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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
October 25, 1999 (August 31, 1999)
SIMULA, INC.
(Exact name of Registrant as specified in its charter)
ARIZONA COMMISSION FILE NO. 1-12410 86-0320129
(State of Incorporation) (I.R.S. Employer
Identification No.)
2700 NORTH CENTRAL AVENUE, SUITE 1000
PHOENIX, ARIZONA 85004
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (602) 631-4005
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FORM 8-K
ITEM 2. DISPOSITION OF ASSETS
On October 21, 1999, Simula, Inc. ("Company") completed the
sale of all of the assets of its wholly owned subsidiary, Coach & Car Equipment
Corporation ("Coach & Car"). The Company has reported Coach & Car as a
discontinued operation since June 1998. The transaction was pursuant to an Asset
Purchase & Sale Agreement dated June 30, 1999, as amended and restated August
31, 1999, and Note Refinancing Agreement dated October 21, 1999.
The buyer is a Nevada corporation owned by Mr. Scott Miller, Phoenix,
Arizona ("Buyer"). Beacon Industries, Inc., a corporation under the control of
Mr. Miller, is also a party to the agreement with respect to certain covenants.
Mr. Miller was a member of the Company's Board of Directors from 1995 to 1998.
The purchase price is $10 million and has been satisfied by two
promissory notes, each with an interest rate of 8-1/2%. The first note in the
amount of $2 million requires quarterly installments of interest commencing in
April 2000. The second note, for $8 million requires semi-annual payments of
interest commencing April 2001. Both notes mature in October 2004 at which time
the outstanding principal and accrued interest is due. As security for the
notes, the Company has a lien on the assets and received a pledge of stock of
Buyer owned by Mr. Miller, and a pledge of stock of Beacon Industries owned by
Mr. Miller. Buyer is negotiating a senior credit facility with a third party
lender, and if obtained, the indebtedness to the Company may be subordinated to
Buyer's senior secured debt. Buyer has stated its intention to conduct an
initial public offering of securities, a portion of the proceeds of which will
be used to repay part of the principal balance of the notes. Until maturity of
the notes, the Company will receive monthly financial reports and a Company
executive will serve on the Buyer's board of directors.
The Company had previously reported that it anticipated an all cash
transaction and would use the proceeds to repay indebtedness. Because the
transaction was restructured, the Company will pursue other sources to provide
liquidity and for repayment of indebtedness.
ITEM 7. EXHIBITS
2.1a Amended and Restated Asset Purchase Agreement by and between
Simula, Inc. and it's wholly owned subsidiary Coach and Car
Equipment Corporation, and Coach and Car Acquisition
Corporation dated August 31, 1999
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2.1b Note Refinancing Agreement by and between Simula, Inc., CCEC
Capital Corp., Coach and Car Equipment corp., and Beacon
Industries, Inc. dated October 21, 1999
2.1c Promissory Note from Coach and Car Acquisition Corporation
dated October 21, 1999
2.1d Promissory Note from Coach and Car Acquisition Corporation
dated October 21, 1999
2.1e Security Agreement from Coach and Car Acquisition Corporation
dated October 21, 1999
2.1f Pledge and Proxy Security Agreement from Coach and Car
Acquisition Corporation and Beacon Industries, Inc. dated
October 21, 1999
2.1g Guarantee of Beacon Industries, Inc.
2.1h Assignment and Assumption by and between Coach and Car
Acquisition Corporation and Coach and Car Equipment
Corporation dated August 31, 1999
2.1i Bill of Sale from Coach and Car Equipment Corporation to
Coach and Car Acquisition Corporation dated August 31, 1999
2.1j Non-Competition Agreement between Coach and Car Acquisition
Corporation and Coach and Car Equipment Corporation and
Simula, Inc. dated October 21, 1999
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EXHIBITS
2.1a Amended and Restated Asset Purchase Agreement by and between
Simula, Inc. and it's wholly owned subsidiary Coach and Car
Equipment Corporation, and Coach and Car Acquisition
Corporation dated August 31, 1999
2.1b Note Refinancing Agreement by and between Simula, Inc., CCEC
Capital Corp., Coach and Car Equipment corp., and Beacon
Industries, Inc. dated October 21, 1999
2.1c Promissory Note from Coach and Car Acquisition Corporation
dated October 21, 1999
2.1d Promissory Note from Coach and Car Acquisition Corporation
dated October 21, 1999
2.1e Security Agreement from Coach and Car Acquisition Corporation
dated October 21, 1999
2.1f Pledge and Proxy Security Agreement from Coach and Car
Acquisition Corporation and Beacon Industries, Inc. dated
October 21, 1999
2.1g Guarantee of Beacon Industries, Inc.
2.1h Assignment and Assumption by and between Coach and Car
Acquisition Corporation and Coach and Car Equipment
Corporation dated August 31, 1999
2.1i Bill of Sale from Coach and Car Equipment Corporation to
Coach and Car Acquisition Corporation dated August 31, 1999
2.1j Non-Competition Agreement between Coach and Car Acquisition
Corporation and Coach and Car Equipment Corporation and
Simula, Inc. dated October 21, 1999
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EXHIBIT 2.1a
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT ("Agreement") is
executed as of August 31, 1999, by and among SIMULA, INC., an Arizona
corporation ("Simula"), and a wholly-owned subsidiary of a wholly-owned
subsidiary of Simula, COACH AND CAR EQUIPMENT CORPORATION, an Arizona
corporation ("Seller"), and COACH AND CAR ACQUISITION CORP., a Nevada
corporation ("Purchaser"), and Purchaser's affiliated corporation under common
control, BEACON INDUSTRIES, INC., a Nevada corporation ("Beacon").
PRELIMINARY STATEMENT
I. Seller owns and operates a business engaged in the manufacturing and
sale of rail and mass transit transportation seating, located at 1951 Arthur
Avenue, Elk Grove Village, Illinois (the "Business").
II. Purchaser desires to purchase the Business and related assets, and
Seller desires to sell such assets, all on the terms and conditions hereinafter
set forth.
III. In connection with, and as conditions to, the purchase and sale of
the assets of the Business:
(a) Purchaser will buy certain assets of Seller including
personal property, equipment, accounts receivable, and inventory, and will
continue to operate the Business as a going concern;
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(b) Purchaser will assume certain liabilities of Seller; and
(c) Purchaser and certain employees may enter into employment
or consulting agreements to provide for continuity of management and operations.
IV. Seller and Purchaser wish to amend the Asset Purchase Agreement
executed between them on June 30, 1999.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties herein set forth, it is agreed by the parties as
follows:
SECTION 1
SALE AND TRANSFER OF ASSETS
1.1 PURCHASE OF ASSETS. Subject to the terms and provisions of this
Agreement, at the Closing (as hereafter defined), Seller shall sell, transfer,
assign and deliver to Purchaser, and Purchaser shall purchase and acquire from
Seller, the following assets of Seller:
(a) the tangible personal property owned by Seller and used in
connection with the Business, as listed on Schedule 1.1(a), including, without
limitation, all equipment, furniture, fixtures, machinery, office furnishings,
leasehold improvements, and all rights in all warranties of any manufacturer or
vendor with respect thereto (the "Personal Property");
(b) all of Seller's rights to all licenses, certificates,
accreditations and registrations and other licenses or permits issued in
connection with the operation of the Business,
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including, without limitation, those described in Schedule 2.7 (the "Licenses");
(c) all of Seller's interest in and to those real property and
personal property leases related to the Business described in (i) Schedule
1.1(c)-A in respect of real property leases; and (ii) Schedule 1.1(c)-B in
respect of personal property leases (all of such leases being referred to
collectively as the "Leases");
(d) all of Seller's interest in and to those contracts,
including back log, and agreements relating to the Business, all as set forth in
Schedule 1.1(d) (the "Contracts");
(e) all inventories, including raw materials and parts,
work-in-process and finished goods presently utilized in the Business with such
additions and deletions thereto as may arise in the ordinary course of business,
and all inventories of manufacturing, assembling and office supplies and other
disposables and consumables owned by Seller used in connection with the Business
and all rights in all warranties of any manufacturer or vendor with respect
thereto (the "Inventories");
(f) all accounts receivable and other rights to receive
payments as arise in the normal course of business and in existence on the
Closing date and, except as reimbursed to Seller pursuant to Section 6.6 of this
Agreement, all deposits, prepayments, bonds, refunds, and all securities owned
by Seller, if any, as set forth on Schedule 1.1(f), and any indemnity payable to
Seller from its predecessors including, but not limited to, any environmental
indemnity;
(g) all documents, records, operating manuals, files and
computer software which pertain to the Business (excluding tax and employee
records, but with reasonable access to such records after the Closing),
including, without limitation, all procedures manuals, all vendor and supplier
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lists, customer lists, ledgers, journals and general operational business and
financial books and records necessary to the uninterrupted conduct of business;
(h) all intangibles including the patents listed on Schedule
1.1(h) copyrights, intellectual property, drawings, formula and rights;
(i) (i) the trade name "Coach and Car Equipment Corporation"
and all uses and derivatives thereof, (ii) the trade name "Artcraft" for use in
the rail business and all uses and derivatives thereof, including "Artcraft
Upholstery," and (iii) all trademarks, logos, symbols, service names and trade
identifications used or associated with the Business, whether registered or not,
and the goodwill of the Business; and
(j) any and all other assets utilized in the Business,
wheresoever situated, except as specifically excluded in Schedule 1.1(j).
The assets to be conveyed to Purchaser by Seller as provided in this
Section 1.1 are hereinafter referred to collectively as the "Assets."
1.2 PURCHASE PRICE AND PAYMENT FOR COVENANTS. At closing, Purchaser
shall purchase the Assets for ten million dollars ($10,000,000). The purchase
price will be paid by Purchaser's promissory note in the amount of Nine Million
Nine Hundred Ninety Six Thousand Dollars ($9,996,000). The principal amount of
the note reflects a One Hundred Thousand Dollar ($100,000) credit for earnest
money paid and a Ninety Six Thousand Dollar ($96,000) debit pursuant to Section
6.6(a). The note in the form of Exhibit "A" attached hereto (the "Note") will
have a term of forty-five (45) days and will bear an annual interest rate of
8-1/2% payable upon maturity. The Note shall be
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secured by a Security Agreement and lien on the Assets in the form of Exhibit
"B-1," by pledges by Beacon's and Purchaser's controlling shareholder of the
common stock held by such shareholder, evidenced by a Pledge and Proxy Security
Agreement in the form of Exhibit "B-2" attached hereto, and a guarantee of
Beacon Industries, Inc., in the form of Exhibit "B-3."
1.3 ALLOCATION OF PURCHASE PRICE; FORM 8594. The Purchase Price shall
be allocated by Purchaser and Seller on the basis of an assessment of value of
the Assets made by the parties and their accounting representatives. Seller
shall cooperate in providing the information necessary for the completion and
filing of Form 8594, Asset Acquisition Statement, under Section 1060 of the
Internal Revenue Code of 1986, as amended, and the parties shall agree to the
contents of, and within forty five (45) days after Closing execute and deliver
Form 8594 appearing as Exhibit "C" hereto.
1.4 ILLINOIS SALES OR TRANSACTION TAX. Purchaser shall pay any and all
state and local sales or transaction taxes in connection with the sale of the
Assets.
1.5 ASSETS FREE AND CLEAR; ASSUMPTION OF LIABILITIES.
(a) The Assets shall be sold, transferred and delivered free
and clear of all liabilities, liens, defects, security interests, rights,
charges and encumbrances, except for Seller's liabilities expressly agreed to be
assumed by Purchaser in an Assignment and Assumption in the form attached hereto
as Exhibit "D" (the "Assignment and Assumption").
(b) The liabilities, obligations, Contracts, and Leases to be
assumed by Purchaser pursuant to the terms hereof shall be reflected in the
Assignment and Assumption.
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1.6 CLOSING; PAYMENT. The sale, purchase and other activities provided
for herein (the "Closing") shall take place at Seller's office at 5:00 p.m.
Pacific Standard Time, on August 31, 1999. The date of the Closing is referred
to herein as the "Closing Date" or "Closing". At the Closing:
(a) Seller shall deliver to Purchaser documents necessary to
transfer title to the Assets as more fully described in Section 1.7 hereof;
(b) Purchaser and Seller shall execute and deliver to each
other the Assignment and Assumption;
(c) Purchaser shall deliver the executed Note to Seller;
(d) Purchaser shall execute and deliver the Security
Agreement;
(e) Beacon shall deliver the executed Pledge and Proxy
Security Agreement to Seller;
(f) Beacon shall deliver the executed Guarantee to Seller; and
(g) All other agreements and documents described in or
contemplated in Sections 5 and 6 hereafter and all other documents reasonably
agreed by counsel to be required to be delivered and/or executed at or prior to
Closing pursuant to this Agreement shall be delivered and/or executed.
1.7 INSTRUMENTS OF CONVEYANCE AND TRANSFER. On the date of Closing,
Seller shall
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deliver to Purchaser (i) a Bill of Sale substantially in the form attached
hereto as Exhibit "E" (the "Bill of Sale"), (ii) the Assignment and Assumption,
(iii) certificates of title to vehicles, (iv) patent assignments in the form
attached hereto as Exhibit "F" and (v) other good and sufficient endorsements,
assignments and instruments of conveyance and transfer, and releases of liens,
in form and substance reasonably satisfactory to Purchaser's counsel, as shall
be effective to vest in Purchaser or Purchaser's designee title to the Assets to
be sold, transferred and delivered hereunder, free and clear of all liabilities,
liens, defects, encumbrances, security interests, charges and rights, all as
provided in and simultaneously with such delivery, all such steps will be taken
as may be reasonably required to put Purchaser in actual possession and
operating control of the Assets and the Business.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF SELLER AND SIMULA
Neither Seller nor Simula makes any representations or warranties
except as expressly provided in this Section 2. Neither Seller nor Simula makes
any representations or warranties as to pro forma information and forecasts
except that they were prepared in good faith. Purchaser acknowledges that it has
relied upon its due diligence and that of its agents in valuing the Assets,
specifically including, but not limited to, tangibles and intangibles,
contracts, inventory, fixed assets, and trade accounts receivable. Seller and
Simula, jointly and severally, represent, warrant and agree as of the Closing as
follows:
2.1 ORGANIZATION AND STANDING. Each of Seller and Simula is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Arizona. Seller is duly qualified and in good standing as a
foreign corporation in all jurisdictions where the nature of the property owned
or leased by it, or the nature of the business conducted by it, makes such
qualification necessary and the absence of such qualification would have a
material adverse effect on the business or financial
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condition of Seller. Seller has all requisite power and authority to carry on
its business as it is now being conducted and to own the properties and assets
it now owns. Seller has heretofore delivered to Purchaser complete and correct
copies of its Articles of Incorporation and Bylaws together, in each case, with
all amendments thereto which have been adopted.
2.2 AUTHORITY FOR AGREEMENT. The Board of Directors of Seller and
Simula have taken all actions required by law, their respective Articles of
Incorporation and Bylaws or otherwise to authorize the execution and delivery on
behalf of Seller and Simula of this Agreement, the performance by Seller and
Simula of their obligations hereunder and the consummation of the transactions
contemplated hereby.
2.3 DEFAULTS; NO VIOLATION. Neither Seller nor Simula is in default
under, nor has any event occurred which, with the lapse of time or action by a
third party, would result in a material default under, any of the Leases or
Contracts or any other outstanding agreement, default under which could result
in any lien on any of the Assets except as disclosed on Schedule 2.3. Except as
disclosed on Schedule 2.3, neither the execution and delivery of this Agreement,
nor the performance by Seller or Simula of their respective obligations
hereunder nor the consummation of the transactions contemplated hereby will (a)
violate any provision of its Articles of Incorporation or Bylaws or financing or
other agreements; (b) violate, or be in conflict with, or constitute a default
under, or permit the termination of any of the Leases or Contracts, or cause the
acceleration of the maturity of any obligation of Seller thereunder or result in
the creation or imposition of any lien upon any of the Assets; (c) require the
agreement or consent of any other party; or (d) violate any material statute or
law or any judgment, decree, order, regulation or rule of any court or
governmental authority to which Seller is subject.
2.4 TAXES. Seller has filed all federal, state, employment, corporate
franchise and local tax returns or information returns required to be filed by
it with respect to which a failure to do so would
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result in any lien on any of the Assets. All of such returns have been prepared
and filed in accordance with the applicable laws and regulations. Seller has
paid or accrued for all taxes and assessments (including, without limitation,
income, excise, unemployment, worker's compensation, social security,
occupation, franchise, property, sales and use taxes, import duties or charges,
and all penalties and interest in respect thereof) due and payable with respect
to which a failure to do so would result in any lien on any of the Assets.
Seller has not been audited by any taxing authority, nor is Seller aware that
any taxing authority contemplates such an audit, nor has Seller signed any
extension agreement with any taxing authority.
2.5 LITIGATION. There is no investigation, audit, litigation or
proceeding pending or, so far as is known, threatened against Seller at law or
in equity before any court or other governmental agency, which if adversely
decided could, except as set forth on Schedule 2.5: (i) result in any liability
for Purchaser; (ii) result in any lien on any of the Assets; (iii) have an
adverse effect on Seller's ability to perform its obligations under the
Agreement; or (iv) have an adverse effect on the Business; provided that, in any
event, Seller shall retain the defense of any such claims pursuant to, and in
accordance with, the terms of Section 7.
2.6 COMPLIANCE WITH LAW AND REGULATIONS. To the best of its knowledge,
Seller is in compliance with all material requirements of law, federal, state
and local, and all material requirements of all governmental bodies or agencies
having jurisdiction over Seller relating to the conduct of the Business and the
use of the Assets.
2.7 LICENSES. Seller has obtained, and is subject only to, the material
licenses necessary to the conduct of its business appearing as Schedule 2.7.
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2.8 OWNERSHIP OF PROPERTIES; CONDITION; INVENTORIES. Seller does not
own any real property. Except as set forth on Schedule 2.8 and Schedule 2.12,
Seller has good and marketable title to the Assets owned by it and good and
valid leasehold estates in all of the Assets leased by it, free and clear of
liabilities, liens (including UCC, landlord, tax and judgment liens), security
interests, defects, rights, charges and encumbrances. All equipment and other
Personal Property of Seller are in good operating condition and repair, ordinary
wear and tear excepted.
(a) Schedule 2.8.1. is a list of all inventories and open shop
orders (including work-in-process) to be purchased and sold, and are reflected
in the Financial Statements. The Inventories reflected in the Financial
Statements and held by Seller on the date hereof are in good, merchantable and
usable condition and have been reflected on such Financial Statements on the
basis of generally accepted accounting principles.
(b) All material documents, books, records, software and other
data necessary for the conduct of the Business are located at the Business.
2.9 COMMITMENTS. Schedule 2.9 is a complete and correct list as of the
date hereof of all agreements and commitments of the following types to which
Seller is a party or by which it or any of its property is bound as of the date
hereof:
(a) notes, loans, credit agreements, mortgages, indentures,
security agreements and other agreements and instruments relating to the
borrowing of money by, or the extension of credit to, Seller;
(b) written employment and consulting agreements;
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(c) written sales agency, representative, broker or
distributorship agreements;
(d) written agreements, orders or commitments for the purchase
by Seller of raw materials, supplies or finished products exceeding $5,000; and
(e) written agreements, orders or commitments for the purchase
by Seller of services exceeding $5,000.
Seller has delivered or made available to Purchaser complete and
correct copies of all written agreements, contracts and commitments, together
with all amendments thereto, listed above. Except as described in Schedule 2.9,
Seller does not have, and at the Closing date will not have, any agreements or
commitments, including, but without limiting the generality of the foregoing,
any agreement or obligations, contingent or otherwise, under any contract or
agreement (1) of indebtedness, (2) for the purchase of supplies, services or
other items in excess of $5,000, or (3) for the purchase of any equipment or
machinery involving in excess of $5,000.
2.10 CONTRACTS TO PROVIDE GOODS AND SERVICES. Schedule 2.10 is a
complete and correct list as of the date hereof of all agreements, contracts and
information of the following types to which Seller is a party as of the date
hereof:
(a) agreements or commitments for the sale to customers of
goods or services including open purchase orders, arrangements or understandings
with customers related to manufacture, assembly, acceptance and sale of rail and
seats, other vehicle seats, components and related equipment or modifications,
and replacement parts; and
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(b) all other material agreements or obligations to provide
goods or services to customers or others.
Seller has delivered or made available to Purchaser complete and
correct copies of all written agreements, contracts and commitments, together
with all amendments thereto listed above. Except as provided on Schedule
2.10(b), all contracts are assumable by Purchaser according to their terms and
all assignments thereof have been approved or consented to by third parties as
required thereunder.
2.11 FINANCIAL STATEMENTS. The Financial Statements of Seller for the
years ended December 31, 1996, 1997, and 1998, and for the three months ended
March 31, 1999 and six months ended June 30, 1999, all as set forth in Schedule
2.11 (collectively, the "Financial Statements") are complete in all respects,
and fairly present the financial condition of Seller as of the dates thereof and
the result of the operations of Seller for the periods covered thereby; the
Financial Statements have been prepared, as appropriate, in accordance with the
percentage of completion accounting method or generally accepted accounting
principles and practices consistently applied as disclosed in Schedule 2.11; the
Financial Statements reflect or adequately provide for all claims against, and
all debts and liabilities of, Seller, fixed or contingent, existing at the dates
thereof. Seller has advised Purchaser of interim financial results from June 30,
1999 through August 30,1999 reflecting operating losses. Except for the
operating losses and matters disclosed in Schedule 2.5, to the best of Seller's
knowledge, there has not been any change between the date of the latest
Financial Statements and the date of this Agreement, and will not be any such
change between the date of this Agreement and the Closing, which has had or will
have a material adverse effect on the financial position or results of
operations of Seller.
2.12 NO OTHER LIABILITIES OR ADVERSE CONDITIONS. With the exception of
the liabilities set
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forth on the Financial Statements and on Schedule 2.12 hereto, and liabilities
incurred in the ordinary course of the business of Seller since the date of the
Financial Statements, to the best of Seller's knowledge, Seller has no
liabilities of any nature, whether absolute, accrued, contingent or otherwise,
or whether due or to become due, in excess of $10,000 in the aggregate, and
there is no basis for the assertion against Seller of any such liability.
2.13 ACCOUNTS RECEIVABLE. Schedule 2.13 is a list of all accounts
receivable with the balances due Seller as of the dates indicated. Accounts
receivable as reflected on the books of Seller on the date hereof, net of
applicable reserves, are collectible in the ordinary course. Except in the
ordinary course of business, Seller has no obligation to accept returns from, or
to extend credit terms to, its customers and has no policy, custom or practice
of accepting returns or extending credit, whether or not legally obligated to do
so, other than in the ordinary course of business.
2.14 ACCOUNTS PAYABLE. Schedule 2.14 is a true and correct list of all
accounts payable of Seller and any collateral or security applicable to the
indebtedness owed to each of these creditors. Except as set forth on Schedules
2.8 and 2.12 no person has a security interest in Seller's accounts receivable
or inventory.
2.15 CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. No consent,
approval or authorization of, or declaration, filing or registration with, any
governmental, quasi-governmental, or regulatory authority is required to be made
or obtained by Seller in connection with the execution, delivery and performance
of this Agreement by Seller, except as set forth in Schedule 2.15. Seller has
filed all reports and returns heretofore required by federal, state or municipal
authorities and all reports and returns to the various governmental authorities
which control, directly or indirectly, the Business, and has paid all sums
heretofore due with respect to such reports and returns.
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2.16 LABOR, EMPLOYMENT CONTRACTS AND EMPLOYEE BENEFITS PROGRAMS.
Schedule 2.16-A includes a copy of Seller's collective bargaining agreement with
the United Electrical Workers dated August 1, 1998, with all modifications and
amendments thereto ("Collective Bargaining Agreement"). Schedule 2.16-A also
includes a list of all union complaints, grievances, arbitrations or other
related actions since the date of the Collective Bargaining Agreement, and a
description of the status or disposition of each. Attached as Schedule 2.16-B is
a list of all written personnel employment agreements, policies, procedures,
practices and employee rules and manuals, which are, or have in the past been
provided to employees, whether or not legally binding, including but not limited
to policies with respect to hiring, compensation, disability, sick leave
(including maternity leave), vacation, leaves of absence, tuition reimbursement,
relocation and termination. Schedule 2.16-C is a list of all group insurance,
group hospitalization and other employee insurance benefit plans. True and
correct copies, certificates or descriptions of the materials listed on Schedule
2.16-B and Schedule 2.16-C have been delivered to Purchaser. Purchaser
acknowledges that it is not assuming Seller's benefit plans. Seller shall retain
all costs and expenses, including self-insurance, in connection with benefits
provided to Seller's employees prior to the Closing.
(a) Except as set forth on Schedule 2.16(a), Seller has no
material obligations, contingent or otherwise, written or oral, under any
employment contract, collective bargaining agreement, pension or retirement
plan, bonus plan, or other employee contract or non-terminable agreement,
expressed or implied, except (i) normal salary or wage accruals, and (ii) paid
vacations and sick leave accruals.
(b) The names and current aggregate annual compensation rates
as of the date hereof of each employee of the Seller receiving regular
compensation, and designations as a union or non-
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union employee, are set forth in Schedule 2.16(b).
(c) The names and current accrued vacation and sick day
allowances due to each employee on the date hereof are listed on Schedule
2.16(c).
(d) There is no unfunded employee benefit plan obligation for
plans established or maintained for employees of Seller, or to which
contributions have, must, or may be made by Seller, which is subject to Tile IV
or Part 3 of Subtitle B of Title I of the Employee Retirement Income Security
Act of 1974, as amended and in effect, and the plans are adequately funded to
meet accrued obligations. Copies of the plans are attached as Schedule 2.16(d).
(e) Seller has obtained Form I-9 from all of its employees and
Seller is in compliance with all rules and regulations of the U.S. Immigration
and Naturalization Service.
2.17 ENVIRONMENTAL MATTERS. Seller is in compliance with all material
rules and regulations (and applicable standards and requirements) of the United
States Environmental Protection Agency (the "EPA") and the agencies and
authorities of the City of Elk Grove Village, County of Cook, State of Illinois,
and any other political subdivision in which it conducts the Business, which
have jurisdiction over environmental matters. Seller has received no notice of,
and, to its best knowledge, has not during its operation of the Business made
any act or omission that would result in, (i) potential responsibility or
liability for environmental damage, or (ii) any suit, claim, action or
proceeding before any court, governmental agency or board or other forum, nor is
any such action threatened by any person or entity or any basis for such suit,
claim, action or proceeding, for (x) noncompliance by Seller with any
environmental law, rule or regulation, (y) personal injury, wrongful death or
other conduct relating to materials, commodities or products used, sold,
transferred, disposed or manufactured by Seller, or (z)
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relating to the presence in or release into the environment by Seller of any
toxic or hazardous material, substance, or waste generated by Seller whether or
not occurring at or on a site owned, leased or operated by Seller. Schedule 2.17
includes all manifests respecting the storage, transportation or disposal of all
hazardous materials of Seller in the 12-month period preceding the Closing date.
2.18 INSURANCE. A complete and correct list and an accurate summary
description (including premiums, exclusions, deductible and coinsurance amounts,
broker and carrier) of all insurance policies maintained by or on behalf of
Seller has previously been provided to Purchaser, and Seller has delivered to
Purchaser complete and correct copies of all such policies together with all
riders and amendments thereto. Such policies are in full force and effect, all
premiums due thereon have been paid, and Seller has complied in all material
respects with the provisions of such policies. Purchaser is not assuming
Seller's insurance plans.
2.19 PRODUCT WARRANTIES. The products and services provided by Seller
are in compliance with and meet the standards of all material federal, state and
local laws and regulations and Seller has either disclaimed or complied with any
express or implied warranty relative to its products or services, including
without limitation any express warranty or any implied warranty of
merchantability or of fitness for any particular purposes. Except as set forth
on Schedule 2.19, Seller has received no notice of any product or service
warranty or liability claims for a material dollar amount, nor is any such claim
threatened against Seller or in respect of products or services leased or sold
by it. Seller has adequately reserved on its Financial Statements for reasonable
estimates for warranty obligations.
2.20 BANKS. Schedule 2.20 is a true and complete list, as of the date
hereof, of each bank or other financial institution, trust company or brokerage
firm in which Seller has an account or safe deposit box, the account number, and
the names of all persons authorized to draw thereon, have access
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thereto or transact business therewith.
2.21 PATENTS AND INTELLECTUAL PROPERTY. Schedule 2.21-A is a list of
all patents and patents pending ("Patents"), trade names, and trade marks
utilized in the business ("Marks"). Seller owns the Patents and Marks. Except as
set forth on Schedule 2.21-B, Seller is not aware, after due diligence, of any
rights of third parties to or infringements of any of the Patents or Marks.
Seller is not aware of any pending or threatened action, suit, proceeding or
claim by others, either domestically or internationally, that alleges that
Seller is violating any patents, copyrights, trademarks or license agreements.
2.22 CERTAIN TRANSACTIONS. Except as set forth in Schedule 2.22, no
director, officer or employee of Seller or Simula, or any relative by blood or
marriage, affiliate or associate of any of the foregoing, is presently a party
to any material transaction with Seller or Simula (other than for services as
employees, officers, and directors) including without limitation, any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from, any such person, or any corporation, partnership,
trust or other entity in which any Stockholder or any such director, officer, or
employee has a substantial interest or is a director, officer, partner, or
trustee.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND BEACON
Purchaser and Beacon represent and warrant as of the Closing as
follows:
3.1 ORGANIZATION AND STANDING. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada. Purchaser has full power and
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authority to carry on its business as now conducted and as contemplated by this
Agreement. Beacon is a corporation duly, organized, validly existing and in good
standing under the laws of the State of Nevada.
3.2 AUTHORITY FOR AGREEMENT. The Board of Directors of each of
Purchaser and Beacon have taken all actions required to authorize the execution
and delivery on behalf of Purchaser of this Agreement and the performance by
Purchaser and Beacon of the obligations hereunder and the consummation of the
transactions contemplated hereby.
3.3 CONSENTS. The execution and performance of this Agreement by
Purchaser and Beacon will not violate any provision of, or result in the breach
of, or constitute a default under, or require any consent under any law, or any
order, writ, injunction or decree of any court, governmental agency or
arbitration tribunal, or any contract, agreement or instrument by which
Purchaser is bound.
SECTION 4
COVENANTS
4.1 SELLER'S AND SIMULA'S COVENANTS.
(a) If, prior to the Maturity Date set forth in the Note, Purchaser
obtains an asset based loan from a third party lender in an amount no less than
$6 Million, no less than $3.5 Million of the proceeds from which Purchaser
agrees to apply against the Note, Seller and Simula will negotiate in good faith
to do the following:
(i) accept the cash proceeds applied against the Note;
(ii) enter into good faith negotiations with Purchaser to
refinance the Note on mutually agreeable terms, which terms may include
(A) a reduction in the principal amount of the
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Note to the extent of the cash proceeds applied against it, (B) an
extension of the term of the remaining indebtedness represented by the
Note, and (C) the representation of the remaining indebtedness by one
or more notes with one or more maturity dates (a "Refinancing Note");
and
(iii) guarantee, as an accommodation to Purchaser, up to
seventy percent (70%) of the amount described in Section 4.1(a)(ii)(A)
above to Purchaser's third party lender on terms and conditions
satisfactory to Simula.
If Purchaser and Seller are unable to agree in good faith to refinance the Note
as described in this Section 4.1(a), then the Note shall remain in full force
and effect in accordance with its terms.
(b) Seller shall enter into an agreement with Airline Interiors, Inc.
("AI") pursuant to which AI will buy from Purchaser (as successor to the Assets)
the materials represented by Seller's open purchase order with Meier Metals.
Such agreement will provide that AI: (i) will buy the raw materials directly
from the vendor and extinguish the account payable relating thereto; or (ii)
will buy, after the Closing, finished parts from Purchaser (as successor to the
Assets) on reasonable terms and conditions for the cost of the materials plus
Purchaser's allocation of reasonable overhead, or with a reasonable profit to
Purchaser. To the extent Purchaser incurs expenses under the purchase order due
to Seller's failure to enter into such an agreement, Purchaser's obligations
under the Note or any Refinancing Note if it has a later maturity, shall be
reduced to the extent of such expense.
(c) Within forty-five (45) days after Closing, Seller shall file an
Amendment to Seller's Articles of Incorporation with the Arizona Corporation
Commission to change Seller's corporate name to eliminate the term "Coach & Car
Equipment" therefrom.
(d) To the extent not provided free and clear at Closing, Seller and
Simula shall continue to use their best efforts to obtain all consents to
assignment and releases necessary to deliver the Assets free and clear to
Purchaser.
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4.2 PURCHASER'S COVENANTS.
(a) Prior to the Maturity Date set forth in the Note, Purchaser will
use its best efforts to obtain an asset based loan from a third party lender in
an amount no less than $6 Million and to apply no less than $3.5 Million of the
proceeds of such loan against the Note. In connection with such third party
loan, Purchaser will enter into good faith negotiations with Seller to refinance
the Note on mutually agreeable terms, which terms may include (A) a reduction in
the principal amount of the Note to the extent of the cash proceeds applied
against it, (B) an extension of the term of the remaining indebtedness
represented by the Note, and (C) the representation of the remaining
indebtedness by one or more notes with one or more maturity dates. Purchaser
acknowledges that if Purchaser and Seller are unable to agree in good faith to
refinance the Note as described in this Section 4.2(a), then the Note shall
remain in full force and effect in accordance with its terms. During the term of
the Note or any Refinancing Note Purchaser will provide Seller with monthly
financial statements related to the Business and shall promptly deliver any
additional information related to the Business reasonably requested by Seller.
(b) Purchaser will assume Seller's liability to Simula, Inc. or
subsidiaries for advances made to Seller from the date of the Asset Purchase
Agreement dated June 30, 1999, in accordance with the terms and conditions of
the certain Post-Agreement Intercompany Revolving Loan Agreement dated effective
as of July 1, 1999, which is attached hereto as Exhibit "L."
4.3 JOINT COVENANTS OF SELLER AND PURCHASER.
(a) Seller and Purchaser shall cooperate in issuing any press releases
or otherwise making public statements with respect to the purchase and sale and
the other transactions contemplated by this Agreement. No such public statement
shall be made without first consulting the other party; provided that Buyer
shall have a reasonable opportunity, not to exceed fifteen (15) days from the
date hereof, to notify its vendors, suppliers and creditors of such transactions
prior to the making of any public statement by Seller and Purchaser.
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(b) In the event Purchaser and Seller are unable to obtain the lessors'
written approval to the assignment and assumption to each of the Leases
described in Sections 1.1(c), then both parties shall continue to seek, and
shall assist each other in all reasonable attempts to obtain, each
non-consenting lessor's written approval to an assignment and assumption after
the Closing until such approval is granted. With respect to each Lease listed on
Schedule 1.1(c)-B, Seller shall sub-lease to Purchaser the equipment covered by
such Lease, on terms and conditions identical to those imposed on Seller under
such Lease, while Seller and Purchaser seek the lessor's approval, as described
in the preceding sentence.
(c) To accommodate Purchaser's assumption and initial operation of the
Business, Seller may, in its sole discretion, provide post-Closing payroll,
payroll services, employee benefits, or other transitional services for up to a
period not to exceed twenty (20) days after Closing. Purchaser shall reimburse
and indemnify Seller for all such transitional services including without
limitation all costs, expenses, claims, liabilities, insurance premiums, self
insurance payments, and fees, incurred and/or paid by Seller post-Closing.
Reimbursement and payment shall be made within five (5) days of Seller's
presentation of invoice for payment. Purchaser's reimbursements of any payments
pursuant to this Section 4.3(c) shall not be considered as an adjustment to the
purchase price and Purchaser's indemnification obligations hereunder shall not
be subject to the limitations set forth in Section 7.3.
(d) Effective as of the Closing, Seller shall terminate the employment
of all its employees. Subject to Section 6.5, Purchaser intends and will use its
best efforts to re-employ substantially all of such employees on terms
satisfactory to Purchaser.
4.4 BEACON'S COVENANTS.
(a) In connection with the letter delivered to Seller pursuant to
Section 6.9, Beacon directly or indirectly will obtain equity financing from a
third party to be utilized as working capital by Purchaser of at least One
Million Dollars ($1,000,000) by September 13, 1999 and an additional One Million
Dollars ($1,000,000) within forty-five (45) days of Closing.
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(b) Prior to the Maturity Date set forth in the Note, Beacon
will use its best efforts to directly or indirectly obtain an asset based loan
from a third party lender in an amount no less than $6 Million and to apply no
less than $3.5 Million of the proceeds of such loan against the Note. In
connection with such third party loan, Beacon will enter into good faith
negotiations with Seller to directly or indirectly refinance the Note on
mutually agreeable terms, which terms may include (A) a reduction in the
principal amount of the Note to the extent of the cash proceeds applied against
it, (B) an extension of the term of the remaining indebtedness represented by
the Note, and (C) the representation of the remaining indebtedness by one or
more notes with one or more maturity dates. Beacon acknowledges that if Beacon
and Seller are unable to agree in good faith to refinance the Note as described
in this Section 4.4(a), then the Note shall remain in full force and effect in
accordance with its terms. During the term of the Note and any Refinance Note,
Beacon will provide Seller with monthly financial statements related to the
Business and to Beacon and shall promptly deliver any additional information
related to the Business and Beacon reasonably requested by Seller, and appoint
to its Board of Directors a member of Simula, Inc. executive management.
(c) In connection with the letter delivered to Seller pursuant
to Section 6.10, Beacon will use its best efforts to complete a private or
public offering of debt or equity securities within one (1) year after Closing
and will apply the proceeds to the repayment of any indebtedness to Seller
and/or Simula, Inc.
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SECTION 5
CONDITIONS TO CLOSING BY PURCHASER
Purchaser shall not be obligated to consummate the transactions
contemplated hereby unless each of the following conditions is fulfilled or
performed (unless waived by Purchaser) prior to or at the Closing.
5.1 COMPLIANCE AND UPDATING. All of the representations and warranties
of Seller contained in Section 2 of this Agreement shall be true as of the time
of the Closing, and Seller shall have performed or complied with all covenants
and conditions required by this Agreement to be performed or complied with by
Seller prior to or at the Closing. All Schedules hereto shall be updated as of
the date of Closing.
5.2 LICENSES. All necessary licenses, certifications, permits and
approvals from federal, state and local governmental units, including, but not
limited to the Licenses on Schedule 2.7, shall have been issued to Purchaser in
form and substance satisfactory to Purchaser, and Purchaser shall have received
confirmation in form and substance satisfactory to it that Purchaser is, and
will remain after consummation of the transactions contemplated hereby, approved
on such terms as are generally then existing in the industry.
5.3 NO ACTION. No action or proceeding shall have been brought, or to
the knowledge of Seller be threatened, before any court or administrative agency
to prevent the consummation of, or to seek damages in a material amount by
reason of the transactions contemplated hereby, and no governmental authority
shall have asserted that these transactions constitute a violation of law or
give rise to liability on the part of Purchaser.
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5.4 PATENT ASSIGNMENTS. The Seller shall have delivered patent
assignments to Purchaser in form and substance satisfactory to Purchaser and its
counsel.
5.5 LIEN SEARCH REPORT. Seller shall have delivered at Closing a lien
search report by a recognized reporting service with respect to UCC liens,
judgment liens, tax liens, and other mortgages and encumbrances of record as
filed in the pertinent city, county or State of Illinois, as the case may be,
representing all the liens of record to which Seller's Assets are subject, which
such report shall be dated no more than sixty (60) days preceding the date of
Closing. Seller shall, within sixty (60) days after Closing and the application
of the Purchase Price proceeds to the payment of secured creditors, deliver in
connection therewith lien releases with respect to all of the liens so
evidenced.
5.6 SELLER'S RESOLUTION. Seller shall deliver at Closing a copy
certified by the Corporate Secretary of Seller evidencing the resolution of the
Board of Directors authorizing the sale of the business and the consummation of
this Agreement, the Assignment and Assumption and other documents of transfer,
and further evidencing the due approval by all of the stockholders of the Seller
with respect to the sale of all or substantially all of the assets of the
Seller, consistent with the requirements of Arizona law.
5.7 ASSUMPTION OF COLLECTIVE BARGAINING AGREEMENT. Purchaser shall have
assumed the collective bargaining agreement with the United Electrical Workers
with respect to the employment of personnel at the Seller's Elk Grove Village,
Illinois, facility, which collective bargaining agreement shall be on terms and
conditions satisfactory in the sole judgment of the Purchaser.
5.8 LEASE. Purchaser shall have assumed from Seller, and Seller shall
have assigned to
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Purchaser, Seller's rights and obligations with respect to the administrative
and manufacturing facility premises located in Elk Grove Village, Illinois under
the Lease attached hereto as Exhibit "G," with the written consent of Lessor (as
defined in the Lease); provided that if Purchaser and Seller are unable to
obtain Lessor's consent to an assignment and assumption of the Lease prior to
the Closing, then Purchaser shall have entered into a sub-lease with Seller, on
terms and conditions as set forth in the Lease. Such sub-lease will include an
undertaking by Purchaser for post-closing assignment and assumption of the Lease
as provided in Section 4.3(b).
5.9 LEGAL MATTERS. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall have been approved by counsel to Purchaser, and such counsel
shall have been furnished with all such opinions, documents and instruments as
they shall have reasonably requested in connection with the transactions
contemplated herein.
5.10 OPINION OF COUNSEL. Purchaser shall have been furnished with the
opinion of counsel to Seller, dated the Closing date, to the effect that:
(a) Seller is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Arizona with full power and
authority to enter into and perform its obligations under this Agreement.
(b) All proceedings required to be taken on the part of the
Seller to authorize it to enter into, carry out and fully comply with the
provisions of this Agreement, the Assignment and Assumption, the Bill of Sale,
the Patent Assignments, and the Non-Competition Agreements, and to transfer and
deliver the Assets, have been duly, validly and properly taken. The execution,
delivery and
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performance of the foregoing agreements of Seller do not violate any provision
of the Articles of Incorporation or Bylaws or financing documents of Seller or
any other agreement or other instrument to which Seller or its stockholders are
a party or by which it or they may be bound, or the Assets may be subject.
(c) The Agreement, the Assignment and Assumption, the Patent
Assignments and the Bill of Sale are the valid and legally binding obligations
of Seller enforceable in accordance with their respective terms except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws relating to or affecting the rights and remedies
of creditors generally and by the general principles of equity.
(d) Except as to the matters described in Schedule 2.5, Seller
is not a party to any pending or, to the knowledge of such counsel, threatened
litigation, proceedings, claim or governmental investigation or audit which may
either (1) materially or adversely affect the Assets or impair the Purchaser's
right or ability to operate the Business in the manner presently conducted by
Seller, or (2) seek to prevent, restrain or interfere with the performance by
Seller of this Agreement.
(e) The Bill of Sale, Assignment and Assumption, Patent
Assignments, and other documents of transfer effectively convey and assign to
Purchaser good and marketable title to the Assets free and clear of liens and
encumbrances except as provided in the Agreement.
5.11 [INTENTIONALLY OMITTED]
5.12 NO COMPETE AGREEMENT. Seller shall have entered into and executed
a No Compete Agreement in the form attached hereto as Exhibit "I."
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5.13 EXECUTION OF SUB-LEASE AGREEMENT FOR MILWAUKEE FACILITY. Purchaser
and Seller shall have entered into a Sub-Lease Agreement for the Artcraft
Milwaukee facility in the form attached hereto as Exhibit "J-1."
5.14 SOFTWARE INSTALLATION CONSULTING AGREEMENT. Purchaser and Seller
shall have entered into a consulting agreement wherein Seller shall provide
reasonable consulting assistance to Purchaser in the installation of DataWorks'
MANFACT software in the form attached hereto as Exhibit "K."
5.15 DELIVERY OF DOCUMENTS; ACKNOWLEDGMENT OF RECEIPT. Seller shall
have delivered all documents referenced in the Schedules attached hereto.
Closing shall constitute conclusive evidence of Purchaser's receipt and
acknowledgment of such documents.
SECTION 6
CONDITIONS TO CLOSING BY SELLER
Seller shall not be obligated to consummate the transactions
contemplated hereby unless each of the following conditions is fulfilled or
performed (unless expressly waived in writing by Seller) prior to or at the
Closing:
6.1 COMPLIANCE. All of the representations and warranties made by
Purchaser contained in Article 3 of this Agreement shall be true as of the time
of Closing; Purchaser shall have performed and complied with all covenants and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing.
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6.2 CONSENT OF BANK. Bank One shall have agreed and consented to the
purchase and sale and other transactions contemplated by this Agreement within
ten (10) days of Closing pursuant to the Simula, Inc. Senior Credit Agreement
with Bank One.
6.3 NO ACTION. No action or proceeding shall have been brought or
threatened before any court or administrative agency to prevent the consummation
of, or to seek damages in a material amount by reason of, the transactions
contemplated hereby, and no governmental authority shall have asserted that
these transactions constitute a violation of law or give rise to liability on
the part of Seller.
6.4 [INTENTIONALLY OMITTED]
6.5 NEW COLLECTIVE BARGAINING AGREEMENT. Purchaser shall have concluded
the negotiation and assumption of the collective bargaining agreement, ratified
pursuant to the current requirements of the union, with the United Electrical
Workers with respect to the employment of bargaining unit employees at Seller's
Elk Grove Village, Illinois, facility and Seller shall be satisfied that the
collective bargaining agreement is no terms and conditions sufficient to
terminate continuing obligations of Seller with respect thereto.
6.6 LEASE. Purchaser shall have assumed from Seller, and Seller shall
have assigned to Purchaser, Seller's rights and obligations with respect to the
administrative and manufacturing facility premises located in Elk Grove Village,
Illinois under the Lease attached hereto as Exhibit "G," with the written
consent of Lessor (as defined in the Lease); provided that if Purchaser and
Seller are unable to obtain Lessor's consent to an assignment and assumption of
the Lease prior to the Closing, then Purchaser shall have entered into a
sub-lease with Seller, in the form set forth as Exhibit "J-2."
(a) To secure Purchaser's right to assume or sub-lease, on or
about July 15, 1999, Seller
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paid the landlord the sum of $96,000 representing a security deposit and prepaid
1999 and 2000 real estate taxes, which Purchaser shall reimburse to Seller on
the Closing Date.
6.7 BENEFIT PLANS. Purchaser shall have made arrangements acceptable to
Seller regarding the termination (without liability to Seller) of Seller's
employee benefit plans.
6.8 [INTENTIONALLY OMITTED]
6.9 INVESTMENT LETTER. Prior to Closing, Purchaser will deliver to
Seller a letter from a third party investor in form satisfactory to Seller
evidencing such investor's intent to invest at least Two Million Dollars
($2,000,000) equity in Beacon or Purchaser within sixty (60) days of Closing to
be applied as Purchaser's working capital.
6.10 UNDERWRITING LETTER. Prior to Closing, Purchaser will deliver to
Seller a letter from a third party investment banker confirming its intent to
underwrite a public offering of securities for Beacon, on customary terms and
conditions, to be completed within one (1) year of Closing.
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SECTION 7
INDEMNIFICATION
7.1 INDEMNIFICATION BY SELLER AND SIMULA. Seller and Simula shall,
jointly and severally, indemnify and hold harmless Purchaser and each officer,
director, employee or agent thereof, and their respective estates, successors,
and assigns, in respect of any and all claims, losses, damages, liabilities and
expenses except as disclosed in this Agreement and the Schedules hereto
(including, without limitation, settlement costs and any legal or other expenses
for investigating or defending any actions or threatened actions) reasonably
incurred by such indemnitees as a result of each and all of the following or any
claims or allegations with respect thereto ("Loss"):
(a) Any misrepresentation or breach of any warranty made by
Seller in this Agreement.
(b) The nonfulfillment or breach of any covenant, agreement or
obligation of Seller contained in this Agreement, the Assignment and Assumption,
or any of the other documents executed pursuant to this Agreement.
(c) Any contract, tort, employment or other claim based upon
an occurrence prior to the Closing attributable to the actions of Seller or the
conduct of Business by the Seller.
(d) Any litigation, the basis for which is conduct of the
Business by the Seller prior to the Closing.
(e) Any environmental claim with respect to Section 2.17.
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7.2 INDEMNIFICATION BY PURCHASER. Purchaser shall indemnify and hold
harmless Seller and each officer, director, employee or agent thereof, and their
respective estates, successors, and assigns, in respect of any and all claims,
losses, damages, liabilities and expenses (including, without limitation,
settlement costs and any legal or other expenses for investigating or defending
any actions or threatened actions) reasonably incurred by such indemnitees as a
result of each and all of the following or any claims or allegations with
respect thereto ("Loss"):
(a) Any misrepresentation or breach of any warranty made by
Purchaser in this Agreement.
(b) The nonfulfillment or breach of any covenant, agreement or
obligation of Purchaser contained in this Agreement, the Assignment and
Assumption, or any of the other documents executed pursuant to this Agreement.
(c) Any contract, tort or other claim based on an occurrence
after the Closing attributable to the actions of Purchaser or conduct of the
Business by Purchaser.
7.3 LIMITATIONS ON OBLIGATIONS TO INDEMNIFY.
(a) Except based upon fraud neither Seller nor Purchaser shall
have any obligation to indemnify the indemnitee in respect of any Loss or Losses
to the extent such Losses total less than One Hundred Thousand Dollars
($100,000).
(b) No party shall have any obligation to indemnify the other
party in respect of
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(i) Losses exceeding Ten Million Dollars ($10,000,000) less, in the event Seller
or Simula is the indemnifying party, the amount of any indebtedness then owing
from Purchaser to Seller, or (ii) Losses a claim for which has not been made
hereunder within three (3) years of the Closing Date.
(c) If any party to this Agreement is of the opinion that it
has a claim against another party for indemnification hereunder, it shall notify
said party of the facts and circumstances of such claim. Such notice shall
furnish sufficient information to enable the other party to evaluate reasonably
the facts or claims and Losses arising therefrom. The assertion of a claim shall
be made in good faith.
(d) Promptly after receipt by an indemnitee of any notice of
claim or commencement of any action, such party shall provide a copy of such
claim, process or other pleadings to the indemnifying party. Such indemnifying
party may request the right to defend, at its own expense and by its own
counsel, any such matter asserted. In any event, the indemnitee and the
indemnifying party and its counsel shall cooperate in the compromise of, or
defense against, any such asserted liability and both parties shall have the
right to participate in the defense. In the event that the indemnifying party
shall decline to participate in or assume the defense, the indemnitee must
supply the indemnifying party with a copy of the final court judgment or decree
showing liability. The indemnitee shall have the right to settle any claim
against it subject to the prior written approval of the indemnifying party.
7.4 DEFENSE OF ACTIONS. In connection with any claim giving rise to
indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the indemnifying
party, at its sole cost and expense, may, upon written notice to the indemnitee,
assume the defense of such claim or legal proceeding, to the extent that the
indemnifying party admits in writing its liability to the indemnitee with
respect to all material elements thereof. If the
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indemnifying party assumes the defense of any such claim or legal proceeding,
the obligations of the indemnifying party hereunder as to such claim or legal
proceeding shall be limited to taking all steps necessary in the defense or
settlement thereof and to holding the indemnitee harmless from and against any
losses, damages, expenses or liability caused by or arising out of any
settlement approved by the indemnifying party or any judgment in connection with
such claim or legal proceeding. Each indemnitee agrees that it will cooperate
with the indemnifying party in the defense of any such action, the defense of
which is assumed by the indemnifying party. Except with the consent of the
indemnitee, which consent will not be unreasonably withheld, the indemnifying
party shall not consent to the entry of any judgment arising from any such claim
or legal proceeding which, in each case, does not include as an unconditional
term thereof the delivering by the claimant or the plaintiff to the indemnitee
of a release from all liability in respect thereof, unless the indemnifying
party has actually paid to the indemnitee the full amount of such judgment or
settlement. If the indemnifying party does not assume the defense of any claim
or litigation, the indemnitee may defend against such claim or litigation in
such manner as it may deem appropriate, including, but not limited to, settling
such claim or litigation, after giving notice of the same to the indemnifying
party, on such terms as the indemnitee may deem appropriate. The indemnifying
party will promptly reimburse the indemnitee in accordance with the provisions
hereof for all damages, costs and expenses incurred by such indemnitee.
7.5 PAYMENT; OFFSET; ARBITRATION. All indemnification hereunder shall
be effected as provided below:
(a) With respect to matters for which an indemnitee has a
claim for indemnification, such indemnification and the payment therefore shall
be upon mutual agreement by the parties and paid by cash or on other terms in
the amount of the indemnification liability as mutually agreed by the parties;
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(b) With respect to any indemnification under this Section 7
not resolved pursuant to subparagraph (a) above, the parties shall submit the
dispute to binding arbitration. With respect to disputes that are not resolved
by the mutual agreement by the parties, each party shall name an arbitrator
within twenty (20) days after either party notifies the other in writing that
there is a dispute and the two arbitrators shall name a third arbitrator. If
either party fails to select an arbitrator within twenty (20) days as required
herein or if the two arbitrators fail to select a third arbitrator within twenty
(20) days as required herein, then the presiding judge of the Maricopa County
Arizona Superior Court shall appoint such arbitrator or arbitrators. The
arbitrators shall render a decision within sixty (60) days after their
appointment and shall conduct all proceedings pursuant to Arizona Revised
Statues, Section 12-1501 through Section 12-1517 and the rules of the American
Arbitration Association governing commercial transactions then existing, to the
extent that such rules are not inconsistent with statues and this Agreement.
Judgment upon the reward rendered under arbitration may be entered in any court
having jurisdiction. The cost of the arbitration procedure shall be borne by the
losing party or if the decision is not clearly in favor or one party or the
other then the costs shall be borne as determined by such arbitration
proceeding. If any proceeding or action shall be brought to recover any amount
under this provision the prevailing party shall be entitled to recover from the
other party as part of the prevailing party's costs, reasonable attorney's fees,
the amount of which shall be fixed by the arbitrators. The provisions for
binding arbitration shall pertain solely to matters of indemnification under
Section 7, and shall not pertain to the resolution of legal disputes among the
parties generally.
7.6 TALGO LITIGATION INDEMNIFICATION. Notwithstanding the limitation to
indemnification provided under Section 7.3(a), Seller shall indemnify and hold
harmless Purchaser from any and all claims, losses, damages, liabilities and
expenses (including without limitation, settlement costs and any legal or other
expenses for investigating or defending any actions or threatened actions)
arising out of
-34-
<PAGE> 35
Seller's dispute with Talgo, Inc. described on Schedule 2.5 and Schedule 2.19
(the "Talgo Dispute"). Seller shall, at its own cost and expense, defend against
any claim or counterclaim brought by Talgo, Inc. relating to the Talgo Dispute.
Both Seller and Purchaser shall reasonably agree to any settlement with Talgo,
Inc. related to the Talgo Dispute. In the event Purchaser has not recovered the
full amount of the trade account balance payable from Talgo, Inc. related to the
Talgo Dispute by the maturity date as defined in the Note or a Refinancing Note,
as the case may be, the principal amount of the Note or Refinancing Note if it
has a later maturity, shall be reduced by the amount of such non-collection.
SECTION 8
TERMINATION
8.1 TERMINATION OF AGREEMENT. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing Date:
(a) By mutual written consent of Purchaser and Seller;
(b) By any party if it reasonably determines that the purchase of the
Assets has become impractical by reason of the institution by state, local or
federal governmental authorities, or by any other person, or entity of any
material litigation, arbitration, grievance or other proceedings relating to
this transaction against any of the parties, and notifies the other parties in
writing of such determination;
(c) By Seller for any reason on or after August 31, 1999; or
(d) By Seller, at its election, if Bank One has not agreed and
consented to the purchase
-35-
<PAGE> 36
and sale and other transactions contemplated by this Agreement within ten (10)
days of Closing. If Seller elects to so terminate this Agreement, the Agreement
shall be terminated and rescinded, the Business and Assets returned to the
possession and control of Seller, all transactions effected hereunder shall be
reversed, and the respective rights and obligations of all parties hereto and
Simula, Inc. shall be restored to pre-Closing status, all without any further
obligations to or among any parties hereunder.
SECTION 9
MISCELLANEOUS
9.1 UPDATING SCHEDULES. The Seller agrees to update the Schedules
through the Closing.
9.2 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given, if
delivered or mailed, first class postage prepaid, to the parties at their
respective addresses reflected on Schedule 9.3 hereto.
9.3 EXPENSES. Except for liabilities assumed by Purchaser in the
Assignment and Assumption, Purchaser and Seller shall each pay their own costs
and expenses (including, without limitation, the fees and expenses of their
counsel, auditors and accountants and any finders' fees) incidental to the
preparation and carrying out of this Agreement and the transactions contemplated
hereby.
9.4 FINDERS' FEES. Each of the parties represents and warrants to the
other that, to the extent it has engaged any broker, finder or other person who
is entitled to a brokerage or other fee or commission in respect of the
execution of this Agreement and the consummation of the transactions
contemplated hereby, such fee is the sole responsibility of such party.
Purchaser shall indemnify and hold Seller harmless against and in respect of any
and all claims, liabilities and/or expenses which may be
-36-
<PAGE> 37
asserted against Seller by any such broker or other person on the basis of any
arrangement or agreement made or alleged to have been made by Purchaser, its
agents or employees; and Seller shall indemnify and hold Purchaser harmless in
respect of any and all claims, liabilities and/or expenses which may be asserted
against Purchaser by any such broker or other person on the basis of any
arrangement or agreement made or alleged to have been made by Seller, its agents
or employees.
9.5 INTEGRATION AND AMENDMENT. This Agreement supersedes any and all
previous agreements between the parties with respect to the subject matter
herein and may not be amended other than by a written instrument executed by
Purchaser and Seller.
9.6 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.
9.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
9.8 PARTIES IN INTEREST. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns.
9.9 ASSIGNMENT. No party hereto shall assign this Agreement without
first obtaining the written consent of the other parties.
9.10 LANGUAGE CONSTRUCTION. The language in all parts of this Agreement
shall be
-37-
<PAGE> 38
construed, in all cases, according to its fair meaning, and not for or against
any party hereto. The parties acknowledge that each party and its counsel have
reviewed and revised this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement.
9.11 GOVERNING LAW; VENUE. This Agreement and any interpretation hereof
and the resolution of any dispute hereunder shall be governed by the laws of the
State of Arizona, and any action to enforce any provision of this Agreement or
to obtain any remedy with respect hereto may be brought in the Superior Court,
Maricopa County, Arizona, and for this purpose each party hereto hereby
expressly and irrevocably consents to the jurisdiction of said Court.
-38-
<PAGE> 39
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the date first set forth above.
SIMULA, INC.
By /s/ Brad Forst
-----------------
Its Executive Vice President
------------------------
COACH AND CAR EQUIPMENT CORPORATION
By /s/ Inam Khan
----------------
Its President
---------
COACH AND CAR ACQUISITION CORP.
By /s/ Scott Miller
----------------
Its President
---------
BEACON INDUSTRIES, INC.
By /s/ Scott Miller
----------------
Its President
---------
-39-
<PAGE> 40
SCHEDULE 1.1(a)
TANGIBLE PERSONAL PROPERTY
Document Number Document Description
27 CCEC Fixed Asset List Summary (as of 12/31/98)
27-A CCEC Fixed Asset List Summary (as of 6/1/99)
28 Office Furniture & Equipment
29 Computer Equipment
30 Machinery & Equipment (as of 12/31/98)
30-A Machinery & Equipment (as of 6/1/99)
31 Vehicles
32 Leasehold Improvements
33 Tooling at Vendors
34 Production Dies & Fixtures
110-A Artcraft Fixed Asset List (as of 6/1/99)
<PAGE> 41
SCHEDULE 1.1(c)-A
REAL PROPERTY LEASES
Document Number Document Description
21 Oakbrook Terrace Apartment Lease Agreement with
Royce Renaissance Village
22 Elk Grove Village Building Lease Agreement with
Edward Buker, Trustee Under Trust Agreement
22-A Amendment to Elk Grove Village Building Lease
Agreement
23 New York Building Lease Agreement with Northeastern
Industrial Park, Inc.
<PAGE> 42
SCHEDULE 1.1(c)-B
PERSONAL PROPERTY LEASES
Document Number Document Description
5 CCEC Equipment Lease List
6 1997 Ford Taurus Installment Contract with Larry Roesch Ford
7 Sharp Copy Machine Lease Agreement with CDP, Inc.
8 Mazak Vertical Machining Center Lease Agreement with M&I First
National Leasing Corp.
9 Piranha/Allsteel Hydro-Mechanical Press Brake Lease Agreement
with M&I
10 Mori Seiki Horizontal Machining Center S/N 317 with Yamazen,
Inc.
11 Mori Seiki Horizontal Machining Center S/N 299 with Yamazen,
Inc.
12 Minuteman Model 320 Scrubber Lease Agreement with M&I
13 Modular ICS Telephone System Lease Agreement with M&I
14 Mazak Vertical Machining Center Lease Agreement with Norwest
Equipment Finance
15 Lease for 2 Mazak Vertical Machining Centers and three Memory
Boards with Norwest
16 Lease for New Johnford Vertical Machining Center and Hass
Drill and Tap Center with Norwest
17 Brown Boggs 110-Ton Punch Press Lease Agreement with M&I
19 1998 Freightliner Truck Lease and Service Agreement with
Rollins Leasing Corp.
20 Postage Meter Lease Agreement with Neopost Leasing
105 Master Software/Equipment Lease Agreement for SolidWorks
Power-Pak Plus Bundle with LPI Software Funding Group, Inc.
<PAGE> 43
SCHEDULE 1.1(d)
SALES CONTRACTS
Document Number Document Description
41 Siemens/Tri-Met Job Number 242A
42 Talgo/Amtrak Job Number 346
43 JPB/Nippon Sharyo Job Number 347
44 Northern Virginia/Kawasaki Job Number 348
45 Siemens/LACMTA Job Number 620
46 Kawasaki/LIRR Job Numbers 992 and A992
47 Kawasaki/LIRR Spares Agreement
48 Amtrak Lounge Cafe Job Number 5561
49 Breda/MBTA Job Number 4331
50 GDLS Job Numbers 5470-5477
51 DART/Artcraft/Kinkisharyo Job Number 5384
52 Artcraft/CTA/TTA Job Numbers 5627-5630
53 DART/Option Job Number 5716
90 Purchase Order Number XESQ46625 with Caterpillar, Inc.
91 Open Shipping Backlog Report as of 1/26/99
91-A Open Shipping Backlog Report as of Closing
113 Purchaser Order Number 2109052 with Bombardier, Inc.
114 Purchase Order Number D2AC-1 with Kinkisharyo (USA), Inc.
115 Purchase Order Number 266098 with TTA for the CTA 2600-97
Program
116 Purchase Order Number 30914 with NICTD
117 Purchase Order Number VB006153 REV with Kawasaki
118 Miscellaneous Customer Purchase Contracts
119 Backlog - Open Purchase Orders
<PAGE> 44
SCHEDULE 1.1(f)
ACCOUNTS RECEIVABLE, PREPAYMENTS, DEPOSITS
BONDS AND REFUNDS AND ALL SECURITIES
ACCOUNTS RECEIVABLE
Document Number Document Description
24 Detailed, Aged Accounts Receivable as of 12/31/98
106 Detailed, Aged Accounts Receivable as of 12/31/98
24-A Detailed, Aged Accounts Receivable at Closing
24-B Detailed Other Accounts Receivable at Closing
DEPOSITS AND PREPAYMENTS BY CCEC
Document Number Document Description
200-A Deposits as of 6/18/99
BONDS, REFUNDS AND SECURITIES
None.
<PAGE> 45
SCHEDULE 1.1(h)
INTANGIBLES
See Schedule 2.21-A.
<PAGE> 46
SCHEDULE 1.1(j)
EXCLUDED ASSETS
All assets associated with the Artcraft Industries Corp. (Milwaukee)
airline soft goods business have been eliminated from all schedules and
documents as updated and/or supplemented.
<PAGE> 47
SCHEDULE 2.3
DEFAULTS WHICH COULD RESULT IN LIENS UPON THE ASSETS; CONSENTS
DEFAULTS
See Schedule 2.5.
CONSENTS
Seller has requested necessary assignment consents under the equipment
leases and production contracts. Such consents have not been received as of
Closing.
<PAGE> 48
SCHEDULE 2.5
LITIGATION
PENDING
1) KUKLA V. MARKS, ILLINOIS DOCKET NO. 98 L 12775
Mr. Kukla was injured in an automobile accident that Mr. Kukla claims
involved an employee of Seller. Seller has tendered the defense of this suit to
its insurance company. The liability of Seller, if any, will be assumed by
Seller and its insurance carrier.
2) MITCHELL V. COACH AND CAR EQUIPMENT CORPORATION, ILLINOIS DOCKET NO. 98 L
4952
Mr. Mitchell was injured while operating a vehicle incorporating a
product of Seller's. Seller has tendered the defense of this suit to its
insurance company. The liability of Seller, if any, will be assumed by Seller
and its insurance carrier.
STAYED
1) TALGO, INC. V. COACH AND CAR EQUIPMENT CORPORATION, WASHINGTON DOCKET NO.
99-2-03748-1 SEA
Seller entered into a new seat design and manufacturing contract with
Talgo, Inc. dated April 7, 1998. Seller's performance under the contract was
challenged by Talgo on the grounds of late delivery and product conformance to
specification. Talgo instituted litigation in Washington State Superior Court.
The litigation was stayed based on a negotiated Settlement Agreement dated March
16, 1999. See document numbers 205 and 206. Under the Settlement Agreement,
Seller is required to complete agreed upon repairs and final shipment and Talgo
is required to remit the balance of $461,206 owing on the contract. Seller has
substantially performed under the Settlement Agreement. To date, Talgo has paid
approximately $140,000 on the remaining balance under the Settlement Agreement.
Seller intends to reopen the litigation and counterclaim against Talgo for
payment of the balance.
2) BUKER V. COACH AND CAR EQUIPMENT CORPORATION, ILLINOIS DOCKET NO. 99 M3
1623
Seller's landlord for the Elk Grove, Illinois premises instituted legal
action against Seller for delinquent rent and possession of the premises. Seller
and its landlord subsequently entered into a Lease Amendment dated June 15,
1999. See document 22-A. Under the terms of the Lease Amendment, the litigation
will be dismissed on or before July 31, 1999.
THREATENED
LEO AVILES
Mr. Aviles was discharged from employment with Seller as a result of
reduction in workforce. Mr. Aviles has claimed retaliatory discharge. Seller
intends to vigorously defend this claim as Seller believes Mr. Aviles' claim has
no merit.
Purchaser is not assuming, and Seller shall retain, all liability
resulting from litigation relating to Seller's operation of the Business.
<PAGE> 49
SCHEDULE 2.7
NECESSARY MATERIAL LICENSES
See Schedule 2.15.
<PAGE> 50
SCHEDULE 2.8
PROPERTY ENCUMBERED
Lien of Bank One Arizona under Loan Agreement dated February 12, 1999
to be released at or after Closing.
<PAGE> 51
SCHEDULE 2.8.1
INVENTORIES, OPEN SHOP ORDERS, WIP
Document Number Document Description
93-A Inventory Reconciliation Report as of 6/23/99
93-B Inventory as of Closing
<PAGE> 52
SCHEDULE 2.9
COMMITMENTS
NOTES, LOANS, CREDIT AGREEMENTS, MORTGAGES, INDENTURES AND SECURITY AGREEMENTS
Document Number Document Description
6 '97 Ford Taurus Installment Contract with Larry
Roesch Ford
WRITTEN EMPLOYMENT AND CONSULTING AGREEMENTS
Document Number Document Description
62 Truck Seat Product Development/Marketing Agreement
with Duane Gaza
WRITTEN SALES AGENCY, REPRESENTATIVE, BROKER OR DISTRIBUTORSHIP AGREEMENTS
None.
WRITTEN AGREEMENTS, ORDERS OR COMMITMENTS FOR PURCHASE OF RAW MATERIALS
Document Number Document Description
92-A Purchase Order Commitment Report as of 6/23/99
92-B Purchase Order Commitment Report as of Closing
201 Agreement with Meier Metal dated 3/5/98 for the
supply of 2024 aluminum
WRITTEN AGREEMENTS FOR PURCHASE OF SERVICES
Document Number Document Description
18 PTC Software Annual Maintenance Agreement with
Parametric Technology Corporation
<PAGE> 53
SCHEDULE 2.10
CONTRACTS AND AGREEMENTS TO SELL
See Schedule 1.1(d).
<PAGE> 54
SCHEDULE 2.10(b)
CONTRACTS REQUIRING APPROVAL OR CONSENTS
Seller has or will request necessary assignment consents under the
equipment leases and production contracts. Such consents have not been received
as of Closing.
<PAGE> 55
SCHEDULE 2.11
FINANCIAL STATEMENTS
Document Number Document Description
39 CCEC percentage of completion basis accounting for
year ended 12/31/96
111 Artcraft percentage of completion basis accounting
for year ended 12/31/96
40 CCEC percentage of completion basis accounting for
year ended 12/31/97
112 Artcraft percentage of completion basis accounting
for year ended 12/31/97
40-A CCEC and Artcraft combined financial statements
prepared under percentage of completion basis
accounting throughout the year ended 12/31/98 and
adjusted to shipment basis accounting at 12/31/98
40-B CCEC and Artcraft combined shipment basis
accounting for quarter ended 3/31/99
40-C Financial Statements for the quarter ended 6/30/99
<PAGE> 56
SCHEDULE 2.12
OTHER LIABILITIES
None.
<PAGE> 57
SCHEDULE 2.13
ACCOUNTS RECEIVABLE
Document Number Document Description
24 CCEC Detailed, Aged Accounts Receivable as of
12/31/98
106 Artcraft Detailed, Aged Accounts Receivable as of
12/31/98
24-A Detailed, Aged Accounts Receivable as of Closing
<PAGE> 58
SCHEDULE 2.14
ACCOUNTS PAYABLE
Document Number Document Description
25 CCEC Detailed, Aged Accounts Payable as of 12/31/98
108 Artcraft Detailed, Aged Accounts Payable as of
12/31/98
25-A Detailed, Aged Accounts Payable as of Closing
<PAGE> 59
SCHEDULE 2.15
CONSENT/APPROVALS REQUIRED BY GOVERNMENTAL AUTHORITIES
Document Number Document Description
81 Illinois EPA Air Pollution Equipment Operating
Permit
<PAGE> 60
SCHEDULE 2.16-A
UE BARGAINING AGREEMENT, UNION COMPLAINTS, GRIEVANCES, AND ARBITRATIONS
BARGAINING AGREEMENT
Document Number Document Description
67 Collective Bargaining Agreement with United
Electrical, Radio, and Machine Workers of America
67-A Addition of Sewer and Upholstery Assembler Jobs
to Collective Bargaining Agreement
UNION COMPLAINTS AND GRIEVANCES
<TABLE>
<CAPTION>
DATE DESCRIPTION DISPOSITION
<S> <C> <C>
1/22/99 Employee bumping rights issue Dropped by Union
2/5/99 (2) Complaint that management engaged in production Dropped by Union
5/19/99 Issue regarding wages for cutters Pending
6/14/99 Complaint that written warning was too severe for a Pending
particular infraction
</TABLE>
ARBITRATIONS
None.
<PAGE> 61
SCHEDULE 2.16-B
PERSONNEL RELATED DOCUMENTS
WRITTEN PERSONNEL AGREEMENTS
None.
POLICIES, PROCEDURES, AND EMPLOYMENT MANUALS
Document Number Document Description
87 CCEC Employee Handbook
88 Affirmative Action Plan
<PAGE> 62
SCHEDULE 2.16-C
GROUP INSURANCE, HOSPITALIZATION, AND OTHER
EMPLOYEE INSURANCE BENEFIT PLANS
See Schedule 2.16(d).
<PAGE> 63
SCHEDULE 2.16(a)
OBLIGATIONS RELATED TO WORKFORCE
None.
<PAGE> 64
SCHEDULE 2.16(b)
EMPLOYEE ANNUAL COMPENSATION AND UNION/NON-UNION DESIGNATION
Document Number Document Description
79 Employees and Compensation List (Annualized)
79-A Employees and Compensation List as of 6/22/99
<PAGE> 65
SCHEDULE 2.16(c)
ACCRUED VACATION AND SICK DAY ALLOWANCES DUE TO EMPLOYEES
Document Number Document Description
202 Non-salaried Accrued Vacation as of 6/22/99
203 Salaried Accrued Vacation as of 6/23/99
<PAGE> 66
SCHEDULE 2.16(d)
EMPLOYEE BENEFIT PLANS
Document Number Document Description
84 Benefits Summary for Office Employees as of
1/19/99
84-A Benefits Summary for Office Employees as of
6/1/99
85 Benefits Summary for Plant Employees as of
1/18/99
85-A Benefits Summary for Plant Employees as of
6/1/99
Simula self-insures its medical plan and purchases excess liability
reinsurance protection.
<PAGE> 67
SCHEDULE 2.17
MANIFESTS RESPECTING STORAGE, TRANSPORTATION, AND
DISPOSAL OF HAZARDOUS MATERIALS
Document Number Document Description
204 Hazardous Materials Related Manifests
<PAGE> 68
SCHEDULE 2.19
NOTICES OF PRODUCT/SERVICE WARRANTY OR LIABILITY CLAIMS
No material warranty claims are outstanding.
See Schedule 2.5, Talgo, Inc. v. Coach and Car Equipment Corporation.
<PAGE> 69
SCHEDULE 2.20
LIST OF BANKS UTILIZED BY THE COMPANY
1) American National Bank
120 South La Salle Street
Chicago, Illinois 60603
Attn: Chris Newton
Account #: 17983797
17983800
18039685
18039448
5330051266
2) Trustco Bank
192 Erie Boulevard
Schenectady, New York 12305
Attn: Philip Holder
Account #: 30-236-984
3) Fleet Bank
P.O. Box 150456
Hartford, Connecticut 06115
Account #: 009-934-1154
Seller's account at Fleet Bank is a facilitating account to effect the
payment of health insurance claims paid as part of Seller's self-insurance
health plan.
<PAGE> 70
SCHEDULE 2.21-A
LISTING OF PATENTS & OTHER INTELLECTUAL PROPERTY
PATENTS ISSUED:
1. Walkover Seat with Inertial Latch
Patent No. 5,149,171
Issued 9/22/92
2. Seat with Adjustable Back
Patent No. 4,372,611
Issued 2/8/83
3. Seat with Back Cushion Attachment
Patent No. 4,365,840
Issued 12/28/82
4. Wheelchair and Occupant Restraining Apparatus
Patent No. 4,369,995
Issued 1/25/83
PROVISIONAL PATENT APPLICATIONS ON FILE:
1. CCE-103 Tray Table for Passenger Seat filed: 3/4/99
2. CCE-104 Self Stowing Footrest for Passenger Seat filed: 3/4/99
3. CCE-105 Energy Absorbing Passenger Seat filed: 3/17/99
PROVISIONAL PATENT APPLICATIONS BEING PREPARED:
CCE-102 Cradle Recline Passenger Seat
TRADEMARK ISSUED:
2. "Safe Stop"
Registration No.1,759,142
Issued: 3/16/93
TRADEMARK APPLICATIONS ON FILE:
1. CCE-101 "Comfort Cruiser" filed: 12/16/98
<PAGE> 71
SCHEDULE 2.21-B
PATENT & OTHER INTELLECTUAL PROPERTY DISPUTES
Seller is the owner of U.S. Patent No. 5,149,171 entitled Walkover Seat
with Inertial Latch which is incorporated in Seller's "walk-over" seat product.
Seller has challenged the use by a competitor, Admiral Seating, Inc., of a
similar mechanism. Periodically since 1992, Seller has asserted infringement by
Admiral; Admiral has denied infringing Seller's patent. No litigation has been
instituted and none is currently contemplated.
<PAGE> 72
SCHEDULE 2.22
CERTAIN TRANSACTIONS WITH DIRECTORS, OFFICERS AND EMPLOYEES OF SELLER
Seller currently provides housing for Inam Khan at the Oakbrook Terrace
Apartment Building. See Schedule 1.1(c)-A, document number 21.
<PAGE> 73
SCHEDULE 9.3
ADDRESSES
SELLER:
Coach & Car Equipment Corporation
1951 Arthur Avenue
Elk Grove Village, Illinois 60007
Attn: Inam Khan
With copy to:
Simula, Inc.
2700 North Central Avenue
Suite 1000
Phoenix, Arizona 85004
Attn: Brad Forst
BUYER:
Coach and Car Acquisition Corp.
730 West 22nd Street
Tempe, Arizona 85282
Attn: Michael Feinstein
<PAGE> 1
EXHIBIT 2.1b
NOTE REFINANCING AGREEMENT
THIS NOTE REFINANCING AGREEMENT ("Agreement") is executed as of October
21, 1999, by and among SIMULA, INC., an Arizona corporation ("Simula"), and a
wholly-owned subsidiary of Simula, CCEC CAPITAL CORP., an Arizona corporation,
f/k/a Coach and Car Equipment Corporation ("Seller"), and COACH AND CAR
EQUIPMENT CORP., a Nevada corporation, f/k/a Coach and Car Acquisition Corp.
("Purchaser"), and Purchaser's affiliated corporation, BEACON INDUSTRIES, INC.,
a Nevada corporation ("Beacon").
PRELIMINARY STATEMENT
I. The parties hereto entered into an Amended and Restated Asset
Purchase Agreement dated August 31, 1999 (the "Purchase Agreement").
II. Pursuant to Section 1.2 of the Purchase Agreement, Seller executed
a promissory note in the principal amount of Nine Million Nine Hundred Ninety
Six Thousand Dollars ($9,996,000) in favor of Purchaser maturing on October 15,
1999 ("Note").
III. Purchaser expects to obtain financing for its working capital
requirements and the parties have agreed to refinance the Note in accordance
with the provisions of this Agreement.
IV. Seller, Purchaser and Beacon have agreed to other terms and
conditions and to enter into certain agreements set forth hereafter.
-1-
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties herein set forth, it is agreed by the parties as
follows:
SECTION 1
REFINANCING NOTES
1.1 RECITAL OF REFINANCING COVENANTS. Purchaser anticipates shortly
obtaining third party financing to fund operations of the Business. In
anticipation of this financing, the parties hereto desire to amend the terms of
Purchaser's indebtedness to Seller under the Purchase Agreement as set forth in
this Agreement.
1.2 CANCELLATION OF NOTE; EXECUTION OF REFINANCING NOTES. Upon the
execution of this Agreement at Closing, the Note shall be cancelled and of no
effect and shall be replaced by the following: (i) Purchaser's promissory note
in the amount of One Million Nine Hundred Ninety Six Thousand Dollars
($1,996,000) with an annual interest rate of 8-1/2% payable in quarterly
interest installments on the terms and conditions as set forth in the form of
Exhibit A-1 attached hereto (the "Installment Note"); and (ii) Purchaser's
promissory note in the amount of Eight Million One Hundred Eighteen Thousand
Eight Dollars ($8,118,008) with an annual interest rate of 8-1/2% payable on the
terms and conditions as set forth in the form of Exhibit A-2 attached hereto
(the "Term Note," together with the Installment Note, the "Refinancing Notes").
The principal amount of the Term Note reflects a One Hundred Eighteen Thousand
Eight Dollar ($118,008) addition for accrued interest through October 20, 1999
under the Note that is cancelled and hereby refinanced. The Refinancing Notes
will mature on October 15, 2004. If Purchaser or Beacon directly or through
affiliates completes a public offering of securities before the maturity of the
Notes, subject only to any limitations set out in the Refinancing Notes, the
proceeds of such offering shall be first applied to repayment of the Refinancing
Notes thereby accelerating the maturity date. The Refinancing Notes shall be
secured by a Security Agreement on the Assets in the form of Exhibit B-1, by
pledges by (i) Beacon's controlling shareholder
-2-
<PAGE> 3
of the common stock held in Beacon, and (ii) Purchaser's controlling
shareholders of the common stock held in Purchaser, by such shareholders
evidence by a Security Agreement in the form of Exhibit B-2, and by a guarantee
of Beacon in the form of Exhibit B-3.
1.3 CLOSING. The refinancing and other activities provided for herein
shall take place at Purchaser's counsel's office in Phoenix, Arizona at 3:00
p.m. Pacific Standard Time on October 21st, 1999 (the "Closing"). At the
Closing:
(a) Purchaser shall deliver the Refinancing Notes to Seller;
(b) the parties shall execute and deliver all agreements and documents
contemplated in this Agreement to the appropriate parties;
(c) Seller will deliver an executed lien release on the Collateral, as
defined in the Security Agreement attached as Exhibit B-1, and on the common
stock of Purchaser and Beacon;
(d) Purchaser will execute and deliver to Seller a new lien on the
Collateral and Scott Miller will execute and deliver to Seller a new lien on
certain shares of the common stock of Purchaser and Beacon, in favor of Seller;
and
(e) Seller will execute and deliver the cancelled Note to Purchaser
within two (2) days of the Closing.
SECTION 2
NON COMPETITION AGREEMENT
2.1 AIRLINE RELATED MATERIALS. Purchaser covenants that it shall
cooperate with Seller and Seller's affiliated company under common control,
Artcraft Industries, Inc. ("Artcraft"), in identifying all materials related in
its possession to the commercial airline seating business, including without
limitation certifications, patterns, and customer information, and delivering
such materials to Artcraft's Atlanta facility, at Artcraft's sole expense, by
November 15, 1999.
-3-
<PAGE> 4
2.2 AIRLINE SEATING FABRIC. Purchaser covenants that it will provide
Artcraft with an accounting of all airline seating related fabric in its
possession by November 15, 1999. Purchaser agrees to enter into a sales or
consignment agreement with Artcraft with respect to such fabric, directly or on
consignment, pursuant to which Artcraft can purchase, in whole or in part, from
time to time, fabric at one hundred five percent (105%) of its value as recorded
on Purchaser's books at Closing. Artcraft shall be responsible for all freight
expenses with respect to such sales or consignments.
2.3 NON-COMPETITION AGREEMENT. Purchaser and Beacon shall,
contemporaneously with the execution of this Agreement, execute the
Non-Competition Agreement in the form of Exhibit C.
SECTION 3
CONDITION TO CLOSING
Purchaser and Seller shall use best efforts to negotiate a retention
bonus funding agreement and other agreements relating to Simula's payment of
certain retention obligations to former employees of Seller. Purchaser
acknowledges receipt from Seller of $400,000 to fund such retention obligations
of Seller and Simula and agrees to refund such amount to Seller in the event
Purchaser and Seller are unable to negotiate a retention bonus funding
agreement.
SECTION 4
ACKNOWLEDGMENT OF MILWAUKEE LEASE
AND CONSULTING OBLIGATIONS
Artcraft's obligations to the Gardner Group, Ltd. for Forty Four
Thousand Twenty Dollars ($44,020) for rent of Artcraft's Milwaukee facility for
the months of July and August and to Michael Gardner for consulting services in
the amount of Seven Thousand Five Hundred Dollars ($7,500) were included in the
trade accounts payable schedule given to Purchaser at the closing of the
Purchase Agreement. Accordingly, Purchaser and Beacon acknowledge and clarify
their financial responsibility for the past-due rent for the months of July and
August and for all of Mr. Gardner's consulting fees, as
-4-
<PAGE> 5
described in Mr. Skalmoski's letter of August 31, 1999 attached as Exhibit E.
Seller shall retain the obligation for rent payments for the month of September,
1999 through the termination of the lease.
SECTION 5
COVENANTS
5.1 PRESS RELEASES. The parties will cooperate in issuing any press
releases or otherwise making public statements with respect to the transactions
contemplated by this Agreement or by the Purchase Agreement as of the Closing.
5.2 TRANSITIONAL SERVICES. Seller will discontinue providing
transitional services to Purchaser, as described in Section 4.3(c) of the
Purchase Agreement, as of the Closing. Purchaser shall thereafter provide
services of a nature similar to those provided by Seller under Section 4.3(c) of
the Purchase Agreement to its employees. Purchaser shall remain liable for
expense reimbursements in accordance with Section 4.3(c) of the Purchase
Agreement for services provided thereunder by Seller.
5.3 FINANCING COVENANTS.
(a) Purchaser will obtain, within thirty (30) days of Closing,
financing from one or more lenders (the "Lender") to fund its operations and
capital requirements.
(b) Seller will agree, on reasonable and customary terms, to accept a
security interest subordinate to the Lender in the Assets purchased under the
Purchase Agreement.
(c) Purchaser will use its best efforts to accelerate the repayment of
its indebtedness under the Refinancing Notes to the maximum extent possible
under its lending arrangements with the Lender and will allow Seller to review
the terms of any proposed financing in order to propose additional refinancing
of the Refinancing Notes to achieve the foregoing.
5.4 BOARD OF DIRECTORS. Purchaser shall place a member of Simula's
senior management on its board of directors within ten (10) days of Closing,
and, in the event that Purchaser is merged into or becomes a subsidiary, parent,
or affiliated corporation under common control of Beacon, Beacon shall
-5-
<PAGE> 6
place a member of Simula's senior management on its board of directors within
ten (10) days of such merger or event giving rise to affiliated status.
5.5 TECHNOLOGY TRANSFER AND DEVELOPMENT AGREEMENT. Purchaser shall
negotiate in good faith to enter into a technology transfer and development
agreement with Simula Technologies, Inc., an affiliated corporation under common
control with Seller, on mutually agreeable terms and conditions.
SECTION 6
NO OTHER CHANGES
Except as specifically provided otherwise herein, this Agreement is
supplemental to, and not in lieu of, the terms and provisions of the Purchase
Agreement, and shall be interpreted consistently therewith. Other than those
changes or modifications expressly provided herein, no changes or modification
are made to the Purchase Agreement, including, without limitation, all exhibits,
agreements, documents, and covenants thereto relating. Nothing in this Agreement
shall be deemed to require the updating of any schedules to the Purchase
Agreement.
[SIGNATURES ON FOLLOWING PAGE]
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the date first set forth above. SIMULA, INC., an Arizona corporation
By /s/ Brad Forst
----------------------------------------------
Its Executive Vice President
------------------------------------
CCEC CAPITAL CORP., an Arizona corporation,
formerly known as Coach and Car Equipment
Corporation
By /s/ Brad Forst
----------------------------------------------
Its President
------------------------------------
COACH AND CAR EQUIPMENT
CORP., a Nevada
corporation, formerly known
as Coach and Car
Acquisition Corp.
By /s/ Michael Feinstein
----------------------------------------------
Its Vice President
------------------------------------
BEACON INDUSTRIES, INC., a Nevada corporation
By /s/ Scott E. Miller
----------------------------------------------
Its Chairman
------------------------------------
-7-
<PAGE> 1
EXHIBIT 2.1c
PROMISSORY NOTE
$1,996,000
October 21, 1999
1. Promise to Pay.
The undersigned, Coach and Car Equipment Corp. ("Maker") promises to
pay to the order of CCEC Capital Corp., in care of Simula, Inc, 2700 N. Central
Avenue, Phoenix, Arizona 85004, Attn: Scott Huson, or its successors ("Coach and
Car") the principal sum of One Million Nine Hundred Ninety Six Thousand Dollars
($1,996,000).
Coach and Car may transfer this Note, and Coach and Car or anyone who
takes this Note by transfer and who is entitled to receive payments under this
Note is called the "Noteholder."
2. Interest.
Interest will be charged on the unpaid principal until the full amount
is paid. Maker will pay interest at an annual rate of eight and one-half percent
(8-1/2%). Interest shall be calculated on the basis of a 360-day year and shall
be computed on the actual number of days elapsed.
3. Payments.
3.1 Maker will make an initial installment payment of accrued interest
on April 1, 2000. Thereafter, Maker will make equal quarterly installment
payments of accrued interest on the first day of each quarter commencing July 1,
1999. Maker will then make a final payment of principal and accrued interest on
the Maturity Date, as defined in Section 4.
3.2 All payments hereunder shall be in accordance with the amortization
schedule attached hereto as Attachment A.
3.3 Maker shall have the right to prepay this Note in full or in part
without penalty.
4. Maturity.
Maker's obligations under the Note shall become fully due and payable
on October 15, 2004 (the "Maturity Date"). In the event Maker directly or
through its Affiliates (hereafter defined) completes a private or public
offering of debt or equity securities before the Maturity Date, the proceeds of
such offering shall be first applied to repayment of the Note thereby
accelerating the Maturity Date, subject only to an Underwriting Limitation, as
defined below. The term "Underwriting Limitation" shall mean the following: (i)
any reasonable and customary
<PAGE> 2
indebtedness repayment limitation imposed on such proceeds by an underwriter
pursuant to an underwriting agreement; or (ii) in the event of a private
offering with no underwriter, an indebtedness repayment limitation imposed on
offering proceeds to which the Noteholder consents; provided however that the
consent of the Noteholder shall not be required on the first Two Million Dollars
($2,000,000) cumulative offering proceeds obtained in the aggregate by Maker and
its Affiliates after the date of this Note. In the event that the proceeds
applied against this Note from any offering of securities is not sufficient to
retire the Note, then the proceeds of any subsequent offering shall be first
applied to repayment of the Note subject to an Underwriting Limitation. Subject
to an Underwriting Limitation, by its terms, any such offering will designate as
part of the use of proceeds the repayment of indebtedness represented by this
Note, and such repayment shall have priority over other applications of the
proceeds. In the event of any offering, the proceeds of such offering to be
applied against the Note shall be so applied within ten (10) days of Closing and
the funding of the offering. As used herein, Affiliates shall mean any
corporation controlling Maker or under the control of Maker or any corporation
in which any shareholder of Maker owns twenty percent (20%) or more of the
outstanding common stock, including but not limited to Beacon Industries, Inc.
5. Note Charges.
If a law which applies to this Note and which sets maximum loan charges
is finally interpreted so that the interest or other charges collected or to be
collected in connection with this Note exceed the permitted limits, then: (i)
any such Note charges shall be reduced by the amount necessary to reduce the
charge to the permitted limit; and (ii) any sums already collected from Maker
which exceeded permitted limits will be refunded to Maker. The Noteholder may
choose to make this refund by reducing the principal it owes under this Note or
by making a direct payment to Maker. If a refund reduces principal the reduction
will be treated as a partial prepayment.
6. No Waiver, Expenses.
6.1 Even if at a time when Maker is in default Noteholder does not
require Maker to pay immediately in full as directed below, Noteholder will
still have the right to do so if Maker is in default at a later time.
6.2 If Noteholder has required immediate payment in full as described
below, Noteholder will have the right to be reimbursed for all of its costs and
expenses to the extent not prohibited by applicable law. Those expenses include,
for example, reasonable attorneys' fees.
6.3 Presentment, demand, protest, notices of protest, dishonor and
non-payment of this Note and all notices of every kind except notices of payment
changes are hereby waived.
6.4 No single or partial exercise of any power under this Note shall
preclude other or further exercise thereof. The Noteholder shall at all times
have the right to proceed against any portion of any security held for this Note
in such order and in such manner as the Noteholder may deem fit, without waiving
any rights with respect to any other security. No delay or omission on the part
of the Noteholder in exercising any right under this Note shall operate as a
waiver of such right or of any other right under this Note. The release of any
party liable on this Note shall not operate to release any other party liable on
the Note.
2
<PAGE> 3
6.5 Any payment hereunder otherwise due on a day that is not a business
day in Phoenix, Arizona shall be due on the immediately preceding business day.
7. Events of Default.
7.1 At the option of the Noteholder, the Note shall become immediately
due and payable unless otherwise stated, without notice or demand, upon the
occurrence at any time of any of the following events of default.
(a) Failure to pay when due any payment of principal or interest
due hereunder within five (5) days of the due date, or failure in the
performance or observance of any of the terms and conditions of the
Amended and Restated Asset Purchase Agreement, dated August 31, 1999,
or the Note Refinancing Agreement (hereinafter defined) and continuance
of such failure for thirty (30) days after notice.
(b) Making an assignment for the benefit of creditors by Maker, or
the voluntary appointment (at the request of any such party or with the
consent of any such party) of a receiver, custodian, liquidator or
trustee in bankruptcy of any such party's property or the filing by any
such party of a petition in bankruptcy or other similar proceeding
under law for relief of debtors;
(c) Filing by Maker of a petition in bankruptcy or other similar
proceeding under the law for relief of debtors, or the involuntary
appointment of a receiver, custodian, liquidator or trustee in
bankruptcy of the property of any such party, and such petition or
appointment is not vacated or discharged within sixty (60) days after
the filing or making thereof.
(d) Any event of default under any financing arrangement between
Maker and any senior lender in connection with the Purchase Agreement
or the Note Refinancing Agreement.
7.2 If this Note is not paid when due, whether at maturity or by
acceleration, Maker promises to pay all costs of collection, including, without
limitation, reasonable attorneys' fees, and all expenses in connection with the
protection or realization of any collateral securing this Note or the
enforcement of any guaranty hereof incurred by the Noteholder on account of such
collection whether or not suit is filed, such costs and expenses shall include,
without limitation, all attorneys' fees and expenses incurred by the Noteholder
in connection with the collection of this Note.
8. Note Refinancing Agreement.
This Note is the "Installment Note" referred to in, and is subject the
terms and provisions of, that certain Note Refinancing Agreement, dated as of
October 21, 1999, and the Security Agreement and Stock Pledge and Proxy
Agreement referenced therein.
3
<PAGE> 4
9. Governing Laws; Jurisdiction.
This Note shall be constructed in accordance with the governed by laws
of the State of Arizona. Any dispute arising under this Note shall be brought in
a court of competent jurisdiction located within the State of Arizona.
COACH AND CAR EQUIPMENT CORP., a Nevada
corporation, formerly known as Coach and
Car Acquisition Corp.
By /s/ Michael Feinstein
---------------------------------------
Its Vice President
--------------------------------------
Dated October 21, 1999
4
<PAGE> 5
ATTACHMENT A
<TABLE>
<CAPTION>
PAYMENT DATE PAYMENT AMOUNT
<S> <C>
4/1/00 77,289.56
7/1/00 42,886.28
10/1/00 43,357.56
1/1/01 43,357.56
4/1/01 42,415.00
7/1/01 42,886.28
10/1/01 43,357.56
1/1/02 43,357.56
4/1/02 42,415.00
7/1/02 42,886.28
10/1/02 43,357.56
1/1/03 43,357.56
4/1/03 42,415.00
7/1/03 42,886.28
10/1/03 43,357.56
1/1/04 43,357.56
4/1/04 42,886.28
7/1/04 42,886.28
10/1/04 43,357.56
10/15/04 2,002,597.89
</TABLE>
PURCHASER'S INITIALS
---------
SELLER'S INITIALS
---------
5
<PAGE> 1
EXHIBIT 2.1d
PROMISSORY NOTE
$8,118,008
October 21, 1999
1. Promise to Pay.
The undersigned, Coach and Car Equipment Corp. ("Maker") promises to
pay to the order of CCEC Capital Corp., in care of Simula, Inc, 2700 N. Central
Avenue, Phoenix, Arizona 85004, Attn: Scott Huson, or its successors ("Coach and
Car") the principal sum of Eight Million One Hundred Eighteen Thousand Eight
Dollars ($8,118,008). The principal amount of this Note reflects a One Hundred
Eighteen Thousand Eight Dollar ($118,008) addition for accrued interest through
October 20, 1999 under that Promissory Note dated August 31, 1999.
Coach and Car may transfer this Note, and Coach and Car or anyone who
takes this Note by transfer and who is entitled to receive payments under this
Note is called the "Noteholder."
2. Interest.
Interest will be charged on the unpaid principal until the full amount
is paid. Maker will pay interest at an annual rate of eight and one-half percent
(8-1/2%), compounded annually. Interest shall be calculated on the basis of a
360-day year and shall be computed on the actual number of days elapsed.
3. Payments.
3.1 Interest for the first year of the Note will be added to the
principal. Maker will make an initial payment of accrued interest on April 1,
2001. Thereafter, Maker will make semi-annual payments of accrued interest on
March 31 and September 30 of each year until the Maturity Date, as defined in
Section 4. On the Maturity Date, Maker will pay all principal and accrued
interest.
3.2 All payments hereunder shall be in accordance with the amortization
schedule attached hereto as Attachment A.
3.3 Maker shall have the right to prepay this Note in full or in part
without penalty.
4. Maturity.
Maker's obligations under the Note shall become fully due and payable
on October 15, 2004 (the "Maturity Date"). In the event Maker directly or
through its Affiliates (hereafter
<PAGE> 2
defined) completes a private or public offering of debt or equity securities
before the Maturity Date, the proceeds of such offering shall be first applied
to repayment of the Note thereby accelerating the Maturity Date, subject only to
an Underwriting Limitation, as defined below. The term "Underwriting Limitation"
shall mean the following: (i) any reasonable and customary indebtedness
repayment limitation imposed on such proceeds by an underwriter pursuant to an
underwriting agreement; or (ii) in the event of a private offering with no
underwriter, an indebtedness repayment limitation imposed on offering proceeds
to which the Noteholder consents; provided however that the consent of the
Noteholder shall not be required on the first Two Million Dollars ($2,000,000)
cumulative offering proceeds obtained in the aggregate by Maker and its
Affiliates after the date of this Note. In the event that the proceeds applied
against this Note from any offering of securities is not sufficient to retire
the Note, then the proceeds of any subsequent offering shall be first applied to
repayment of the Note subject to an Underwriting Limitation. Subject to an
Underwriting Limitation, by its terms, any such offering will designate as part
of the use of proceeds the repayment of indebtedness represented by this Note,
and such repayment shall have priority over other applications of the proceeds.
In the event of any offering, the proceeds of such offering to be applied
against the Note shall be so applied within ten (10) days of Closing and the
funding of the offering. As used herein, Affiliates shall mean any corporation
controlling Maker or under the control of Maker or any corporation in which any
shareholder of Maker owns twenty percent (20%) or more of the outstanding common
stock, including but not limited to Beacon Industries, Inc.
5. Note Charges.
If a law which applies to this Note and which sets maximum loan charges
is finally interpreted so that the interest or other charges collected or to be
collected in connection with this Note exceed the permitted limits, then: (i)
any such Note charges shall be reduced by the amount necessary to reduce the
charge to the permitted limit; and (ii) any sums already collected from Maker
which exceeded permitted limits will be refunded to Maker. The Noteholder may
choose to make this refund by reducing the principal it owes under this Note or
by making a direct payment to Maker. If a refund reduces principal the reduction
will be treated as a partial prepayment.
6. No Waiver, Expenses.
6.1 Even if at a time when Maker is in default Noteholder does not
require Maker to pay immediately in full as directed below, Noteholder will
still have the right to do so if Maker is in default at a later time.
6.2 If Noteholder has required immediate payment in full as described
below, Noteholder will have the right to be reimbursed for all of its costs and
expenses to the extent not prohibited by applicable law. Those expenses include,
for example, reasonable attorneys' fees.
6.3 Presentment, demand, protest, notices of protest, dishonor and
non-payment of this Note and all notices of every kind except notices of payment
changes are hereby waived.
6.4 No single or partial exercise of any power under this Note shall
preclude other or further exercise thereof. The Noteholder shall at all times
have the right to proceed against any portion of any security held for this Note
in such order and in such manner as the
2
<PAGE> 3
Noteholder may deem fit, without waiving any rights with respect to any other
security. No delay or omission on the part of the Noteholder in exercising any
right under this Note shall operate as a waiver of such right or of any other
right under this Note. The release of any party liable on this Note shall not
operate to release any other party liable on the Note.
6.5 Any payment hereunder otherwise due on a day that is not a business
day in Phoenix, Arizona shall be due on the immediately preceding business day.
7. Events of Default.
7.1 At the option of the Noteholder, the Note shall become immediately
due and payable unless otherwise stated, without notice or demand, upon the
occurrence at any time of any of the following events of default.
(a) Failure to pay when due any payment of principal or interest
due hereunder within five (5) days of the due date, or failure in the
performance or observance of any of the terms and conditions of the
Amended and Restated Asset Purchase Agreement, dated August 31, 1999,
or the Note Refinancing Agreement and continuance of such failure for
thirty (30) days after notice.
(b) Making an assignment for the benefit of creditors by Maker, or
the voluntary appointment (at the request of any such party or with the
consent of any such party) of a receiver, custodian, liquidator or
trustee in bankruptcy of any such party's property or the filing by any
such party of a petition in bankruptcy or other similar proceeding
under law for relief of debtors;
(c) Filing by Maker of a petition in bankruptcy or other similar
proceeding under the law for relief of debtors, or the involuntary
appointment of a receiver, custodian, liquidator or trustee in
bankruptcy of the property of any such party, and such petition or
appointment is not vacated or discharged within sixty (60) days after
the filing or making thereof.
(d) Any event of default under any financing arrangement between
Maker and any senior lender in connection with the Purchase Agreement
or the Note Refinancing Agreement.
7.2 If this Note is not paid when due, whether at maturity or by
acceleration, Maker promises to pay all costs of collection, including, without
limitation, reasonable attorneys' fees, and all expenses in connection with the
protection or realization of any collateral securing this Note or the
enforcement of any guaranty hereof incurred by the Noteholder on account of such
collection whether or not suit is filed, such costs and expenses shall include,
without limitation, all attorneys' fees and expenses incurred by the Noteholder
in connection with the collection of this Note.
8. Note Refinancing Agreement.
This Note is the "Term Note" referred to in, and is subject the terms
and provisions of, that certain Note Refinancing Agreement dated as of October
21, 1999, and the Security Agreement and Stock Pledge and Proxy Agreement
referenced therein.
3
<PAGE> 4
9. Governing Laws; Jurisdiction.
This Note shall be constructed in accordance with the governed by laws
of the State of Arizona. Any dispute arising under this Note shall be brought in
a court of competent jurisdiction located within the State of Arizona.
COACH AND CAR EQUIPMENT CORP., a Nevada
corporation, formerly known as Coach and Car
Acquisition Corp.
By /s/ Michael Feinstein
------------------------------------------
Its Vice President
-----------------------------------------
Dated October 21, 1999
4
<PAGE> 5
ATTACHMENT A
<TABLE>
<CAPTION>
PAYMENT DATE PAYMENT AMOUNT
<S> <C>
4/1/01 379,421.20
10/1/01 379,421.20
4/1/02 377,347.86
10/1/02 379,421.20
4/1/03 377,347.86
10/1/03 379,421.20
4/1/04 379,421.20
10/1/04 379,421.20
10/15/04 8,810,230.91
</TABLE>
PURCHASER'S INITIALS ______
SELLER'S INITIALS ______
5
<PAGE> 1
EXHIBIT 2.1e
SECURITY AGREEMENT
DATE: October 21, 1999
DEBTOR: Coach and Car Equipment Corp., f/k/a Coach and Car
Acquisition Corp.
SECURED PARTY: CCEC Capital Corp., f/k/a Coach and Car Equipment
Corporation
a. DEFINITIONS. The following words shall have the following meanings
when used in this Security Agreement:
(1) Collateral. The word "Collateral" means all of Debtor's right,
title and interest in all the tangible and intangible assets purchased from
Coach and Car Equipment Corporation wheresoever situated, as conveyed to Debtor
or for the benefit of Debtors, under an agreement consummated on August 31, 1999
(the "Purchase Agreement"). Secured Party's interest extends to and includes,
but is not limited to, the Assets as described in the Purchase Agreement,
including without limitation, all property, plant, and equipment, patents, trade
secrets and other data of Coach and Car Equipment Corporation, including
proceeds from the sale of such assets pursuant to Section (c)(2), purchased by
Debtor pursuant to the Purchase Agreement.
(2) Indebtedness. Indebtedness includes all indebtedness and
liabilities of Debtor to Secured Party, due or to become due, whether or not now
existing or hereafter contracted for or arising, including, but not limited to:
(a) The indebtedness evidenced by the Installment Note and the
Term Note executed in favor of Secured Party, in an aggregate original
principal sum of Ten Million One Hundred Fourteen Thousand Eight
Dollars ($10,114,008) and any and all extensions, renewals,
refinancings and other amounts owing thereon (collectively, the
"Notes") dated October 21, 1999; and
(b) In the event of any proceeding to enforce the collection
of any of the Indebtedness, the reasonable expenses of retaking,
holding, preparing for sale, or otherwise disposing of any or all of
the Collateral upon any exercise by Secured Party of its rights under
this Security Agreement, and attorneys' fees, court costs and other
expenses in connection therewith.
<PAGE> 2
b. GRANT OF SECURITY INTEREST. For valuable consideration, Debtor
hereby grants to Secured Party a security interest in the Collateral, to secure
the Indebtedness and agrees that Secured Party shall have the rights stated in
this Security Agreement with respect to the Collateral in addition to all other
rights which Secured Party may have by law.
c. OBLIGATIONS OF DEBTOR. Debtor warrants to and covenants to Secured
Party as follows:
(1) Perfection of Security Interest. Debtor agrees to execute financing
statements, execute letters of assignment for patents, and to take whatever
other actions as are reasonably requested by Secured Party to perfect and
continue Secured Party's security interest in the Collateral. Debtor hereby
appoints Secured Party as its irrevocable attorney-in-fact for the purpose of
executing any documents necessary to perfect or to continue the security
interest granted in this Security Agreement. Secured Party may at any time, and
without further authorization from Debtor, file a copy of this Security
Agreement as a financing statement. Debtor will reimburse Secured Party for all
reasonable out-of-pocket expenses for the perfection and the continuation of the
perfection of Secured Party's security interest in the Collateral.
(2) Transactions Involving Collateral. Except for disposal of assets in
the ordinary course of business, Debtor shall not sell, offer to sell, or
otherwise transfer or dispose of the Collateral. Debtor shall not pledge,
mortgage, encumber or otherwise permit the Collateral to be subject to any lien,
security interest, encumbrance or charge, whether or not subordinate or junior
to the lien evidenced by this Security Agreement without the prior written
consent of Secured Party other than as required under the terms of any financing
arrangement with a senior lender ("Senior Lender"), as permitted under Section
5.3(b) of the Note Refinancing Agreement dated October 21, 1999 between the
parties (the "Note Refinancing Agreement"). Unless waived by Secured Party, all
proceeds from any disposition of the Collateral shall be held in trust for
Secured Party, and shall not be commingled with any other funds.
(3) Repairs. Debtor shall keep the Collateral in good condition and
repair (ordinary wear and tear excepted). Debtor will not commit or permit
damage to or destruction of any material part of the Collateral. Secured Party
and its designated representatives and agents shall have the right at all
reasonable times, and upon reasonable notice, to examine and inspect the
Collateral wherever located.
(4) Compliance With Governmental Requirements. Debtor shall materially
comply promptly with all laws, ordinances and regulations of all governmental
authorities applicable to the use of the Collateral. Debtor may contest in good
faith any such law, ordinance or regulation and withhold compliance during any
proceeding, including appropriate appeals, so long as Secured Party's interest
in the Collateral, in Secured Party's opinion, is not jeopardized.
(5) Maintenance of Insurance. Debtor shall procure and maintain fire,
casualty and liability insurance on a replacement basis naming Secured Party as
loss payee or additional insured, as appropriate, with respect to the
Collateral, in form, amounts, coverages and with insurance companies reasonably
acceptable to Secured Party. Subject to Debtor's obligations to Senior Lender,
Debtor, upon request of Secured Party, will deliver to Secured Party
certificates of coverage from each insurer containing a loss payable endorsement
to Secured Party and a stipulation that coverage will not be canceled or
diminished without a minimum of ten (10) days prior written notice to Secured
Party.
2
<PAGE> 3
(6) Application of Insurance Proceeds. Debtor shall promptly notify
Secured Party of any loss or damage to the Collateral in excess of Five Thousand
Dollars ($5,000). Secured Party may make proof of loss if Debtor fails to do so
within fifteen (15) days of the casualty. If an Event of Default has not
occurred, all proceeds of any insurance of the Collateral, including accrued
proceeds thereon, shall be used by Debtor to replace the Collateral in question.
If an Event of Default has occurred, all proceeds of any insurance of the
Collateral, including accrued proceeds thereon, shall be applied against the
Note.
(7) Insurance Reports. Debtor, upon request of Secured Party, shall
furnish to Secured Party reports on each existing policy of insurance showing
such information as Secured Party may reasonably request including the
following: (i) the name of the insurer; (ii) the risks insured; (iii) the amount
of the policy; (iv) the property insured; (v) the then current value on the
basis of which insurance has been obtained and the manner of determining that
value; and (vi) the expiration date of the policy.
d. DEBTOR'S RIGHT TO POSSESSION. Until an Event of Default (as defined
below), Debtor may have possession of and beneficial use of all of the
Collateral and may use it in any lawful manner not inconsistent with this
Security Agreement.
e. EXPENDITURES BY SECURED PARTY. If not discharged or paid when due,
Secured Party may discharge taxes, liens, security interests or other
encumbrances at any time levied or placed on the Collateral, may pay for
insurance with respect to the Collateral, and may pay for maintenance and
preservation of the Collateral. All such payments shall become a part of the
Indebtedness and shall be payable on demand. Such right shall be in addition to
any other rights or remedies to which Secured Party may be entitled on account
of default.
f. EVENTS OF DEFAULT. The following are Events of Default under this
Security Agreement:
(1) Default on Indebtedness. Debtor fails to make any payment when due
on the Indebtedness, subject to any grace period provided in the document
evidencing such indebtedness.
(2) Defective Collateralization. This Security Agreement or the
security interest granted herein at any time and for any reasons shall cease to
be in full force and effect or shall at any time not be perfected, or cease to
be perfected, unless caused by the fault, failure or omission of Secured Party.
(3) Insolvency. Making an assignment for the benefit of creditors of
Debtor, or the voluntary appointment (at the request of any such party or with
the consent of any such party) of a receiver, custodian, liquidator or trustee
in bankruptcy of any such party's property or the filing by any such party of a
petition in bankruptcy or other similar proceeding under law for relief of
debtors.
(4) Creditor Proceedings. Commencement of foreclosure, whether by
judicial proceeding, self-help, repossession or any other method, by any
creditor of Debtor against any of the property of Debtor, including, without
limitation, the Collateral. However, this subsection shall not apply in the
event of a good faith dispute by Debtor as to the validity or reasonableness of
the claim which is the basis of the foreclosure suit, provided that Debtor gives
Secured Party
3
<PAGE> 4
written notice of such claim and furnishes adequate reserves for the claim.
(5) Destruction or Impairment of Collateral. There shall occur any
material uninsured damage to or loss, theft or destruction of the Collateral, or
notwithstanding the maintenance of any insurance, if the value or validity of
any of the Collateral is materially impaired by virtue of the failure of Debtor
to comply with any state, federal or municipal rules or regulations.
(6) Cross Defaults. A default beyond any applicable grace or right to
cure periods by Debtor under any agreement, arrangement, covenant, undertaking,
or condition of (i) the Purchase Agreement between the parties including without
limitation the Subleases and Assignment and Assumption, as defined in the
Purchase Agreement, or (ii) the Note Refinancing Agreement including without
limitation the Pledge and Security Agreement, Guarantee, and Non-Competition
Agreement, as defined in the Note Refinancing Agreement.
g. RIGHTS OF SECURED PARTY. Upon an Event of Default, Secured Party
shall have all the rights of a secured party under the Uniform Commercial Code.
In addition and without limitation, Secured Party may exercise any one or more
of the following rights and remedies:
(1) Accelerate Indebtedness. Secured Party may, at its option, after
any applicable cure periods and without further demand, notice or legal process
of any kind, declare the entire Indebtedness immediately due and payable.
(2) Assemble Collateral. Secured Party may require Debtor to deliver
to Secured Party all or any portion of the Collateral and any and all documents
relating to the Collateral. Secured Party may require Debtor to assemble the
Collateral and make it available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to both parties. Secured Party
shall also have full power to enter upon the property of Debtor to take
possession of and remove the Collateral pursuant to due legal process.
(3) Sell the Collateral. Secured Party shall have full power to
sell, lease, transfer and otherwise deal with the Collateral or proceeds thereof
in its own name or that of Debtor. Secured Party may sell the Collateral at
public auction or private sale. Unless the Collateral threatens to decline
rapidly in value or is of a type customarily sold on a recognized market,
Secured Party will give Debtor reasonable notice of the time after which any
private sale or any other intended disposition of the Collateral is to be made.
The requirements of reasonable notice shall be met if such notice is given at
least ten (10) days before the time of the sale or disposition. All expenses
relating to the disposition of the Collateral, including without limitation the
expenses of retaking, holding, preparing for sale and selling the Collateral
shall become a part of the Indebtedness secured by this Security Agreement, and
shall be payable on demand, with interest at the default rate provided in the
Note from date of expenditure until repaid.
(4) Appointment of Receiver. Secured Party may have a receiver
appointed as a matter of right. The receiver may be an employee of Secured Party
and may serve without bond. All fees of the receiver and his attorney shall be
secured by this Security Agreement.
4
<PAGE> 5
(5) Obtain Deficiency. Secured Party may obtain a judgment for any
deficiency remaining on the Indebtedness due to Secured Party after application
of all amounts received from the exercise of the rights provided in this
Security Agreement.
(6) Other Rights and Remedies. In addition to Secured Party's rights
and remedies as a secured creditor under the provisions of the Uniform
Commercial Code, Secured Party shall have and may exercise any or all of the
rights and remedies it may have available at law, in equity or otherwise.
h. CUMULATIVE REMEDIES. All of Secured Party's rights and remedies,
whether evidenced by this Security Agreement or by any other writing, shall be
cumulative and may be exercised singularly or concurrently. Election by Secured
Party to pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation of
Debtor under this Security Agreement, after Debtor's failure to perform, shall
not affect Secured Party's right to declare a default and to exercise its
remedies.
i. WAIVER. Secured Party shall not be deemed to have waived any rights
under this Security Agreement unless such waiver is in writing and signed by
Secured Party. No delay or omission on the part of Secured Party in exercising
any right shall operate as a waiver of such right or any other right. A waiver
by any party of a provision of this Security Agreement shall not constitute a
waiver of or prejudice the party's right otherwise to demand strict compliance
with that provision or any other provision. No prior waiver, nor any course of
dealing between Secured Party and Debtor, shall constitute a waiver of any of
Secured Party's rights or Debtor's obligations as to any future transactions.
Whenever consent by Secured Party is required in this Security Agreement, the
granting of such consent by Secured Party in any instance shall not constitute
continuing consent to subsequent instances where such consent is required.
j. NOTICES. All notices, requests and demands to or upon the respective
parties hereto shall, in order to be effective, be in writing. Written notices
and written confirmations shall be either delivered by hand, deposited in the
U.S. mail, postage prepaid, sent by any air freight service, next day delivery
of which is guaranteed, telegraphed by the telegraph company or telexed, answer
back received, properly addressed as indicated below, or to such other address,
notice of which may be hereafter given to the respective parties hereto and/or
to any future holder of the Note by the respective addressee. All such notices,
requests or demands shall be deemed to have been duly given or made (a) when
delivered, if hand delivered; (b) five (5) days after being so deposited in the
U.S. Mail; and (c) one (1) business day after being so sent by air freight or so
telegraphed, telexed or transmitted via facsimile.
k. EXPENSES AND COSTS AND ATTORNEYS' FEES.
(1) Debtor shall reimburse Secured Party on demand for all its
expenses (including, but not limited to, reasonable attorneys' fees) of, or
incidental to: (i) any attempt to enforce any rights of Secured Party against
Debtor or any other person or entity which may be obligated to Secured Party by
virtue of this Security Agreement, including without limitation, any bankruptcy
proceedings and efforts to modify or vacate any automatic stay or injunction,
any account debtor, whether or not a lawsuit or proceeding is filed; and/or (ii)
any attempt to protect, collect, sell, liquidate or otherwise dispose of the
Collateral. All such sums and expenses shall constitute a portion of the
Indebtedness hereunder secured by the Collateral. All such sums shall be part of
the Indebtedness secured by this Security Agreement.
5
<PAGE> 6
(2) In the event of any litigation, contest, dispute, suit, proceeding
or action, whether instituted by Secured Party, Debtor or any other party,
person or entity) in any way relating to the Collateral, the Security Agreement,
or Debtor's affairs, the prevailing party in any such litigation, contest,
dispute, suit, proceeding or action, shall be entitled to recover its costs and
expenses incurred, including its reasonable attorney's fees, from the other
party. If the prevailing party is the Secured Party, all such sums shall become
part of the Indebtedness secured by this Security Agreement. If Debtor is the
prevailing party, all such sums shall be offset against the Indebtedness secured
by this Security Agreement.
l. INTERPRETATION. Caption headings in this Security Agreement are for
convenience purposes only and are not to be used to interpret or define the
provisions of this Security Agreement. If any provision of this Security
Agreement is held to be invalid, illegal or unenforceable by any court for any
reason, the remaining provisions of this Security Agreement shall nevertheless
be binding, and this Security Agreement shall be enforceable as if the void or
unenforceable provision or provisions had not been included in this Security
Agreement. Any terms used in this Security Agreement, including without
limitation, "account," "account debtor," "chattel paper," "document,"
"instrument," and "general intangible," which are not specifically defined in
this Security Agreement but are specifically defined in the Uniform Commercial
Code, shall have the meanings ascribed in the Uniform Commercial Code.
m. APPLICABLE LAW; JURISDICTION. This Security Agreement shall be
governed by and construed in accordance with the laws of the State of Arizona
and any dispute arising under this Security Agreement shall be brought in a
court of competent jurisdiction located within the State of Arizona.
n. SUCCESSOR INTERESTS. This Security Agreement shall be binding upon
and inure to the benefit of the parties, their successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement on the date first above written.
DEBTOR:
Coach and Car Equipment Corp., a Nevada
corporation formerly known as Coach and
Car Acquisition Corp.
By /s/ Michael Feinstein
-----------------------------------------
Its Vice President
----------------------------------------
SECURED PARTY:
CCEC Capital Corp., an Arizona corporation
formerly known as Coach and Car Equipment
Corporation
By /s/ Brad Forst
-----------------------------------------
Its Executive Vice President
----------------------------------------
6
<PAGE> 1
EXHIBIT 2.1f
PLEDGE AND PROXY
SECURITY AGREEMENT
THIS PLEDGE AND PROXY SECURITY AGREEMENT is made and entered into as of
October 21, 1999, by Scott Miller ("Pledgor"), in favor of CCEC Capital
Corporation, f/k/a Coach & Car Equipment Corporation, and its successors and
assigns (hereinafter called "Secured Party").
I. RECITALS
1.1 Secured Party has made a loan to Coach and Car Equipment
Corp., f/k/a Coach and Car Acquisition Corp. ("Coach and
Car"), which is an affiliated corporation with Beacon
Industries, Inc. ("Beacon"), represented by an Installment
Note and a Term Note both dated October 21, 1999
(collectively, the "Notes").
1.2 Secured Party's agreement to make this financial accommodation
to Pledgor is conditioned upon Secured Party's receiving a
pledge and security interest in certain stock and securities
issued by Coach and Car and Beacon (hereinafter when referred
to in this capacity collectively called the "Company"), now
owned or hereafter acquired by Pledgor.
1.3 Pledgor is the majority shareholder of the outstanding shares
of the common stock of Coach and Car of Beacon.
2. PLEDGE OF STOCK
2.1 Pledgor hereby assigns, transfers, pledges, and delivers to
Secured Party and grants Secured Party a security interest in
all issued and outstanding stock in the Company now owned or
hereafter acquired by Pledgor, including without limitation,
the stock described on Schedule "A."
2.2 Upon the execution of this Agreement, Pledgor shall deliver to
Secured Party certificates for the Pledged Securities,
together with appropriate stock transfer powers therefor duly
executed by Pledgor in blank.
3. OBLIGATION SECURED
This Agreement shall secure:
(a) Payment of the sum of $10,114,008 plus accrued
interest under the terms of the Notes; and
1
<PAGE> 2
(b) Payment, performance, and observance by Pledgor of
each covenant, condition, provision, and agreement
contained herein, in the Amended and Restated Asset
Purchase Agreement dated August 31, 1999, and in the
Note Refinancing Agreement between the parties dated
October 21, 1999 (the "Note Refinancing Agreement"),
and all of the agreements and arrangements entered
into as a part thereof, and of all monies expended or
advanced by Secured Party pursuant to the terms
hereof, or to preserve all right of Secured party
hereunder, or to protect or preserve the Collateral
or any part thereof.
All of the indebtedness and obligations secured by this Agreement are
hereinafter collectively called the "Obligations."
4. REPRESENTATIONS AND WARRANTIES OF PLEDGOR
Pledgor hereby represents and warrants that:
4.1 The Pledged Securities are and shall be duly and validly
issued and pledged in accordance with applicable law, and this
Agreement shall not contravene any law, agreement, or
commitment binding Pledgor or the Company, and Pledgor shall
defend the right, title, lien, and security interest of
Secured Party in and to the Pledged Securities against the
claims and demands of all persons and other entities
whatsoever.
4.2 Pledgor has the right, power, and authority to convey good and
marketable title to the Pledged Securities, and the Pledged
Securities and the proceeds thereof are and shall be free and
clear of all claims, mortgages, pledges, liens, encumbrances,
and security interest of every nature whatsoever other than as
imposed hereby.
4.3 As of the date of this Agreement, the Pledged Securities
represent in excess of fifty percent (50%) of the voting power
of all of the outstanding common stock of each of Coach and
Car and Beacon.
4.4 Pledgor shall not allow to be issued shares of common stock of
either Coach and Car or Beacon without first obtaining the
written consent of Secured Party, which consent shall not be
unreasonably withheld.
5. IRREVOCABLE PROXY
5.1 Upon an Event of Default as defined hereafter, Pledgor shall
and without further action by Pledgor hereby does irrevocably
constitute and appoint Secured Party, whether or not the
Pledged Securities have been transferred into the name of
Secured Party or its nominee, as Pledgor's proxy with full
power, in the same manner, to the same extent and with the
same effect as if Pledgor were to do the same, in the sole
discretion of Secured Party:
2
<PAGE> 3
(a) To consent to any and all actions by or with respect
to the Company for which consent of the stockholders
of the Company is or may be necessary or appropriate;
and
(b) Without limitation, to do all things that Pledgor can
do or could do as stockholder of the Company, giving
Secured Party full power of a substitution and
revocation.
6. EVENTS OF DEFAULT; REMEDIES; RECOURSE
6.1 "Event of Default" hereunder shall mean any "Event of Default"
as defined in the Notes.
6.2 Upon the occurrence of any Event of Default and at any time
while such Event of Default is continuing, Secured Party shall
have the following rights and remedies and may do one or more
of the following:
(a) Declare all or any part of the Obligation to be
immediately due and payable, and the same, with all
costs and charges, shall be collectible thereupon by
action at law;
(b) Transfer the Pledged Securities or any part thereof
into its own name or that of it nominee so that
Secured Party or its nominee may appear of record as
the sole owner thereof;
(c) Vote any or all of the Pledged Securities and give
all consents, waivers, and ratifications in respect
thereof and otherwise acting with respect thereto as
though it were the absolute owner thereof;
(d) Receive and retain any dividend or other distribution
on account of the Pledged Securities; and
(e) Sell any or all of the Pledged Securities in
accordance with the provisions hereof.
6.3 Upon an Event of Default, Secured Party, before exercise of
the rights and remedies described above, shall first exercise
its rights to recourse to the Collateral pledged under the
Security Agreement between Secured Party and Coach and Car
dated October 21, 1999 in connection with the Notes. Secured
Party shall seek recourse under Section 6.2 above only in the
event the proceeds of a liquidation or other disposition of
the Collateral is insufficient to repay the indebtedness and
then only to the extent of the amount of such deficiency.
Furthermore, in the event of recourse to the Pledged
Securities, Secured Party shall forbear from any of the
remedies for a reasonable time to allow Beacon the opportunity
to repay the indebtedness or, as necessary, to allow Pledgor
to manage an orderly liquidation of Beacon's assets in an
expeditious manner. Only after Pledgor's failure to repay the
deficiency after Secured Party's reasonable forbearance may
Secured Party exercise the remedies of Section 6.2.
3
<PAGE> 4
7. RELEASE OF PLEDGED SECURITIES
The Pledged Securities shall be released and this Agreement terminated
upon the payment of all outstanding indebtedness to Secured Party.
8. MISCELLANEOUS PROVISIONS
8.1 The terms herein shall have the meanings in and be construed
under the Uniform Commercial Code. This Agreement shall be
governed by and construed according to the internal laws of
the State of Arizona. Each provision of this Agreement shall
be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement
is held to be void or invalid, the same shall not affect the
remainder thereof which shall be effective as though the void
or invalid provision had not been contained herein;
8.2 No modification, recission, waiver, release, or amendment of
any provision of this Agreement shall be made except by a
written agreement executed by Pledgor and a duly authorized
officer of Secured Party.
IN WITNESS WHEREOF, these presents are executed as of the date
indicated above.
PLEDGOR
/s/ Scott Miller
------------------------------------
Scott Miller
4
<PAGE> 5
SCHEDULE A
1) Stock Certificate Number 1013-2 representing 12,740,000 shares of common
stock of Beacon Industries, Inc.
2) Stock Certificate Number 1 representing 655,000 shares of common stock of
Coach and Car Equipment Corp.
5
<PAGE> 1
EXHIBIT 2.1g
GUARANTEE
OF
BEACON INDUSTRIES, INC.
FOR VALUE RECEIVED, the undersigned hereby unconditionally guarantees
to CCEC CAPITAL CORP., an Arizona corporation f/k/a Coach and Car Equipment
Corporation ("Seller"), the prompt and complete payment and performance by COACH
AND CAR EQUIPMENT CORP., a Nevada Corporation f/k/a Coach and Car Acquisition
Corp. ("Purchaser"), which is an affiliated corporation with the undersigned, of
all Purchaser's payment, performance, and other obligations (the "Obligations")
under (i) that certain Amended and Restated Asset Purchase Agreement, dated
August 31, 1999 (the "Asset Purchase Agreement"), between Seller, Purchaser and
the undersigned, as the same may be amended, supplemented or otherwise modified
from time to time, including without limitation all representations, warranties
and covenants, (ii) that certain Note Refinancing Agreement, dated October 21,
1999, between Seller, Purchaser and the undersigned, (iii) the "Notes" of
Purchaser payable to Seller and referred to in the Note Refinancing Agreement,
(iv) the "Security Agreement" referred to in the Note Refinancing Agreement, and
(v) any and all other agreements, documents, and instruments executed by
Purchaser and Seller in connection with the Asset Purchase Agreement and Note
Refinancing Agreement, including without limitation the Sublease Agreement
attached as Exhibit J-2 to the Asset Purchase Agreement, all as the same may be
amended, supplemented or otherwise modified from time to time. Upon the
occurrence of any event of default under the Obligations, Seller may enforce
this Guaranty independently as to the undersigned and independently of any other
remedy or security which Seller may at any time have in connection with the
Obligations. The undersigned expressly waives any right to require Seller to
proceed against Purchaser and agrees that Seller may proceed against the
undersigned and/or any collateral in such order as Seller shall determine in its
sole and absolute discretion.
The undersigned hereby warrants and represents to Purchaser that this
guarantee is the legal, valid and binding obligation of the undersigned,
enforceable in accordance with its terms.
The undersigned hereby irrevocably waives all rights which may have
arisen in connection with this guarantee to be subrogated to any of the rights
(whether contractual, under Title 11 of the United States Code, including
Section 509 thereof, under common law or otherwise) of Seller against Purchaser
or against any collateral security or guarantee or right of offset held by
Seller for payment of the Obligations. The undersigned hereby further
irrevocably waives all contractual, common law, statutory or other rights of
reimbursement, contribution, exoneration or indemnity (or any similar right)
from or against Seller or any other person which may have arisen in connection
with this guarantee. So long as the Obligations remain outstanding, if any
amount shall be paid by or on behalf of the Purchaser to
<PAGE> 2
the undersigned on account of any of the rights waived in this paragraph, such
amount shall be held by the undersigned in trust, segregated from other funds of
the undersigned, and shall, forthwith upon receipt by the undersigned, be turned
over to Seller in the exact form received by the undersigned to be applied
against the Obligations. The provisions of this paragraph shall survive the term
of this guarantee and the satisfaction in full of the Obligations.
Seller may assign its rights and interests under this guarantee.
THIS GUARANTEE HAS BEEN DELIVERED AT PHOENIX, ARIZONA, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ARIZONA.
Wherever possible each provision of this guarantee shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this guarantee shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this guarantee.
SIGNED AND DELIVERED this day of October, 1999.
BEACON INDUSTRIES, INC.
By /s/ Scott Miller
--------------------------------
Its Chairman
--------------------------------
<PAGE> 1
EXHIBIT 2.1h
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION, dated as of August 31, 1999, by and between
Coach and Car Acquisition Corp., a Nevada corporation ("Purchaser"), and Coach
and Car Equipment Corporation, an Arizona corporation ("Seller").
WHEREAS, by an Asset Purchase Agreement dated August 31, 1999, (the
"Purchase Agreement"), Seller agreed to sell, transfer and deliver, to the
extent transferable, to Purchaser at the Closing certain assets of Seller in
consideration of (i) the payment by Purchaser to Seller of the Purchase price of
such assets, and (ii) delivery by Purchaser to Seller of an undertaking of the
character set forth below.
NOW, THEREFORE, in consideration of the premises and to complete the
actions required of Seller and Purchaser by the Purchase Agreement to effect the
Closing, Purchaser and Seller hereby undertake and agree as follows:
1. The terms defined in the Purchase Agreement, unless otherwise
defined herein or unless the context otherwise requires, shall have the same
defined meanings herein.
2. Purchaser agrees to assume the liabilities of Seller as of August
30, 1999 set out as Exhibit A hereto.
3. Seller hereby assigns to Purchaser all of Seller's right, title and
interest in, to and under the Leases, Contracts, Commitments, and other
agreements described on Schedules 1.1(c)-A, 1.1(c)-B, 1.1(d), 2.9, 2.10, 2.14
and 2.16-A and Exhibit L under the Purchase Agreement (the "Assigned
Instruments").
4. Purchaser hereby assumes and agrees to pay, perform and discharge
the non-delinquent liabilities and obligations of Seller under the Assigned
Instruments.
5. Simula, Inc. ("Simula"), the sole shareholder of Seller, is a
guarantor of Seller's obligations and liabilities under the following Assigned
Instruments:
i) Freightliner Truck Lease and Service Agreement with Rollins
Leasing Corp. dated September 3, 1998;
ii) Elk Grove Village Building Lease Agreement, as amended, with
Edward Buker, Trustee under Trust Agreement dated December 14,
1997; and
iii) Contract for provision of rail seats to N.V.T.C. dated July 8,
1998.
To the extent Simula is not expressly released in writing from the guarantees at
or prior to Closing, Purchaser shall indemnify Seller in the event Purchaser
defaults in its obligations under any Assigned Instrument and recourse against
Simula is made by the third party seeking to enforce the guarantee.
6. Any and all other liabilities and obligations of Seller (whether by
contract or otherwise) are specifically excluded and excepted from the
liabilities and obligations assumed by Purchaser hereunder and shall be
discharged and paid by Seller. Purchaser's assumptions of liabilities
shall be only to the extent disclosed to Purchaser under the Purchase Agreement
and assumed hereunder and
<PAGE> 2
Purchaser shall be entitled to Seller's duty of indemnification under the
Purchase Agreement in connection with this Assignment and Assumption.
7. Notwithstanding anything to the contrary in this Assignment and
Assumption or in the Purchase Agreement, to the extent that the assignment
hereunder of any of the Assigned Instruments shall require the consent of any
other party which has not been obtained (or in the event that any of the same
shall be non-assignable), neither this Assignment and Assumption nor the
Purchase Agreement nor any action taken pursuant to their respective provisions
shall constitute any assignment or any agreement to assign if such assignment or
attempted assignment would constitute a breach of such Assigned Instruments or
result in the loss or diminution thereof; provided, however, that in each such
case, the parties shall use their best efforts to obtain the consent of such
third party to an assignment to Purchaser and the release of Seller, or a
novation of the Assigned Instrument. If such consent or novation is not
obtained, the parties shall cooperate in any reasonable arrangement designed to
transfer to Purchaser the benefits and obligations of the Assigned Instruments
including, without limitation, enforcement for the account and benefit of
Purchaser, of any and all rights of Seller against any other person with respect
to the Assigned Instruments.
8. This Assignment and Assumption shall be binding upon and shall inure
to the benefit of Purchaser, Seller and their respective successors and assigns.
The purpose hereof is to relieve Seller of certain liabilities and obligations
and to assign certain rights and benefits to Purchaser and not to create third
party beneficiary rights. Therefore, this Assignment and Assumption may be
modified by a writing signed by Seller and Purchaser without the consent of any
third party.
IN WITNESS WHEREOF, Seller and Purchaser have caused this Assignment
and Assumption to be signed by their duly authorized officers as of the date
first above written.
COACH AND CAR ACQUISITION CORP.
By /s/ Scott E. Miller
-------------------------------------
Its President
-------------------------------------
COACH AND CAR EQUIPMENT CORPORATION
By /s/ Inam Khan
-------------------------------------
Its President
-------------------------------------
<PAGE> 3
EXHIBIT A
LIABILITIES ASSUMED
Coach & Car Equipment Corp. liabilities at August 30, 1999 are as follows:
<TABLE>
<S> <C>
Accounts Payable $2,556,500
Accrued Expenses 632,577
Customer Deposits 1,063,000
----------
$4,252,077
==========
</TABLE>
<PAGE> 1
EXHIBIT 2.1i
BILL OF SALE
FROM COACH AND CAR EQUIPMENT CORPORATION
TO COACH AND CAR ACQUISITION CORP.
FOR VALUE RECEIVED and in accordance with the provisions of an Asset
Purchase Agreement dated August 31, 1999 the (the "Purchase Agreement"), between
Coach and Car Equipment Corporation, an Arizona corporation, ("Seller") and
Coach and Car Acquisition Corp., a Nevada corporation ("Purchaser"), Seller
hereby sells, transfers, assigns and delivers to Purchaser the following
described assets (the "Assets") used in connection with the operation of the
Business, as described in the Purchase Agreement:
(a) the tangible personal property owned by Seller and used in
connection with the Business, as listed on Schedule 1.1(a) to the Purchase
Agreement, including, without limitation, all equipment, furniture, fixtures,
machinery, office furnishings, leasehold improvements, spare parts, and, to the
extent assignable or transferable by Seller, all rights in all warranties of any
manufacturer or vendor with respect thereto (the "Personal Property");
(b) all of the Seller's rights, to the extent assignable or
transferable, to all licenses, certificates, accreditations and registrations
and other licenses or permits issued in connection with the operation of the
Business, including, without limitation, those described in Schedule 2.7 of the
Purchase Agreement (the "Licenses");
(c) all of Seller's interest, to the extent assignable or transferable,
in and to those real property and personal property leases related to the
Business described in the Purchase Agreement(i) Schedule 1.1(c)-A in respect of
real property leases; and (ii) Schedule 1.1(c)-B in respect of personal property
leases (all of such leases being referred to collectively as the "Leases");
(d) all inventories, including raw materials and parts, work-in-process
and finished goods presently utilized in the Business with such additions and
deletions thereto as may arise in the ordinary course of business, and all
inventories of supplies, and office supplies and other disposables and
consumables owned by Seller used in connection with the Business and, to the
extent assignable or transferrable by Seller, all rights in all warranties of
any manufacturer or vendor with respect thereto (the "Inventories");
(e) all accounts receivable and other rights to receive payments as
arise in the normal course of business and in existence on the Closing date as
well as cash on hand received as deposits, prepayments, bonds, refunds, and all
securities owned by Seller, if any, as set forth on Schedule 1.1(f) to the
Purchase Agreement;
(f) all documents, records, operating manuals, files and computer
software which pertain to the Business; and
(g) all intangibles including the patents listed on Schedule 1.1(h) to
the Purchase Agreement, copyrights, intellectual property, drawings, formulas
and rights;
(h) the trade name "Coach and Car Equipment Corporation," "Coach and
Car", "Safe Stop", and all uses and derivatives thereof, and all trademarks,
logos, symbols, service names and trade identifications used or associated with
the Business, whether registered or not, and the goodwill of the Business.
<PAGE> 2
Seller warrants to Purchaser that it has good title to the Assets free
and clear of all liabilities, liens, defects, security interests, rights,
charges and encumbrances, except for liabilities expressly assumed by Purchaser
under the Assignment and Assumption, dated as of August 31, 1999, between
Purchaser and Seller, pursuant to which Purchaser has assumed Seller's
obligations under certain leases and contracts and other arrangements. Seller
further warrants that it has full power and authority to sell the Assets and
that the sale thereof has been duly authorized by all necessary corporation
action.
Executed on August 31, 1999
Coach and Car Equipment Corporation
By /s/ Inam Khan
--------------------------------
Its President
--------------------------------
State of Arizona )
)ss
County of Maricopa )
Before me, a Notary Public in and said County and State personally
appeared Inam Khan, a duly authorized officer of COACH AND CAR EQUIPMENT
CORPORATION, INC., who acknowledged the execution of the foregoing Bill of Sale.
Witness my hand and Notarial Seal this 31 day of August, 1999.
/s/ Elaine Micucci
-------------------------
Notary Public
My Commission Expires:
February 17, 2003
- -------------------- --------
<PAGE> 1
EXHIBIT 2.1j
NON-COMPETITION AGREEMENT
AGREEMENT, dated as of October 21, 1999, between COACH AND CAR
EQUIPMENT CORP., a Nevada corporation f/k/a Coach and Car Acquisition Corp.
("Company"), and CCEC CAPITAL CORP., an Arizona corporation f/k/a Coach and Car
Equipment Corporation ("Coach and Car").
WHEREAS, pursuant to an Amended and Restated Asset Purchase Agreement
dated August 31, 1999 ("Purchase Agreement"), the Company acquired all of the
operating assets of Coach and Car, which owns and operates a business located
principally in Elk Grove Village, Illinois, engaged in rail transportation hard
goods and soft goods manufacture and sale (the "Business").
WHEREAS, the Company's agreement not to compete with Coach and Car and
its affiliated entities under common control in the airline seating soft goods
business (the "Excluded Business") is a material inducement in Coach and Car's
agreement to refinance the promissory note given by the Company to Coach and Car
in connection with the Purchase Agreement.
NOW, THEREFORE, the Company and Coach and Car covenant and agree as
follows:
1. No Competition. For a period of seven (7) years from the date
hereof, neither the Company nor any affiliated entity under common control with
the Company nor anyone acting on their behalf will:
(a) compete with Coach and Car or any affiliated company under
common control with Coach and Car ("Coach and Car Affiliate") through any
interest in the ownership or operation of a business similar to the Excluded
Business; or
(b) interfere with, disrupt or attempt to interfere with or disrupt
any past, present or prospective relationship, contractual or otherwise, between
Coach and Car or any Coach and Car Affiliate and (i) any supplier or employee of
the Excluded Business, or (ii) any customer who has used the goods and services
of the Excluded Business.
The term "compete" as used herein means to engage at any geographic
location in competition directly or indirectly, either as a proprietor,
employee, agent, consultant, director, officer, creditor, partner, stockholder
(other than solely as a minority stockholder of a corporation listed on a
national securities exchange or whose stock is regularly traded in the
over-the-counter market) or in any other capacity or manner whatever.
2. Remedies. Seller agrees and acknowledges the violations of the
covenants and agreements in Section 1 hereof would cause irreparable injury to
Coach and Car, that remedies at law for a violation or threatened violation
thereof would be inadequate, and that Coach and Car is entitled to temporary and
permanent injunctive or other equitable relief in the event of such violation or
threatened violation as well as to damages and other legal remedies. In the
event that Coach and Car prevails in any court execution brought to enforce the
provisions of this Agreement, it shall be entitled to recover its costs,
including reasonable attorneys fees, in addition to any other relief granted.
<PAGE> 2
3. Interpretation; Separability. The Company and Coach and Car
recognize that the laws and public policies of the various states of the United
States differ as to the validity and enforceability of covenants and agreements
similar to those contained in Section 1 hereof. It is the intention of the
Company and Coach and Car that the provisions of this Agreement shall be
enforced to the fullest extent permissible under the laws and the public
policies of the States of Illinois and Arizona and of any other jurisdiction in
which enforcement may be sought, but that the enforceability (or the
modification to conform with such laws or public policies) of any provisions
hereof shall not render unenforceable or impair the remainder of this Agreement.
Accordingly, any provisions of this Agreement shall be deemed amended to delete
or modify, as necessary, the offending provisions and to alter the balance of
this Agreement in order to render the same valid and enforceable to the fullest
extent permissible.
4. Miscellaneous. This Agreement shall inure to the benefit of Coach
and Car, all Coach and Car Affiliates, and their successors and assigns. This
Agreement shall be governed in all respects by the laws of the State of Arizona.
The headings herein are for convenience of reference only and shall not be
deemed to be part of the substance of this Agreement.
5. Notices. Any notice of other communication under this Agreement
shall be in writing and shall be sent by certified or registered mail addressed
to the respective parties as follows:
If to the Company:
Coach and Car Equipment Corp.
730 West 22nd Street
Tempe, Arizona 85282
Attn: Michael Feinstein
If to Coach and Car:
Simula, Inc.
2700 N. Central Avenue
Suite 1000
Phoenix, Arizona 85004
Attn: Brad Forst
Any notice or other communication shall be deemed to have been given
when deposited, postage paid, in the United States mail. Either of the above
addresses may be changed any time on ten (10) days' prior notice given as
provided above.
2
<PAGE> 3
IN WITNESS WHEREOF, the Company and Coach and Car have executed this
agreement on the date first above written.
COACH AND CAR EQUIPMENT CORP., a Nevada
corporation formerly known as Coach and Car
Acquisition Corp.
By: /s/ Michael Feinstein
-----------------------------------------
Its: Vice President
----------------------------------------
CCEC CAPITAL CORP., an Arizona corporation
formerly known as Coach and Car Equipment
Corporation
By: /s/ Brad Forst
-----------------------------------------
Its: Executive Vice President
----------------------------------------
3
