
options to purchase capital stock of the Borrower in connection with the
exercise of outstanding stock options, (b) if no Default or Event of Default
has occurred and is continuing (or would occur and be continuing after giving
effect thereto) when any such dividend is declared by the Board of Directors of
the
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77
Borrower, quarterly cash dividends on the Borrower's capital stock not to
exceed $2,500,000 in the aggregate per quarter but only to the extent permitted
by the terms of the Subordinated Debt and (c) dividends in the form of
additional shares of capital stock.
8.8 Limitation on Capital Expenditures. Make or commit to
make any Capital Expenditures during any fiscal year set forth below not
exceeding, in the aggregate for the Borrower and its Subsidiaries, the amount
set forth opposite such fiscal year below:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1995 $150,000,000
1996 125,000,000
1997 130,000,000
1998 100,000,000
1999 75,000,000
2000 75,000,000
2001 75,000,000;
</TABLE>
provided that up to $20,000,000 of any such permitted amount which is not
expended in any fiscal year may be carried over for expenditure in any
subsequent fiscal year, and provided, further, that up to $5,000,000 of any
such permitted amount available to be expended for any subsequent fiscal year
may be carried back for expenditure in any fiscal year.
8.9 Limitation on Investments, Loans and Advances. Make or
suffer to exist any advance, loan, extension of credit or capital contribution
to, or purchase any stock, bonds, notes, debentures or other securities of, or
make any other investment in, any Person, or acquire any interest in any
Person, except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) investments by Foreign Subsidiaries in high quality
investments of a type similar to Cash Equivalents made outside of the
United States of America;
(d) investments, loans and advances listed on Schedule 8.9;
(e) (i) loans, advances and capital contributions to the
Borrower, Subsidiaries (including Foreign Subsidiaries) and Special
Affiliates and (ii) loans, advances and capital contributions up to an
aggregate amount not to exceed $50,000,000 at any time from and after
the Closing Date to any Special Entity, in each case described in the
foregoing clauses (i) and (ii), in the ordinary course of business,
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78
and in an aggregate amount for all such investments described in the
foregoing clauses (i) and (ii) not to exceed $100,000,000 at any one
time from and after the Closing Date, provided that (x) any loans,
advances and capital contributions that are made to the Borrower or
any such Subsidiary or Foreign Subsidiary for the sole purpose of the
Borrower or such Subsidiary or Foreign Subsidiary making a loan,
advance or capital contribution to the Borrower or another Subsidiary
or Foreign Subsidiary, shall be deemed to have been made only to the
ultimate recipient of such funds and (y) the aggregate amount of
loans, advances and capital contributions to Probel S.A. may not
exceed $100,000 from and after the Closing Date;
(f) capital contributions, investments or transfers in
connection with transactions permitted by subsection 8.5;
(g) loans and advances to employees of the Borrower or its
Subsidiaries for travel, entertainment and relocation expenses in the
ordinary course of business;
(h) (i) loans and advances by any Subsidiary to the Borrower
and (ii) loans and advances by any Subsidiary to any other Subsidiary
which is a guarantor under any Guarantee;
(i) any Foreign Subsidiary may make loans, advances and
capital contributions to any other Foreign Subsidiary;
(j) any Wholly Owned Subsidiary organized under the laws
of any jurisdiction in the United States may make loans, advances and
capital contributions to any other Wholly Owned Subsidiary organized
under the laws or any jurisdiction in the United States;
(k) the acquisition, directly or indirectly, of the stock
of CISA not currently owned by the Borrower or its Subsidiaries;
(l) loans to Management Investors in connection with stock
purchases in an aggregate principal amount not exceeding $4,000,000 at
any one time outstanding;
(m) capital contributions to any Foreign Subsidiary organized
under the laws of Italy in an amount not to exceed $40,000,000;
(n) capital contributions to any Foreign Subsidiary organized
under the laws of Poland in an amount not to exceed $5,000,000;
(o) (i) loans or participating interests in loans made to
Lear Italia, provided Lear Italia is permitted to incur such
Indebtedness pursuant to subsection 8.2(m) and (ii)
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investments in high quality debt instruments acceptable to the Agent,
having a cost not exceeding the purchase price of the Fiat Seat
Business, and which are pledged to secure Indebtedness permitted
pursuant to subsection 8.2(m) or Guarantee Obligations permitted
pursuant to subsection 8.4(f);
(p) the transactions contemplated by the Tender Offer, the
Merger and the Acquisition;
(q) the purchase by the Borrower of participating interests
in loans to Foreign Subsidiaries; provided that the amount of each
such participating interest does not exceed the amount which the
Borrower would otherwise be permitted to lend or contribute to such
Foreign Subsidiaries pursuant to this subsection 8.9;
(r) investments or loans by the Borrower or its Subsidiaries
to AIHI or its Subsidiaries to refinance Indebtedness of AIHI and its
Subsidiaries outstanding as of the Closing Date;
(s) investments, loans and advances, which are in existence
on the Closing Date, among AIHI and its Subsidiaries; and
(t) other loans, advances or other investments up to an
aggregate amount not to exceed $5,000,000.
8.10 Limitation on Optional Payments and Modification of Debt
Instruments. (a) Prepay, purchase, redeem, retire, defease or otherwise
acquire, or make any payment on account of any principal of, interest on, or
premium payable in connection with the prepayment, redemption or retirement of
any outstanding Subordinated Debt, except that the Borrower may prepay,
purchase or redeem Subordinated Debt with the proceeds of the issuance of other
subordinated Indebtedness of the Borrower; provided that either (i) the
principal terms of such other subordinated Indebtedness are no more restrictive
to the Borrower and its Subsidiaries than the principal terms of the
Subordinated Notes or (ii) the terms and conditions of the other subordinated
Indebtedness are reasonably satisfactory to the Agent or (b) without the
consent of the Agent, amend, modify or change, or consent or agree to any
amendment, modification or change to any of the terms of any Subordinated Debt
(except that without the consent of the Agent or any Bank, the terms of the
Subordinated Debt may be amended, modified or changed if such amendment,
modification or change would extend the maturity or reduce the amount of any
payment of principal thereof, would reduce the rate or extend the date for
payment of interest thereon, would eliminate covenants (other than covenants
with respect to subordination to Indebtedness under this Agreement) or defaults
in such Subordinated Debt or would make such covenants or defaults less
restrictive); provided that, notwithstanding any
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provision contained in this subsection 8.10, if no Default or Event of Default
has occurred and is continuing or would occur and be continuing as a result of
the following, the Subordinated Debt may be prepaid (A) in an amount equal to
the net proceeds of any public offering of common stock of the Borrower
occurring after the Closing Date and (B) in addition to any prepayment
permitted pursuant to clause (A) above, in an amount not to exceed $135,000,000
in the aggregate; provided, that prior to December 31, 1995, prepayments
permitted pursuant to clause (B) above shall not exceed $100,000,000 in the
aggregate.
8.11 Transactions with Affiliates. (a) Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transactions are otherwise permitted under this Agreement, the
Stockholders Agreement or the Subscription Agreements as in effect on the date
hereof, or such transactions are in the ordinary course of the Borrower's or
such Subsidiary's business and are upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary, as the case may be, than it would
obtain in a comparable arm's length transaction with a Person not an Affiliate;
provided, however, that the Borrower may engage Lehman Brothers Inc., The
Cypress Group, LLC, FIMA or any Affiliate of Lehman Brothers Inc., The Cypress
Group, LLC or FIMA as financial advisor, underwriter, broker, dealer-manager or
finder in connection with any transaction at the then customary market rates
for similar services.
8.12 Sale and Leaseback. Enter into any arrangement with any
Person providing for the leasing by the Borrower or any Subsidiary of real or
personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary except that the
Borrower or any Subsidiary may enter into such transactions provided that the
fair market value of the real or personal property sold or transferred by the
Borrower or such Subsidiary does not exceed $50,000,000 in the aggregate.
8.13 Corporate Documents. Amend its Certificate of
Incorporation or By-Laws, each as in effect on the Closing Date, in any way
adverse to the interests of the Agent and the Banks.
8.14 Fiscal Year. Permit the fiscal year of the Borrower to
end on a day other than December 31.
8.15 Limitation on Restrictions Affecting Subsidiaries.
Enter into any agreement with any Person other than the Banks pursuant hereto
which prohibits or limits the ability of any Subsidiary to (a) pay dividends or
make other distributions or pay any Indebtedness owed to the Borrower or any
Subsidiary, (b) make loans or advances to the Borrower or any
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81
Subsidiary, (c) transfer any of its properties or assets to the Borrower or any
Subsidiary or (d) create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired,
except (i) for any such restrictions existing by reasons of Contractual
Obligations listed on Schedule 8.15 and (ii) with respect to clauses (c) and
(d) above, agreements granting a Lien on such Subsidiary's assets which is
permitted by subsection 8.3.
8.16 Hazardous Materials. Release, discharge or otherwise
dispose of any Hazardous Material on any of the Mortgaged Properties or permit
the manufacture, storage, transmission or presence of any Hazardous Material
over or upon any of the Mortgaged Properties except in accordance in all
material respects with all Environmental Laws.
8.17 Special Purpose Subsidiary. Permit (a) any Special
Purpose Subsidiary to engage in any business other than Receivables Financing
Transactions and activities directly related thereto or (b) at any time the
Borrower or any of its Subsidiaries (other than a Special Purpose Subsidiary)
or any of their respective assets to incur any liability, direct or indirect,
contingent or otherwise, in respect of any obligation of a Special Purpose
Subsidiary whether arising under or in connection with any Receivables
Financing Transaction or otherwise.
8.18 Subsidiaries. Create, acquire or otherwise suffer to
exist any Subsidiary which was not a direct or indirect Subsidiary on the
Closing Date unless either (a) such new Subsidiary is organized under the laws
of a jurisdiction within the United States and (i) is party to a Guarantee
Supplement and (ii) all of the common stock of such new Subsidiary owned
directly or indirectly by the Borrower is pledged to the Agent, for the ratable
benefit of the Banks, pursuant to a pledge agreement in form and substance
satisfactory to the Agent or (b) such new Subsidiary is a Foreign Subsidiary;
provided that a Special Purpose Subsidiary shall not be required to enter into
a Guarantee Supplement pursuant to this subsection 8.18.
SECTION 9. EVENTS OF DEFAULT
Upon the occurrence of any of the following events:
(a) The Borrower shall fail to pay (i) any principal of any
Notes when due (whether at the stated maturity, by acceleration or
otherwise) in accordance with the terms thereof or hereof or (ii) any
interest on any Notes, or any fee or other amount payable hereunder,
within five days after any such interest, fee or other amount becomes
due in accordance with the terms thereof or hereof; or
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82
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document
or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with this
Agreement or any other Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of (i) any negative covenant contained in
Section 8 or in any Security Document to which it is a party or (ii)
any covenant contained in subsection 7.12; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document other than as provided in (a)
through (c) above, and such default shall continue unremedied for a
period of 30 days; or
(e) Any Loan Document shall cease, for any reason, to be in
full force and effect, or the Borrower or any other Loan Party shall
so assert; or any security interest created by any of the Security
Documents shall cease to be enforceable and of the same effect and
priority purported to be created thereby, except, in each case, as
provided in subsection 11.13; or
(f) The Subsidiary Guarantee shall cease, for any reason, to
be in full force and effect, or any guarantor thereunder shall so
assert; or
(g) The subordination provisions contained in any instrument
pursuant to which the Subordinated Debt was created or in any
instrument evidencing such Subordinated Debt shall cease, for any
reason, to be in full force and effect or enforceable in accordance
with their terms; or
(h) The Borrower or any of its Subsidiaries shall (i) default
in any payment of principal of or interest on any Indebtedness (other
than the Notes), in the payment of any Guarantee Obligation or in the
payment of any Interest Rate Agreement Obligation, in any case where
the principal amount thereof then outstanding exceeds $20,000,000
beyond the period of grace (not to exceed 30 days), if any, provided
in the instrument or agreement under which such Indebtedness,
Guarantee Obligation or Interest Rate Agreement Obligation was
created; or (ii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness, Guarantee
Obligation or Interest Rate Agreement Obligation or contained in any
instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of
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which default or other event or condition is to cause, or to permit
the holder or holders of such Indebtedness or, beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to
become due prior to its stated maturity or such Guarantee Obligation
to become payable; or
(i) (i) The Borrower or any Material Subsidiary shall
commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets, or
the Borrower or any Material Subsidiary shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any Material Subsidiary any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged
or unbonded for a period of 60 days; or (iii) there shall be commenced
against the Borrower or any Material Subsidiary any case, proceeding
or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof; or (iv)
the Borrower or any Material Subsidiary shall take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) the Borrower or any Material Subsidiary shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(j) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Single Employer Plan, (iii) a
Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed,
to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or
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appointment of a trustee is, in the reasonable opinion of the Required
Banks, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate
for purposes of Title IV of ERISA, (v) the Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required
Banks is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist, with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could subject the Borrower or any of its
Subsidiaries to any tax, penalty or other liabilities in the aggregate
material in relation to the business, operations, property or
financial or other condition of the Borrower and its Subsidiaries
taken as a whole; or
(k) One or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance) of $5,000,000 or
more and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 30 days from the
entry thereof; or
(l) (i) Any Person or "group" (within the meaning of Section
13(d) or 14(d) of the Exchange Act) (other than FIMA, the Merchant
Banking Partnerships, The Cypress Group, LLC and the officers and
directors of the Borrower) (A) shall have acquired beneficial
ownership of 35% or more of any outstanding class of capital stock of
the Borrower having ordinary voting power in the election of directors
or (B) shall obtain the power (whether or not exercised) to elect a
majority of the Borrower's directors or (ii) the Board of Directors of
the Borrower shall not consist of a majority of Continuing Directors;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (i) above with respect of the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under
this Agreement, the Letters of Credit and the Notes shall immediately become
due and payable, and (B) if such event is any other Event of Default, any of
the following actions may be taken: (i) with the consent of the Required
Banks, the Agent may, or upon the request of the Required Banks, the Agent
shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; (ii) with the
consent of the Required Banks, the Agent may, or upon the direction of the
Required Banks, the Agent shall, by notice of default to the Borrower, declare
the Loans hereunder (with accrued interest thereon) and all other amounts owing
under this
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85
Agreement (including amounts payable in respect of Letters of Credit whether or
not the beneficiaries thereof shall have presented the drafts and other
documents required thereunder) and the Notes to be due and payable forthwith,
whereupon the same shall immediately become due and payable and (iii) the Agent
may, and upon the direction of the Required Banks shall, exercise any and all
remedies and other rights provided pursuant to this Agreement and/or the other
Loan Documents. Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.
SECTION 10. THE AGENT
10.1 Appointment. Each Bank hereby irrevocably designates
and appoints Chemical Bank as the Agent of such Bank under this Agreement, and
each Bank irrevocably authorizes Chemical Bank, as the Agent for such Bank, to
take such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Agreement and such other
Loan Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement or such other Loan Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or the other Loan Documents or otherwise exist against the Agent.
Notwithstanding anything to the contrary contained in this Agreement, the
parties hereto hereby agree that no Managing Agent, Co-Agent or Lead Manager
identified on the signature pages hereof shall have any rights, duties or
responsibilities in its capacity as Managing Agent, Co-Agent or Lead Manager,
as the case may be, and that no Managing Agent, Co-Agent or Lead Manager shall
have the authority to take any action hereunder in its capacity as such.
10.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
10.3 Exculpatory Provisions. Neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or the other Loan
Documents (except for its or such Person's own gross negligence or willful
misconduct), or (ii) responsible in any manner to any
<PAGE> 91
86
of the Banks for any recitals, statements, representations or warranties made
by the Borrower, any other Loan Party or any officer thereof contained in this
Agreement or the other Loan Documents or in any certificate, report, statement
or other document referred to or provided for in, or received by the Agent
under or in connection with, this Agreement or the other Loan Documents or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or the other Loan Documents or for any failure of the
Borrower or any other Loan Party to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Bank to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Borrower.
10.4 Reliance by Agent. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement and the other Loan Documents
unless it shall first receive such advice or concurrence of the Required Banks
as it deems appropriate or it shall first be indemnified to its satisfaction by
the Banks against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the Notes in accordance with a request of the Required Banks
(or, when required hereunder, all of the Banks), and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Banks and all future holders of the Notes.
10.5 Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Bank or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall promptly give notice thereof to the
Banks. The Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Banks; provided that
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or
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Event of Default as it shall deem advisable in the best interests of the Banks.
10.6 Non-Reliance on Agent and Other Banks. Each Bank
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrower or the other Loan
Parties, shall be deemed to constitute any representation or warranty by the
Agent to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon the Agent, the Managing Agents or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and the other Loan Parties and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Bank also represents that it
will, independently and without reliance upon the Agent, the Managing Agents or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of the Borrower and the other Loan Parties. Except for
notices, reports and other documents expressly required to be furnished to the
Banks by the Agent hereunder or by the other Loan Documents, the Agent shall
not have any duty or responsibility to provide any Bank with any credit or
other information concerning the business, operations, property, financial and
other condition or creditworthiness of the Borrower and the other Loan Parties
which may come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
10.7 Indemnification. The Banks agree to indemnify the Agent
in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
the respective amounts of their original Commitments, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including without limitation at any time following the payment of the
Notes) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or the other Loan Documents, or
any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Agent under or in connection with any of the foregoing; provided that no
Bank shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or
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88
disbursements resulting solely from the Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the payment of the
Notes and all other amounts payable hereunder.
10.8 Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower and the other Loan Parties as though the
Agent were not the Agent hereunder. With respect to its Loans made or renewed
by it and any Note issued to it, the Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Bank and may
exercise the same as though it were not the Agent, and the terms "Bank" and
"Banks" shall include the Agent in its individual capacity.
10.9 Successor Agent. The Agent may resign as Agent upon ten
days' notice to the Banks. If the Agent shall resign as Agent under this
Agreement, then the Required Banks shall appoint from among the Banks a
successor agent for the Banks which successor agent shall be approved by the
Borrower (which consent shall not be unreasonably withheld), whereupon such
successor agent shall succeed to the rights, powers and duties of the Agent,
and the term "Agent" shall mean such successor agent effective upon its
appointment, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement or any holders of the Notes.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this subsection 10.9 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement.
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers. Neither this Agreement, any
Note or any other Loan Document, nor any terms hereof or thereof may be
amended, supplemented or modified except in accordance with the provisions of
this subsection. With the written consent of the Required Banks, the Agent and
the Borrower may, from time to time, enter into written amendments, supplements
or modifications hereto for the purpose of adding any provisions to this
Agreement, the Notes, or the other Loan Documents to which the Borrower is a
party or changing in any manner the rights of the Banks or of the Borrower
hereunder or thereunder or waiving, on such terms and conditions as the Agent
may specify in such instrument, any of the requirements of this Agreement or
the Notes or the other Loan Documents to which the Borrower is a party or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall directly
(a) extend the expiry date of any Letter of Credit beyond the Termination Date
or extend the maturity of any Note, or reduce the rate or
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89
extend the time of payment of interest thereon, or reduce any fee, or extend
the time of payment of such fee, payable to the Banks hereunder, or reduce the
principal amount thereof, or increase the amount of any Bank's Commitment or
amend, modify or waive any provision of subsection 2.8 or this subsection 11.1
or reduce the percentage specified in the definition of Required Banks, or
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement, or release all or substantially all the
collateral security under the Security Documents, in each case without the
written consent of all the Banks, or (b) amend, modify or waive any provision
of Section 10 without the written consent of the then Agent or (c) except as
provided in subsection 11.13, release less than all or substantially all of the
collateral security under the Security Documents having a fair market value (as
determined in good faith by the Board of Directors (or the executive committee
thereof) of the Borrower and evidenced by a certificate delivered to the Agent)
in excess of $25,000,000 in the aggregate while this Agreement is in effect
without the written consent of the Required Banks. Any such waiver and any
such amendment, supplement or modification shall apply equally to each of the
Banks and shall be binding upon the Borrower, the Banks, the Agent and all
future holders of the Notes. In the case of any waiver, the Borrower, the
Banks and the Agent shall be restored to their former position and rights
hereunder and under the outstanding Notes, and any Default or Event of Default
waived shall be deemed to be cured and not continuing; but no such waiver shall
extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereon.
11.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telegraph or telecopy), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered by hand, or five days
after being deposited in the mail, postage prepaid, or, in the case of
telegraph or telecopy notice, when sent and receipt has been confirmed,
addressed as follows in the case of the Borrower and the Agent, and as set
forth in Schedule 1.1(a) in the case of the other parties hereto, or to such
other address as may be hereafter notified by the respective parties hereto and
any future holders of the Notes:
The Borrower: Lear Seating Corporation
21557 Telegraph Road
Southfield, Michigan 48034
Attention: Donald J. Stebbins
Telecopy: (810) 746-1593
The Agent: Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Rosemary Bradley
Telecopy: (212) 972-0009
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; provided that any notice, request or demand to or upon the Agent or the Banks
pursuant to subsections 2.3, 2.4, 2.6, 2.8 and 2.9 shall not be effective until
received.
11.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Agent or any Bank, any right,
remedy, power or privilege hereunder or under the Loan Documents, shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided or
provided in the Loan Documents are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement,
the Letters of Credit and the Notes.
11.5 Payment of Expenses and Taxes. The Borrower agrees (a)
to pay or reimburse the Agent for all its reasonable out-of-pocket costs and
reasonable expenses incurred in connection with the development, preparation
and execution of, and any amendment, supplement or modification to, this
Agreement, the Notes, the Letters of Credit and the other Loan Documents and
any other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Agent, (b) to pay or reimburse each Bank and the Agent for all their costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the Notes, the Letters of Credit and any such
other documents, including, without limitation, fees and disbursements of
counsel to the Agent and the reasonable fees and disbursements of counsel to
the several Banks, and (c) to pay, indemnify, and hold each Bank and the Agent
and their respective directors, officers, employees and agents harmless from,
any and all recording and filing fees and any and all liabilities with respect
to, or resulting from any delay in paying, stamp, excise and other taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the Notes, the Letters of
Credit and any such other documents, and (d) to pay, indemnify, and hold each
Bank and the Agent harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and
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administration of this Agreement, the Notes, the Letters of Credit and the
other Loan Documents, the use or proposed use by the Borrower of the proceeds
of the Loans (all the foregoing, collectively, the "indemnified liabilities");
provided that the Borrower shall have no obligation hereunder to the Agent or
any Bank with respect to indemnified liabilities arising from the gross
negligence or willful misconduct of the Agent or any such Bank as finally
determined by a court of competent jurisdiction. The agreements in this
subsection shall survive repayment of the Notes and all other amounts payable
hereunder.
11.6 Successors and Assigns; Participations; Purchasing
Banks. (a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Banks, the Agent, all future holders of the Notes and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of each Bank.
(b) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Loan owing to such Bank, any Note held by such Bank, any Letter of Credit
Participating Interest of such Bank, any Commitment of such Bank or any other
interest of such Bank hereunder. In the event of any such sale by a Bank of
participating interests to a Participant, such Bank's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Bank shall remain solely responsible for the performance thereof, such Bank
shall remain the holder of any such Note for all purposes under this Agreement
and the Borrower and the Agent shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under this
Agreement. The Borrower agrees that if amounts outstanding under this
Agreement, the Letter of Credit and the Notes are due and unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this Agreement,
any Letter of Credit and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this Agreement
or any Note; provided that such right of setoff shall be subject to the
obligation of such Participant to share with the Banks, and the Banks agree to
share with such Participant, as provided in subsection 11.7. The Borrower also
agrees that each Participant shall be entitled to the benefits of subsections
2.11, 2.12, 2.13, 2.14, 3.5 and 11.5 with respect to its participation in the
Commitments and the Loans and Letters of Credit outstanding from time to time;
provided that no Participant shall be entitled to receive any greater amount
pursuant to such subsections than the transferor Bank would have been entitled
to receive in respect of the amount of the
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participation transferred by such transferor Bank to such Participant had no
such transfer occurred.
(c) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to any
Bank or any affiliate thereof, and, subject to the limitations set forth in the
proviso to this sentence and with the consent of the Borrower and the Agent
(which in each case shall not be unreasonably withheld) to one or more
additional banks or financial institutions ("Purchasing Banks") all or any part
of its rights and obligations under this Agreement and the Notes, pursuant to
an Assignment and Acceptance, executed by such Purchasing Bank, such transferor
Bank (and, in the case of a Purchasing Bank that is not then a Bank or an
affiliate thereof, by the Borrower and the Agent), and delivered to the Agent
for its acceptance and recording in the Register; provided, however, that (i)
the Commitment purchased by any such Purchasing Bank that is not then a Bank
shall be equal to or greater than $15,000,000 and (ii) the transferor Bank
which has transferred part of its Commitment to any such Purchasing Bank shall
retain a Commitment, after giving effect to such sale, equal to or greater than
$15,000,000. Upon such execution, delivery, acceptance and recording, from and
after the Transfer Effective Date determined pursuant to such Assignment and
Acceptance, (x) the Purchasing Bank thereunder shall be a party hereto and, to
the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder with a Commitment as set forth therein, and (y)
the transferor Bank thereunder shall, to the extent provided in such Assignment
and Acceptance, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of a transferor Bank's rights and obligations under this Agreement, such
transferor Bank shall cease to be a party hereto). Such Assignment and
Acceptance shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Bank and the
resulting adjustment of Commitment Percentages arising from the purchase by
such Purchasing Bank of all or a portion of the rights and obligations of such
transferor Bank under this Agreement and the Notes. On or prior to the
Transfer Effective Date determined pursuant to such Assignment and Acceptance,
the Borrower, at its own expense, shall execute and deliver to the Agent in
exchange for the surrendered Revolving Credit Note a new Revolving Credit Note
to the order of such Purchasing Bank in an amount equal to the Commitment
assumed by it pursuant to such Assignment and Acceptance and, if the transferor
Bank has retained a Commitment hereunder, a new Revolving Credit Note to the
order of the transferor Bank in an amount equal to the Commitment retained by
it hereunder. Such new Note shall be dated the Closing Date and shall
otherwise be in the form of the Note replaced thereby. The Note surrendered by
the transferor Bank shall be returned by the Agent to the Borrower marked
"cancelled". If any Letter of Credit Participation Certificates have been
issued to the transferor
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Bank and are then outstanding, new certificates shall be issued in the
appropriate amounts by the Issuing Bank to the Purchasing Bank and, if
appropriate, the transferor Bank, as promptly as practicable after the Transfer
Effective Date.
(d) The Agent shall maintain at its address referred to in
subsection 11.2 a copy of each Assignment and Acceptance delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Banks and the Commitment of, and principal amount of the Loans owing to, each
Bank from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower, the Agent and the Banks may
treat each Person whose name is recorded in the Register as the owner of the
Loan recorded therein for all purposes of this Agreement. The Register shall
be available for inspection by the Borrower or any Bank at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by a transferor Bank and a Purchasing Bank (and, in the case of a Purchasing
Bank that is not then a Bank or an affiliate thereof, by the Borrower and the
Agent) together with payment by the Purchasing Bank to the Agent of a
registration and processing fee of $2,500, the Agent shall (i) promptly accept
such Assignment and Acceptance (ii) on the Transfer Effective Date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Banks and the Borrower.
(f) The Borrower authorizes each Bank to disclose to any
Participant or Purchasing Bank (each, a "Transferee") and any prospective
Transferee any and all financial information in such Bank's possession
concerning the Borrower and its affiliates which has been delivered to such
Bank by or on behalf of the Borrower pursuant to this Agreement or which has
been delivered to such Bank by or on behalf of the Borrower in connection with
such Bank's credit evaluation of the Borrower and its affiliates prior to
becoming a party to this Agreement; provided that the prospective Transferee
shall agree to maintain the confidentiality of such information pursuant to
subsection 11.10.
(g) If, pursuant to this subsection, any interest in this
Agreement, any Note or any Letter of Credit is transferred to any Transferee
which is organized under the laws of any jurisdiction other than the United
States or any State thereof, the transferor Bank shall cause such Transferee,
concurrently with the effectiveness of such transfer, (i) to represent to the
transferor Bank (for the benefit of the transferor Bank, the Agent and the
Borrower) that under applicable law and treaties no taxes will be required to
be withheld by the Agent, the Borrower or the transferor Bank with respect to
any payments to be made to such Transferee in respect of the Loans or the
Letters of Credit, (ii) to furnish to the transferor Bank, the Agent and the
<PAGE> 99
94
Borrower either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 or successor applicable form, as the case may be,
certifying in each case that the Transferee is entitled to receive payments
under this Agreement without deduction or withholding of any United States
federal income taxes, (iii) an Internal Revenue Service Form W-8 or W-9 or
successor applicable form, as the case may be, establish an exemption from
United States backup withholding taxes, and (iv) to agree (for the benefit of
the transferor Bank, the Agent and the Borrower) to provide the transferor
Bank, the Agent and the Borrower a new Form 4224 or Form 1001 and from W-8 or
W-9, or successor applicable forms, or other manner of certification, as the
case may be, on or before the date that any such letter or from expires or
becomes obsolete or after the occurrence of any event requiring change in the
most recent letter and from previously delivered by it to the Borrower, and
such extensions or renewals thereof as may reasonably be requested by the
Borrower, certifying in the case of a Form 1001 or 4224 that such Transferee is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, unless in any such cases
an event (including without limitation any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent the
Transferee from duly completing and delivering any such letter or from with
respect to it and such Transferee advises the transferor Bank, the Agent and
the Borrower that it is not capable of receiving payments without any deduction
or withholdings of United States federal income tax, and in the case of a Form
W-8 or W-9, establishing an exemption from United States backup withholding
tax.
(h) Nothing herein shall prohibit any Bank from pledging or
assigning any Note to any Federal Reserve Bank in accordance with applicable
law.
11.7 Adjustments; Set-off. (a) If any Bank (a "benefitted
Bank") shall at any time receive any payment of all or part of its Loans,
interest thereon or participations in Letters of Credit, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by
set-off, pursuant to events or proceedings of the nature referred to in clause
(i) of Section 9, or otherwise) in a greater proportion than any such payment
to and collateral received by any other Bank, if any, in respect of such other
Bank's Loans, or interest thereon, such benefitted Bank shall purchase for cash
from the other Banks such portion of each such other Bank's Loan, or shall
provide such other Banks with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such benefitted Bank to share
the excess payment or benefits of such collateral or proceeds ratably with each
of the Banks; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Bank, such
purchase shall be rescinded, and the purchase price and benefits returned,
<PAGE> 100
95
to the extent of such recovery, but without interest. The Borrower agrees that
each Bank so purchasing a portion of another Bank's Loan may exercise all
rights of payment (including, without limitation, rights of set-off) with
respect to such portion as fully as if such Bank were the direct holder of such
portion.
(b) In addition to any rights and remedies of the Banks
provided by law, each Bank shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon the occurrence and continuance of a Default
and any amount becoming due and payable by the Borrower hereunder or under the
Notes (whether at the stated maturity, by acceleration or otherwise) to set-off
and appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct
or indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Bank or any branch or agency thereof to or for the credit or the
account of the Borrower. Each Bank agrees promptly to notify the Borrower and
the Agent after any such set-off and application made by such Bank, provided
that the failure to give such notice shall not affect the validity of such
set-off and application.
11.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of the copies of this Agreement signed by all
the parties shall be lodged with the Borrower and the Agent.
11.9 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
11.10 Confidentiality. Each Bank and the Issuing Bank agrees
to take normal and reasonable precautions to maintain the confidentiality of
information designated in writing as confidential and provided to it by the
Borrower or any Subsidiary in connection with this Agreement; provided,
however, that any Bank may disclose such information (a) at the request of any
bank regulatory authority or in connection with an examination of such Bank by
any such authority, (b) pursuant to subpoena or other court process, (c) when
required to do so in accordance with the provisions of any applicable law, (d)
at the discretion of any other Governmental Authority, (e) to such Bank's
Affiliates, independent auditors and other professional advisors or (f) to any
Transferee or potential Transferee; provided that such Transferee agrees to
comply with the provisions of this subsection 11.10.
<PAGE> 101
96
11.11 Submission to Jurisdiction; Waivers. The Borrower
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action or proceeding relating to this Agreement or any other Loan
Document to which it is a party, or for recognition and enforcement of
any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives trial by jury and any objection that
it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower, as the case may be, at its address set forth
in subsection 11.2 or at such other address of which the Agent shall
have been notified pursuant thereto; and
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction.
11.12 Existing Credit Agreement. (a) On the Closing Date,
all outstanding letters of credit under the Existing Credit Agreement set forth
on Schedule 3.1 shall be converted into Letters of Credit hereunder on the
terms and conditions set forth in this Agreement.
(b) The Required Banks (as defined in the Existing Credit
Agreement) hereby waive compliance by the Borrower of its obligations under
subsections 2.8 and 2.9 of the Existing Credit Agreement to notify the Agent of
its intention to terminate the "Commitments" and prepay "Loans" under (and as
defined in) the Existing Credit Agreement within the time periods specified in
such subsections.
11.13 Release of Collateral. (a) The Banks hereby agree
with the Borrower, and hereby instruct the Agent, that if (i) the implied
senior long-term unsecured debt securities of the Borrower are rated at least
BBB- by Standard and Poor's Ratings Group and at least BAA3 by Moody's
Investors Service, Inc., (ii) the Agent has no actual knowledge of the
existence of a Default and (iii) the Borrower shall have delivered a
certificate of a Responsible Officer stating that such Responsible Officer has
<PAGE> 102
97
obtained no knowledge of any Default or Event of Default, the Agent shall, at
the request and expense of the Borrower, take such actions as shall be
reasonably requested by the Borrower to release its security interest in all
collateral held by it pursuant to the Security Documents.
(b) The Banks hereby agree with the Borrower, and hereby
instruct the Agent, that upon any sale (i) of accounts receivable permitted by
this Agreement or (ii) of any assets permitted by subsection 8.6(f) or upon any
transfer of assets pursuant to the last sentence of subsection 8.5, the Agent
shall release, to the extent necessary, its security interest in such accounts
receivable or such assets, as the case may be.
(c) The Banks hereby agree with the Borrower and hereby
instruct the Agent to release its security interest in assets on which Liens
are being created by the Borrower or any Subsidiary as permitted by subsection
8.3(m).
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in New York, New York by their
proper and duly authorized officers as of the day and year first above written.
LEAR SEATING CORPORATION
By: /s/
--------------------------------
Title:
CHEMICAL BANK, as Agent and as
a Bank
By: /s/
--------------------------------
Title:
ABN AMRO BANK N.V., as a Co-Agent
and as a Lender
By: /s/
--------------------------------
Title:
By: /s/
--------------------------------
Title:
<PAGE> 103
THE ASAHI BANK, LTD.
By: /s/
--------------------------------
Title:
BANKERS TRUST COMPANY, as a
Managing Agent and as a Lender
By: /s/
--------------------------------
Title:
BANK OF AMERICA ILLINOIS, as a Co-
Agent and as a Lender
By: /s/
--------------------------------
Title:
BANK OF MONTREAL, as a Co-Agent and
as a Lender
By: /s/
--------------------------------
Title:
THE BANK OF NEW YORK, as a Co-Agent
and as a Lender
By: /s/
--------------------------------
Title:
THE BANK OF NOVA SCOTIA, as a
Managing Agent and as a Lender
By: /s/
--------------------------------
Title:
THE BANK OF TOKYO TRUST COMPANY, as
a Co-Agent and as a Lender
By: /s/
--------------------------------
Title:
<PAGE> 104
BANQUE PARIBAS
By: /s/
-------------------------------
Title:
By: /s/
-------------------------------
Title:
CAISSE NATIONALE de CREDIT AGRICOLE
By: /s/
-------------------------------
Title:
CIBC INC., as a Co-Agent and as a
Lender
By: /s/
-------------------------------
Title:
CITICORP USA, INC., as a Managing
Agent and as a Lender
By: /s/
-------------------------------
Title:
COMERICA BANK, as a Co-Agent and
as a Lender
By: /s/
-------------------------------
Title:
<PAGE> 105
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE, as a Lead
Manager and as a Lender
By: /s/
-------------------------------
Title:
By: /s/
-------------------------------
Title:
COOPERATIEVE CENTRALE RAIFFEISEN -
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
By: /s/
-------------------------------
Title:
By: /s/
-------------------------------
Title:
CREDITANSTALT CORPORATE FINANCE,
INC.
By: /s/
-------------------------------
Title:
By: /s/
-------------------------------
Title:
CREDIT LYONNAIS CHICAGO BRANCH, as
a Co-Agent and as a Lender
By: /s/
-------------------------------
Title:
CREDIT LYONNAIS CAYMAN BRANCH, as a
Co-Agent and as a Lender
By: /s/
-------------------------------
Title:
<PAGE> 106
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/
--------------------------------
Title:
DEUTSCHE BANK AG, CHICAGO BRANCH,
as a Co-Agent and as a Lender
By: /s/
--------------------------------
Title:
By: /s/
--------------------------------
Title:
DRESDNER BANK AG, CHICAGO AND GRAND
CAYMAN BRANCHES, as a Co-Agent
and as a Lender
By: /s/
--------------------------------
Title:
By: /s/
--------------------------------
Title:
FIRST AMERICAN NATIONAL BANK
By: /s/
--------------------------------
Title:
FIRST BANK NATIONAL ASSOCIATION
By: /s/
--------------------------------
Title:
THE FIRST NATIONAL BANK OF BOSTON,
as a Lead Manager and as a Lender
By: /s/
--------------------------------
Title:
<PAGE> 107
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, as a Co-Agent and as a
Lender
By: /s/
-------------------------------
Title:
THE FUJI BANK, LIMITED, as a
Co-Agent and as a Lender
By: /s/
-------------------------------
Title:
THE INDUSTRIAL BANK OF JAPAN, LTD.,
CHICAGO BRANCH, as a Co-Agent and
as a Lender
By: /s/
-------------------------------
Title:
ISTITUTO BANCARIO SAN PAOLO
DI TORNIO SPA
By: /s/
-------------------------------
Title:
By: /s/
-------------------------------
Title:
KREDIETBANK N.V.
By: /s/
-------------------------------
Title:
By: /s/
-------------------------------
Title:
<PAGE> 108
LEHMAN COMMERCIAL PAPER INC., as
a Managing Agent and as a Lender
By: /s/
-------------------------------
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., CHICAGO BRANCH
By: /s/
-------------------------------
Title:
THE MITSUBISHI BANK, LIMITED
(CHICAGO BRANCH), as a Lead
Manager and as a Lender
By: /s/
-------------------------------
Title:
THE MITSUBISHI TRUST & BANKING
CORPORATION, CHICAGO BRANCH
By: /s/
-------------------------------
Title:
NATIONAL BANK OF CANADA
By: /s/
-------------------------------
Title:
By: /s/
-------------------------------
Title:
NATIONSBANK, N.A. (CAROLINAS), as a
Co-Agent and as a Lender
By: /s/
-------------------------------
Title:
<PAGE> 109
NBD BANK, as a Lead Manager and as
a Lender
By: /s/
-------------------------------
Title:
THE NIPPON CREDIT BANK, LTD., as a
Co-Agent and as a Lender
By: /s/
-------------------------------
Title:
ROYAL BANK OF CANADA, as a Lead
Manager and as a Lender
By: /s/
-------------------------------
Title:
THE ROYAL BANK OF SCOTLAND, plc.
By: /s/
-------------------------------
Title:
THE SAKURA BANK, LIMITED
By: /s/
-------------------------------
Title:
THE SANWA BANK, LIMITED,
CHICAGO BRANCH, as a Lead Manager
and as a Lender
By: /s/
-------------------------------
Title:
SOCIETE GENERALE, CHICAGO BRANCH
By: /s/
-------------------------------
Title:
<PAGE> 110
SOCIETY NATIONAL BANK
By: /s/
-------------------------------
Title:
THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH
By: /s/
-------------------------------
Title:
By: /s/
-------------------------------
Title:
THE SUMITOMO TRUST & BANKING CO.,
LTD., NEW YORK BRANCH
By: /s/
-------------------------------
Title:
THE TOKAI BANK, LTD. (CHICAGO
BRANCH)
By: /s/
-------------------------------
Title:
VIA BANQUE
By: /s/
-------------------------------
Title:
By: /s/
-------------------------------
Title:
WESTPAC BANKING CORPORATION
By: /s/
-------------------------------
Title:
<PAGE> 111
THE YASUDA TRUST & BANKING COMPANY,
LTD.
By: /s/
-------------------------------
Title:
<PAGE> 112
FIRST AMENDMENT AND CONSENT
FIRST AMENDMENT AND CONSENT, dated as of December 8, 1995
(this "Amendment"), to the Credit Agreement, dated as of August 17, 1995 (as
amended, supplemented or otherwise modified, the "Credit Agreement"), among
Lear Seating Corporation, a Delaware corporation (the "Borrower"), the several
financial institutions parties thereto (the "Banks"), Chemical Bank, as
administrative agent for the Banks (in such capacity, the "Agent"), and the
Managing Agents, Co-Agents and Lead Managers identified therein.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Banks have
agreed to make, and have made, extensions of credit to the Borrower; and
WHEREAS, the Borrower has requested that certain provisions of
the Credit Agreement and other Loan Documents be modified in the manner
provided for in this Amendment, and the Banks are willing to agree to such
modifications as provided for in this Amendment;
NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Defined Terms. Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
2. Amendments to Credit Agreement. (a) Subsection 1.1
of the Credit Agreement is hereby amended by (i) deleting the definition of
"Security Documents" contained therein in its entirety and (ii) adding the
following new definitions in correct alphabetical order:
"`Additional Subsidiary Guarantee': the Additional Subsidiary
Guarantee made by Lear Operations Corporation and NAB Corporation in
favor of the Agent, substantially in the form of Exhibit A of the
First Amendment and Consent, dated December 8, 1995, to this
Agreement, as the same may be amended, supplemented or otherwise
modified from time to time.
`Security Documents': the collective reference to the
Security Agreements, the Pledge Agreements, the Mortgages, the
Subsidiary Guarantee and the Additional Subsidiary Guarantee."
<PAGE> 113
2
(b) Subsection 8.4(a) of the Credit Agreement is hereby
amended by deleting it in its entirety and inserting in lieu thereof the
following:
"(a) Guarantee Obligations in respect of the Subsidiary
Guarantee and the Additional Subsidiary Guarantee;"
(c) Subsection 8.5 of the Credit Agreement is hereby amended
by adding the following sentence to the end of such subsection:
"Notwithstanding any provision contained in paragraphs (a) and (c) of
this subsection, no Subsidiary of the Borrower may (i) be merged or
consolidated with or into either Lear Operations Corporation or NAB
Corporation or any Subsidiary thereof or (ii) sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to either Lear Operations Corporation or NAB
Corporation or any Subsidiary thereof unless, in each case, (A) the
Additional Subsidiary Guarantee shall have been amended in writing to
remove the limitation on such transferee's liability thereunder
contained in clause (ii) of paragraph 2(b) of the Additional
Subsidiary Guarantee or (B) the Agent shall have received a
certificate of a Responsible Officer of the Borrower in form and
substance satisfactory to the Agent describing such sale, lease,
transfer or other disposition and certifying the fair market value of
the assets to be so sold, leased, transferred or otherwise disposed.
Upon the Agent's approval of the certificate described in clause (B)
of the preceding sentence, the limitation on the transferee's
liability under clause (ii) of paragraph 2(b) of the Additional
Subsidiary Guarantee shall automatically increase by an amount equal
to the fair market value of the assets described in such certificate.
For purposes of the preceding two sentences, if the transferee is a
Subsidiary of either Lear Operations Corporation or NAB Corporation,
the term transferee in such two sentences shall refer to either Lear
Operations Corporation or NAB Corporation, whichever is the parent of
such Subsidiary."
(d) Subsection 8.6 of the Credit Agreement is hereby
amended by (i) deleting the word "and" at the end of paragraph (e) thereof,
(ii) deleting the period at the end of paragraph (f) thereof and inserting in
lieu thereof the word "; and" and (iii) adding the following to the end of such
subsection:
"(g) the transfer or other disposition of assets permitted
pursuant to subsection 8.9(e) to any Subsidiary."
(e) Subsection 8.8 of the Credit Agreement is hereby
amended by deleting the table contained therein in its entirety and inserting
in lieu thereof the following table:
<PAGE> 114
3
<TABLE>
<CAPTION>
"Fiscal Year Amount
----------- ------
<S> <C>
1995 $150,000,000
1996 160,000,000
1997 125,000,000
1998 125,000,000
1999 100,000,000
2000 100,000,000
2001 100,000,000;"
</TABLE>
(f) Subsection 8.9 of the Credit Agreement is hereby
amended by (i) deleting paragraph (d) thereof in its entirety and inserting in
lieu thereof the following:
"(d) investments, loans and advances listed on Schedule
8.9, together with any replacements, substitutions or refinancings
thereof that do not increase the amount thereof;",
(ii) deleting the word "and" at the end of paragraph (s) thereof, (iii)
deleting the period at the end of paragraph (t) thereof and inserting in lieu
thereof the word "; and" and (iv) adding the following to the end of such
subsection:
"(u) the contribution by the Borrower to a Subsidiary of the
Borrower formed under the laws of the Cayman Islands of loans or
participating interests in loans made to Lear Italia and permitted
pursuant to paragraph (o) of this subsection 8.9."
3. Consents and Waivers. (a) Notwithstanding any
provision contained in subsections 8.5 and 8.6 of the Credit Agreement,
paragraph 5(j) of the Security Agreement or any Mortgage to which the Borrower
is a party, the Banks consent to the Borrower's transfer of (i) substantially
all of its non-Michigan assets to Lear Operations Corporation, a Delaware
corporation and a newly formed, Wholly Owned Subsidiary of the Borrower
("LOC"), (ii) all of its assets obtained in connection with the November 1993
acquisition of Ford Motor Company's North American seat cover and seat systems
business, and assets currently used in the operation of such business, to NAB
Corporation, a Delaware corporation and a newly formed and Wholly Owned
Subsidiary of the Borrower ("NAB Co."), (iii) the Borrower's existing
participating interest in loans made to Lear Italia to a direct Subsidiary of
the Borrower to be formed under the laws of the Cayman Islands ("Cayman Co."),
provided that simultaneously with such transfer described in this clause (iii),
(A) the Borrower shall have executed and delivered a pledge agreement in form
and substance reasonably satisfactory to the Agent whereby the Borrower shall
have pledged 65% of the stock of Cayman Co. to the Agent, (B) the Agent shall
have received certificates of Cayman Co. representing such pledged stock
together with related executed stock transfer forms and (C) the Agent shall
have received, with a copy for each Bank, (I) the
<PAGE> 115
4
opinion of Cayman Islands counsel in form and substance reasonably satisfactory
to the Agent and (II) the opinion of Winston & Strawn in form and substance
reasonably satisfactory to the Agent.
(b) Notwithstanding any provision contained in any Loan
Document, but subject to the adjustments provided in subsection 8.5 of the
Credit Agreement, the maximum liability of each of LOC and NAB Co. under the
Additional Subsidiary Guarantee and, without duplication, the maximum amount of
Obligations secured pursuant to the Security Agreements or Mortgages to which
either LOC or NAB Co. is a party or by assets owned or held by LOC or NAB Co.
(including, without limitation, any real property transferred by the Borrower
to either LOC or NAB Co., whether or not subject to a Mortgage) shall in no
event exceed $54,000,000, in the case of LOC, and $59,000,000, in the case of
NAB Co.
(c) Notwithstanding any provision contained in subsection 8.5
of the Credit Agreement or any provision of the Pledge Agreements, AIHI and any
of its Subsidiaries may merge, in one or more transactions, into Automotive
Industries Manufacturing Inc., a Delaware corporation and a newly formed and
Wholly Owned Subsidiary of the Borrower ("AII"), which shall be the surviving
corporation of such mergers.
(d) The Banks hereby waive compliance with the provisions
of subsection 8.18 of the Credit Agreement with respect to (i) each of LOC and
NAB Co. being parties to a Guarantee Supplement and (ii) having the stock of
each of LOC and NAB Co. pledged to the Agent, for the ratable benefit of the
Banks; provided that such waiver is given subject to the condition that the
Borrower, LOC and NAB Co., as applicable, execute and deliver the Additional
Subsidiary Guarantee, the First Amendment to the Domestic Pledge Agreement and
the Additional Security Agreement (as such documents are described in Section
5(b), (c) and (e) hereof).
(e) Notwithstanding any provision contained in the Lear
Seating Canada Ltd. Share Pledge Agreement, dated as of August 17, 1995, made
by the Borrower in favor of the Agent, the Banks consent to the amalgamation of
Lear Seating Canada Ltd. and 115335 Ontario Inc., a newly formed Subsidiary of
the Borrower ("Holdco"), provided that such consent is given subject to the
condition that upon the amalgamation of Lear Seating Canada Ltd. and Holdco
(the continuing corporation after such amalgamation being referred to herein as
"Lear Canada"), the Borrower and Lear Canada shall deliver the First Amendment
to the Lear Seating Canada Ltd. Share Pledge Agreement in substantially the
form of Exhibit E hereto, and the Borrower shall deliver to the Agent share
certificates in the name of the Agent representing 65% of the issued and
outstanding shares of each class of capital stock of Lear Canada.
<PAGE> 116
5
4. Agreements of Banks. The Banks hereby consent to (a)
the First Amendment to Domestic Pledge Agreement in substantially the form of
Exhibit D hereto, (b) the First Amendment to Lear Seating Canada Ltd. Share
Pledge Agreement in substantially the form of Exhibit E hereto and (c) after
the contribution of the capital stock of Lear Seating (U.K.) Limited into
Automotive Industries Holdings Limited ("AIHL"), the release of the charge over
65% of the stock of Lear Seating (U.K.) Limited pursuant to the Charge Over
Shares, dated August 17, 1995 (the "Old Charge"), between the Borrower and the
Agent, provided that simultaneously with such release (i) AII and the Agent
shall have executed and delivered a new Charge Over Shares in substantially the
form of the Old Charge whereby AII shall have pledged 65% of the stock of AIHL
to the Agent, (ii) the Agent shall have received certificates of AIHL
representing such pledged stock, together with related executed stock transfer
forms and (iii) the Agent shall have received, with a copy for each Bank, (A)
the opinion of English counsel to the Agent in form and substance reasonably
satisfactory to the Agent and (B) the opinion of Winston & Strawn in form and
substance reasonably satisfactory to the Agent.
5. Conditions to Effectiveness. This Amendment shall
become effective on the date (the "Amendment Effective Date") on which all of
the following conditions precedent have been satisfied or waived:
(a) execution and delivery of this Amendment by the
Borrower, the Agent and the Required Banks;
(b) receipt by the Agent, with a counterpart for each
Bank, of the Additional Subsidiary Guarantee in substantially the form
of Exhibit A hereto duly executed by each of LOC and NAB Co.;
(c) receipt by the Agent, with a counterpart for each
Bank, of the Additional Security Agreement in substantially the form
of Exhibit B hereto duly executed by each of LOC and NAB Co.;
(d) receipt by the Agent, with a counterpart for each Bank,
of the Second Additional Security Agreement in substantially the form
of Exhibit C hereto, duly executed by AII;
(e) receipt by the Agent, with a counterpart for each
Bank, the First Amendment to Domestic Pledge Agreement in
substantially the form of Exhibit D hereto duly executed by the
Borrower and consented to by AII, LOC and NAB Co.;
(f) receipt by the Agent of certificates representing
shares pledged pursuant to the First Amendment to Domestic Pledge
Agreement, together with an undated stock power for
<PAGE> 117
6
each such certificate executed in blank by a duly authorized officer
of the Borrower;
(g) receipt by the Agent of evidence in form and
substance satisfactory to it that all filings, recordings,
registrations and other actions, including, without limitation, the
filing of duly executed financing statements on form UCC-1, necessary
or, in the opinion of the Agent, desirable to perfect the Liens
created by the Additional Security Agreement, the Second Additional
Security Agreement and the First Amendment to Domestic Pledge
Agreement shall have been completed;
(h) receipt by the Agent of the results of a recent
search by a Person satisfactory to the Agent, of the Uniform
Commercial Code, judgment and the tax lien filings which may have been
filed with respect to personal property of each of LOC, NAB Co. and
AII, and the results of such search shall be reasonably satisfactory
to the Agent;
(i) receipt by the Agent, with a counterpart for each
Bank, of a certificate of the Secretary or Assistant Secretary of each
of the Borrower, LOC, NAB Co. and AII, dated the Amendment Effective
Date, as to the incumbency and signature of their respective officers
executing each of this Amendment, the Additional Subsidiary Guarantee,
the Additional Security Agreement, the Second Additional Security
Agreement and the First Amendment to Domestic Pledge Agreement, as
applicable, together with satisfactory evidence of the incumbency of
such Secretary or Assistant Secretary;
(j) receipt by the Agent, with a counterpart for each
Bank, of a copy of the resolutions in form and substance satisfactory
to the Agent, of the Board of Directors of each of the Borrower, LOC,
NAB Co., and AII authorizing (i) the execution, delivery and
performance of this Amendment and the other documents being executed
and delivered in connection herewith and (ii) the granting by it of
the pledge and security interest granted by it pursuant to such
documents, certified by their respective Secretary or an Assistant
Secretary as of the Amendment Effective Date, which certificate shall
state that the resolutions therein certified have not been amended,
modified revoked or rescinded as of the date of such certificate; and
(k) receipt by the Agent, with a copy for each Bank, of
an opinion, dated the Amendment Effective Date, of Winston & Strawn in
substantially the form of Exhibit F hereto.
6. Representations and Warranties. The Borrower
represents and warrants that the representations and warranties made by the
Borrower in the Loan Documents are true and correct
<PAGE> 118
7
in all material respects on and as of the Amendment Effective Date, before and
after giving effect to the effectiveness of this Amendment, as if made on and
as of the Amendment Effective Date, except to the extent such representations
and warranties expressly relate to an earlier date.
7. Payment of Expenses. The Borrower agrees to pay or
reimburse the Agent for all of its out-of-pocket costs and reasonable expenses
incurred in connection with this Amendment and any other documents prepared in
connection herewith and the transactions contemplated hereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Agent.
<PAGE> 119
8
8. No Other Amendments; Confirmation. Except as
expressly amended, modified and supplemented hereby, the provisions of the
Credit Agreement, the Notes and the other Loan Documents are and shall remain
in full force and effect.
9. Governing Law; Counterparts. (a) This Amendment and
the rights and obligations of the parties hereto shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New
York.
(b) This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Amendment signed by all the parties
shall be lodged with the Borrower and the Agent. This Amendment may be
delivered by facsimile transmission of the relevant signature pages hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective proper and duly
authorized officers as of the day and year first above written.
LEAR SEATING CORPORATION
By: /s/
----------------------------
Title:
CHEMICAL BANK, as Agent and as a
Bank
By: /s/
----------------------------
Title:
<PAGE> 120
9
ABN AMRO BANK N.V.
By: /s/
---------------------------
Title:
By: /s/
---------------------------
Title:
THE ASAHI BANK, LTD.
By:
---------------------------
Title:
BANKERS TRUST COMPANY
By: /s/
---------------------------
Title:
BANK OF AMERICA ILLINOIS
By: /s/
---------------------------
Title:
BANK OF MONTREAL
By: /s/
---------------------------
Title:
THE BANK OF NEW YORK
By: /s/
---------------------------
Title:
THE BANK OF NOVA SCOTIA
By: /s/
---------------------------
Title:
THE BANK OF TOKYO TRUST COMPANY
By:
---------------------------
Title:
<PAGE> 121
10
BANQUE PARIBAS
By: /s/
---------------------------
Title:
By: /s/
---------------------------
Title:
CAISSE NATIONALE DE CREDIT AGRICOLE
By: /s/
---------------------------
Title:
CIBC INC.
By: /s/
---------------------------
Title:
CITICORP USA, INC.
By: /s/
---------------------------
Title:
COMERICA BANK
By: /s/
---------------------------
Title:
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By: /s/
---------------------------
Title:
By: /s/
---------------------------
Title:
<PAGE> 122
11
COOPERATIEVE CENTRALE RAIFFEISEN -
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
By: /s/
------------------------------
Title:
By: /s/
------------------------------
Title:
CREDITANSTALT CORPORATE FINANCE,
INC.
By: /s/
------------------------------
Title:
By: /s/
------------------------------
Title:
CREDIT LYONNAIS CHICAGO BRANCH
By: /s/
------------------------------
Title:
CREDIT LYONNAIS CAYMAN ISLANDS
BRANCH
By: /s/
------------------------------
Title:
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/
------------------------------
Title:
DEUTSCHE BANK AG, CHICAGO AND/OR
CAYMAN ISLANDS BRANCHES
By: /s/
------------------------------
Title:
By: /s/
------------------------------
Title:
<PAGE> 123
12
DRESDNER BANK AG, CHICAGO AND GRAND
CAYMAN BRANCHES
By: /s/
-----------------------------
Title:
By: /s/
-----------------------------
Title:
FIRST AMERICAN NATIONAL BANK
By:
-----------------------------
Title:
FIRST BANK NATIONAL ASSOCIATION
By: /s/
-----------------------------
Title:
THE FIRST NATIONAL BANK OF BOSTON
By: /s/
-----------------------------
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By: /s/
-----------------------------
Title:
THE FUJI BANK, LIMITED
By: /s/
-----------------------------
Title:
THE INDUSTRIAL BANK OF JAPAN, LTD.,
CHICAGO BRANCH
By: /s/
-----------------------------
Title:
<PAGE> 124
13
ISTITUTO BANCARIO SAN PAOLO
DI TORNIO SPA
By: /s/
-----------------------------
Title:
By: /s/
-----------------------------
Title:
KREDIETBANK N.V.
By:
-----------------------------
Title:
By:
-----------------------------
Title:
LEHMAN COMMERCIAL PAPER INC.
By:
-----------------------------
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., CHICAGO BRANCH
By: /s/
-----------------------------
Title:
THE MITSUBISHI BANK, LIMITED
(CHICAGO BRANCH)
By: /s/
-----------------------------
Title:
THE MITSUBISHI TRUST & BANKING
CORPORATION, CHICAGO BRANCH
By: /s/
-----------------------------
Title:
<PAGE> 125
14
NATIONAL BANK OF CANADA
By: /s/
----------------------------
Title:
By: /s/
----------------------------
Title:
NATIONSBANK, N.A. (CAROLINAS)
By: /s/
----------------------------
Title:
NBD BANK
By: /s/
----------------------------
Title:
THE NIPPON CREDIT BANK, LTD.
By: /s/
----------------------------
Title:
ROYAL BANK OF CANADA
By: /s/
----------------------------
Title:
THE ROYAL BANK OF SCOTLAND, PLC.
By: /s/
----------------------------
Title:
THE SAKURA BANK, LIMITED
By: /s/
----------------------------
Title:
THE SANWA BANK, LIMITED, CHICAGO
BRANCH
By:
----------------------------
Title:
<PAGE> 126
15
SOCIETE GENERALE, CHICAGO BRANCH
By: /s/
------------------------------
Title:
SOCIETY NATIONAL BANK
By: /s/
------------------------------
Title:
THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH
By:
------------------------------
Title:
By:
------------------------------
Title:
THE SUMITOMO TRUST & BANKING CO.,
LTD., NEW YORK BRANCH
By: /s/
------------------------------
Title:
THE TOKAI BANK, LTD. (CHICAGO
BRANCH)
By: /s/
------------------------------
Title:
VIA BANQUE
By:
------------------------------
Title:
By:
------------------------------
Title:
WESTPAC BANKING CORPORATION
By: /s/
------------------------------
Title:
<PAGE> 127
16
THE YASUDA TRUST & BANKING COMPANY,
LTD.
By: /s/
-------------------------------
Title:
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/
-------------------------------
Title:
MITSUI TRUST & BANKING COMPANY,
LIMITED,NEW YORK BRANCH
By: /s/
-------------------------------
Title:
THE TOYO TRUST AND BANKING
COMPANY, LIMITED
By: /s/
-------------------------------
Title:
<PAGE> 128
ACKNOWLEDGEMENT AND CONSENT
Each of the undersigned corporations as guarantors under the
Subsidiary Guarantee, dated as of August 17, 1995, made by LS Acquisition Corp.
No. 14, Lear Seating Holdings Corp. No. 50, Progress Pattern Corp., Lear
Plastics Corp., LS Acquisition Corporation No. 24, Fair Haven Industries, Inc.
and Automotive Industries Holding, Inc. (as successor by merger to AIHI
Acquisition Corp.) in favor of the Agent as supplemented by the Guarantor
Supplements, each dated September 12, 1995, by ASAA, Inc., Gulfstream
Automotive, Inc. and Automotive Industries, Inc. hereby (a) consents to the
transaction contemplated by this Amendment and (b) acknowledges and agrees that
the guarantees contained in such Subsidiary Guarantee as supplemented by such
Guarantor Supplements (and all collateral security therefor) are, and shall
remain, in full force and effect after giving effect to this Amendment and all
prior modifications to the Credit Agreement.
LS ACQUISITION CORP., NO. 14
By: /s/
------------------------------
Title:
LEAR SEATING HOLDINGS CORP.
No. 50
By: /s/
------------------------------
Title:
PROGRESS PATTERN CORP.
By: /s/
------------------------------
Title:
LEAR PLASTICS CORP.
By: /s/
------------------------------
Title:
LS ACQUISITION CORPORATION
NO. 24
By: /s/
------------------------------
Title:
<PAGE> 129
2
FAIR HAVEN INDUSTRIES, INC.
By: /s/
--------------------------------
Title:
AUTOMOTIVE INDUSTRIES HOLDING,
INC. (as successor by merger to
AIHI Acquisition Corp.)
By: /s/
--------------------------------
Title:
ASSA, INC.
By: /s/
--------------------------------
Title:
GULFSTREAM AUTOMOTIVE, INC.
By: /s/
--------------------------------
Title:
AUTOMOTIVE INDUSTRIES, INC.
By: /s/
--------------------------------
Title:
<PAGE> 1
EXHIBIT 99.1(c)
AGREEMENT AND PLAN OF MERGER DATED MAY 23, 1996
BY AND AMONG LEAR CORPORATION;
PA ACQUISITION CORP. AND
MASLAND CORPORATION
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
THE OFFER
1.01 THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 COMPANY ACTION . . . . . . . . . . . . . . . . . . . . . . 3
1.03 DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
THE MERGER
2.01 THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . 5
2.02 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.03 CONVERSION OF SHARES. . . . . . . . . . . . . . . . . . . . 6
2.04 DISSENTING SHARES . . . . . . . . . . . . . . . . . . . . . 7
2.05 PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.06 NO FURTHER RIGHTS . . . . . . . . . . . . . . . . . . . . . 9
2.07 CLOSING OF COMPANY TRANSFER BOOKS . . . . . . . . . . . . . 9
2.08 CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS
AND OFFICERS. . . . . . . . . . . . . . . . . . . . . 9
2.09 WITHHOLDING RIGHTS. . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 REPRESENTATIONS AND WARRANTIES OF PURCHASER
AND SUB. . . . . . . . . . . . . . . . . . . . . . . . 11
3.02 REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . 12
ARTICLE IV
COVENANTS
4.01 PROXY STATEMENT . . . . . . . . . . . . . . . . . . . . . . 29
4.02 MEETING OF STOCKHOLDERS OF THE COMPANY. . . . . . . . . . . 29
4.03 MERGER WITHOUT MEETING OF STOCKHOLDERS. . . . . . . . . . . 30
4.04 INTERIM OPERATIONS. . . . . . . . . . . . . . . . . . . . . 30
4.05 APPRAISAL RIGHTS. . . . . . . . . . . . . . . . . . . . . . 33
4.06 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . 33
4.07 NO SOLICITATION . . . . . . . . . . . . . . . . . . . . . . 34
4.08 CERTAIN LITIGATION. . . . . . . . . . . . . . . . . . . . . 35
i
<PAGE> 3
4.09 NOTICES OF CERTAIN EVENTS . . . . . . . . . . . . . . . . . 35
4.10 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . 36
4.11 CREDIT AGREEMENT WAIVER . . . . . . . . . . . . . . . . . . 37
ARTICLE V
CONDITIONS
5.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY . . . . . . . . 37
5.02 CONDITIONS TO THE OBLIGATIONS OF PURCHASER
AND SUB . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VI
MISCELLANEOUS
6.01 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 38
6.02 LIABILITIES IN EVENT OF TERMINATION . . . . . . . . . . . . 40
6.03 FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . 40
6.04 WAIVER AND AMENDMENT. . . . . . . . . . . . . . . . . . . . 41
6.05 OFFICERS' AND DIRECTORS' LIABILITY INSURANCE;
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . 41
6.06 EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . 41
6.07 STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . . . 42
6.08 REPRESENTATIONS, WARRANTIES AND AGREEMENTS. . . . . . . . . 43
6.09 PUBLIC STATEMENTS . . . . . . . . . . . . . . . . . . . . . 43
6.10 SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . 43
6.11 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.12 GOVERNING LAW; CONSENT TO JURISDICTION. . . . . . . . . . . 45
6.13 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . 45
6.14 INTEGRATION . . . . . . . . . . . . . . . . . . . . . . . . 46
6.15 COUNTERPARTS; EFFECTIVENESS . . . . . . . . . . . . . . . . 46
6.16 HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.17 NO THIRD-PARTY BENEFICIARIES. . . . . . . . . . . . . . . . 46
EXHIBIT A
SCHEDULE I
ii
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated May 23, 1996 (this "Agreement") by and
among LEAR CORPORATION, a Delaware corporation ("Purchaser"), PA ACQUISITION
CORP., a Delaware corporation and a wholly-owned subsidiary of Purchaser
("Sub") and MASLAND CORPORATION, a Delaware corporation (the "Company") (Sub
and the Company being hereinafter collectively referred to as the "Constituent
Corporations").
W I T N E S S E T H
WHEREAS, the Board of Directors of Purchaser and the Board of Directors of
the Company have approved the acquisition of the Company by Purchaser, by means
of the merger of Sub with and into the Company, upon the terms and conditions
set forth in this Agreement;
WHEREAS, to effectuate such acquisition, Purchaser proposes to make or to
cause Sub or another direct or indirect wholly-owned subsidiary of Purchaser to
make a tender offer for any and all Shares of Common Stock of the Company, $.01
par value, which are issued and outstanding (the "Shares") (including the
associated rights (the "Rights") to purchase Series A Junior Participating
Preferred Stock, par value $.01 per share, of the Company (or other securities)
issued pursuant to the Rights Agreement dated as of November 16, 1995, as
amended (the "Rights Agreement"), between the Company and Mellon Securities
Trust Company, as Rights Agent) on the terms set forth in the Offer to Purchase
(as hereinafter defined), and the Board of Directors of the Company has
approved such tender offer and recommended that it be accepted by the
stockholders of the Company;
WHEREAS, Purchaser and Sub are unwilling to enter into this Agreement (and
effect the transactions contemplated hereby) unless, contemporaneously with the
execution and delivery hereof, certain beneficial and record holders of the
Shares identified on Schedule I hereto enter into agreements (collectively, the
"Stockholders Agreement") providing for certain matters with respect to their
Shares, including the tender of their Shares and certain other
<PAGE> 5
actions relating to the Offer (as defined in Section 1.01) and the other
transactions contemplated by this Agreement, and in order to induce Purchaser
and Sub to enter into this Agreement, such stockholders have agreed to enter
into the Stockholders Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, Purchaser, Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
1.01 The Offer. (a) Provided that this Agreement shall not have been
terminated in accordance with Section 6.01 and that nothing shall have occurred
which would result in a failure to satisfy any of the conditions set forth in
Exhibit A hereto, Purchaser or Sub shall as promptly as practicable, and in no
event later than one business day after the date hereof, publicly announce the
execution and delivery of this Agreement, and within five business days after
such public announcement commence (within the meaning of Rule 14d-2(a) of the
Securities Exchange Act of 1934, as amended, (including the rules and
regulations promulgated thereunder, the "Exchange Act")), a tender offer for
all outstanding Shares (including the associated Rights) at a price of $26.00
per Share net to the Seller in cash (the "Offer") and, subject to the
satisfaction of the conditions set forth in such Exhibit A, shall use its best
efforts to consummate the Offer on the terms set forth herein.
(b) As soon as practicable on the date the Offer is commenced,
Purchaser and Sub shall file with the Securities and Exchange Commission (the
"Commission") a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer (the "Schedule 14D-1") which shall include as an exhibit and incorporate
by reference an offer to purchase (the "Offer to Purchase") (or portions
thereof) and forms of the related letter of transmittal and summary
advertisement (which documents, together with any supplements or amendments
thereto, are referred to collectively herein as the "Offer Documents"). The
Company and its counsel shall be given the opportunity to review the Offer
Documents and any amendments thereto prior to the filing thereof with the
Commission. Each of Purchaser, Sub and the Company represents and warrants
that the written information supplied and to be supplied for inclusion by
Purchaser, Sub and the Company, respectively, in the Schedule 14D-1 and the
Offer Documents shall, on the date the Schedule 14D-1 is filed with the
Commission, and on the date the Offer Documents are first published, sent or
given to holders of Shares, as the case
2
<PAGE> 6
may be, not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, and each of Purchaser, Sub and the Company agrees
promptly to correct any such information provided by them which shall have
become false or misleading in any material respect and take all steps necessary
to cause such Schedule 14D-1 as so corrected to be filed with the Commission
and such Offer Documents as so corrected to be disseminated to holders of
Shares, in each case as and to the extent required by applicable law.
Purchaser and Sub agree that the Schedule 14D-1 shall comply as to form in all
material respects with the provisions of applicable law.
(c) Without the prior written consent of the Company, the Purchaser
shall not (i) decrease the price per Share or change the form of consideration
payable in the Offer, (ii) decrease the number of Shares sought, (iii) amend or
waive satisfaction of the Minimum Condition (as defined in Exhibit A), (iv)
impose additional conditions to the Offer or amend any other term of the Offer
in any manner adverse to the holders of Shares, or (v) extend the expiration
date of the Offer (except as required by law and except that Sub may extend the
expiration date of the Offer for up to ten (10) business days after the initial
expiration date or for longer periods in the event that at the expiration date
of the Offer the conditions to the Offer described in Exhibit A hereto shall
not have been satisfied or earlier waived); provided, however, that, except as
set forth above, Sub may waive any other condition to the Offer in its sole
discretion; and provided further, that the Offer may be extended in connection
with an increase in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules and regulations of the Commission. Upon the terms
and subject to the conditions of the Offer, the Purchaser will accept for
payment and purchase, as soon as permitted under the terms of the Offer, all
Shares validly tendered and not withdrawn prior to the expiration of the Offer
(it being understood that the Offer shall expire as soon as is permissible
under the Exchange Act and the Rules and Regulations of the New York Stock
Exchange Inc. subject to the provisions of this Subsection (c) and Section 6.01
below).
1.02 Company Action. (a) The Company hereby consents to the Offer and
represents that (i) the Board of Directors of the Company (the "Board") at a
meeting duly called and held (x) has unanimously approved this Agreement and
the transactions contemplated hereby, including the Offer and the Merger (as
such term is defined in Section 2.01), (y) has resolved to recommend acceptance
of the Offer and approval of this Agreement and the Merger by the Company's
stockholders and (z) by the unanimous vote
3
<PAGE> 7
of the Board, determined that each of this Agreement, the Offer and the Merger
are fair to and in the best interests of the stockholders of the Company, and
(ii) Goldman Sachs & Co. ("Goldman Sachs") has delivered to the Board its
opinion that the per Share (including the associated Rights) consideration to
be received by the Company's stockholders pursuant to the Offer and the Merger
is fair to such stockholders. The Company hereby consents to the inclusion in
the Offer Documents of the recommendations of the Board referred to in this
Section 1.02 (a). On the date the Offer is commenced, the Company shall file
with the Commission and mail to the holders of Shares a Solicitation/
Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"), which shall
reflect such recommendations and actions of the Board. The Company and with
respect only to information that they have supplied for inclusion in the
Schedule 14D-9, Purchaser and Sub, represent and warrant that the Schedule
14D-9 and any amendments or supplements thereto shall not, at the time filed
with the Commission and on the date such Schedule or any amendment or
supplement thereto is first mailed to the holders of Shares, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The Company
agrees promptly to correct any information in the Schedule 14D-9 which shall
have become false or misleading in any material respect and take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the
Commission and disseminated to holders of Shares, as and to the extent required
by applicable law. The Company agrees that the Schedule 14D-9 shall comply as
to form in all material respects with all provisions of applicable law.
Purchaser, Sub and their counsel shall be given the opportunity to review the
Schedule 14D-9 and any amendments thereto prior to the filing thereof with the
Commission.
(b) The Company shall promptly furnish Purchaser with a list of the
record holders of Shares and mailing labels containing the names and addresses
of all record holders of Shares and lists of securities positions of Shares
held in stock depositories, each as of the latest practicable date, and shall
promptly furnish Purchaser with such additional information, including updated
lists of stockholders of the Company, mailing labels and lists of securities
positions, and assistance as Purchaser or its agents may reasonably request in
connection with the Offer.
1.03 Directors. (a) Promptly upon the purchase by Sub of Shares pursuant
to the Offer, and from time to time thereafter, Purchaser or Sub shall be
entitled to designate such number of directors, rounded up to the next whole
number (but in no event more than one less than the total number of directors
on the Board)
4
<PAGE> 8
as will give Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board equal to the product of (x) the
number of directors on the Board (giving effect to any increase in the number
of directors pursuant to this Section 1.03) and (y) the percentage that such
number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being, the "Board Percentage"), and the Company shall,
upon request by Purchaser, promptly satisfy the Board Percentage by (i)
increasing the size of the Board or (ii) using its best efforts to secure the
resignations of such number of directors as is necessary to enable Purchaser's
designees to be elected to the Board and shall cause Purchaser's designees
promptly to be so elected. At the request of Purchaser, the Company shall take,
at the Company's expense, all lawful action necessary to effect any such
election. In addition, the Company shall mail to its stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder with the Schedule 14D-9. Purchaser will supply to the
Company in writing and will be solely responsible for any information with
respect to it and its designees, officers, directors and affiliates required by
Section 14(f) of the Exchange Act and Rule 14f-1.
(b) Following the election or appointment of Purchaser's designees
pursuant to this Section 1.03 and prior to the Effective Time of the Merger,
any amendment or termination of this Agreement, extension for the performance
or waiver of the obligations or other acts of Purchaser or Sub or waiver of the
Company's rights hereunder, shall require the concurrence of a majority of
directors of the Company then in office who are directors on the date hereof
and who voted to approve this Agreement.
ARTICLE II
THE MERGER
2.01 The Merger. (a) Subject to the terms and conditions hereof, at the
Effective Time (as such term is defined in Section 2.01(b)), Sub will be merged
with and into the Company (the "Merger") in accordance with the General
Corporation Law of Delaware (the "Delaware Law"), the separate existence of Sub
shall cease and the Company shall continue as the surviving corporation in the
Merger (the "Surviving Corporation") under the name "MASLAND CORPORATION"
(b) At the Closing (as hereinafter defined) the parties hereto shall
cause the Merger to be consummated by filing with the Secretary of State of
Delaware the appropriate certificate of merger (the "Certificate of Merger")
duly executed by the Company
5
<PAGE> 9
in accordance with the requirements of the Delaware Law and with this
Agreement. The date and time of filing of the Certificate of Merger with the
Secretary of State of Delaware is referred to herein as the "Effective Time."
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers, immunities and franchises, and be
subject to all of the restrictions, disabilities and duties of each of the
Constituent Corporations; and all property, real, personal and mixed, and all
debts due on whatever account, including subscriptions to shares, and all other
choses in action, and all and every other interests, of or belonging to or due
to each of the Constituent Corporations shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed; and the title to any real estate, or any interest therein, vested in any
of the Constituent Corporations shall not revert or be in any way impaired by
reason of the Merger; all in accordance with Section 259 of the Delaware Law.
(d) Notwithstanding anything to the contrary herein, the parties to
this Agreement may, by mutual consent prior to the Effective Time, elect,
instead of merging Sub into the Company as hereinabove provided, to merge the
Company into Sub. In such event, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect the foregoing change.
2.02 Closing. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Winston & Strawn, 35 West Wacker Drive, Chicago, IL
60601, at 10:00 A.M., local time, on the later of (x) the day of the Special
Meeting provided for in Section 4.02, if such Special Meeting is required to be
held or (y) the first business day after the day on which the last of the
conditions set forth in Article V is fulfilled or waived (subject to applicable
law) or (ii) at such other time and place and on such other date as Purchaser
and the Company shall agree (the "Closing Date").
2.03 Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of the holders of any securities of the
Constituent Corporations:
(a) each Share (including the associated Rights) then issued and
outstanding, other than Dissenting Shares (as such term is defined in Section
2.04) and Shares to be cancelled pursuant to Section 2.03(b), shall be
converted into and represent the right to receive $26.00 net in cash, without
any interest thereon, or an amount in cash, without interest, having a value
equal to such greater amount per Share (including the associated Rights) as may
be paid (in cash or other property or a combination thereof) by
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Purchaser for any Shares (including the associated Rights) validly tendered and
not withdrawn pursuant to the Offer (the "Merger Consideration"); in the event
the price per Share (including the associated Rights) paid by Purchaser in the
Offer is paid in whole or in part in property other than cash, such price shall
be deemed to be equal to the sum of (i) the amount of cash, if any, paid for
each Share (including the associated Rights) plus (ii) the fair value of such
property, as agreed to by the Company and the Purchaser, or, if they are unable
to agree, as determined by a nationally recognized investment banking firm,
selected by the Company and approved by the Purchaser, which approval shall not
be unreasonably withheld, and the fees of which shall be shared equally by the
Company and the Purchaser;
(b) each Share (including the associated Rights) then held, directly
or indirectly, by Purchaser, Sub or any subsidiary of Purchaser, Sub or the
Company or held in the Company's treasury shall be cancelled and retired
without payment of any consideration therefor; and
(c) each Share of common stock, par value $.01 per share, of Sub ("Sub
Common Stock") issued and outstanding immediately prior to the Effective Time
shall be converted into and become one validly issued, fully paid and
non-assessable share of common stock, $.01 par value, of the Surviving
Corporation ("Surviving Corporation Common Stock"). After the Effective Time,
Purchaser shall be the holder of all outstanding shares of Surviving
Corporation Common Stock.
2.04 Dissenting Shares. Notwithstanding any other provision of this
Agreement to the contrary, Shares (including the associated Rights) held by
each stockholder who has not voted such Shares in favor of the Merger and with
respect to which the holder thereof has properly exercised the right to dissent
and demanded the fair value thereof in accordance with Section 262 of the
Delaware Law ("Dissenting Shares") shall not be converted into and represent
the right to receive the Merger Consideration; provided, however, that if any
such stockholder ceases to be entitled to an appraisal of his Shares pursuant
to Section 262 of the Delaware Law, then such holder's Dissenting Shares shall
cease to be Dissenting Shares and shall, subject to the terms of this
Agreement, be converted into and represent the right to receive the Merger
Consideration.
2.05 Payment. (a) Pursuant to an agreement (the "Disbursing Agent
Agreement") to be entered into on or before the Closing Date between Purchaser
and a disbursing agent (the "Disbursing Agent") which shall be a commercial
bank with capital of at least $1,000,000,000, Purchaser or the Surviving
Corporation shall
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deposit with the Disbursing Agent, in trust for the benefit of the Company's
stockholders, at the Closing, the cash (in immediately available funds) to
which holders of Shares shall be entitled pursuant to Section 2.03(a). The
Disbursing Agent may invest portions of the cash deposited with it in such
manner as Purchaser or the Surviving Corporation, as the case may be, directs,
provided that all such investments be in obligations of or guaranteed by the
United States of America, in commercial paper obligations receiving the highest
rating from either Moody's Investors Service, Inc. or Standard & Poor's
Corporation, or in certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $1,000,000,000
the securities of which, or the securities of the holding company of which, are
rated in the highest category by a nationally recognized credit agency
(collectively, "Permitted Investments") or in money market funds which are
invested solely in Permitted Investments; provided, further, that the
maturities of Permitted Investments shall be such as to permit the Disbursing
Agent to make prompt payment of the Merger Consideration to former stockholders
of the Company entitled thereto. Any net profit resulting from, or interest or
income produced by, Permitted Investments shall be payable to the Surviving
Corporation. Purchaser shall replace any monies lost through any investment
made at its direction pursuant to this Section 2.05(a) prior to the Effective
Time, and the Surviving Corporation shall replace any monies lost through any
investment made at its direction pursuant to this Section 2.05(a) after the
Effective Time. Any funds remaining with the Disbursing Agent one year after
the Effective Time shall be released and repaid by the Disbursing Agent to the
Surviving Corporation, after which time persons entitled thereto may look,
subject to applicable escheat and other similar laws, only to the Surviving
Corporation for payment thereof.
(b) As soon as practicable after the Effective Time, the Disbursing
Agent shall send a notice and a transmittal form to each holder of certificates
formerly evidencing Shares (other than certificates formerly representing
Shares to be cancelled pursuant to Section 2.03(b) and certificates
representing Dissenting Shares) advising such holder of the effectiveness of
the Merger and the procedure for surrendering to the Disbursing Agent (who may
appoint forwarding agents with the approval of Purchaser) such certificates for
exchange into the Merger Consideration. Each holder of certificates
theretofore evidencing Shares, upon proper surrender thereof to the Disbursing
Agent together with and in accordance with such transmittal form, shall be
entitled to receive in exchange therefor the Merger Consideration deliverable
in respect of the Shares theretofore evidenced by the certificates so
surrendered. Upon such proper surrender, the Disbursing Agent shall promptly
deliver the Merger Consideration. Until properly
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surrendered, certificates formerly evidencing Shares (other than Dissenting
Shares) shall be deemed for all purposes to evidence only the right to receive
the Merger Consideration. Notwithstanding the foregoing, neither the Disbursing
Agent nor any party hereto shall be liable to a holder of certificates
theretofore representing Shares for any amount which may be required to be paid
to a public official pursuant to an applicable abandoned property, escheat or
similar law.
(c) If the Merger Consideration (or any portion thereof) is to be
delivered to a person other than the person in whose name the certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of such Merger Consideration that the certificates so surrendered shall
be properly endorsed or accompanied by appropriate stock powers and otherwise
in proper form for transfer, that such transfer otherwise be proper and that
the person requesting such transfer pay to the Disbursing Agent any transfer or
other taxes payable by reason of the foregoing or establish to the satisfaction
of the Disbursing Agent that such taxes have been paid or are not required to
be paid.
(d) In the event any certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed, the Surviving Corporation
will issue in exchange for such lost, stolen or destroyed certificate the
Merger Consideration deliverable in respect thereof as determined in accordance
with this Article II. When authorizing such issue of the Merger Consideration
in exchange therefor, the Board of Directors of the Surviving Corporation may,
in its discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate to give the Surviving
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Surviving Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
2.06 No Further Rights. From and after the Effective Time, holders of
certificates theretofore evidencing Shares shall cease to have any rights as
stockholders of the Company, except as provided herein or by law.
2.07 Closing of Company Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and no transfer of Shares shall
thereafter be made.
2.08 Certificate of Incorporation By-Laws: Directors and Officers. The
Restated Certificate of Incorporation and By-Laws of the Company in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and By-Laws of the Surviving
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Corporation until thereafter amended as provided therein and under the Delaware
Law, except that (i) Article Seven (c) and (h) of the Restated Certificate of
Incorporation shall be deleted; (ii) Article Four of the Restated Certificate
of Incorporation shall be amended to read in its entirety as follows:
"ARTICLE FOUR
The total number of shares of stock that the corporation is
authorized to issue is One Hundred (100) shares of common stock,
having a par value of $.01 per share";
and (iii) Article Seven (d) of the Restated Certificate of Incorporation shall
be amended to read in its entirety as follows:
"(d) Vacancies and newly erected directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until their successors
are duly elected and qualified, or until their earlier resignation or removal."
The directors of Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation and the officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, in each case until their successors are duly elected and
qualified. The Company will use its best efforts to obtain the resignations of
its directors at the Effective Time.
2.09 Withholding Rights. Purchaser shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Shares such amounts as Purchaser is required to deduct and
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code"), or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Purchaser, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Shares in respect of which such deduction and
withholding was made by Purchaser.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Resentation and Warranties of Purchaser and Sub. Purchaser and Sub
hereby jointly and severally represent and warrant to the Company as follows:
(a) Organization. Each of Purchaser and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) Authorization and Validity of Agreements. Each of Purchaser and
Sub has all requisite corporate power and authority to enter into this
Agreement and to perform its respective obligations hereunder. The execution,
delivery and performance by each of Purchaser and Sub of this Agreement, and
the consummation by it of the transactions contemplated hereby, have been duly
authorized by its Board of Directors, and by Purchaser, as the sole stockholder
of Sub. No other corporate action on the part of Purchaser or Sub is necessary
to authorize the execution, delivery or performance by Purchaser and Sub of
this Agreement and the consummation by Purchaser and Sub of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Purchaser and Sub and is the legal, valid and binding obligation of Purchaser
and Sub, enforceable against each of them in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.
(c) No Approvals or Notices Required; No Conflict with Instruments to
which Purchaser or Sub is a Party. Neither the execution and delivery of this
Agreement by Purchaser and Sub nor the performance by Purchaser and Sub of
their respective obligations hereunder nor the consummation of the transactions
contemplated hereunder will: (i) conflict with or violate the Certificate of
Incorporation or By-Laws of Purchaser or Sub; (ii) assuming satisfaction of the
requirements set forth in clause (iii) below, conflict with or violate any
provision of law applicable to Purchaser or Sub; or (iii) except for (1)
requirements of the Exchange Act, (2) requirements, if any, arising out of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (3) applicable requirements, if any, of any non-United States
competition, antitrust or investment laws (including, without limitation,
Council Regulation (EEC) 4064/89, the Investment Canada Act, the Competition
Act (Canada), the Fair
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Trading Act 1973 (UK), and any rules or regulations promulgated by the
Secretary of State for Trade and Industry (U.K.), collectively, "Foreign
Antitrust Laws") and (4) the delivery of the Certificate of Merger in
accordance with the Delaware Law, require any order, consent, material
authorization or permit or approval of, or filing with or notice to any
governmental, administrative or regulatory commission, agency, authority or
other public body, domestic or foreign (each a "Governmental Entity") under any
provision of law applicable to Purchaser or Sub; or (iv) other than the Credit
Agreement Waiver (as defined in Exhibit A attached hereto), require any
consent, approval or notice under, or violate, be in conflict with or result in
any breach of or constitute a default under, or permit the termination of any
provision of or loss of any material benefit under, or result in the
acceleration of the maturity or performance of any obligation of or result in
the creation or imposition of any lien or other encumbrance upon any
properties, assets or businesses of Purchaser or Sub under any note, bond,
indenture, mortgage, deed of trust, lease, franchise, permit, authorization,
license, contract, instrument or other agreement or commitment, or any order,
judgment or decree to which Purchaser or Sub is a party or by which it or any
of its assets or properties is bound or encumbered, which in any of the
foregoing cases in this clause (iv) would, individually or in the aggregate,
have a material adverse effect on the condition (financial or otherwise),
results of operations, business, assets or liabilities of Purchaser and its
subsidiaries taken as a whole.
(d) Financing. Assuming that the Credit Agreement Waiver Condition
(as defined in Exhibit A attached hereto) is satisfied, Purchaser has or will
have, prior to the expiration of the Offer, sufficient funds available to
purchase all of the Shares outstanding and to pay all related fees and expenses
on a fully diluted basis pursuant to the Offer and this Agreement.
3.02 Representations and Warranties of the Company. The Company hereby
represents and warrants to Purchaser and Sub as follows:
(a) Organization. Each of the Company and the Subsidiaries (as such
term is defined in Section 3.02(c)) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority and all
necessary governmental approvals to own, lease and operate its properties and
to carry on its business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such
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qualification necessary, except where the failure to be so duly qualified or
licensed would not, individually or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), results of operations,
business, assets or liabilities of the Company and the Subsidiaries taken as a
whole (a "Company Material Adverse Effect").
(b) Capitalization. The authorized capital stock of the Company
consists of 60,000,000 shares, of which 50,000,000 shares are Common Stock,
having a par value of $.01 per share (the "Common Stock"), and 10,000,000
shares are Preferred Stock, having a par value of $.01 per share (the
"Preferred Stock"). As of the date hereof, 13,590,393 Shares of Common Stock
and no shares of Preferred Stock were issued and outstanding and no Shares were
held in the Company's treasury. All outstanding Shares have been duly
authorized and validly issued and are fully paid and nonassessable and have no
preemptive rights. There are 1,883,204 Shares reserved for issuance upon
exercise of the stock options and warrants to acquire Common Stock
(collectively, the "Company Stock Options") issued pursuant to the Company's
1991 Stock Purchase and Option Plan, 1993 Stock Option Incentive Plan and the
Non-Employee Director Stock Option Plan (the "Stock Option Plans") of which
Company Stock Options to acquire (1) 1,883,204 Shares have been granted, (2)
1,196,030 Shares are fully vested and exercisable on the date hereof and (3)
108,174 Shares will become fully vested and exercisable upon consummation of
the Offer. Except as disclosed in the preceding sentence and as set forth in
the Rights Agreement, the Company does not have outstanding any subscriptions,
options, warrants, rights, convertible securities or other agreements or
commitments of any character relating to the issued or unissued capital stock
or other securities of the Company obligating the Company to issue any
securities. All Shares subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the Company Stock Options, will be duly
authorized, validly issued, fully paid and nonassessable. There are no
outstanding contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any shares of Common Stock or any
capital stock of any Subsidiary or make any material investment (in the form of
a loan, capital contribution or otherwise) in any Subsidiary.
(c) Subsidiaries. The only corporation, partnership, joint venture or
other entity in which the Company, directly or indirectly, has an equity or
other interest of 50% or greater or otherwise controls (the "Subsidiaries") are
those named in Exhibit 21.1 to the Company's Annual Report on Form 10-K dated
September 26, 1995 for the fiscal year ended June 30, 1995 (the "1995 10-K"),
as filed with the Commission and heretofore delivered to Purchaser. Except as
otherwise disclosed in Schedule 3.02(c), the Company is,
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directly or indirectly, the record and beneficial owner of all of the
outstanding shares of capital stock of each of the Subsidiaries, there are no
irrevocable proxies with respect to such shares, and no equity securities of
any of the Subsidiaries are or may become required to be issued for any reason
including, without limitation, by reason of any options, warrants, scrip,
rights to subscribe for, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock of any Subsidiary, and there are no contracts,
understandings or arrangements by which any Subsidiary is bound to issue
additional shares of its capital stock or securities convertible into or
exchangeable for such shares. All of such shares so owned by the Company or any
of the Subsidiaries have been duly authorized and validly issued and are fully
paid and nonassessable and are owned by it free and clear of any claim, lien,
encumbrance or agreement with respect thereto.
(d) Authorization and Validity of Agreements. The Company has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder (subject to obtaining any necessary approval
of its stockholders with respect to the Merger). The execution, delivery and
performance by the Company of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by the Board (by a
vote of at least two-thirds of the directors) and no other corporate action on
the part of the Company is necessary to authorize the execution and delivery by
the Company of this Agreement and the consummation by it of the transactions
contemplated hereby (other than obtaining any necessary approval of its
stockholders with respect to the Merger). This Agreement has been duly
executed and delivered by the Company and is the legal, valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.
(e) No Approvals or Notices Required; No Conflict with Instruments to
which the Company is Party. Neither the execution and delivery of this
Agreement by the Company nor the performance by the Company of its obligations
hereunder nor the consummation of the transactions contemplated hereunder will
(i) conflict with or violate the Certificate of Incorporation or By-Laws of the
Company or any of its Subsidiaries; (ii) assuming satisfaction of the
requirements set forth in clause (iii) below, conflict with or violate any
provision of law applicable to the Company or its Subsidiaries or by which any
property or asset of the Company or
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any of its Subsidiaries is bound or affected; (iii) except for (1) requirements
of the Exchange Act, (2) requirements, if any, arising out of the HSR Act, (3)
applicable requirements, if any, of Foreign Antitrust Laws and (4) the delivery
of the Certificate of Merger in accordance with the Delaware Law, require any
order, consent, material authorization or permit, or approval of, or filing
with or notice to any Governmental Entity under any provision of law applicable
to the Company or any of the Subsidiaries; (iv) except as disclosed on Schedule
3.02(e) hereto, require any consent, approval or notice under, or violate, be
in conflict with or result in any breach of or constitute a default under, or
permit or cause the termination of any provision of or loss of any material
benefit under, or result in the acceleration of the maturity or performance of
any obligation of or result in the creation or imposition of any lien or other
encumbrance upon any properties, assets or businesses of the Company or any of
the Subsidiaries under any note, bond, indenture, mortgage, deed of trust,
lease, franchise, permit, authorization, license, contract, instrument or other
agreement or commitment, or any order, judgment or decree to which the Company
or any of the Subsidiaries is a party or by which it or any of the Subsidiaries
or any of their respective assets or properties is bound or encumbered, which
in any of the foregoing cases in this clause (iv) would have, either
individually or in the aggregate, a Company Material Adverse Effect. The Board
of Directors of the Company, at a meeting duly called and held, has taken all
actions necessary under the Delaware Law, including approving the transactions
contemplated by this Agreement and the Stockholders Agreement, to ensure that
the restrictions on "business combinations" set forth in Section 203 of the
Delaware Law do not, and will not, apply to Purchaser, Sub, affiliates or
associates of Purchaser or Sub or the transactions contemplated by this
Agreement or the Stockholders Agreement. The affirmative vote of the holders
of a majority of the Shares is the only vote of the holders of any class or
series of the Common Stock necessary to approve the Merger. The Board has
taken all necessary actions under the Rights Agreement to amend the Rights
Agreement so that the Rights Agreement shall not be applicable to the purchase
of the Shares pursuant to the Offer or the Merger or the consummation of the
transactions contemplated hereby, and so that none of the execution or delivery
of this Agreement, the purchase of Shares pursuant to the Offer or the Merger
or the consummation of the transactions contemplated by this Agreement or the
Stockholders Agreement will cause the Distribution Date (as defined in the
Rights Agreement) to occur, the Rights to become exercisable or Purchaser or
Sub or any affiliate or associate of Purchaser or Sub to become an Acquiring
Person (as defined in the Rights Agreement). Except as so amended in
accordance with the previous sentence, the Rights Agreement is otherwise in
full force and effect. On the date hereof, the Company has delivered to
Purchaser a certificate of the Company,
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signed by an executive officer of the Company and dated on the date of
execution thereof, to evidence satisfaction by the Company of all of the
conditions set forth in the four preceding sentences.
(f) Legal Proceedings. Except as set forth in the 1995 10-K, there is
no suit, action, proceeding or investigation pending or, to the best knowledge
of the Company, threatened, against or involving the Company or any of its
Subsidiaries, or any of their respective properties or rights, which (i) if
adversely determined, would have, either individually or in the aggregate, a
Company Material Adverse Effect or (ii) seeks to, or is reasonably likely to,
delay or prevent the consummation of the Offer, the Merger or any other
transaction contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any court, arbitrator or Governmental Entity
outstanding against the Company or any of the Subsidiaries having any such
effect. Neither the Company nor any of the Subsidiaries nor any property or
asset of the Company or of any of the Subsidiaries is subject to, or in
violation of, any term of any judgment, decree, injunction or order outstanding
against it which would have, either individually or in the aggregate, a Company
Material Adverse Effect.
(g) Commission Filings. The Company has heretofore delivered to
Purchaser true and complete copies of all reports, registration statements,
proxy statements and other filings (including all notes, exhibits and schedules
thereto and documents incorporated by reference therein) filed by the Company
with the Commission since August 31, 1993 (such reports, registration
statements and other filings, together with any amendments thereto, are
sometimes collectively referred to as the "Commission Filings"). The
Commission Filings and any forms, reports and other documents filed by the
Company with the Commission after the date of this Agreement (1) were or will
be prepared in all material respects in accordance with the requirements of the
Securities Act of 1933, as amended (including the rules and regulations
promulgated thereunder, the "Securities Act") and the Exchange Act, as the case
may be, and (2), at the time they were or will be filed with the Commission,
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. No Subsidiary is required to file any form, report or other
document with the Commission. Each of the audited consolidated financial
statements and unaudited interim financial statements (including any related
notes or schedules) included in the Commission Filings was prepared in
accordance with generally accepted accounting principles applied on a
consistent basis exceptas may be indicated therein or in the notes or schedules
thereto, and fairly presents the financial position of the Company and its
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consolidated subsidiaries as at the dates thereof and the results of their
operations, cash flows, changes in financial position and changes in
stockholders' equity for the periods then ended, subject, in the case of the
unaudited interim financial statements to normal year end audit adjustments and
except that such unaudited interim financial statements do not include all of
the notes required by generally accepted accounting principles to be included
therein. Since March 31, 1996, neither the Company nor any of the Subsidiaries
has incurred any liability or obligation material to the Company and the
Subsidiaries taken as a whole, except as disclosed in Schedule 3.02(g) hereto
or as disclosed in the Commission Filings.
(h) Conduct of Business in the Ordinary Course; Absence of Certain
Changes and Events. Since June 30, 1995, the Company and the Subsidiaries have
conducted their businesses only in the ordinary and usual course, and, except
as disclosed in Schedule 3.02(h) hereto or in the Commission Filings or as
specifically contemplated by this Agreement, there has not been: (i) any
Company Material Adverse Effect; (ii) any declaration, setting aside or payment
of any dividend (whether in cash, stock or property) with respect to the
capital stock of the Company (except regular quarterly cash dividends of $.05
per Share prior to the date hereof) or any redemption, purchase or other
acquisition by the Company of any of its securities; (iii) any entry into any
agreement or understanding between the Company or the Subsidiaries and any of
their respective executive officers or key employees providing for employment
of any such officer or key employee or any general or material increase in the
compensation (including without limitation deferred compensation), severance or
termination benefits payable or to become payable by the Company or the
Subsidiaries to any of their respective officers or key employees, or any
increase in any bonus, insurance, pension or other employee benefit plan,
payment or arrangement (including without limitation the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards) made to, for or with any such officer or key employee; (iv) any labor
dispute, which is or may be material to the Company and the Subsidiaries taken
as a whole; (v) other than in the ordinary course of business, any entry into,
or material modification of, any material commitment, agreement, or license or
transaction (including, without limitation, any borrowing or capital
expenditure or sale of assets); (vi) any change in any significant accounting
methods, principles or practices of the Company; (vii) any damage, destruction
or loss (whether or not covered by insurance) with respect to any property or
asset of the Company or any Subsidiary having or which could reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, (viii) any revaluation by the Company of any material asset (including,
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without limitation, any writing down of the value of inventory or writing off
of notes or accounts receivable), other than in the ordinary course of business
consistent with past practice, or (ix) any failure by the Company to revalue
any material asset in accordance with generally accepted accounting principles
consistent with past practice.
(i) Compliance. Neither the Company nor any Subsidiary is in conflict
with, or in default or violation of (a) any law, rule, regulation, order,
judgment or decree applicable to the Company or any Subsidiary or by which any
property or asset of the Company or any Subsidiary is bound or affected, or (b)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any property
or asset of the Company or any Subsidiary is bound or affected, except for any
such conflicts, defaults or violations that would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(j) Certificate of Incorporation and By-Laws. The Company has
heretofore made available to Purchaser a complete and correct copy of the
Certificate of Incorporation and the By-Laws, each as amended to date, of the
Company and each Subsidiary. Such Certificates of Incorporation and By-Laws
are in full force and effect. Neither the Company nor any Subsidiary is in
violation of any provision of its Certificate of Incorporation or By-Laws.
(k) Employee Benefit Plans/ERISA.
(i) Except as disclosed on Schedule 3.02(k) hereto, no
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") which (a) is
maintained for, or to which contributions have been made on behalf of,
employees ("Employees") of the Company of any current or former corporation,
person or trade or business which is a member of a group which is under common
control with the Company, or together with the Company, is treated as a single
employer, within the meaning of Sections 4 14(b)-(o) of the Code or Sections
4001(a) and (b) of ERISA (an "ERISA Affiliate") or (b) has at any time within
the preceding three (3) years (or six (6) years for the purposes of Section
4069 of ERISA) been maintained for, or to which contributions have been made on
behalf of, employees of the Company or any ERISA Affiliate (an "Employee
Benefit Plan"), exists or has ever existed.
(ii) Except as disclosed on schedule 3.02(k) hereto, none of
the Employee Benefit Plans is or was a
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"multiemployer plan" as defined in Section 4001(a)(3) of ERISA. Neither the
Company nor any ERISA Affiliate is a participating employer in any Employee
Benefit Plan in which more than one employer makes contributions as described
in Sections 4063 and 4064 of ERISA.
(iii) Except as disclosed on Schedule 3.02(k) hereto, neither
the Company nor any ERISA Affiliate has any contingent liability with respect to
any post-retirement benefit under any Employee Benefit Plan which is a welfare
benefit plan as defined in Section 3(1) of ERISA (a "Welfare Plan"), other than
liability for health plan continuation coverage described in Part 6 of Title I
of ERISA.
(iv) Except as disclosed on Schedule 3.02(k) hereto, none of
the Employee Benefit Plans is a severance plan, arrangement or program, and
none of the Employee Benefit Plans provides for compensation or benefits after
a termination of employment with the Company or any ERISA Affiliate for any
reason. Except as set forth on Schedule 3.02(k) hereto, the consummation of the
transactions contemplated by this Agreement will not directly (or indirectly
upon a termination of employment): (i) entitle any Employee to severance pay,
unemployment compensation or any other payment or (ii) accelerate the timing of
any payment or the vesting of any rights or increase the amount of any
compensation due any Employee.
(v) The Company has given to the Purchaser true and complete
copies of all the following: each Employee Benefit Plan and related trust
agreement (including all amendments to such Employee Benefit Plan or trust)
which the Company or any ERISA Affiliate maintains or is committed to
contribute to as of the date hereof and the most recent summary plan
description, actuarial report, determination letter issued by the Internal
Revenue Service and Form 5500 filed in respect of each such Employee Benefit
Plan for the past three (3) years.
(vi) Each Employee Benefit Plan complies, in both form and
operation in all material respects, with its terms, ERISA and the Code,
including, without limitation, Code Section 4980B, and no condition exists or
event has occurred with respect to any such plan which would result in the
incurrence by the Company or any ERISA Affiliate of any material liability,
fine or penalty. Neither the Company nor any ERISA Affiliate has incurred any
liability to the Pension Benefit Guaranty Corporation ("PBGC") which remains
outstanding other than the payment of premiums, and there are no premiums which
have become due which are unpaid. Neither the Company nor any ERISA Affiliate
has engaged in any
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transaction which could subject it to any material liability under Section
4069 or Section 4212(c) of ERISA. Each Employee Benefit Plan, related trust
agreement, arrangement and commitment of each of the Company and any ERISA
Affiliate is legally valid and binding in full force and effect. Each Employee
Benefit Plan that is intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter for "TRA" (as defined in Rev.
Proc. 93-39) from the IRS or has filed for such a determination letter within
the remedial amendment period, and each trust related to such plan has been
determined to be exempt under Section 501(a) of the Code. To the knowledge of
the Company, nothing has occurred or is expected to occur that would adversely
affect the qualified status of the Employee Benefit Plan or any related trust
subsequent to the issuance of such determination letter. To the knowledge of
the Company, no Employee Benefit Plan is being audited or investigated by any
government agency or subject to any pending or threatened claim or suit (other
than for ordinary claims for benefits).
(vii) Each employee pension benefit plan that is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and is maintained either (a) by the Company or any ERISA Affiliate
for employees of the Company or such ERISA Affiliate or (b) pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and, with respect to either (a) or (b), the
Company or any ERISA Affiliate is then making or accruing an obligation to make
contributions or has within the preceding three (3) plan years made
contributions ("Pension Plan") currently meets the minimum funding standard of
Section 302 of ERISA and Section 412 of the Code (without regard to any funding
waiver). Except as disclosed on Schedule 3.02(k) hereto, all contributions or
payments due and owing as required by Section 302 of ERISA, Section 412 of the
Code or the terms of any Pension Plan have been made by the due date for such
contributions or payments. Except as disclosed on Schedule 3.02(k) hereto, with
respect to each Pension Plan, the market value of assets (exclusive of any
contribution due to the Pension Plan) equals or exceeds the present value of
benefit liabilities as of the latest actuarial valuation date for such plan
(but not prior to 12 months prior to the date hereof), determined on the basis
of a shutdown of the company in accordance with actuarial assumptions used by
the PBGC in single-employer plan terminations and since its last valuation
date, there have been no amendments to such plan that materially increased the
present value of accrued benefits nor any other material adverse changes in the
funding status of such plan. Neither the Company nor any ERISA Affiliate is
required to provide security to a Pension Plan pursuant to Section 307 of ERISA
or Section 401(a)(29) of the Code.
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(viii) Neither the Company nor any ERISA Affiliate nor any
fiduciary of any Employee Benefit Plan has engaged in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code that will have a Company
Material Adverse Effect.
(ix) No Termination Event has occurred or is reasonably
expected to occur. A "Termination Event" means any of the following:
(1) a "Reportable Event" by the Company or any ERISA Affiliate
described in Section 4043 of ERISA and the regulations issued thereunder;
or
(2) the withdrawal of the Company or any ERISA Affiliate from
a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed such
under Section 4068(f) of ERISA; or
(3) the distress termination of a Pension Plan, the filing of
a notice of intent to terminate a Pension Plan as a distress termination
or the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or
(4) the institution of proceedings to terminate a Pension
Plan by the PBGC; or
(5) any other event or condition which would constitute
grounds under Section 4042(a) of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; or
(6) the imposition of a lien pursuant to Section 412 of the
Code or Section 302 of ERISA.
(x) Except as disclosed on Schedule 3.02(k) hereto, there are
no agreements which will provide payments to any Company officer, employee,
shareholder or highly compensated individual which will be "parachute payments"
under Section 280G of the Code that are nondeductible to the payor of such
benefits and which will be subject to the tax under Section 4999 of the Code
for which any payor would have a material withholding liability.
(xi) Except as disclosed on Schedule 3.02(k) hereto, the
Stock Option Plans are the only plans, program or arrangement sponsored or
maintained by the Company or any ERISA Affiliate which provides stock options,
or any other form of compensation or benefits to Employees, based upon the
equity of the Company ("Equity-Based Compensation"). Other than as disclosed on
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Schedule 3.02(k) hereto, there are no existing grants of Equity-Based
Compensation held by Employees.
(xii) Except as disclosed on Schedule 3.02(k) hereto, none of
the options granted pursuant to the Stock Option Plans are "incentive stock
options" as defined under Section 422 of the Code.
(xiii) With respect to any Employee Benefit Plan which
provides for medical or health benefits for Employees (such plan or plans, the
"Medical Plans"), such plan or plans satisfy the nondiscrimination requirements
of Code Section 105(h).
(l) Labor Matters. Except as disclosed on Schedule 3.02(l) hereof,
(i) there are no controversies pending or, to the best knowledge of the
Company, threatened between the Company or any Subsidiary and any of their
respective employees, which controversies have or are reasonably likely to have
a Company Material Adverse Effect; (ii) except as set forth in Schedule 3.02(1)
hereto, neither the Company nor any Subsidiary is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or any Subsidiary, nor, to the best knowledge of the
Company, are there nor have there been during the five (5) years prior to the
date hereof, any activities or proceedings of any labor union to organize any
such employees; (iii) neither the Company nor any Subsidiary has breached or
otherwise failed to comply with any provision of any such agreement or contract
and there are no grievances outstanding against the Company or any Subsidiary
under any such agreement or contract which breach, failure or grievance has or
is reasonably likely to have a Company Material Adverse Effect; (iv) there are
no unfair labor practice charges or complaints pending against the Company or
any Subsidiary before the National Labor Relations Board or any current union
representation questions involving employees of the Company or any Subsidiary
which charges, complaints or questions have or are reasonably likely to have a
Company Material Adverse Effect; and (v) there is no strike, slowdown, work
stoppage or lockout, or, to the best knowledge of the Company, threat of any
such action, by or with respect to any employees of the Company or any
Subsidiary.
(m) Tangible Property: Real Property and Leases.
(1) The Company and each Subsidiary have sufficient title to all
their tangible properties and assets to conduct their respective businesses as
currently conducted or as contemplated to be conducted, with only such
exceptions as, individually or in the aggregate, would not have a Company
Material Adverse Effect.
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(2) Each parcel of real property owned or leased by the Company or
any Subsidiary (i) is owned or leased free and clear of all mortgages, pledges,
liens, security interests, conditional and installment sale agreements,
encumbrances, charges or other claims of third parties of any kind
(collectively, "Liens"), other than (A) Liens for current taxes and assessments
not yet past due, (B) workmen's, repairmen's, warehousemen's and carriers'
Liens arising in the ordinary course of business of the Company or such
Subsidiary consistent with past practice, and (C) all matters of record, Liens
and other imperfections of title and encumbrances which, individually or in the
aggregate, would not have a Company Material Adverse Effect (collectively,
"Permitted Liens"), and (ii) no material portion of which is either subject to
any governmental decree or order to be sold or is being condemned, expropriated
or otherwise taken by any public authority with or without payment of
compensation therefor, nor, to the best knowledge of the Company, has any such
condemnation, expropriation or taking been proposed.
(3) All leases of real property leased for the use or benefit of the
Company or any Subsidiary to which the Company or any Subsidiary is a party
requiring annual rental payments in excess of $100,000 during the period of the
lease and all amendments and modifications thereto are in full force and effect
and have not been otherwise modified or amended, the Company is in possession
of such leased real property, and there exists no default under any such lease
by the Company or any Subsidiary, nor any event which with notice or lapse of
time or both would constitute a default thereunder by the Company or any
Subsidiary, except as, individually or in the aggregate, would not have a
Company Material Adverse Effect.
(n) Trademarks, Patents and Copyrights. The Company and the
Subsidiaries own or possess adequate licenses or other valid rights to use all
patents, trademarks, trade names, trade dress, copyrights, servicemarks, trade
secrets, applications for trademarks and for servicemarks, mask works, know-how
and other proprietary rights and information used or held for use in connection
with the business of the Company and the Subsidiaries as conducted since June
30, 1995, as currently conducted or as contemplated to be conducted and the
Company is unaware of any assertion or claim challenging the validity of any of
the foregoing, which, individually or in the aggregate, is reasonably likely to
have a Company Material Adverse Effect. The conduct of the business of the
Company and the Subsidiaries as conducted since June 30, 1995, as currently
conducted and as contemplated to be conducted did not, does not and will not
infringe in any way with any patent, license, trademark, trade dress, trade
name, service mark, mask work or copyright of any third party that,
individually or in the aggregate, is reasonably likely to have a Company
Material Adverse Effect. There are no infringements of any proprietary rights
owned by or licensed by or to the Company or any Subsidiary which, individually
or in the aggregate, is reasonably likely to have a Company
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Material Adverse Effect. Neither the Company nor any Subsidiary has licensed or
otherwise authorized the use by any third party of any proprietary information
on terms or in a manner which, individually or in the aggregate, is reasonably
likely to have a Company Material Adverse Effect.
(o) Taxes. (a) The Company and the Subsidiaries (i) have filed or
caused to be filed with the appropriate taxing authorities on a timely basis
all federal Tax Returns (as hereinafter defined), all required state income Tax
Returns and all other Tax Returns which are required to have been filed, and
such Tax Returns are true, correct and complete in all material respects, and
(ii) have paid on a timely basis or have made adequate provision on their
balance sheet for all Taxes (as hereinafter defined) related to such Tax
Returns and the periods covered thereby. Except as disclosed on Schedule
3.02(o) hereto, there are no material liens for Taxes upon the assets of the
Company and the Subsidiaries, except liens for Taxes not yet due. Except as
disclosed on Schedule 3.02(o) hereto, neither the Company nor any Subsidiary
has received a notice of any pending audits, actions, proceedings,
investigations or claims with respect to any Taxes payable by or asserted
against the Company and the Subsidiaries, which if resolved adversely would be
material. Except as disclosed on Schedule 3.02(o) hereto, neither the Company
nor any Subsidiary is or has been a member of any affiliated, consolidated,
combined or unitary group for Tax purposes in any jurisdiction. Except as
disclosed on Schedule 3.02(o) hereto, no claim has ever been made by a
jurisdiction where the Company or any of the Subsidiaries does not pay Taxes or
file Tax Returns that such entity may be subject to material Taxes in such
jurisdiction for any period beginning after December 31, 1989. Except as
disclosed on Schedule 3.02(o) hereto, the taxable years or periods for the
assessment of federal income tax of the Company and the Subsidiaries (including
assessments relating to consolidated federal income tax returns, if any, that
include the Company or any of the Subsidiaries) are closed either by agreement
with the Internal Revenue Service or by operation of the applicable statute of
limitations for all taxable periods through 1993. Except as set forth in
Schedule 3.02(o) hereto, the taxable years or periods hereto, the taxable years
or periods for the assessment of state and local income tax of the Company and
the Subsidiaries (including assessments relating to consolidated, combined or
unitary Tax Returns, if any, that include the Company or any Subsidiary) are
closed either by agreement with the appropriate taxing authority or by
application of the applicable statute of limitations for all periods through
1993. Except as disclosed on Schedule 3.02(o) hereto, the Company and the
Subsidiaries are not and have not been
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subject to any material tax in any jurisdiction outside the United States of
America. Except as disclosed on Schedule 3.02(o) hereto, no agreements
relating to allocation or sharing of Taxes exists among the Company and the
Subsidiaries or among the Company and any of its stockholders. Except as
disclosed on Schedule 3.02(o) hereto, there are no outstanding waivers or
comparable consents or extensions given by the Company or the Subsidiaries
regarding the application of the statute of limitations with resect to any
Taxes or Tax Returns. Except as disclosed on Schedule 3.02(o) hereto, neither
the Company nor any Subsidiary has filed a consent pursuant to Section 341(f)
of the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a Section 341(f) asset (as such term is defined in Section
341(f)(4) of the Code). Except as disclosed on Schedule 3.02(o) hereto, there
is no contract, agreement, plan or arrangement that individually or
collectively could give rise to the payment by the Company or the Subsidiaries
of any amount that would not be deductible by reason of Section 280G of the
Code. Except as disclosed on Schedule 3.02(o) hereto, neither the Company nor
any Subsidiary has any outstanding Corporate Acquisition Indebtedness as such
term is used in Code Section 279(b).
(b) For purposes of this Agreement, (i) the term "Taxes" shall mean
all taxes, charges, fees, levies or other like assessments, including without
limitation, all net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, withholding, payroll,
employment, excise, estimated, severance, stamp, occupation, capital stock,
property or other taxes, customs duties, fees, assessments or charges of any
kind whatsoever, together with any interest, penalties or additional amounts
attributable to Taxes imposed by any governmental authority, and (ii) the term
"Tax Returns" shall mean all returns (including information returns),
declarations, reports, estimates and statements regarding Taxes required to be
filed under the United States federal, state or local laws or any foreign laws.
(p) Environmental Matters. (i) For purposes of this Agreement, the
following terms shall have the following meanings: (I) "Hazardous Substances"
means (A) all substances, wastes, pollutants, contaminants and materials
regulated, or defined or designated as hazardous, extremely or imminently
hazardous, dangerous, or toxic under federal or state statutes and implementing
regulations, including, without limitation: the Comprehensive Environmental
Response, Compensation and Liability Act, the Federal Insecticide, Fungicide
and Rodenticide Act, the Atomic Energy Act, the Resource Conservation and
Recovery Act, the Clean Air Act and the Hazardous Materials Transportation Act;
(B)
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any asbestos or asbestos-containing material, petroleum and petroleum products,
including crude oil and any fractions thereof, natural gas, natural gas
liquids, synthetic gas, polychlorinated biphenyls, radioactive substances, urea
formaldehyde or radon; or (C) any substance with respect to which a federal,
state or local agency requires environmental investigator monitoring, reporting
or remediation; and (II) "Environmental Law" means any applicable statute,
code, enactment, ordinance, rule, regulation, permit, consent, authorization,
judgment, order, common law rule (including without limitation the common law
respecting nuisance and tortious liability) or other requirement having the
force and effect of law, whether local, state, territorial or national, at any
time in force or effect relating to: (A) emissions, discharges, spills,
releases or threatened releases of Hazardous Substances or materials containing
Hazardous Substances into ambient air, surface water, ground water, water
courses, publicly or privately owned treatment works, drains, sewer systems,
wetlands, septic systems or onto land; (B) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; (C) the regulation of storage tanks;
or (D) otherwise relating to pollution or the protection of human health,
safety or the environment.
(ii) In each case when the failure to comply with this Section
3.02(p)(ii) would result in a Company Material Adverse Effect, (I) neither the
Company nor any Subsidiary has violated or is in violation of any Environmental
Law; (II) the Company and each Subsidiary has all permits, licenses and other
authorizations required under any Environmental Law and the Company and each
Subsidiary has always been and is in compliance with their requirements; (III)
no Hazardous Substances have been used, stored, manufactured, treated or
processed on or transported to or from, the property owned or leased by the
Company or any Subsidiary except as necessary to conduct the business of the
Company and the Subsidiaries, and in compliance with all Environmental Laws;
(IV) there has been no disposal, release or threatened release of Hazardous
Substances from or to the property owned or leased by the Company or any
Subsidiary; (V) none of the properties owned or leased by the Company or any
Subsidiary (including, without limitation, soils and surface and ground waters)
are contaminated with any Hazardous Substance; (VI) neither the Company nor any
Subsidiary is liable for any off-site contamination and neither the Company nor
any Subsidiary has transported or arranged for the transportation of any
Hazardous Substances to any location that is listed or proposed for listing on
the National Priorities List or on the CERCLIS or any analogous state list; and
(VII) neither the Company nor any Subsidiary has received nor reasonably
expects to receive any notice, letter, citation, order, warning, complaint,
inquiry, claim or demand alleging or asserting a violation of or
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potential responsibility under any Environmental Law or a release or threatened
release of any Hazardous Substances at, from or onto the properties. As to
leased properties for the time period prior to occupancy or use by the Company
or any Subsidiary, Subparagraphs (III), (IV) and (V) herein are to the
knowledge of the Company and its Subsidiaries.
(iii) Subject to the same qualification that a failure to comply
would result in a Company Material Adverse Effect, with respect to each of the
former operations or properties owned or operated by the Company or any of the
Subsidiaries each of the representations and warranties set forth in Section
3.02(p)(ii) is true and correct as to or concerning activities of the Company
or any Subsidiary during the period of such ownership or operation.
(q) Material Contracts. Each contract or agreement to which the Company or
any of the Subsidiaries is a party that is material to the Company or any
Subsidiary (a "Material Contract"), including, but not limited to, any
contracts or agreements (i) involving payments to or from the Company or any
Subsidiary in excess of $500,000, (ii) with the Government of the United States
of America or any department or instrumentality thereof or (iii) containing a
provision purporting to limit the ability of the Company to compete in any line
of business, with any person, in any geographic area or during any time, is in
full force and effect and is enforceable against the parties thereto in
accordance with its terms and no condition or state of facts exists that, with
notice or the passage of time, or both, could constitute a material default by
the Company or any Subsidiary or, to the best knowledge of the Company, any
third party under such Material Contracts. The Company or each applicable
Subsidiary has duly complied in all material respects with the provision of
each Material Contract to which it is a party.
(r) Absence of Undisclosed Liabilities. Neither the Company nor any
Subsidiary has any liabilities or obligations of any kind, whether absolute,
accrued, asserted or unasserted, contingent or otherwise, which would have been
required to be recorded on a balance sheet prepared as of April 30, 1996, or as
disclosed in the notes thereto, in accordance with generally accepted
accounting principles consistently applied, except for liabilities, obligations
or contingencies (a) which are accrued or reserved against in the audited
consolidated balance sheet of the Company as of June 30, 1995 contained in the
1995 10-K or reflected in the notes thereto, (b) which were disclosed in the
Commission Filings filed with the Commission after the 1995 1O-K, (c) which
arise under this Agreement or the Stockholders Agreement or the transactions
contemplated hereby or are otherwise expressly
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disclosed in this Agreement or any Schedule hereto, or (d) which, individually
or in the aggregate, are not reasonably likely to have a Company Material
Adverse Effect.
(s) Insurance. There is no default by the Company or any Subsidiary with
respect to any provision contained in any insurance policy maintained by the
Company or any Subsidiary, and there has not been any failure to give any
notice or present any claim under any such policy in a timely fashion or in the
manner or detail required by the policy, except for defaults or failures which,
individually or in the aggregate, are not reasonably likely to have a Company
Material Adverse Effect.
(t) Opinion of Financial Advisor. The Company has received the written
opinion of Goldman Sachs to the effect that the consideration to be received by
the stockholders of the Company pursuant to the Offer and the Merger is fair to
such stockholders, a copy of which opinion has been delivered to Purchaser and
will be included in the Schedule 14D-9 and the Proxy Statement.
(u) Affiliate Transactions. Except for employment relationships with
executive officers and except as set forth on Schedule 3.02(u) hereto, neither
the Company nor any Subsidiary is a party to any transaction (including,
without limitation, the purchase or sale of any property or service) with, or
involving the making of any payment or transfer to, any Affiliate (as defined
below) other than the Company or a Subsidiary. Except for employment
relationships with executive officers and except as set forth on Schedule
3.02(u) hereto, all of such transactions shall be terminated and be of no
further legal force or effect, and neither the Company nor any Subsidiary shall
have any obligation or liability thereunder, from and after the Effective Time.
"Affiliate" of any person means any other person directly or indirectly
controlling, controlled by or under common control with such person. A person
shall be deemed to control another person if the controlling person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled person,
whether through ownership of stock, by contract or otherwise.
(v) Use of Name. The Company has the legal right to use the name "Masland"
and each derivative thereof in each jurisdiction where the Company and each
Subsidiary conduct business. The use of such name by the Company and/or any
Subsidiary does not conflict with or infringe on the rights of any other
person, and the Company
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is not aware of any claim or written notice from any person to such effect.
ARTICLE IV
COVENANTS
4.01 Proxy Statement. As promptly as practicable after expiration of the
Offer, the Company shall, if required by applicable law or otherwise deemed
advisable by Purchaser, file with the Commission under the Exchange Act, and
shall use all reasonable efforts to have cleared by the Commission, and as
promptly as practicable after expiration of the Offer shall mail to its
stockholders, a proxy statement or information statement, as appropriate (the
"Proxy Statement"), with respect to the Special Meeting (as such term is
defined in Section 4.02). Each of Purchaser, Sub and the Company represents
that the written information supplied or to be supplied for inclusion by
Purchaser, Sub or the Company, respectively, in the Proxy Statement will, at
the times when the definitive Proxy Statement is filed with the Commission and
when it is first mailed to stockholders of the Company, not contain any untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, and each of
Purchaser, Sub and the Company agrees promptly to correct any such information
provided by them which shall have become false or misleading in any material
respect and take all steps necessary to cause the Proxy Statement as so
corrected to be filed with the Commission and mailed to stockholders of the
Company as and to the extent required by applicable law. The Company agrees
that the Proxy Statement shall comply as to form in all material respects with
the provisions of applicable law. The Proxy Statement shall contain the
recommendation of the Board in favor of this Agreement and the Merger;
provided, however that nothing in this sentence shall require the Board to act,
or refrain from acting, in any manner which, in the opinion of independent
legal counsel for the Company (who may be the Company's regularly engaged
independent legal counsel), would conflict with the proper discharge of their
fiduciary duties to stockholders under applicable law.
4.02 Meeting of Stockhoiders of the Company. Promptly after expiration of
the Offer, the Company shall take all action necessary, in accordance with the
Delaware Law and its Certificate of Incorporation and By-Laws, to convene a
meeting of its Stockholders (the "Special Meeting") as promptly as practicable
to consider and vote on this Agreement and the Merger. The Company shall, to
the extent the Proxy Statement has been filed with, and
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cleared by, the Commission, solicit from stockholders of the Company proxies in
favor of the approval and adoption of this Agreement and the Merger and to take
all other action necessary or, in the reasonable judgment of Purchaser, helpful
to secure a vote of Stockholders in favor of this Agreement and the Merger;
provided, however, that nothing in this sentence shall require the Board to act,
or refrain from acting, in any manner which, in the opinion of independent legal
counsel for the Company (who may be the Company's regularly engaged independent
legal counsel), would conflict with the proper discharge of their fiduciary
duties to stockholders under applicable law. At the Special Meeting, Purchaser
shall vote, or cause to be voted, all of the Shares then owned by Purchaser (or
any subsidiary of Purchaser) in favor of this Agreement and the Merger.
4.03 Merger Without Meeting of Stockholders. The foregoing to the
contrary notwithstanding, in the event that Purchaser and Sub or any other
wholly-owned subsidiary of Purchaser shall acquire in the aggregate at least
90% of the outstanding Shares, the parties hereto agree, at the request of
Purchaser, to take all necessary and appropriate action to cause a merger of
the Company and Sub to become effective without a meeting of Stockholders of
the Company, in accordance with Section 253 of the Delaware Law.
4.04 Interim Operations. During the period from the date of this
Agreement to the earlier of the Effective Time or until Purchaser's designees
constitute a majority of the members of Company's Board under Section 1.03(a),
except as specifically contemplated by this Agreement or otherwise as consented
to or approved in writing by Purchaser:
(a) the business of the Company and each of the Subsidiaries shall be
conducted only in, and the Company and each of its Subsidiaries shall not take
any action except in, the ordinary and usual course of business and consistent
with past practice;
(b) neither the Company nor any of the Subsidiaries shall make or
propose any change or amendment in its charter or By-Laws or the Rights
Agreement;
(c) neither the Company nor any of the Subsidiaries shall (i) issue
or sell, or authorize the issuance or sale of, any shares of its capital stock
or any of its other securities or issue any securities convertible into or
exchangeable for, or options, warrants to purchase, scrip, rights to subscribe
for, calls or commitments of any character whatsoever relating to, or enter
into any contract, understanding or arrangement with respect to the issuance
of, any shares of its capital stock or any of its other
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securities, or enter into any arrangement or contract with respect to the
purchase or voting of shares of its capital stock or adjust, split, combine or
reclassify any of its securities, or make any other changes in its capital
structure; provided that the Company may issue shares of its Common Stock
pursuant to the terms of vested and currently exercisable Company Stock Options
upon the exercise of such Common Stock Options or (ii) except as contemplated
by Section 6.07, amend, waive or otherwise modify any of the terms of any Stock
Option Plan or Company Stock Option;
(d) the Company shall not declare, pay or make any dividend or other
distribution or payment with respect to, or purchase, redeem or otherwise
acquire any shares of its capital stock or otherwise make any payments to
stockholders in their capacity as stockholders, except for the regular
quarterly dividend of $.05 per share declared on May 9, 1996;
(e) the Company shall, and shall cause the Subsidiaries to, use all
reasonable efforts to preserve intact the business organization of the Company
and each of the Subsidiaries, to keep available the services of its and their
present officers and key employees, and to preserve the good will of those
having business relationships with it and the Subsidiaries;
(f) neither the Company nor any of the Subsidiaries shall take any
action with respect to the grant of any severance or termination pay (otherwise
than pursuant to written plans of the Company or any of the Subsidiaries in
effect on the date hereof) or with respect to any increase of benefits payable
under its written plans providing for severance or termination pay in effect on
the date hereof;
(g) neither the Company nor any of the Subsidiaries shall (except for
salary increases or other employee benefit arrangements in the ordinary course
of business consistent with past practice that do not result in a material
increase in benefits or compensation expense to the Company or any Subsidiary
or pursuant to collective bargaining agreements as presently in effect) adopt
or amend any bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment or other employee benefit plan,
agreement, trust, plan, fund or other arrangement for the benefit or welfare of
any Employee or increase in any manner the compensation or fringe benefits of
any Employee or pay or grant any benefit not required by any existing plan or
arrangement;
(h) except with respect to transactions between and among the
Company and any of the Subsidiaries or the endorsement of negotiable
instruments in the ordinary course of its business,
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neither the Company nor any of the Subsidiaries shall incur or assume any
indebtedness for money borrowed (other than borrowings in the ordinary course
of business) or guarantee any such indebtedness (other than any guaranty of
Subsidiary indebtedness in the ordinary course of business) or the obligations
of any person;
(i) the Company shall not and shall not permit any Subsidiary to pay,
discharge or satisfy any material claims, liabilities or obligations (absolute,
accrued, asserted, unasserted, contingent or otherwise), other than payment,
discharge or satisfaction in the ordinary course of business and consistent
with past practices, pursuant to existing contractual arrangements or as
required by law;
(j) except in the ordinary course of business consistent with past
practice or in the case of obsolete or redundant assets, or those requiring
replacement, the Company shall not and shall not permit any Subsidiary to sell,
lease or otherwise dispose of any of its assets;
(k) the Company shall not and shall not permit any Subsidiary to
acquire (for cash, shares of stock or other consideration) (including, without
limitation, by merger, consolidation, or acquisition of stock or assets) any
corporation, partnership, other business organization or any division thereof
or the assets thereof or any other assets;
(l) the Company shall not and shall not permit any Subsidiary to
take any action, other than reasonable actions in the ordinary course of
business and consistent with past practice, with respect to accounting policies
or procedures;
(m) the Company shall not and shall not permit any Subsidiary to
authorize, recommend, propose or announce an intention to adopt a plan of
complete or partial liquidation or dissolution of the Company or any of its
Subsidiaries:
(n) the Company shall not and shall not permit any Subsidiary to
make any material tax elections or settle or compromise any material income tax
liability;
(o) other than in the ordinary course of business and consistent
with past practice, the Company shall not and shall not permit any Subsidiary
to waive any material rights or make any payment, direct or indirect, of any
material liability of the Company or any of the Subsidiaries before the same
comes due in accordance with its terms;
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(p) the Company shall not and shall not permit any Subsidiary to
fail to maintain its existing material insurance coverage in effect or, in the
event any such coverage shall be terminated or lapse, to the extent available
at reasonable cost, procure substantially similar substitute insurance policies
which in all material respects are in at least such amounts and against such
risks as are currently covered by such policies;
(q) the Company shall not and shall not permit any Subsidiary to
enter into any new collective bargaining agreement or any successor collective
bargaining agreement; and
(r) the Company shall not and shall not permit any Subsidiary to
enter into any contract, agreement, commitment or arrangement to do any of the
foregoing.
4.05 Appraisal Rights. The Company shall give Purchaser prompt notice of
any demands received by the Company for appraisal of Shares, and Purchaser
shall have the right to participate in all negotiations and proceedings with
respect to such demands. The Company shall not settle or compromise any claim
for appraisal rights prior to the Effective Time without the prior written
consent of Purchaser.
4.06 Additional Agreements. (a) Upon reasonable notice the Company shall,
and shall cause each of the Subsidiaries to, afford Purchaser and Sub and their
respective officers, employees and authorized representatives reasonable access
during normal business hours throughout the period prior to the Effective Time
to all of its properties, books, contracts, commitments, records, tax records
and accountants' working papers. During such period, the Company shall, and
shall cause each of the Subsidiaries to, furnish promptly to Purchaser (i) a
copy of each report, schedule and other document filed or received by it
pursuant to the requirements of federal or state securities laws and (ii) all
such other information concerning its business, properties and personnel as
Purchaser may reasonably request and which is customarily prepared by the
Company or is in the Company's possession, provided that no investigation
pursuant to this Section shall affect or be deemed to modify any
representations or warranties made in this Agreement or the conditions to the
obligations of Purchaser and Sub to accept Shares pursuant to the Offer or the
parties hereto to consummate the Merger under this Agreement.
(b) Subject to the terms and conditions herein provided, each of the
parties hereto agrees, subject to its legal obligations, to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make
effective the
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transactions contemplated by this Agreement, including using all reasonable
efforts to (i) obtain all necessary waivers, consents and approvals and effect
all necessary registrations and filings, including, but not limited to, (a)
filings under the HSR Act, including responses to requests for additional
information, and (b) submissions of information requested by any Governmental
Entity and (ii) rectify any event or circumstance which would impede
consummation of the transactions contemplated hereby.
No Solicitation (a) From and after the date hereof until the termination of
this Agreement the Company shall not, and shall cause each of its Subsidiaries
and its and their respective officers, directors, employees, representatives,
agents and affiliates (including, without limitation, any investment banker,
attorney or accountant retained by the Company or any of its Subsidiaries) not
to, (i) directly or indirectly, invite, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information or assistance), any
inquiries with respect to or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal (as defined below),
or (ii) enter into or maintain or continue discussions or negotiations with any
person or entity in furtherance of such inquiries or to obtain an Acquisition
Proposal or (iii) agree to endorse any Acquisition Proposal. Notwithstanding the
foregoing, nothing contained herein shall prohibit the Board from furnishing
information to, or entering into discussions or negotiations with, any person or
entity that makes an unsolicited written, bona fide Acquisition Proposal or,
after payment of the Termination Fee as described in Section 6.03, endorsing
such an Acquisition Proposal, if and only to the extent that, (A) the Board,
after consultation with and based upon the advice of independent legal counsel
(who may be the Company's regularly engaged independent legal counsel),
determines in good faith that such action is necessary for the Board to comply
with its fiduciary duties to its stockholders under applicable law, and (B)
prior to taking such action, the Company receives from such person or entity an
executed confidentiality agreement on terms no less favorable to the Company
than the Confidentiality Agreement (excluding the standstill provisions
thereof). For purposes of the Agreement, "Acquisition Proposal" shall mean any
of the following (other than the transactions between the Company and Purchaser
and Sub contemplated by this Agreement): (i) any merger, consolidation, share
exchange, recapitalization, business combination, or other similar transaction
involving the Company or its Subsidiaries (other than business combinations or
similar transactions involving only foreign Subsidiaries); (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 20% or more of the
assets of the Company and its Subsidiaries, taken as a whole, in a single
transaction or series of transactions; (iii) any tender offer or
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exchange offer for 20% or more of the outstanding shares of capital stock of the
Company or the filing of a registration statement under the Securities Act in
connection therewith or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing. The Company represents that neither it, its Subsidiaries nor, to its
knowledge, any of its stockholders is a party to or bound by any agreement with
respect to an Acquisition Proposal. In the event that the Company receives or
becomes aware of any Acquisition Proposal, the Company will promptly notify
Purchaser in writing of such communication, of the identity of the person or
entity making such Acquisition Proposal and of the terms and conditions of such
Acquisition Proposal; provided, however, that the Company shall not be required
to disclose the identity of the person or entity making the Acquisition Proposal
or the terms and conditions of such Acquisition Proposal if the Board, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent legal counsel) determines in
good faith that nondisclosure would be necessary for the Board to comply with
its fiduciary duties to its stockholders under applicable law.
4.08 Certain Litigation. The Company agrees that it will not settle any
litigation commenced after the date hereof against the Company or any of its
directors by any stockholder of the Company relating to the Offer, the Merger or
this Agreement, without the prior written consent of Purchaser. In addition, the
Company will not voluntarily cooperate with any third party which may hereafter
seek to restrain or prohibit or otherwise oppose the Offer or the Merger and
will cooperate with Purchaser and Sub to resist any such effort to restrain or
prohibit or otherwise oppose the Offer or the Merger, unless the Board
determines in good faith, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent counsel) that failing so to cooperate with such third party or
cooperating with Purchaser or Sub, as the case may be, would constitute a breach
of the Board's fiduciary duties to stockholders under applicable law.
4.09 Notice of Certain Events. Each party shall promptly notify the other
parties of:
(i) Any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
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(ii) Any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement; and
(iii) Any actions, suits, claims, investigations or proceedings commenced
or, to the best of its knowledge threatened against, relating to or involving
or otherwise affecting any party hereto which relates to the consummation of
the transactions contemplated by this Agreement.
4.10 Confidentiality. (a) In addition to, and not in limitation of, that
certain Confidentiality and Standstill Agreement between Purchaser and the
Company dated as of March 14, 1996 (the "Confidentiality Agreement"), prior to
the consummation of the Offer and after any termination of this Agreement,
Purchaser and Sub will hold, and will use its best efforts to cause its
officers, directors, employees, accountants, counsel, consultants, advisors and
agents to hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all confidential
documents and information concerning the Company and the Subsidiaries furnished
to Purchaser and Sub in connection with the transactions contemplated by this
Agreement, including, without limitation, the stockholder lists furnished by the
Company pursuant to Section 1.02(b), except to the extent that such information
can be shown to have been (i) previously known on a non-confidential basis by
Purchaser or Sub, (ii) in the public domain through no fault of purchaser or Sub
or (iii) later lawfully acquired by Purchaser or Sub from sources other than the
Company; provided that Purchaser and Sub may disclose such information to its
officers, directors, employees, accountants, counsel, consultants, advisors and
agents in connection with the transactions contemplated by this Agreement so
long as such persons are informed by purchaser and Sub of the confidential
nature of such information and are directed by Purchaser and Sub to treat such
information confidentially. Purchaser's and Sub's obligation to hold any such
information in confidence shall be satisfied if it exercises the same degree of
care with respect to such information as it would take to preserve the
confidentiality of its own similar information. If this Agreement is terminated
pursuant to Section 6.01 and Purchaser thereafter ceases to pursue the
acquisition of the Company, Purchaser and Sub will, and will use its best
efforts to cause its officers, directors, employees, accountants, counsel,
consultants, advisors and agents to destroy or deliver to the Company, upon
request, all documents and other materials, and all copies thereof, obtained by
Purchaser and Sub or on its behalf from the Company in connection with this
Agreement that are subject to such confidence.
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(b) The Confidentiality Agreement shall terminate and be of no further
force or effect upon consummation of the Offer.
(c) From and after the time an Acquisition Proposal, as defined in
Section 4.07, is made to the Company, Purchaser and Sub shall not be prohibited
by the Confidentiality Agreement from taking any or all of the actions described
in the "standstill" provisions of the Confidentiality Agreement, in which case
the Confidentiality Agreement shall be deemed to be modified to the extent
required to permit Purchaser and Sub to engage in any and all such actions.
4.11 Credit Agreement Waiver. Purchaser will use its best efforts to
obtain from its lenders the Credit Agreement Waiver.
ARTICLE V
CONDITIONS
5.01 Conditions to the Obligations of Each Party. The obligations of each
party hereto to consummate the Merger shall be subject to the fulfillment at or
prior to the Effective Time of the following conditions:
(a) Approval of Stockholders. The approval of the stockholders of the
Company referred to in Section 4.02 shall have been obtained, if required by
applicable law.
(b) HSR and Other Antitrust. Any applicable waiting period (and any
extension thereof) applicable to the Merger under the HSR Act shall have expired
or been terminated and any approvals under any applicable Foreign Antitrust Laws
shall have been granted.
(c) Litigation, etc.. No preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction in the
United States or by a Governmental Entity nor any statute, rule, regulation or
executive order promulgated or enacted by any Governmental Entity shall be in
effect, which would prevent the consummation of the Merger.
5.02 Conditions to the Obligations of Purchaser and Sub. The obligations
of Purchaser and Sub to consummate the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the further condition that
Purchaser or any affiliate thereof shall have purchased all of the Shares
validly tendered and not withdrawn pursuant to the Offer; provided, that this
condition shall be deemed to be satisfied if the Offer shall have terminated
without
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the purchase of such Shares thereunder and all of the conditions to the Offer
set forth in Exhibit A hereto were satisfied upon the expiration of the Offer.
ARTICLE VI
MISCELLANEOUS
6.01 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether or not it has been approved by the stockholders
of the Company:
(a) by the mutual written consent of the respective Boards of
Directors of the Company and Purchaser;
(b) by Purchaser or the Company, if the Offer expires or is
terminated or withdrawn pursuant to its terms without any Shares being
purchased thereunder; provided however, that Purchaser may not terminate this
Agreement pursuant to this Section 6.01(b) if Purchaser's termination of, or
failure to accept for payment or pay for any Shares tendered pursuant to, the
Offer does not follow the failure of one or more of the conditions set forth in
Exhibit A hereto to be satisfied or is otherwise in violation of the terms of
the Offer or this Agreement;
(c)(i) by Purchaser prior to the purchase of and payment for any
Shares pursuant to the Offer if there has been a material breach of any
representation or warranty set forth in this Agreement on the part of the
Company and (ii) by the Company prior to the purchase of and payment for any
Shares pursuant to the Offer if there has been a material breach of any
representation or warranty set forth in this Agreement on the part of Purchaser
or Sub;
(d)(i) by Purchaser if there has been a material breach of any
covenant or agreement set forth in this Agreement on the part of the
Company, which is incapable of being, or is not, cured (other than by mere
disclosure of the breach) within five days after written notice from the
Purchaser to the Company, and (ii) by the Company if there has been a material
breach of any covenant or agreement set forth in this Agreement on the part of
the Purchaser or Sub, which is incapable of being, or is not, cured (other than
by mere disclosure of the breach) within five days after written notice from
the Company to Purchaser of such breach;
(e) by either Purchaser or the Company if the Merger has not been
consummated on or before October 31, 1996, which date may
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be extended by the mutual written consent of the Board of Directors of the
Company and the Board of Directors of Purchaser;
(f) (i) by the Company if the Offer has not been commenced within the
period of time required under the Exchange Act following the date hereof and
(ii) by the Purchaser if the Company has failed to mail the Schedule 14D-9 to
its stockholders on or prior to the date on which the Offer has been commenced
or failed to include in such Schedule 14D-9 when first mailed to stockholders
the approval and recommendations of the Board of the Offer and the Merger
required by Section 1.02(a) to be included in the Schedule 14D-9;
(g) by the Company or Purchaser if any permanent injunction or final
nonappealable order, decree or ruling issued by a court of competent
jurisdiction within the United States or Governmental Entity is in effect which
would prevent the consummation of the Merger;
(h) by the Company, if the Board modifies, in a manner adverse to
Purchaser, or withdraws its approval or recommendation of, the Offer or the
Merger referred to in Section 1.02(a) hereof, so long as the Board, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent legal counsel), determines
in good faith that such action is necessary for the Board to comply with its
fiduciary duties to stockholders under applicable law; or
(i) by Purchaser if (i) the Board modifies, in a manner adverse to
Purchaser, or withdraws its approval or recommendation of, the Offer or the
Merger referred to in Section 1.02(a) hereof, (ii) the Board shall have
recommended or accepted any Acquisition Proposal; (iii) the Board shall have
resolved to do any of the acts referred to in (i) or (ii); (iv) Purchaser shall
request that the Board reaffirm its approval or recommendation of the Offer or
the Merger and the Board shall fail to do so within ten business days after
such request; or (v) any corporation, partnership, person, other entity or
group (as defined in Section 13(d)(3) of the Exchange Act) other than Purchaser
or Sub or any of their respective subsidiaries shall have become the beneficial
owner of more than 20% of the outstanding shares other than for purposes of
arbitrage, but provided that such termination under (i) and (iv) (or under
(iii) as it relates to (i) only) above relates to actions of the Board which,
after consultation with and based upon the advice of independent legal counsel
(who may be the Company's regularly engaged independent legal counsel), it has
determined in good faith are necessary for the Board to comply with its
fiduciary duties to stockholders under applicable law, in which case the
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effectiveness of such termination may not be prior to the later of (x) the
close of business immediately preceding the then scheduled termination date of
the Offer or (y) ten days following such modification or withdrawal, and then
only if the Board has not reinstated its affirmative recommendation or approval
of the Purchaser's Offer or the Merger within such period of time.
6.02 Liabilities in Event of Termination. In the event of any termination
of this Agreement pursuant to Section 6.01, the Company, Purchaser and Sub
shall have no obligation or liability to each other except as provided
in Sections 4.10 and 6.03, and except that nothing herein will release any
party from liability for any willful breach of this Agreement.
6.03 Fees and Expenses. (a) If (i) an Acquisition Proposal (as defined
in Section 4.07) is made prior to the termination of this Agreement
(other than a termination pursuant to Section 6.01(f)(ii), 6.01(h) or 6.01(i)),
and within nine months of such termination the Company shall have entered into
an agreement with respect to, approved, recommended or taken any affirmative
action to facilitate, an Acquisition Proposal, or any transaction constituting
an Acquisition Proposal is consummated, (ii) this Agreement is terminated
pursuant to Section 6.01(f)(ii) and an Acquisition Proposal exists, or (iii)
this Agreement is terminated pursuant to Section 6.01(h) or 6.01(i), then the
Company shall pay to Purchaser a fee equal to $10,000,000 in cash (the
"Termination Fee"). The Termination Fee shall be payable (x) in the case of
entering into an agreement with respect to an Acquisition Proposal or the
consummation of a transaction constituting an Acquisition Proposal as described
in clause (i) of this Section 6.03(a), upon the signing of a definitive
agreement relating to such Acquisition Proposal or, if no such agreement is
executed, then at the closing (and as a condition to the closing) of such
transaction constituting an Acquisition Proposal, (y) upon the occurrence of
any other event described in clause (i) of this Section 6.03(a) and (z) within
one business day of the termination of this Agreement upon any termination of
this Agreement under Sections 6.01(f)(ii), 6.01(h) or 6.01(i). The Company
acknowledges that the agreements contained in this Section 6.03 are an integral
part of the transactions contemplated by this Agreement.
(b) Except as specifically provided in Section 6.03(a), each party
shall bear all expenses incurred by it in connection with this Agreement and
the transactions contemplated hereby, including those incident to the
negotiation and preparation of this Agreement and to its performance of and
compliance with all agreements and conditions contained herein to be performed
or complied with by it.
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(c) Except for the Company's fee engagement letter with Goldman Sachs
dated April 25, 1996, or as previously disclosed by a party to this Agreement
in writing to the other parties hereto, no broker, finder or investment banker
is entitled to a brokerage, finder's or other fee or commission in connection
with the Offer or the Merger or the transactions contemplated by this
Agreement. Such fees or other commissions payable by the Company and its
Subsidiaries shall not exceed the amount previously disclosed to Purchaser.
6.04 Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party which is, or whose stockholders are, entitled
to the benefits thereof. This Agreement may not be amended or supplemented at
any time, except by an instrument in writing signed on behalf of each party
hereto; provided, that after this Agreement has been approved by the
stockholders of the Company no such amendment shall reduce the amount or change
the form of consideration to be paid to the stockholders of the Company in the
Merger or alter or change any of the terms or conditions of this Agreement if
such alteration or change would adversely affect the stockholders of the
Company.
6.05 Officers' and Directors' Liability Insurance; Indemnification. (a)
After the Effective Time, or such earlier date as Purchaser acquires
control of the Company, Purchaser shall cause the Surviving Corporation to (i)
maintain the Company's current directors' and officers' insurance and
indemnification policy or an equivalent policy, subject to terms and conditions
no less advantageous, for all directors and officers of the Company on the date
hereof, for six years after the Effective Time to cover acts and omissions of
directors and officers of the Company occurring at or prior to the Effective
Time; provided that Purchaser shall not be required to pay an annual premium
for such insurance in excess of 300% of the last annual premium paid by the
Company prior to the date hereof, but in such case Purchaser shall purchase as
much coverage as possible for such amount and (ii) maintain in effect for six
years after the Effective Time provisions no less favorable to the indemnified
parties than those contained in the Certificate of Incorporation of the Company
on the date hereof (which shall be contained in the Certificate of
Incorporation of the Surviving Corporation) relating to the rights to
indemnification of officers and directors with respect to indemnification for
acts and omissions occurring at or prior to the Effective Time.
(b) This Section 6.05 is intended to benefit the Company, the
Surviving Corporation and each of the directors and officers of the
Company on the date hereof (each of whom shall be entitled to enforce this
Section 6.05 against the Purchaser or the
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Surviving Corporation, as the case may be) and shall be binding on all
successors and assigns of the Purchaser and the Surviving Corporation.
6.06 Employee Benefit Plans. For a period ending no earlier than (i)
with respect to Employee Benefit Plans which are Pension Plans or
Welfare Plans (other than severance plans), the last day of the first plan year
beginning after the Effective Time, (ii) with respect to Employee Benefit Plans
which are cafeteria plans as defined in Section 125 of the Code, the last day
of the plan year during which the Effective Time occurs and (iii) one year from
the date of this Agreement with respect to any other employee benefits,
Purchaser agrees that after the Effective Time it shall cause the Surviving
Corporation to maintain all of the Company's and the Subsidiaries' existing
employee retirement benefit plans and other employee benefit plans or plans
providing benefits generally comparable thereto or provide compensation which
in the aggregate is substantially comparable thereto.
(b) The foregoing shall not constitute any commitment, contract,
understanding or guarantee (express or implied) on the part of the Surviving
Corporation of a post-Effective Time employment relationship of any term or
duration or on any terms other than those the Surviving Corporation may
establish. Employment of any of the Employees by the Surviving Corporation
shall be "at will" and may be terminated by the Surviving Corporation at any
time for any reason (subject to any legally binding agreement, applicable laws
or collective bargaining agreement). No provision of this Agreement shall
create any third-party beneficiary rights in any employee or former employee
(including any beneficiary or dependent thereof) of the Company or any of its
subsidiaries in respect of continued employment or resumed employment.
6.07 Stock Options. (a) At the Effective Time, each Company Stock Option
issued under the 1991 Stock Purchase and Option Plan, whether or not
then exercisable and whether or not then vested, at the election of the
optionee, shall be either cancelled or assumed and converted by Purchaser. If
cancelled, then each holder of a cancelled option shall be entitled to receive,
in consideration for the cancellation of such option, an amount in cash equal
to the product of (x) the number of Shares previously subject to such option
and (y) the excess, if any, of the Merger Consideration over the exercise price
per Share previously subject to such option. If assumed, each option shall be
amended to be exercisable into Purchaser's Common Stock (a "Substitute
Option"); provided, however, that the excess aggregate value of each option
following the substitution and assumption shall be the same as the excess
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aggregate value of such outstanding option before the substitution and
assumption. The number of shares of Purchaser's Common Stock subject to such
Substitute Option and the exercise price thereunder shall be computed in
compliance with the requirements of Section 424(a) of the Code, and, except as
agreed in writing by Purchaser and the Company, such Substitute Option shall
not confer any additional rights upon the optionee and shall be subject to
substantially all of the other terms and conditions of the original option
granted by the Company to which it relates except in the case of an optionee
whose employment with the Company or its successor is terminated, other than
for cause, within one year following the Effective Time, for whom the exercise
period of the vested Substitute Option will be extended to a period of two
years. At the Effective Time, each Company Stock Option issued under the
Non-Employee Directors Stock Option Plan shall be cancelled in the manner
provided above, and each Company Stock Option issued under the 1993 Stock
Option Incentive Plan shall be assumed and converted into a Substitute Option
in the manner provided above.
(b) Prior to the Effective Time, the Company shall obtain any
consents or elections required or deemed necessary and the original Company
Stock Option agreements (i) for cancellation from holders of outstanding
Company Stock Options or (ii) to make any amendments to the terms of the Stock
Option Plans or Company Stock Option Agreements that, in the case of clause (a)
of this Section 6.07, are necessary to give effect to the transactions
contemplated hereby.
6.08 Representations, Warranties and Agreements. No representations and
warranties in this Agreement shall survive the purchase by Purchaser of any
Shares pursuant to the Offer. All representations, warranties and agreements
made by Purchaser or Sub in this Agreement shall be deemed to be made jointly
and severally by Purchaser and Sub. All agreements in this Agreement shall not
survive the Merger, except for the agreements contained in Sections 6.03 and
6.05 of this Agreement.
6.09 Public Statements. The Company, on the one hand, and Purchaser or
Sub, on the other, agree to consult with each other in issuing any press
release or otherwise making any public statement with respect to the
transactions contemplated hereby, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by law or any listing agreement with any national securities exchange
(as advised by independent legal counsel (who may be the Company's regularly
engaged independent legal counsel)).
6.10 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties
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<PAGE> 47
hereto and their respective successors and assigns; provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto, except that Sub
may assign its rights and obligations hereunder to another wholly-owned
subsidiary of Purchaser without the consent of the other parties hereto.
6.11 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given by delivery, by
facsimile transmission, or by registered or certified mail, first class postage
prepaid, return receipt requested, to the respective parties as follows:
If to the Company:
MASLAND CORPORATION
50 Spring Road
Carlisle, PA 17013
Attention: William J. Branch, Jr.
Chairman of the Board
Telephone: (717) 258-7214
Facsimile: (717) 258-7576
With a copy to:
Peter O. Clauss, Esquire
Clark, Ladner, Fortenbaugh & Young
One Commerce Square
2005 Market Street, 22nd Floor
Philadelphia, PA 19103
Telephone: (215) 241-1876
Facsimile: (215) 241-1857
If to Purchaser or Sub:
LEAR CORPORATION
21557 Telegraph Road
Southfield, MI 48034
Attention: Joseph F. McCarthy, Esquire
Telephone: (810) 746-1714
Facsimile: (810) 746-1677
44
<PAGE> 48
With a copy to:
John L. MacCarthy, Esquire
Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601-9703
Telephone: (312) 558-5876
Facsimile: (312) 558-5700
or to such other address as either party may have furnished to the other in
writing in accordance herewith. Any such notice, request, claim, demand or
other communication shall only be effective upon receipt.
6.12 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the substantive law of the State of
Delaware without giving effect to the principles of conflicts of laws thereof.
Each of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any state or federal court located in the State of Delaware in
the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction or venue by motion or other request for leave
from any such court and (c) agrees that it will not bring any action relating to
this Agreement or any of the transactions contemplated by this Agreement in any
court other than a state or federal court sitting in the State of Delaware,
except as otherwise required by applicable law.
6.13 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
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<PAGE> 49
6.14 Integration. This Agreement constitutes the entire Agreement and
understanding among the parties hereto relating to the subject matter hereof and
supersedes any and all prior agreements and understandings, oral or written,
relating to the subject matter hereof, including without limitation (i) the
Confidentiality Agreement, except as provided in Section 4.10, and (ii) the
Agreement to Negotiate Exclusively dated May 2, 1996 between the Company and the
Purchaser.
6.15 Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
6.16 Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.
6.17 No Third-Party Beneficiaries. Except for Section 6.05 (which is
intended to and shall confer upon such persons all rights and remedies by
reason of this Agreement as if such person was a party hereto), no provision of
this Agreement is intended to, or shall, confer any third-party beneficiary or
other rights or remedies upon any person other than the parties hereto.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto on the date first above
written.
LEAR CORPORATION
By: /s/ JH Vandenberghe
---------------------------
PA ACQUISITION CORP.
By: /s/ JH Vandenberghe
---------------------------
MASLAND CORPORATION
By: /s/ WJ Branch
---------------------------
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<PAGE> 50
EXHIBIT A
The capitalized terms used in this Exhibit have the meanings set forth in
the attached Agreement, except that the term "Merger Agreement" shall be deemed
to refer to the attached Agreement, "Purchaser" shall be deemed to refer to PA
ACQUISITION CORP. and "Parent" shall be deemed to refer to LEAR CORPORATION.
Notwithstanding any other provision of the Offer, the Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), to pay for any Shares
(including the associated Rights) tendered, and may postpone the acceptance for
payment or, subject to the restriction referred to above, payment for any
Shares (including the associated Rights) tendered, and, except as otherwise
provided in the Merger Agreement, may amend or terminate the Offer (whether or
not any Shares (including the associated Rights) have theretofore been accepted
for payment) if, (i) prior to the expiration of the Offer, (A) the condition
that there shall be validly tendered and not withdrawn prior to the expiration
of the Offer a number of Shares which represents at least a majority of the
number of Shares outstanding on a fully diluted basis on the date of purchase
shall not have been satisfied (the "Minimum Condition") ("on a fully-diluted
basis" meaning, as of any date: the number of Shares outstanding, together with
Shares the Company is then required to issue pursuant to obligations
outstanding at that date under employee stock option or other benefit plans or
otherwise (assuming all options and other rights to acquire Shares are fully
vested and exercisable and all Shares issuable at any time have been issued),
including without limitation, pursuant to the Company Stock Options (defined in
Section 3.02(b) of the Merger Agreement)), (B) any applicable waiting period
under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer, (C) all material regulatory and related approvals
shall not have been obtained on terms reasonably satisfactory to the Purchaser
or (D) the financial institutions (the "Banks") party to the Credit Agreement
dated as of August 17, 1995, as amended, among Parent, the Banks, Chemical Bank,
as Administrative Agent and the Managing Agents, Co-Agents and Lead Managers
named therein (the "Credit Agreement"), shall not have granted the Parent a
waiver (the "Credit Agreement Waiver") under the Credit Agreement permitting
the consummation of the Offer and the Merger (the "Credit Agreement Waiver
Condition"), or (ii) at any time after the date of the Merger Agreement and
before the time of payment for any such Shares (including the associated
Rights) (whether or not any Shares (including the associated Rights) have
theretofore been accepted for payment), any of the following conditions exists:
<PAGE> 51
(a) the Purchaser and the Company shall have reached a written
agreement that the Purchaser shall amend the Offer to terminate the Offer or
postpone payment for Shares pursuant thereto;
(b) there shall be instituted or pending any action or proceeding by
any Governmental Entity or before any court or Governmental Entity, (1)
challenging the acquisition by Parent or Purchaser of Shares or otherwise
seeking to restrain or prohibit the consummation of the Offer, the Merger or the
transactions contemplated by the Merger Agreement, (2) seeking to materially
restrict or prohibit Parent's or Purchaser's ownership or operation of all or a
material portion of its or the Company's business or assets, or to compel Parent
or Purchaser to dispose of or hold separate all or a material portion of its or
the Company's business or assets, as a result of the Offer or the Merger, which
in either case, in the sole judgment of Parent and Purchaser, might, directly or
indirectly, result in the relief sought being obtained or (3) which might
result, directly or indirectly, in any of the consequences set forth in clauses
(2) through (5) of paragraph (c) below;
(c) there shall have been any statute, rule, executive order, decree,
injunction, regulation or other order (whether temporary, preliminary or
permanent) enacted, promulgated, entered or issued or deemed applicable to the
Offer or the Merger, by any Governmental Entity or court, which, in the sole
judgment of Parent and Purchaser would, directly or indirectly, (1) materially
restrict or prohibit Parent's or Purchaser's ownership or operation of all or a
material portion of its or the Company's business or assets or compel Parent or
Purchaser to dispose of or hold separate all or a material portion of its or the
Company's business or assets as a result of the Offer or the Merger, (2) render
Parent or Purchaser unable to purchase or pay for some or all of the Shares
pursuant to the Offer or to consummate the Merger, or otherwise prevent
consummation of the Offer or the Merger, except for the waiting period
provisions of the HSR Act, (3) make such purchase, payment or consummation
illegal, (4) impose or confirm material limitations on the ability of Parent or
Purchaser effectively to acquire or hold, or to exercise full rights of
ownership of, any Shares purchased by it, including, without limitation, the
right to vote any Shares purchased by it on all matters (including the Merger
and the Merger Agreement) properly presented to the Company's stockholders, or
(5) otherwise materially adversely affect the condition (financial or
otherwise), results of operations, business, assets or liabilities of the
Company and its Subsidiaries taken as a whole (a "Company Material Adverse
Effect");
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<PAGE> 52
(d) there shall have occurred (1) any general suspension of, or
limitation on prices for, or trading in, securities on the New York Stock
Exchange, any national securities exchange or in the over-the-counter market,
(2) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (3) a commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States, (4) from the date of this Agreement through the
date of termination or expiration of the Offer, a decline of at least 25% in the
Standard & Poor's 500 Index, or (5) in the case of any of the foregoing existing
at the time of the commencement of the Offer, a material acceleration or
worsening thereof;
(e) there shall have occurred a Company Material Adverse Effect, or
the Merger Agreement shall have been terminated in accordance with its terms;
(f) beneficial ownership of 20% or more of the outstanding Shares
shall have been acquired by another person or by a "group" as defined in Section
13(d)(3) of the Exchange Act other than for purposes of arbitrage;
(g) any of the representations and warranties of the Company contained
in the Merger Agreement shall not be true and correct as of the date of
consummation of the Offer as though made on and as of such date, except (i) for
changes specifically permitted by the Merger Agreement, (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date, and (iii) with respect to
those representations and warranties which are not qualified by materiality or a
similar qualification, in any case where such failures to be true and correct
would not, individually or in the aggregate, have a Company Material Adverse
Effect; or
(h) the Company shall not have performed or complied in all material
respects with all agreements and covenants required by the Merger Agreement to
be performed or complied with by the Company on or prior to the date of
consummation of the Offer, which, in the sole judgment of Parent and
Purchaser in any such case and regardless of the circumstances (including any
action by Parent or Purchaser) giving rise to any such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment
or payment for such Shares.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent and Purchaser regardless of the circumstances
giving rise to any such conditions or may be waived by Parent and Purchaser in
whole or in part at any
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<PAGE> 53
time and from time to time in the sole discretion of each of Parent and
Purchaser. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time. Any determination by Parent or Purchaser concerning the
events described herein will be final and binding upon all parties.
4
<PAGE> 1
EXHIBIT 99.2(c)
STOCKHOLDERS AGREEMENT
AGREEMENT dated May 23, 1996, among LEAR CORPORATION, a Delaware
corporation ("Purchaser"), PA ACQUISITION CORP., a Delaware corporation and a
direct wholly-owned subsidiary of Purchaser ("Sub"), and the other parties
signatory hereto (each a "Stockholder", and collectively, the "Stockholders").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Purchaser, Sub and MASLAND CORPORATION,
a Delaware corporation (the "Company"), are entering into an Agreement and Plan
of Merger (as such agreement may hereafter be amended from time to time, the
"Merger Agreement"; capitalized terms used and not defined herein have the
respective meanings ascribed to them in the Merger Agreement), pursuant to
which Sub will be merged with and into the Company (the "Merger"); and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Purchaser has required that the Stockholders agree, and the
Stockholders have agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having ownership of record or "beneficial ownership" of
such securities (as determined pursuant to Rule 13d-3 under the Exchange Act),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing. Without duplicative counting of the same securities by the same
holder, securities Beneficially Owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute
a "group" as within the meanings of Section 13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean at any time the Common Stock,
$.01 par value, of the Company.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(d) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
<PAGE> 2
2. Tender of Shares.
(a) Each Stockholder hereby agrees to validly tender (and not to
withdraw) pursuant to and in accordance with the terms of the Offer, not later
than the fifth business day after commencement of the Offer pursuant to Section
1.01(a) of the Merger Agreement, (i) all of the shares of Company Common Stock
owned of record or Beneficially Owned by such Stockholder, including, without
limitation, the number of shares of Company Common Stock set forth opposite
such Stockholder's name on Schedule I hereto (the "Existing Shares"), and (ii)
any shares of Company Common Stock acquired by such Stockholder after the date
hereof and prior to the termination of this Agreement whether upon the exercise
of options, warrants or rights, the conversion or exchange of convertible or
exchangeable securities, or by means of purchase, dividend, distribution or
otherwise (each Stockholder shall promptly provide written notice to Purchaser
upon consummation of such acquisition from the date hereof and such Shares
shall together with the Existing Shares be referred to herein as the "Shares").
Each Stockholder hereby acknowledges and agrees that Purchaser's obligation to
accept for payment and pay for Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer. Anything to the contrary herein notwithstanding if (x) the Merger
Agreement is terminated, (y) the Offer is terminated without the purchase of
Shares thereunder or (z) the Minimum Condition is not satisfied (other than by
waiver) upon termination of the Offer, within two business days thereof the
Shares tendered under the Offer pursuant to this Agreement by each Stockholder
shall be returned to such Stockholder.
(b) Through the transfer by each Stockholder of his or its Shares to
Sub in the Offer, Sub shall acquire good, valid and marketable title to the
Shares, free and clear of all claims, liens, charges, encumbrances,
restrictions, security interests, pledges, limitations, conditional sales
agreements, or obligations relative to the sale or transfer thereof, and not
subject to any adverse claim.
(c) Each Stockholder hereby agrees to permit Purchaser, Sub and the
Company to publish and disclose in the documents relating to the Offer and
Merger (including all documents, schedules and proxy statements filed with the
Commission) his or its identity and ownership of Company Common Stock and the
nature of his or its commitments, arrangements and understandings under this
Agreement.
3. Proxy; Provisions Concerning Company Common Stock. Each
Stockholder, by this Agreement, does hereby constitute and appoint Purchaser,
or any nominee of Purchaser, with full power of substitution, as his or its
true and lawful attorney and proxy, for and in his or its name, place and
stead, to vote as his or its
2
<PAGE> 3
proxy at any meeting of the holders of Company Common Stock, however called,
and to sign such Stockholder's name to any written consent of the holders of
Company Common Stock with respect to, the Shares held of record or Beneficially
Owned by such Stockholder, whether issued, heretofore owned or hereafter
acquired, (i) in favor of the Merger, the execution and delivery by the Company
of the Merger Agreement and the approval of the terms thereof and each of the
other actions contemplated by the Merger Agreement and this Agreement and any
actions reasonably required in furtherance thereof and hereof; (ii) against any
action or agreement that would reasonably be expected to result in a breach of
any covenant, representation or warranty or any other obligation or agreement
of the Company under the Merger Agreement or this Agreement; and (iii) against
the following actions or agreements (other than the Merger and the transactions
contemplated by the Merger Agreement): (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or any of its Subsidiaries; (B) a sale, lease or transfer
of a material amount of assets of the Company or its Subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its Subsidiaries; (C)(1) any change in a majority of the persons who constitute
the board of directors of the Company; (2) any change in the present
capitalization of the Company or any amendment of the Company's Certificate of
Incorporation or Bylaws; (3) any other material change in the Company's
corporate structure or business; or (4) any other action or agreement which, in
the case of each of the matters referred to in clauses C(1), (2) or (3), is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, discourage, or adversely affect the Merger and the transactions
contemplated by this Agreement and the Merger Agreement. Such Stockholder
further agrees to cause his or its Shares to be voted in accordance with the
foregoing. Such Stockholder acknowledges receipt and review of a copy of the
Merger Agreement.
4. Other Covenants, Representations and Warranties. Each
Stockholder hereby represents and warrants to Purchaser as follows:
(a) Ownership of Shares. Such Stockholder is the record owner of
the number of Shares set forth opposite such Stockholder's name on Schedule I
hereto. On the date hereof, the Existing Shares set forth opposite such
Stockholder's name on Schedule I hereto constitute all of the Shares owned of
record by such Stockholder. The Shares are not subject to any voting trust
agreement or to such Stockholder's knowledge other agreement restricting or
otherwise relating to the voting, dividend rights or disposition of the Shares,
other than this Agreement. Such Stockholder has sole power with respect to the
matters set forth in this Agreement with respect to all of the Existing Shares
set forth opposite such Stockholder's name on Schedule I hereto, with no
limitations,
3
<PAGE> 4
qualifications or restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting agreement, stockholders agreement or voting trust. This Agreement
has been duly and validly executed and delivered by such Stockholder and
constitutes a valid and binding agreement of such Stockholder, enforceable
against such Stockholder in accordance with its terms. There is no beneficiary
or holder of a voting trust certificate or other interest of any trust of which
such Stockholder is trustee whose consent is required for the execution and
delivery of this Agreement or the consummation by such Stockholder of the
transactions contemplated hereby.
(c) No Conflicts. (i) No filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by such Stockholder
and the consummation by such Stockholder of the transactions contemplated
hereby other than filings required under the Exchange Act and (ii) none of the
execution and delivery of this Agreement by such Stockholder, the consummation
by such Stockholder of the transactions contemplated hereby or compliance by
such Stockholder with any of the provisions hereof shall result in a violation
or breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any third party right of termination, cancellation,
modification or acceleration) under any of the terms, conditions or provisions
of any agreement to which such Stockholder is a party or by which such
Stockholder may be bound or affected.
(d) No Encumbrances. Except as applicable in connection with the
transactions contemplated by Section 2 hereof, such Stockholder's Shares and
the certificates representing such Shares are, and at all times during the term
hereof will be, held by such Stockholder, or by a nominee or custodian for the
benefit of such Stockholder, free and clear of all liens, security interests,
proxies, voting trusts or agreements, or to such Stockholder's knowledge any
other encumbrances whatsoever, except for any such encumbrances or proxies
arising hereunder.
(e) No Finder's Fees. Except as provided in the Merger Agreement,
no broker, investment banker, financial advisor or other person is entitled to
any broker's, finder's, financial adviser's or other similar fee or commission
in connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of such Stockholder.
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<PAGE> 5
(f) No Solicitation. No Stockholder shall, in his capacity as such,
directly or indirectly, through any agent or representative or otherwise
invite, initiate, solicit or knowingly encourage (including by way of
furnishing information), or respond to, any inquiries or the making of any
proposal by any person or entity (other than Purchaser or any affiliate of
Purchaser) that constitutes or any reasonably be expected to lead to, an
Acquisition Proposal, or otherwise cooperate with, or assist or participate in
or facilitate or encourage any effort or attempt by any person to do or seek
any of the foregoing. If any Stockholder receives or becomes aware of any such
inquiry or proposal or Acquisition Proposal, then such Stockholder will
promptly inform Purchaser in writing of the existence thereof. Each Stockholder
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. However, nothing in this Section 4(f) or this
Agreement shall restrict, limit or prohibit such Stockholder from taking any
actions necessary in his capacity as a Director of the Company to satisfy his
fiduciary duties as a Director under Delaware law.
(g) Restriction on Transfer, Proxies and Non-Interference. Except as
applicable in connection with the transactions contemplated by Section 2
hereof, no Stockholder shall, directly or indirectly: (i) except for transfers
to such Stockholder's family or trusts established for the benefit of members
of such Stockholder's family (provided that in the case of this clause (i) the
transferee of such shares agrees in writing to be bound by the terms hereof in
form satisfactory to Purchaser), offer for sale, sell, transfer, tender,
pledge, encumber, assign or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to or consent to the
offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or
other disposition of, any or all of such Stockholder's Shares or any interest
therein; (ii) except as contemplated by this Agreement, grant any proxies or
powers of attorney, deposit any Shares into a voting trust or enter into a
voting agreement with respect to any Shares; or (iii) take any action that
would make any representation or warranty of such Stockholder contained herein
untrue or incorrect or have the effect of preventing or disabling such
Stockholder from performing such Stockholder's obligations under this Agreement.
(h) Waiver of Appraisal Rights. Each Stockholder hereby waives any
rights of appraisal or rights to dissent from the Merger that such Stockholder
may have.
(i) Reliance by Purchaser. Such Stockholder understands and
acknowledges that Purchaser is entering into, and causing Sub to enter into,
the Merger Agreement in reliance upon such Stockholder's execution and delivery
of this Agreement.
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<PAGE> 6
(j) Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as
may be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement. Without limiting the foregoing, each Stockholder agrees, upon the
written request of Purchaser, to use his best efforts to cause all certificates
representing such Stockholder's Shares to bear in a conspicuous place the
following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS
AGREEMENT DATED AS OF MAY 23, 1996, A COPY OF WHICH IS ON FILE AT THE
OFFICES OF THE CORPORATION AND WILL BE FURNISHED BY THE CORPORATION TO
THE HOLDER HEREOF UPON WRITTEN REQUEST. SUCH STOCKHOLDERS AGREEMENT
PROVIDES, AMONG OTHER THINGS, FOR THE GRANTING OF CERTAIN PROXIES TO
VOTE THE SHARES REPRESENTED HEREBY AND FOR CERTAIN RESTRICTIONS ON THE
SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE. BY ACCEPTANCE OF THIS CERTIFICATE, EACH
HOLDER HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF SUCH STOCKHOLDERS
AGREEMENT. THE CORPORATION RESERVES THE RIGHT TO REFUSE TO TRANSFER THE
SHARES REPRESENTED BY THIS CERTIFICATE UNLESS AND UNTIL THE CONDITIONS
TO TRANSFER SET FORTH IN SUCH STOCKHOLDERS AGREEMENT HAVE BEEN
FULFILLED.
5. Stop Transfer. Each Stockholder agrees with, and covenants to,
Purchaser that such Stockholder shall not request that the Company register
the transfer (book-entry or otherwise) of any certificate or uncertificated
interest representing any of such Stockholder's Shares, unless such transfer is
made in compliance with this Agreement (including the provisions of Section 2
hereof). In the event of a stock dividend or distribution, or any change in the
Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Shares" shall be deemed to refer to and include the Shares as well as all such
stock dividends and distributions and any shares into which or for which any or
all of the Shares may be changed or exchanged.
6. Termination. Except as otherwise provide herein, the covenants
and agreements contained herein with respect to the Shares shall terminate upon
the termination of the Merger Agreement in accordance with its terms.
7. Confidentiality. The Stockholders recognize that successful
consummation of the transactions contemplated by this Agreement may be
dependent upon confidentiality with respect to the matters referred to herein.
In this connection, pending public disclosure thereof or of the Merger
Agreement, each Stockholder
6
<PAGE> 7
hereby agrees not to disclose or discuss this Agreement with anyone not a party
to this Agreement (other than such Stockholder's counsel and advisors, if any)
without the prior written consent of Purchaser, except for filings required
pursuant to the Exchange Act and the rules and regulations thereunder or as
required by law, in which event such Stockholder shall give notice of such
disclosure to Purchaser as promptly as practicable so as to enable Purchaser to
seek a protective order from a court of competent jurisdiction with respect
thereto.
8. Miscellaneous.
(a) Entire Agreement. This Agreement, the Consulting and Noncompete
Agreement, the Merger Agreement and the agreements contemplated thereby
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) Certain Events. Each Stockholder agrees that this Agreement and
the obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, such Stockholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party, provided
that Purchaser may assign, in its sole discretion, its rights and obligations
hereunder to any direct or indirect wholly-owned subsidiary of Purchaser, but no
such assignment shall relieve Purchaser of its obligations hereunder.
(d) Amendments; Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, with respect
to any one or more Stockholders, except upon the execution and delivery of a
written agreement executed by the relevant parties hereto; provided that
Schedule I hereto may be supplemented by Purchaser by adding the name and other
relevant information concerning any stockholder of the Company who agrees to be
bound by the terms of this Agreement without the agreement of any other party
hereto, and thereafter such added stockholder shall be treated as a
"Stockholder" for all purposes of this Agreement.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail
7
<PAGE> 8
(registered or certified mail, postage prepaid, return receipt requested) or by
any courier service, such as Federal Express, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to Stockholder: At the addresses set forth on
Schedule I hereto
If to Purchaser: Lear Corporation
21557 Telegraph Road
Southfield, MI 48034
810/746-1500 (telephone)
810/746-1677 (telecopier)
Attention: Joseph F. McCarthy, Esq.
copy to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
312/558-5600 (telephone)
312/558-5700 (telecopier)
Attention: John L. MacCarthy, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
8
<PAGE> 9
(h) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy or
to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity
who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(l) Jurisdiction. Each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any state or federal court located in
the State of Delaware in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction or venue by motion or
other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a state or federal court
sitting in the State of Delaware.
(m) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
9
<PAGE> 10
IN WITNESS WHEREOF, Purchaser, Sub and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
LEAR CORPORATION
By: /s/ James H. Vandenberghe
----------------------------
Name: James H. Vandenberghe
Title:
PA ACQUISITION CORP.
By: /s/ James H. Vandenberghe
----------------------------
Name: James H. Vandenberghe
Title:
/s/ William J. Branch
--------------------------------
William J. Branch
/s/ Larry W. Owen
--------------------------------
Larry W. Owen
/s/ Darrell F. Sallee
--------------------------------
Darrell F. Sallee
10
<PAGE> 11
SCHEDULE I
NAME AND ADDRESS NUMBER OF SHARES*
- ---------------- -----------------
William J. Branch 62,156
c/o Masland Corporation
50 Spring Road
Carlisle, PA 17013
717/249-1866 (telephone)
717/249-7576 (telecopier)
Larry W. Owen 132,411
c/o Masland Corporation
50 Spring Road
Carlisle, PA 17013
717/249-1866 (telephone)
717/249-7576 (telecopier)
Darrell F. Sallee 36,204
c/o Masland Corporation
50 Spring Road
Carlisle, PA 17013
717/249-1866 (telephone)
717/249-7576 (telecopier)
- --------------
* This figure does not include Shares subject to stock options or warrants
which have not been exercised.
11
<PAGE> 1
EXHIBIT 99.3(c)
CONFIDENTIALITY AND STANDSTILL AGREEMENT
This Agreement is dated as of March 14, 1996, between and among Masland
Corporation, a Delaware corporation, and its subsidiaries (collectively,
"Company"), and Lear Seating Corporation, a Delaware corporation, and its
subsidiaries (collectively, "Recipient"). Company and Recipient anticipate that
in connection with a possible transaction between them and/or their
stockholders, Company may share with Recipient certain non-public, confidential
or proprietary information which requires protection upon the terms set forth in
this Agreement. Accordingly, once this Agreement has been executed and returned
by appropriate officers of Recipient to Company the dissemination of the
information contemplated hereby will be facilitated.
References to Company and Recipient in this Agreement shall refer, in each
case, to that company and the entities under its control, severally and not
jointly. As a condition to Recipient being furnished the information
contemplated by this Agreement by Company, Recipient agrees to treat any such
information (whether prepared by Company, its advisors or otherwise, and whether
oral or written) that is furnished to the Recipient or its directors, officers,
partners, employees, agents, advisors, investment bankers and potential
financing sources (collectively, the "Representatives") by or on behalf of
Company (herein collectively referred to as the "Evaluation Material") in
accordance with the provisions of this Agreement, and as a further condition to
being furnished such information, Recipient agrees to take or abstain from
taking certain other actions herein set forth.
The term "Evaluation Material" includes the information described above,
but does not include information that (i) is already Recipient's possession,
provided that such information is not known by Recipient to be subject to
another confidentiality agreement with or other obligation of secrecy to Company
or another person or (ii) is or becomes generally available to the public other
than as a result of a disclosure by Recipient or Recipient's Representatives or
(iii) becomes available to Recipient on a non-confidential basis from a source
other than Company or its advisors, provided that such source is not known by
Recipient to be bound by a confidentiality agreement with or other obligation of
secrecy to Company or another person.
Recipient hereby agrees that the Evaluation Material will be used solely
for the purpose of evaluating a possible transaction between Company and
Recipient, or involving either or both of their stockholders, will not be used
in any way knowingly detrimental to Company, and will be kept strictly
confidential by Recipient and Recipient's Representatives; provided, however,
that (i) any of such information may be disclosed to Recipient's Representatives
who need to know such information for the purpose of evaluating any such
possible transaction (it being understood that (a) under no circumstances shall
Recipient's Representatives include any employees, suppliers or customers of
Company, and (b) Recipient's Representatives shall be informed by Recipient of
the confidential nature of such information and shall agree to keep such
information confidential and to be bound by the confidential provisions of this
Agreement to the same extent as if they were parties hereto) (ii) any such
information may be disclosed if disclosure is, in the reasonable opinion of
Recipient's counsel necessary to comply with applicable statutes, or
regulations, or is otherwise legally compelled (provided Recipient complies with
the provisions of the fourth paragraph following this paragraph) and (iii)
disclosure of such information may be made if Company has given Recipient its
prior written consent. Recipient will be responsible for any breach by
Recipient's Representatives of this Agreement. It is recognized that Company
shall be entitled to directly enforce this Agreement.
Recipient hereby acknowledges that it is aware, and that it will so advise
its Representatives who are informed as to the matters which are the subject of
this Agreement, that the United States securities laws prohibit any person who
has received from an issuer material, non-public information concerning the
matters which are the subject of this Agreement from purchasing or selling
securities of such issuer or from communicating such information to any other
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell such securities.
In addition, without the prior written consent of Company, Recipient will
not, and will advise its Representatives not to, disclose to any person the fact
that the Evaluation Material has been made available to Recipient or the
Representatives, that discussions or negotiations are taking place concerning a
possible transaction between Company and Recipient or of any of the terms,
conditions or other facts with respect to such possible transaction, including
the status thereof (collectively, the "Status Information") provided,
<PAGE> 2
however that status information may be disclosed if disclosure is, in the
reasonable opinion of Recipient's counsel, necessary to comply with applicable
statutes or regulations, or is otherwise legally compelled (provided Recipient
complies with the provisions of the second paragraph following this paragraph).
For a period of one year from the date hereof, Recipient agrees that
neither it nor any entity under its control will actively solicit for employment
any employees of Company, and for a period of two years from the date hereof any
management employees of Company met during the process of its due diligence or
review and evaluation of the Evaluation Material; provided that the foregoing
shall not be deemed to prohibit general solicitations of employment in the
Recipient's ordinary course of business of persons who are not officers of
Company and the employment of such persons.
In the event that Recipient or its Representatives are requested or become
legally compelled (by oral questions, interrogatories, requests for information
or documents subpoena, civil investigative demand, or similar process, or
pursuant to an applicable statute or regulation) to disclose any Evaluation
Material or Status Information, Recipient agrees to (i) immediately notify
Company of the existence, terms and circumstances surrounding such a request, so
that it may seek an appropriate protective order and/or waive Recipient's
compliance with the provisions of this Agreement (and, if Company seeks such an
order, to provide such cooperation as Company shall reasonably request) and (ii)
if disclosure of such information is required in the reasonable opinion of
Recipient's counsel, exercise Recipient's best efforts to obtain an order or
other reliable assurance that confidential treatment will be accorded to such of
the disclosed information which Company so designates.
Although Company has and will endeavor to include in the Evaluation
Material information which it believes to be relevant for the purpose of
Recipient's investigation, Recipient understands that neither Company nor any of
its representatives or advisors have made or make any representation or warranty
as to the accuracy or completeness of the Evaluation Material. Recipient agrees
that neither Company nor its Representatives or advisors shall have any
liability to Recipient or any of its Representatives resulting from the use or
contents of the Evaluation Material or from any action taken or any inaction
occurring in reliance on the Evaluation Material.
Subject to compliance with applicable statutes and regulations, at the
request of Company or in the event that the parties do not proceed with a
possible transaction which is the subject of this letter, each of Recipient and
Recipient's Representatives shall promptly redeliver to Company all written
Evaluation Material and any other written material containing or reflecting any
information in the Evaluation Material (whether prepared by the Company, its
advisors, agents) and will not retain any copies, extracts or other
reproductions thereof. At the request of the Company, all documents, memoranda,
notes and other writings whatsoever prepared by Recipient or Recipient's
Representatives based on any information in the Evaluation Material shall be
destroyed, and such destruction shall be certified in writing to Company by an
authorized officer supervising such destruction.
It is further understood and agreed that no failure or delay by Company or
Recipient in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any right, power or
privilege hereunder.
Recipient agrees that it will be liable to Company for the unauthorized use
or disclosure of the Evaluation Material or the Status Information by Recipient
or Recipient's Representatives.
The parties to this Agreement also desire to enter into a mutual
"standstill agreement" as contained in this and the following paragraph, and
Recipient hereby acknowledges that the Evaluation Material is being furnished to
it in specific reliance upon that portion of this Agreement as well as the
confidentiality undertakings. Accordingly, for the period specified below, each
party further agrees not to enter into any discussions, negotiations,
arrangements or understandings with any third person which would be in
derogation of such "standstill agreement". If at any time during the term of
such "standstill agreement" either party is approached by any third person
concerning its or their participation in a transaction involving the assets or
businesses of the other party it will promptly inform the other party of the
nature of such contact and the parties thereto.
<PAGE> 3
For a period of three (3) years from the date of this Agreement, neither
party nor any entities under their control, either alone or in concert with one
another, shall launch, cause any other person to launch, participate in, or
advise or encourage any other Person with respect to, a takeover bid, proxy
contest or solicitation of stockholder consents against the other party nor
accumulate more than a 4% stock ownership or voting interest in such other party
without the prior written consent of such other party's Board of Directors. More
specifically, neither party shall, unless following the prior written consent of
the Board of Directors of the other party:
(a) make, or in any way participate, or permit any other entity under
its control to make or participate, directly or indirectly, in any
"solicitation" of "proxies" to vote or stockholder written consents (as
such terms are used in Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Act") and in the Delaware General Corporation Law,
Section 228, respectively) in the election of directors or in opposition to
the recommendation of the majority of the directors of the other party with
respect to any matter or seek to advise any person or entity with respect
to the voting of any Voting Securities of such other party; or
(b) acquire, offer to acquire or agree to acquire, directly or
indirectly, or permit any other entity under its control (including but not
limited to its parents, subsidiaries, and any pension, profit sharing or
other trusts under the investment management control of such party or any
of them) (but excluding shares issued to any such entity in connection with
(A) a stock split, reverse split or other reclassification affecting
outstanding securities, or (B) a stock dividend or other pro rata
distribution to holders of its outstanding securities), to acquire, offer
to acquire, or agree to acquire, directly or indirectly, by purchase,
tender offer, exchange offer, or otherwise, more than an aggregate 4%
interest in all classes of securities of the other party (whether Voting
Securities or not) or direct or indirect rights or options to acquire any
such securities, or one or more classes of equity securities which would
give it effective control over any other Person, which, prior to the time
such party acquires effective control over such other Person, is publicly
disclosed (by filing with the Securities and Exchange Commission or
otherwise) to be the beneficial owner of more than 4% of any class of
securities of the other party, but provided that if such party or other
entities controlled by it acquires control of such other Person by
inadvertence or without knowledge of such beneficial ownership, such other
party shall have the right, but not the obligation, to purchase all of the
other party's securities owned by such other Person at current fair market
value (and for purposes of this clause all such other party's securities
held by all such entities or Persons shall be aggregated so as not to
exceed the 4% permitted); or
(c) form or join, encourage, advise or permit any other entity under
its control to form, join, actively encourage or advise a partnership,
limited partnership, syndicate or other "group" for the purpose of
acquiring, holding, disposing, or otherwise with respect to any class or
classes of securities of the other party within the meaning of Section
13(d) of the Act; or
(d) initiate, propose, advise or otherwise solicit, or permit any
other entity under its control to initiate, propose, advise or solicit, any
stockholder of the other party regarding any matter relating to the other
party, or induce or attempt to induce any other person to initiate any
stockholder proposal or a tender offer for shares or securities of the
other party, or any change of control of the other party, or for the
purpose of actively soliciting proxies from stockholders or stockholders'
written consents to accomplish any of the foregoing, or for the purpose of
convening a stockholders' meeting of the other party; or
(e) otherwise act, or permit any other entity under its control to
act, alone or in concert with others, to seek to control the management,
Board of Directors or policies of the other party.
For purposes of this Agreement, the following terms shall have the following
definitions. The term "Person" shall mean any individual, partnership,
corporation, trust or other entity. The term "Voting Securities" shall mean
common stock or any other securities entitled to vote generally for the election
of directors, or any security convertible into or exchangeable for or
exercisable for the purchase of common stock or other securities entitled to
vote generally for the election of directors. Any other provision of the
"standstill" provisions of this Agreement to the contrary notwithstanding,
either party may terminate the "standstill"
<PAGE> 4
provisions of this Agreement if (i) the other party fails to perform or observe
any of its covenants and obligations pursuant to this Agreement or (ii) if
either party shall, but only to the extent permitted under the "standstill"
provisions of this Agreement, acquire more than fifty percent (50%) control over
the Voting Securities of the other with the prior written consent of the other's
Board of Directors.
Both parties agree that unless and until a definitive agreement between
them with respect to any transaction referred to in the first paragraph of this
letter has been executed and delivered, neither party will be under any legal
obligation of any kind whatsoever with respect to such a transaction by virtue
of this or any written or oral expression with respect to such a transaction by
any of its directors, officers, employees, agents or any other representatives
or its advisors except for the matters specifically agreed to in this letter.
Each party further agrees that the other party shall have no obligation to
authorize or pursue with it or any other party any transaction referred to in
the first paragraph of this letter and each party understands that the other has
not, as of the date hereof, authorized any such transaction. The agreements set
forth in this letter may be modified or waived only by a separate writing by
each party expressly so modifying or waiving such agreements.
The parties hereto acknowledge that money damages are an inadequate remedy
for breach of this Agreement because of the difficulty of ascertaining the
amount of damage that will be suffered by Company in the event that this
Agreement is breached, and agree that they would be irreparably damaged in the
event any of the provisions of this Agreement (and, particularly the
"standstill" provisions hereof) were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, each party agrees that
the other party shall be entitled to such specific remedies upon proper
application to appropriate courts, including specific performance of this
Agreement and injunctive relief against any breach hereof, in addition to any
other remedy to which the other party may be entitled at law or in equity. Each
party hereby expressly consents to the jurisdiction of any court within the
State of Delaware over it without regard to personal service upon it within such
jurisdiction, in addition to any other court of appropriate jurisdiction. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated. It is hereby stipulated and declared to be the intention of each
party that it would have executed the remaining terms, provisions, covenants and
restrictions in this Agreement without including any of such which may be
hereafter declared invalid, void or unenforceable by any court of competent
jurisdiction and final recourse.
If and to the extent Company or its Stockholders enter into a
confidentiality or standstill agreement with respect to a possible transaction
in which Company would effectively be acquired and which contains material terms
that are less restrictive than those in this Agreement (for example, as to the
term of any such standstill arrangement), then this Agreement shall be deemed
amended and modified to incorporate such less restrictive terms. This Agreement
shall be binding upon and enure to the benefit of, and be enforceable by, the
successors and assigns of the parties hereto. Each party shall cause entities
under its control to observe and adhere to all of the provisions of this
Agreement to the same extent as if such entities were parties hereto.
All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto shall
be validly given, made or served, if in writing and delivered personally, by
telex or telecopier (except for legal process), by recognized courier service or
sent by registered or certified mail, first class postage prepaid, if to:
Company:
Masland Corporation
50 Spring Road, Box 40
Carlisle, PA 17013
Telephone: (717) 249-1866
Telecopy: (717) 254-7576
<PAGE> 5
Recipient:
Lear Seating Corporation
21557 Telegraph Road
Southfield, MI 48086
Attn: Joseph F. McCarthy
Telephone: (810) 746-1714
Telecopy: (810) 746-1677
Or to such other address, telex or telecopier number as either party may, from
time to time, designate in a written notice given in a like manner. Notice given
by telex or telecopier shall be deemed delivered on the day sender receives
telex or telecopier information that such notice was received at the telex or
telecopier number of the addressee. Notice given by mail as set forth above
shall be deemed delivered three (3) days after the date the same as postmarked.
This Agreement shall be governed by, construed and enforced in accordance
with the laws of the State of Delaware applicable to contracts made and to be
performed therein, and shall take effect as an instrument under seal.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed and delivered by a properly authorized officer of each, and such officer
affirms by his signature below that this Agreement constitutes a valid and
binding agreement of the corporate party he represents and that he has been duly
authorized by such party to execute and deliver same.
MASLAND CORPORATION
By: /s/ W. BRANCH
------------------------
LEAR SEATING CORPORATION
By: /s/ JH VANDENBERGHE
------------------------
<PAGE> 1
EXHIBIT 99.4(c)
CONFIDENTIAL
AGREEMENT TO NEGOTIATE EXCLUSIVELY
This Agreement ("Agreement") is entered into this 2nd day of May, 1996
by and between Lear Seating Corporation, a Delaware corporation ("Lear"), and
Masland Corporation, a Delaware corporation ("Masland").
WHEREAS, Lear and Masland have had discussions concerning the
acquisition of Masland by Lear, and Masland and Lear have entered into a
Confidentiality and Standstill Agreement dated as of March 14, 1996 (the
"Confidentiality Agreement") pursuant to which Lear received certain
confidential non-public information concerning Masland (the "Confidential
Information");
WHEREAS, based on the Confidential Information received to date and
discussions with representatives of Masland, Lear is willing to continue its
due diligence review of Masland and to enter into negotiations with
representatives of Masland to attempt to reach agreement on a definitive Merger
Agreement (a "Merger Agreement") pursuant to which Lear and/or a wholly-owned
subsidiary of Lear would make an all cash tender offer for the outstanding
common stock of Masland, provided that Masland enters into this Agreement to
negotiate exclusively with Lear.
NOW THEREFORE, Masland and Lear hereby agree as follows:
1. Exclusive Negotiation; No Solicitation. (a) From and after the date
hereof until the earlier of the execution of a Merger Agreement or May 24, 1996
(the "Expiration Date"), Masland shall, and shall cause its officers, directors,
representatives and agents, including, without limitation, any investment
banker, attorney or accountant retained by Masland or any subsidiary of Masland
(collectively, the "Masland Representatives") to, negotiate exclusively with
Lear and its officers, directors, representatives and agents with respect to
any Acquisition Transaction (as defined below). Further, prior to the
Expiration Date, Masland shall not, and shall cause the Masland Representatives
not to, directly or indirectly, invite, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or
assistance), any inquiries with respect to, the making of any proposal for, or
the taking of any actions that could reasonably be expected to lead to any
proposal for, an Acquisition Transaction. Notwithstanding the foregoing,
nothing contained herein shall prohibit the Board of Directors of Masland (the
"Board") from furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited proposal for
an Acquisition Transaction if, and only to the extent that, (A) the Board,
after consultation with and based upon the advice of independent legal
counsel (who may be Masland's regularly engaged independent legal counsel),
determines in good faith that such action is necessary for the Board to comply
with its fiduciary duties to stockholders under applicable law, and (B) prior
to taking such action, Masland receives from such person or entity an executed
confidentiality and standstill agreement on terms no less favorable to Masland
than the Confidentiality Agreement. For purposes of this Agreement,
"Acquisition Transaction" shall mean any of the following (other than the
transactions between Masland and Lear contemplated by a Merger Agreement): (i)
any acquisition
<PAGE> 2
of Masland or any of its U.S. subsidiaries as a result of a merger,
consolidation, share exchange, recapitalization, business combination, or other
similar transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 20% or more of the assets of Masland and its
subsidiaries, taken as a whole, in a single transaction or series of
transactions; or (iii) any tender offer or exchange offer for 20% or more of
the outstanding shares of capital stock of Masland or the filing of a
registration statement under the Securities Act of 1933, as amended, in
connection therewith. Masland represents that neither it nor, to its knowledge,
any of its stockholders is a party to or bound by any agreement with respect to
an Acquisition Transaction. In the event that Masland receives or becomes aware
of any Acquisition Transaction or any proposal for an Acquisition Transaction,
Masland will promptly notify Lear in writing of such communication, of the
identity of the person proposing such Acquisition Transaction and of the terms
and conditions of such Acquisition Transaction, except disclosure of the
identity of such person or of the terms and conditions of such proposal will
not be required where such disclosure would violate the terms of any
confidentiality agreement existing on the date hereof by which Masland is bound.
(b) In consideration of the foregoing, from and after the date
hereof until the Expiration Date, Lear shall not, and shall cause its officers,
directors, representatives and agents, including, without limitation, any
investment banker, attorney or accountant retained by Lear or a subsidiary of
Lear, not to, enter into or proceed with any negotiations for the acquisition
of any company or other entity engaged in the business of providing automotive
carpet to Original Equipment Manufacturers in North America.
2. Standstill Provisions. From and after the time at which any
proposal for an Acquisition Transaction is made to Masland, Lear shall not be
prohibited by the Confidentiality Agreement from taking any or all of the
actions described in the "standstill" provisions of the Confidentiality
Agreement (which, in which case the Confidentiality Agreement, shall be deemed
to be modified to the extent required to permit Lear to engage in all such
transactions). Following the Expiration Date, Lear shall again be prohibited by
the Confidentiality Agreement from taking any or all of the actions described
in the "standstill" provisions of the Confidentiality Agreement to the extent
Lear has not already taken any such action or is currently in the process of
taking any such action.
3. Public Announcements. Prior to the Expiration Date, Masland
and Lear will consult with each other before issuing any press release or
making any public statement with respect to any Acquisition Transaction between
them or any negotiations with respect thereto and will not issue any such press
release or make any such public statement without the other party's consent,
except as may be required by applicable law or any listing agreement with any
national securities exchange (as advised by independent counsel).
4. Miscellaneous. (a) Masland and Lear agree that unless and
until a Merger Agreement between them with respect to an Acquisition
Transaction has been executed and delivered, neither party will be under any
legal obligation of any kind whatsoever with respect to such a transaction by
virtue of this or any written or oral expression with respect to such a
transaction by any of its directors, officers, employees, agents or any other
representatives or its advisors except for
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<PAGE> 3
the matters specifically agreed to in this Agreement and the Confidentiality
Agreement. The agreements set forth in this Agreement may be modified or waived
only by a separate writing by each party expressly so modifying or waiving such
agreements.
(b) The parties hereto acknowledge that money damages are an
inadequate remedy for breach of this Agreement because of the difficulty of
ascertaining the amount of damage that will be suffered by the non-breaching
party in the event that this Agreement is breached, and agree that they would
be irreparably damaged in the event any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, each party agrees that the other party shall be entitled
to such specific remedies upon proper application to appropriate courts,
including specific performance of this Agreement and injunctive relief against
any breach hereof, in addition to any other remedy to which the other party may
be entitled at law or in equity. Each party hereby expressly consents to the
jurisdiction of any court within the State of Delaware over it without regard
to personal service upon it within such jurisdiction, in addition to any other
court of appropriate jurisdiction. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is hereby
stipulated and declared to be the intention of each party that it would have
executed the remaining terms, provisions, covenants and restrictions in this
Agreement without including any of such which may be hereafter declared
invalid, void or unenforceable by any court of competent jurisdiction and
final recourse.
(c) This Agreement shall be binding upon and enure to the
benefit of, and be enforceable by, the successors and assigns of the parties
hereto. Each party shall cause entities under its control to observe and adhere
to all of the provisions of this Agreement to the same extent as if such
entities were parties hereto.
(d) The notices and other communications provided for herein
and all legal process in regard hereto shall be validly given, made or served,
if in writing and delivered personally, by telecopier (except for legal
process), or by recognized courier service, to:
Masland at:
Masland Corporation
50 Spring Road, Box 40
Carlisle, PA 17013
Attn: William J. Branch, Chairman
Telephone: (717) 258-7214
Telecopy: (717) 258-7576
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<PAGE> 4
Lear at:
Lear Seating Corporation
21557 Telegraph Road
Southfield, MI 48034
Attn: Joseph F. McCarthy, Esq.
Telephone: (810) 746-1714
Telecopy: (810) 746-1677
or to such other address or telecopier number as either party may, from time to
time, designate in a written notice given in a like manner. Notice given by
telecopier shall be deemed delivered on the day sender receives telecopier
confirmation that such notice was received at the telecopier number of the
addressee. Notice given by personal delivery or recognized courier service
shall be deemed delivered upon receipt.
(e) This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed therein, and shall take effect as an instrument under seal.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed and delivered by a properly authorized officer.
MASLAND CORPORATION
By: /s/ W. Branch
----------------------
LEAR SEATING CORPORATION
By: /s/ J. H. Vandenberghe
----------------------
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<PAGE> 1
EXHIBIT 99.5(c)
TERMINATION, CONSULTING AND
NONCOMPETE AGREEMENT
AGREEMENT dated May 29, 1996, among LEAR CORPORATION, a Delaware
corporation ("Purchaser"), MASLAND CORPORATION, a Delaware corporation
("Company"), and the other party signatory hereto (the "Covenantor").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Purchaser, PA ACQUISITION CORP., a
Delaware Corporation and a wholly-owned subsidiary of Purchaser (the "Sub") and
the Company are entering into an Agreement and Plan of Merger (as such agreement
may hereafter be amended from time to time, the "Merger Agreement"; capitalized
terms used and not defined herein have the respective meanings ascribed to them
in the Merger Agreement), pursuant to which Sub will be merged with and into the
Company (the "Merger");
WHEREAS, the Covenantor is conversant with the affairs, operations,
customers and confidential and proprietary information of the Company;
WHEREAS, the Company wishes to terminate the employment of the
Covenantor as of the Effective Date (as defined herein) and engage the
Covenantor as an independent consultant in accordance with the terms this
Agreement;
WHEREAS, Purchaser and the Company each wishes to assure itself of the
protection of the goodwill and proprietary interests of the Company's and
Purchaser's business by having the Covenantor enter into this Agreement on the
date hereof; and
WHEREAS, the Covenantor acknowledges that as an inducement and a
condition to entering into the Merger Agreement, Purchaser has required that the
Covenantor agree, and the Covenantor has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions. For purposes of this Agreement:
(a) "Affiliate" shall mean (i) a corporation, partnership or
other business entity which, directly or indirectly, is controlled by, controls,
or is under common control with the Covenantor and (ii) in the case of an
individual, (x) any trust or other estate in which the Covenantor has a
substantial beneficial
<PAGE> 2
interest or as to which the Covenantor serves as trustee or in a similar
fiduciary capacity or (y) the Covenantor's spouse. "Control" means and
includes, but is not necessarily limited to the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such corporation, partnership, joint venture or other business
entity.
(b) "Business Conducted by the Company" shall mean the business
conducted by the Company or any Subsidiary of the Company with respect to
products currently produced by the Company or any Subsidiary on or prior to the
date hereof.
(c) "Consulting Period" shall mean the period commencing on the
date on which the Offer is consummated pursuant to the terms of the Merger
Agreement (the "Effective Date") and ending on the second anniversary of such
date, or such shorter period in accordance with the provisions of Section 9
hereof.
(d) "Noncompete Period" shall mean the Consulting Period;
provided that if the Consulting Period is terminated for cause as defined in
clauses (i) or (iii) of the last sentence of Section 9 hereof, Non-Compete
Period shall mean the period commencing on the Effective Date and ending on the
second anniversary of such date.
2. Termination of Employment and Consulting Services.
(a) The Covenantor's employment with the Company shall terminate
effective as of the Effective Date.
(b) During the Consulting Period, the Covenantor shall perform
consulting services related to the Business Conducted by the Company and shall
perform such projects and functions that may be assigned from time to time by
Purchaser's Chief Executive Officer and/or the Company's Board of Directors. The
Company shall not assign consulting services to Covenantor that are inconsistent
with duties assigned to senior officers of the Company. In the performance of
consulting services hereunder, the Covenantor shall be an independent contractor
and not an employee of the Company, notwithstanding any title that may be
assigned to the Covenantor. The Covenantor agrees to carry out his consulting
duties to the best of his ability and in a timely and complete manner, and at
all times to act in the best interests of the Company and Purchaser. As an
independent contractor, the Covenantor will not be eligible to receive nor
participate in any benefit plan provided to employees of the Company or
Purchaser, including but not limited to any health, life, long term disability,
retirement, incentive savings, supplemental deferred compensation, flexible
benefits or supplemented executive salaried benefit plan, except that during the
Consulting Period, the Company shall continue to provide the Covenantor with
health and medical benefits on terms no less
2
<PAGE> 3
favorable than those currently provided to him by the Company. In the
performance of consulting services hereunder, the Covenantor shall not be
required to work more than 20 days per year. Nothing herein shall prohibit the
Covenantor from devoting his time to civic and community activities, serving as
a member of the Board of Directors of other corporations who do not compete with
the Company or managing personal investments, as long as the foregoing do not
interfere with the performance of the Covenantor's duties hereunder.
3. Compensation.
(a) Fee. As consideration for the execution, delivery and
performance of this Agreement by the Covenantor, during the Consulting Period
the Company shall pay the Covenantor $175,000 per annum. Because the Covenantor
shall be an independent contractor and not an employee of the Company or
Purchaser, there shall be no withholdings or deductions from these payments.
The Covenantor will be responsible for payment of any and all personal income
taxes due in connection with payments made pursuant to this Agreement.
(b) Reimbursement of Certain Expenses. During the Consulting
Period, the Company shall reimburse the Covenantor for reasonable and necessary
business expenses, in accordance with its policies and upon presentation of
appropriate documentation.
4. Covenant Not to Compete. Except as approved by Purchaser in
writing, the Covenantor agrees that during the Noncompete Period, neither the
Covenantor, nor any Affiliate of the Covenantor shall, without the prior written
consent of Purchaser, participate, own, control, manage or engage in, directly
or indirectly, whether as an owner, partner, shareholder (except that the
Covenantor or such Affiliate may hold equity securities representing not more
than five percent (5%) of the equity securities of any publicly-held enterprise
provided that neither the Covenantor nor such Affiliate renders advice or
assistance to such enterprise), employee, officer, director, independent
contractor, consultant, advisor or in any other capacity calling for the making
of investments or the rendition of services, advice, or acts of management,
operation or control, any business which is competitive with the Business
Conducted by the Company within the geographic area in which the Company,
Purchaser or any of their respective subsidiaries conducted business during the
last three (3) years prior to the date hereof.
5. No Diversion of Business Opportunities and Prospects. The
Covenantor agrees that during the Noncompete Period, neither the Covenantor, nor
any Affiliate of the Covenantor, shall, without the written consent of
Purchaser, directly or indirectly, seek to divert from continuing to do business
with or entering into business with the Company, Purchaser
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<PAGE> 4
or any of their respective subsidiaries, any supplier, customer or other person
or entity which to the Covenantor's knowledge has a business relationship with
Purchaser, the Company or any of their respective subsidiaries or with which the
Company or any of its Subsidiaries was actively planning or pursuing a business
relationship before the date in which the Offer is consummated pursuant to the
terms of the Merger Agreement.
6. Non-Solicitation-Customers or Prospective Customers. The
Covenantor agrees that during the Noncompete Period, neither the Covenantor, nor
any Affiliate of the Covenantor shall, without the prior written consent of
Purchaser, directly or indirectly solicit, in connection with any business which
is competitive with the Business Conducted by the Company, any customers with
whom the Company, Purchaser or any of their respective subsidiaries did business
at, or within three (3) years prior to, the date in which the Offer is
consummated pursuant to the terms of the Merger Agreement or any entity known by
the Covenantor to be a prospective customer at the date on which the Offer is
consummated pursuant to the terms of the Merger Agreement. A "prospective
customer" is a company, person or other entity with which the Company or any of
its Subsidiaries has had actual contact or for which the Company has begun
formulating a market strategy.
7. Non-Solicitation -- Employees. The Covenantor agrees that during
the Noncompete Period, the Covenantor shall not, without the prior written
consent of Purchaser, directly or indirectly solicit any employee of the Company
to leave such employment or join or become affiliated with any business which is
competitive with the Business Conducted by the Company in any area in which the
Company, Purchaser or any of their respective Subsidiaries does business.
8. Confidentiality. The Covenantor acknowledges that the Covenantor
has had access to confidential information (including, but not limited to,
current and prospective confidential product information, know-how, inventions,
trade secrets, customer lists, supplier lists, business plans, processes and
technology) concerning the business, products, customers, plans, finances,
suppliers, and assets of the Company and its Subsidiaries and which is not
generally known outside the Company (the "Confidential Information"). The
Covenantor agrees that the Covenantor shall not, without the prior written
authorization of Purchaser, directly or indirectly use, divulge, furnish or make
accessible to any person any Confidential Information, but instead shall keep
all Confidential Information strictly and absolutely confidential, except (1) as
required by law, in which event the Covenantor shall give notice of such
disclosure to Purchaser as promptly as practicable so as to enable Purchaser to
seek a protective order from a court of competent jurisdiction with respect
thereto and (ii) for information which become public other than as a result of a
violation of this Agreement.
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<PAGE> 5
9. Termination of Consulting Period. The Consulting Period shall
terminate with respect to the Covenantor prior to the second anniversary of the
date on which the Offer is consummated upon termination by the Company with
respect to the Covenantor for "cause." For purposes of this Agreement, "cause"
means (i) fraud, misappropriation or other intentional or material damage to the
Company's, Purchaser's or any of their respective subsidiaries' property,
goodwill or business, (ii) commission by the Covenantor of a felony, or (iii)
material breach of this Agreement after the Company provides notice of such
breach and gives the Covenantor at least (20) days to cure breach.
10. Representations and Warranties. The Covenantor hereby represents
and warrants to Purchaser as follows:
(a) Power; Binding Agreement. The Covenantor has the legal capacity,
power and authority to enter into and perform all of the Covenantor's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Covenantor will not violate any other agreement to which
the Covenantor is a party including, without limitation, any voting agreement,
stockholders agreement or voting trust. This Agreement has been duly and
validly executed and delivered by the Covenantor and constitutes a valid and
binding agreement of the Covenantor, enforceable against the Covenantor in
accordance with its terms.
(b) No Conflicts. (i) No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by the Covenantor and the
consummation by the Covenantor of the transactions contemplated hereby and (ii)
none of the execution and delivery of this Agreement by the Covenantor, the
consummation by the Covenantor of the transactions contemplated hereby or
compliance by the Covenantor with any of the provisions hereof shall result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, modification or acceleration) under any of the terms, conditions
or provisions of any agreement to which the Covenantor is a party or by which
the Covenantor may be bound or affected.
(c) Reliance by Purchaser. The Covenantor understands and
acknowledges that Purchaser is entering into, and causing Sub to enter into, the
Merger Agreement in reliance upon the Covenantor's execution and delivery of
this Agreement.
11. Specific Performance. The Covenantor acknowledges that the
Covenantor's compliance with this Agreement is necessary to preserve and protect
the proprietary rights, Confidential Information and the goodwill of the
Business Conducted by the Company as a going concern and that any failure by the
Covenantor to comply with the provisions of this Agreement will result in
5
<PAGE> 6
irreparable and continuing injury to the Business Conducted by the Company for
which there will be no adequate remedy at law. Therefore the Covenantor agrees
that in the event of any such breach Purchaser and Sub shall be entitled to the
remedy of specific performance of the covenants and agreements contained herein
and injunctive and other equitable relief in addition to any other remedy to
which it may be entitled, at law or in equity.
12. Miscellaneous.
(a) Entire Agreement. This Agreement, the Stockholders Agreement, the
Merger Agreement and the agreements contemplated thereby constitute the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
(b) Assignment. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party, provided
that Purchaser may assign, in its sole discretion, its rights and obligations
hereunder to any direct or indirect wholly owned subsidiary of Purchaser, but no
such assignment shall relieve Purchaser of its obligations hereunder if such
assignee does not perform such obligations.
(c) Amendments; Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the Covenantor,
Purchaser and the Company.
(d) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to Covenantor: William J. Branch
4 Truffle Glen Road
Mechanicsburg, PA 17055
717/692-6648 (telephone)
If to Purchaser: Lear Corporation
21557 Telegraph Road
Southfield, MI 48034
810/746-1500 (telephone)
810/746-1677 (telecopier)
Attention: Joseph F. McCarthy, Esq.
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<PAGE> 7
copy to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
312/558-5600 (telephone)
312/558-5700 (telecopier)
Attention: John L. MacCarthy, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(e) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein. Without limiting the foregoing, in the event that any
provision hereof is held by any court of competent jurisdiction to be
unenforceable because it is too extensive in scope or time or territory, such
provision shall be deemed to be and shall be amended without any prior act by
the parties hereto to conform to the scope and period of time and geographical
area which would permit it to be enforced.
(f) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(g) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(h) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Pennsylvania, without giving effect to
the principles of conflicts of law thereof.
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<PAGE> 8
(i) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(j) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
(k) Effectiveness. This Agreement shall be of no force or effect
unless and until the Offer is consumated.
8
<PAGE> 9
IN WITNESS WHEREOF, Purchaser, Company and the Covenantor have caused
this Agreement to be duly executed as of the day and year first above written.
LEAR CORPORATION
By: /s/ J.H. Vandenberghe
---------------------------
Name: J.H. Vandenberghe
Title: Executive Vice President
and Chief Financial
Officer
MASLAND CORPORATION
By: /s/ Daniel R. Perkins
---------------------------
Name: Daniel R. Perkins
Title: CFO & Treasurer
/s/ W. Branch
------------------------------
William J. Branch
9
<PAGE> 1
EXHIBIT 99.6(c)
Date: May 29, 1996
Dr. Frank J. Preston
50 Spring Road
Carlisle, PA 17013
Dear Frank:
Masland Corporation (the "Company") considers it essential to its best
interest and the best interests of its stockholders to foster the continuous
employment of key management personnel.
The Board of Directors of the Company (the "Board") has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Company's management, including
yourself, to their assigned duties. In order to induce you to remain in the
employ of the Company, and in consideration of your agreement to the
termination of any existing employment contract you may have with the Company
or any predecessor; the Company agrees that you shall receive, upon the terms
and conditions set forth herein, the compensation and benefits set forth in
this letter agreement ("Agreement") during the Term hereof.
1. Term of Agreement. This Agreement shall commence as of the date of
the consummation the Offer (as defined in that certain Agreement and Plan of
Merger dated May 23, 1996 (the "Merger Agreement") (the "Effective Date") by and
among Lear Corporation ("Lear"), PA Acquisition Corp. and the Company) and,
unless earlier terminated as provided herein, shall continue in effect until the
fourth anniversary of such date (the "Term"); provided, that this Agreement
shall be of no force or effect unless and until the Offer is consummated. The
Term may be extended pursuant to paragraph 12, hereafter.
2. Terms of Employment. During the Term, you agree to be a full-time
employee of the Company serving in the position of Corporate Senior Vice
President of Lear and President of the Masland Division and to devote
substantially all of your working time and attention to the business and affairs
of the Company and, to the extent necessary to discharge the responsibilities
associated with your position as Corporate Senior Vice President of Lear and
President of the Masland Division, to use your best efforts to perform
faithfully and efficiently such responsibilities. In addition, you agree to
serve in such other capacities or offices to which you may be assigned,
appointed or elected from time to time by the Board or the Board of Directors of
Lear. Nothing herein shall prohibit you from devoting your time to civic and
community activities, serving as a member of the Board of Directors of other
corporations who do not compete with the Company (provided that you have
received prior written approval from the Company's Chairman) or
<PAGE> 2
managing personal investments, as long as the foregoing do not interfere with
the performance of your duties hereunder.
3. Compensation.
(i) As compensation for your services, under this Agreement, you
shall be entitled to receive an initial base salary of $275,000 per
annum, to be paid in accordance with existing payroll practices for
executives of the Company. Increases in your base salary, if any,
shall be determined by the Compensation Committee of Lear. In
addition, you shall be eligible to receive an annual incentive
compensation bonus ("Bonus") to be determined from time to time by the
Compensation Committee of the Board of Directors of Lear.
(ii) In addition to compensation provided for in Subsection (i) of
this Section 3, the Company agrees (A) to provide the same or
comparable benefits with respect to any compensation or benefit plan
in which you participate as of the Effective Date which is material to
your total compensation (including, without limitation, the Supplement
Employee Retirement Pension Agreement dated March 30, 1995 with Frank
J. Preston), unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such
plan; and (B) to maintain your ability to participate therein (or in
such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the opportunities provided and the level
of your participation relative to other participants, than exists on
the Effective Date.
(iii) The Company shall reimburse you for all reasonable travel,
entertainment and other business expenses incurred by you in the
performance of your responsibilities under this Agreement promptly
upon receipt of written substantiation of such expenses. You shall
also be paid all additional amounts necessary to discharge all federal
and state tax liabilities incurred by you that are attributable to all
deemed compensation arising as a consequence of your personal use of
property owned or leased by the Company, excepting only your personal
use of any Company aircraft, including federal and state taxes
assessed against such additional compensation.
(iv) You shall be entitled to perquisites available to all other
executives of the Company and shall be entitled to 4 weeks of vacation
per year.
(v) Upon consummation of the Merger, the options to purchase 60,000
shares of Common Stock, $.01 par value per share, of the Company
("Company Common Stock") granted to you on January 3, 1995 and 30,000
shares of Company Common Stock granted to you on May 11, 1995, in each
case under the 1993 Stock Option
2
<PAGE> 3
Incentive Plan of the Company, shall (i) become options to purchase
Common Stock, $.01 par value per share, of Lear pursuant to Section
6.07 of the Merger Agreement and (ii) shall all become vested and
exercisable upon consummation of the Merger.
4. Termination of Employment. Your employment may be terminated by
either the Company or you by giving a Notice of Termination, as defined in
Subsection (iv) of this Section 4. If your employment should terminate during
the Term, your entitlement to benefits shall be determined in accordance with
Section 5 hereof.
(i) Disability. If, as a result of your incapacity due to physical
or mental illness, you are unable to perform your duties hereunder for
more than six consecutive months or six months aggregate during any
twelve month period, your employment may be terminated for
"Disability".
(ii) Cause. Termination of your employment for "Cause" shall mean
termination upon (A) the willful and continued failure by you to
substantially perform your duties with the Company (other than any
such failure resulting from your Disability), (B) the engaging by you
in conduct which is significantly injurious to the Company, monetarily
or otherwise, (C) your conviction of a felony, (D) your abuse of
illegal drugs or other controlled substances or your habitual
intoxication, or (E) the breach of any of your material obligations
hereunder including without limitation any breach of Section 9 or 10
hereof. For purposes of this Subsection, no act or failure to act, on
your part shall be deemed "willful" unless knowingly done, or omitted
to be done, by you not in good faith and without reasonable belief
that your action or omission was in the best interest of the Company.
(iii) Good Reason. For purposes of this Agreement, "Good Reason"
shall mean the occurrence, without your express written consent, of
any of the following circumstances unless such circumstances are fully
corrected prior to the Date of Termination specified in the Notice of
Termination, as such terms are defined in Subsections (v) and (iv) of
this Section 4, respectively, given in respect thereof:
(A) The permanent assignment to you of any duties inconsistent
with your status as an executive officer of the Company, your
physical relocation on a permanent basis to an area outside of
the metropolitan Detroit area, a substantial adverse alteration
in the nature or status of your responsibilities from those in
effect immediately prior to such assignment of duties, your
removal from any office specified in Section 2 hereof;
3
<PAGE> 4
(B) Any reduction by the Company in your base salary as in
effect from time to time, except for across-the-board salary
reductions similarly affecting all executive officers of the
Company;
(C) The failure by the Company to pay or provide to you within
seven (7) days of receipt by the Company of your written demand
any amounts of base salary or Bonus or any benefits which are
due, owing and payable to you pursuant to the terms hereof,
except pursuant to an across-the-board compensation deferral
similarly affecting all executive officers, or to pay to you any
portion of an installment of deferred compensation due under any
deferred compensation program of the Company;
(D) Except in the case of across-the-board reductions,
deferrals or eliminations similarly affecting all executive
officers of the Company, the failure by the Company to (i)
continue in effect any compensation plan in which you participate
which is material to your total compensation, including but not
limited to the Company's plans currently in effect or hereafter
adopted, and any plans adopted in substitution therefore, or (ii)
continue to provide you with benefits substantially similar, in
aggregate, to the Company's life insurance, medical, dental,
health, accident or disability plans in which you are
participating at the date of this Agreement; or
(E) The failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 7 hereof.
Your continued employment with the Company shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
(iv) Notice of Termination. Any termination of your employment by
the Company or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 8
hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination
provision in this agreement relied upon, if any, and shall set forth
in reasonable detail the facts and circumstances claimed to provide a
basis for termination of your employment under the provision so
indicated.
(v) Date of Termination, Etc. "Date of Termination" shall mean (A)
if your employment is terminated for Disability pursuant to Subsection
(i) of this Section 4, thirty (30) days after Notice of Termination is
given (provided that you shall not
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<PAGE> 5
have returned to the full-time performance of your duties during such
thirty (30) day period), (B) if your employment is terminated by
reason of your death, the date of your death, (C) if by you for Good
Reason or by either party for any other reason (other than Disability,
death, or your voluntary resignation without Good Reason), the date
specified in the Notice of Termination (which, in the case of a
termination by you for Good Reason, shall not be less than thirty (30)
nor more than sixty (60) days from the date such Notice of Termination
is given), and (D) if your employment is terminated by your voluntary
resignation without Good Reason (as defined in Subsection (iii) of
this Section 4), the Date of Termination shall be forty-five (45) days
from the date such Notice of Termination is given or such other date
as may be identified by the Company. Unless the Company instructs you
not to do so, you shall continue to perform services as provided in
this Agreement through the Date of Termination.
5. Compensation Upon Termination or During Disability. Upon termination
of your employment with the Company during the Term, you shall be entitled to
the following compensation and benefits:
(i) If your employment is terminated for Disability, you shall
receive until the end of the Term all compensation payable to you
under the Company's disability and medical plans and programs, as in
effect on the Date of Termination plus an additional payment from the
Company (if necessary) such that the aggregate amount received by you
in the nature of salary continuation from all sources equals your base
salary at the rate in effect on the Date of Termination. After the
end of the Term, your benefits shall be determined under the Company's
retirement, insurance and other compensation programs then in effect
in accordance with the terms of such programs, provided that such
terms shall not be less advantageous to you than the terms of such
programs in effect as of the Effective Date.
(ii) If your employment shall be terminated (A) by the Company for
Cause, or (B) by you other than for Good Reason, the Company shall pay
you your full base salary through the Date of Termination, at the rate
in effect at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation or benefit
plans of the Company at the time such payments are due, and the
Company shall have no further obligations to you under this Agreement.
Provided, however, that if your employment is terminated by your
voluntary resignation without Good Reason, you shall be compensated
per this Paragraph only to the extent that you actively performed your
assigned responsibilities through the Date of Termination.
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(iii) If your employment shall be terminated by reason of your death,
the Company shall pay your estate or designated beneficiary (as
designated by you by written notice to the Company, which designation
shall remain in effect for the remainder of the Term and any
extensions thereof until revoked or a new beneficiary is designated,
in either case by written notice to the Company) your full base salary
through the Date of Termination and for a period of 12 whole calendar
months thereafter plus, if the Date of Termination shall not occur on
the first day of a calendar month, the balance of the month in which
the Date of Termination occurs, at the rate in effect at the time of
your death, plus any Bonus earned, prorated for the portion of the
Bonus measurement period occurring prior to the date of your death,
plus all other amounts to which you are entitled under any
compensation or benefit plans of the Company at the date of your
death, and the Company shall have no further obligation to you, your
beneficiaries or your estate under this Agreement.
(iv) If your employment shall be terminated (a) by the Company other
than for Cause or Disability or (b) by you for Good Reason, then you
shall be entitled to the benefits provided below:
(A) The Company shall pay you your full base salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given (or, if greater, at the rate in effect 30
days prior to the time Notice of Termination is given), plus all
other amounts to which you are entitled under any compensation or
benefit plans of the Company, including without limitation, any
Bonus measurement period occurring prior to the Date of
Termination, at the time such payments are due, except as
otherwise provided below;
(B) in lieu of any further salary payment to you for periods
subsequent to the Date of Termination, the Company shall pay to
you your full base salary at the rate in effect immediately prior
to the time Notice of Termination is given (or, if greater, at
the rate in effect 30 days prior to the time Notice of
Termination is given), payable periodically in accordance with
past payroll practices, until the end of the Term;
(C) in lieu of any further Bonus payments to you for periods
subsequent to the Date of Termination, the Company shall pay to
you a Bonus payable in each March following the Date of
Termination in respect of the previous plan fiscal year equal to
the quotient obtained by aggregating the Bonuses received by you
in respect of the two plan fiscal years ending prior to the Date
of Termination (the "Bonus Period") and dividing such sum by two.
Such Bonus shall be paid in respect of each plan fiscal year or
portion thereof ending after
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<PAGE> 7
the Date of Termination until the end of the Term, and shall be
prorated for partial years, if any, including without limitation
the portion of the calendar year occurring after the Date of
Termination and the final plan fiscal year in respect of which
any such March Bonus is payable pursuant to this Section
5(iv)(C). Provided, however, that the amount of bonus to be paid
pursuant to this Paragraph shall not be greater than the amount
of bonus that would have been paid in accordance with Bonus
Plans, existing from time to time, had your employment not been
terminated;
(D) until the end of the Term, you will continue to participate
in all other compensation and benefit plans (including
perquisites) in which you were participating immediately prior to
the time Notice of Termination is given, or comparable plans
substituted therefor; provided, however, that if you are
ineligible, (e.g., by operation of law or the terms of the
applicable plan to continue to participate in any such plan) the
Company will provide you with a comparable level of compensation
or benefits;
(E) the Company shall also pay to you all reasonable legal fees
and expenses incurred by you in contesting or disputing any such
termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement if such termination is
determined by arbitration to have been for Good Reason or other
than Cause or Disability; and
(F) if you should die after the Date of Termination and prior
to the end of the period of payment provided for in paragraphs
(B), (C), and (D) hereof, the Company shall pay your estate or
your designated beneficiary any amounts that are or become
payable pursuant to any of such paragraphs until the end of the
Term.
(v) In addition to all other amounts payable to you under this
Section 5, you shall be entitled to receive all benefits payable to
you pursuant to the terms of any plan or agreement of the Company
relating to retirement benefits.
6. Travel. You shall be required to travel to the extent necessary for
the performance of your responsibilities under this Agreement.
7. Successors; Binding Agreement. The Company will, by Agreement in form
and substance satisfactory to you, require any successor (whether direct or
indirect, by purchase merger, consolidation or otherwise) to all or
substantially all the business and/or assets of the Company, to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken
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<PAGE> 8
place. Failure of the Company to obtain such assumption and agreement prior to
the effectiveness of any such succession shall entitle you to compensation from
the Company in the same amount and on the same terms as you would be entitled to
hereunder if you terminate your employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, "Company" shall mean the Company as herein before defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
8. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the
Secretary of the Company (or, if you are the Secretary at the time such notice
is to be given, to the Chairman of the Company's Board of Directors), or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
9. Noncompetition.
(i) Until the Date of Termination, you agree not to enter into
competitive endeavors and not to undertake any commercial activity
which is contrary to the best interests of Lear, the Company or their
respective affiliates, including becoming an employee, owner (except
for passive investments of not more than one percent of the
outstanding shares of, or any other equity interest in, any company or
entity listed or traded on a national securities exchange or in an
over-the-counter securities market), officer, consultant, agent or
director of any firm or person which either directly or indirectly
competes with a line or lines of business of Lear or the Company.
Notwithstanding any provision of this Agreement to the contrary, you
agree that your breach of the provisions of this Section 9(i) shall
permit the Company to terminate your employment for Cause.
(ii) If you are terminated for Cause or if you resign, until the
later of (A) one year after the Date of Termination and (B) the
conclusion of any period that you continue to be paid your salary
(including any other payments in lieu of salary) pursuant to Section 5
hereof and for one year thereafter, or you are terminated other than
for Cause, until the later of (A) the Date of Termination and (B) the
conclusion any period that you continue to be paid your salary
(including any other payment in lieu of salary) pursuant to Section 5
hereof, you agree not to become an employee, owner (except for passive
investments of not more than one percent of the
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<PAGE> 9
outstanding shares of, or any other equity interest in, any company or
entity listed or traded on a national securities exchange or in an
over-the-counter securities market), consultant, officer, agent or
director of any firm or person which directly or indirectly competes
with a line or lines of business of Lear or the Company. During the
period of payment provided in Section 5 hereof, you will be available,
consistent with other responsibilities that you may then have, to
answer questions and provide advice to the Company. Notwithstanding
anything in this Agreement to the contrary, you agree that, from and
after any breach by you of the provisions of this Section 9(ii), the
Company shall cease to have any obligations to make payments to you
under this Agreement.
(iii) If you are terminated for Cause or if you resign, until the
later of (A) one year after the Date of Termination and (B) the
conclusion of any period that you continue to be paid your salary
(including any other payments in lieu of salary) pursuant to Section 5
hereof and for one year thereafter, or if you are terminated other
than for Cause, until the later of (A) the Date of Termination and (B)
the conclusion of any period that you continue to be paid your salary
(including any other payment in lieu of salary) pursuant to Section 5
hereof, you shall not directly or indirectly, either on your own
account or with or for anyone else, (X) solicit or attempt to solicit
any of Lear or the Company's customers (Y) solicit or attempt to
solicit for any business endeavor any employee of Lear or the Company
or (Z) otherwise divert or attempt to divert from Lear or the Company
any business whatsoever or interfere with any business relationship
between Lear or the Company and any other person.
(iv) You acknowledge and agree that damages for breach of the
covenant not to compete in this Section 9 will be difficult to
determine and will not afford a full and adequate remedy, and
therefore agree that the Company, in addition to seeking actual
damages pursuant to Section 11 hereof, may seek specific enforcement
of the covenant not to compete in any court of competent jurisdiction,
including, without limitation, by the issuance of a temporary or
permanent injunction, without the necessity of a bond. You and the
Company agree that the provisions of this covenant not to compete are
reasonable. However, should any court or arbitrator determine that
any provision of this covenant not to compete is unreasonable, either
in period of time, geographical area, or otherwise, the parties agree
that this covenant not to compete should be interpreted and enforced
to the maximum extent which such court or arbitrator deems reasonable.
10. Confidentiality.
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<PAGE> 10
(i) You shall not knowingly use, disclose or reveal to any
unauthorized person, during or after the Term, any trade secret or
other confidential information relating to the Company or any of its
affiliates, or any of their respective businesses or principals, such
as, without limitation, dealers' or distributor's lists, information
regarding personnel and manufacturing processes, marketing and sales
plans, and all other such information; and you confirm that such
information is the exclusive property of the Company and its
affiliates. Upon termination of your employment, you agree to return
to the Company on demand of the Company all memoranda, books, papers,
letters and other data, and all copies thereof or therefrom, in any
way relating to the business of the Company and its affiliates,
whether made by you or otherwise in your possession.
(ii) Any ideas, processes, characters, productions, schemes, titles,
names, formats, adaptations, plots, slogans, catchwords, incidents,
treatment, and dialogue which you may conceive, create, organize,
prepare or produce during the period of your employment and which
ideas, processes, etc. relate to any of the businesses of the Company,
shall be owned by the Company and its affiliates whether or not you
should in fact execute an assignment thereof or other instrument or
document which may be reasonably necessary to protect and secure such
rights to the Company.
(iii) Notwithstanding anything in this Agreement to the contrary, you
agree that from and after any breach by you of the provisions of this
Section 10 during any period of payment provided in Section 5 hereof,
the Company shall cease to have any obligations to make payments to
you under this Agreement.
11. Arbitration.
(i) Except as contemplated by Section 9 and Section 11 (iii) hereof,
any dispute or controversy arising under or in connection with this
Agreement that cannot be mutually resolved by the parties to this
Agreement and their respective advisors and representatives shall be
settled exclusively by arbitration in Southfield, Michigan before one
arbitrator of exemplary qualifications and stature, who shall be
selected jointly by an individual to be designated by the Company and
an individual to be selected by you, or if such two individuals cannot
agree on the selection of the arbitrator, who shall be selected
pursuant to the procedures of the American Arbitration Association.
(ii) The parties agree to use their best efforts to cause (a) the two
individuals set forth in the preceding Section 11 (i), or, if
applicable, the American Arbitration Association, to appoint the
arbitrator within 30 days of the date that a party hereto notifies the
other party that a dispute or controversy exists that necessitates the
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<PAGE> 11
appointment of an arbitrator, and (b) any arbitration hearing to be
held within 30 days of the date of selection of the arbitrator, and,
as a condition to his or her selection, such arbitrator must consent
to be available for a hearing at such time.
(iii) Judgment may be entered on the arbitrator's award in any court
having jurisdiction, provided that you shall be entitled to seek
specific performance of your right to be paid and to participate in
benefit programs during the pendency of any dispute or controversy
arising under or in connection with this Agreement. The Company and
you hereby agree that the arbitrator shall be empowered to enter an
equitable decree mandating specific performance of the terms of this
Agreement.
(iv) If you prevail in full or in substantial part, the Company shall
bear all expenses of the arbitrator incurred in any arbitration
hereunder. The Company agrees to pay your reasonable and documented
legal fees and expenses in connection with any arbitration hereunder
if you prevail in full or in substantial part.
12. Extension of Term. The Term of this Agreement shall be automatically
extended for a period of one year on each anniversary of the Effective Date of
this Agreement; said automatic extension commencing on the second anniversary of
the Effective Date. There shall be no renewal of the Term after the Date of
Termination.
13. Modifications. No provision of this Agreement may be modified,
amended, waived or discharged unless such modification, amendment, waiver or
discharge is agreed to in writing and signed by both you and such officer of the
Company as may be specifically designated by the Board.
14. No Implied Waivers. Failure of either party at any time to require
performance by the other party of any provision hereof shall in no way affect
the full right to require such performance at any time thereafter. Waiver by
either party of a breach of any obligation hereunder shall not constitute a
waiver of any succeeding breach of the same obligation. Failure of either party
to exercise any of its rights provided herein shall not constitute a waiver of
such right.
15. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Michigan.
16. Payments Net of Taxes. Any payments provided for herein which are
subject to Federal, State or local tax or other withholding requirements, shall
have such amounts withheld prior to payment.
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17. Survival of Obligations. The obligations of the Company under
Section 5(iii) and your obligations under Sections 9 and 10 hereof shall survive
the expiration of the Term of this Agreement.
18. Capacity of Parties. The parties hereto warrant that they have the
capacity and authority to execute this Agreement.
19. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of the Agreement, which shall remain in full force and effect.
20. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
21. Entire Agreement. This Agreement and any attachments hereto, contain
the entire agreement by the parties with respect to the matters covered herein
and supersedes any prior agreement (including without limitation any prior
employment agreement), condition, practice, custom, usage and obligation with
respect to such matters insofar as any such prior agreement, condition,
practice, custom, usage or obligation might have given rise to any enforceable
right. No agreements, understandings or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
Sincerely,
MASLAND CORPORATION
BY: /s/ W. Branch
---------------------------
Agreed to this 29th day of May, 1996
BY: /s/ Frank J. Preston
--------------------
Dr. Frank J. Preston
12
