SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 02549
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): MARCH 28, 1996
HAYES WHEELS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-11592 13384636
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
38481 Huron River Drive, Romulus, Michigan 48174
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313) 941-2000
<PAGE>
ITEM 5. OTHER EVENTS
Hayes Wheels International, Inc. (the "Company") has entered into
an Agreement and Plan of Merger, dated as of March 28, 1996 (the "Merger
Agreement"), with MWC Holdings, Inc., a Delaware corporation
("Holdings"), which provides for the merger (the "Merger") of Holdings
with and into the Company with the Company continuing as the surviving
corporation (the "Surviving Corporation"). Pursuant to the Merger
Agreement, at the effective time of the Merger (the "Effective Time"):
(i) each share of Common Stock, par value $.01 per share, of the Company
("Company Common Stock") outstanding immediately prior to the Effective
Time (other than shares held by the Company or its subsidiaries (which
will be cancelled) and shares for which appraisal rights under Delaware
law are perfected) will be converted into the right to receive $28.80 in
cash and one-tenth of one share of common stock, par value $.01 per<PAGE>
share, of the Surviving Corporation ("Surviving Corporation Common
Stock"); (ii) each share of Common Stock, par value $.01 per share, of
Holdings outstanding prior to the Effective Time (other than shares held
by Holdings or its subsidiaries (which will be cancelled) and shares for
which appraisal rights under Delaware law are perfected) will be
converted into the right to receive 8,231.76 shares of Surviving
Corporation Common Stock and 3,029.29 warrants, each warrant entitling
the holder thereof to purchase one share of Surviving Corporation Common
Stock at a price of $48.00 during the period commencing on the fourth
anniversary of the Effective Time and ending on the seventh anniversary
of the Effective Time ("Warrants"); and (iii) each share of Series A
Preferred Stock, par value $.01 per share, of the Company ("Company
Preferred Stock"), to be issued by the Company immediately prior to the
Effective Time, will be converted into the right to receive 31.25 shares
of Surviving Corporation Common Stock.
Concurrently with the execution of the Merger Agreement, Varity
Corporation, a Delaware corporation ("Varity"), Varity's wholly owned
subsidiary, K-H Corporation, a Delaware corporation ("K-H"), and Holdings
entered into a Stock Option Agreement (the "Stock Option Agreement")
whereby K-H granted to Holdings an option to purchase all 8,144,000
shares of Company Common Stock currently owned by K-H (approximately
46.3% of the outstanding shares of Company Common Stock) at a price of
$32.00 per share (or such higher price as may be paid to holders of
Company Common Stock pursuant to the Merger), which option becomes
exercisable upon the occurrence of certain events set forth in the Stock
Option Agreement. In connection with the Merger Agreement, the Company
has entered into a Registration Rights Agreement, dated as of March 28,
1996 (the "Registration Rights Agreement"), with Varity and K-H, pursuant
to which the Company has agreed to use its best efforts to register for
resale the 814,000 shares (approximately 7.3% of the then outstanding
shares) of Surviving Corporation Common Stock that Varity and K-H will
receive upon consummation of the Merger.
In connection with the Merger Agreement, the Company has also
entered into five subscription agreements, dated as of March 28, 1996,
with certain investors (the "Subscription Agreements") providing for the
purchase by such investors of an aggregate of 200,000 newly issued shares
of Company Preferred Stock and 150,000 Warrants for an aggregate purchase
price of $200 million. The sales of Company Preferred Stock and Warrants
contemplated by the Subscription Agreements will occur immediately prior
to the Effective Time and is subject to the consummation of the Merger.
Copies of the Merger Agreement, the form of the Subscription
Agreements, the form of Warrant Agreement pursuant to which the Warrants
will be issued, the Stock Option Agreement and the Registration Rights
Agreement are filed as exhibits hereto. The foregoing description is
qualified in its entirety by reference to such exhibits.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits<PAGE>
2 Agreement and Plan of Merger, dated as of March 28, 1996,
between MWC Holdings, Inc. and Hayes Wheels International,
Inc.
10.1 Form of Subscription Agreement
10.2 Form of Warrant Agreement
10.3 Stock Option Agreement, dated as of March 28, 1996, by and
among Varity Corporation, K-H Corporation, and MWC Holdings,
Inc.
10.4 Registration Rights Agreement, dated as of March 28, 1996,
among Hayes Wheels International, Inc., Varity Corporation
and K-H Corporation
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
HAYES WHEELS INTERNATIONAL, INC.
April 5, 1996 By: /s/ Daniel M. Sandberg
Daniel M. Sandberg,
Vice President, General
Counsel and Secretary
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
2 Agreement and Plan of Merger,
dated as of March 28, 1996,
between MWC Holdings, Inc.
and Hayes Wheels
International, Inc.
10.1 Form of Subscription Agreement
10.2 Form of Warrant Agreement
10.3 Stock Option Agreement, dated
as of March 28, 1996, by and
among Varity Corporation, K-H
Corporation and MWC Holdings, Inc.<PAGE>
10.4 Registration Rights Agreement,
dated as of March 28, 1996,
among Hayes Wheels International,
Inc., Varity Corporation and K-H
Corporation
<PAGE>
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
between
MWC HOLDINGS, INC.
and
HAYES WHEELS INTERNATIONAL, INC.
Dated as of March 28, 1996
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 28, 1996
(this "Agreement"), by and among MWC HOLDINGS, INC., a Delaware
corporation ("Holdings") and HAYES WHEELS INTERNATIONAL, INC., a Delaware
corporation (the "Company") (Holdings and the Company being hereinafter
collectively referred to as the "Constituent Corporations").
WHEREAS, the Board of Directors of Holdings and the Board of
Directors of the Company, have each approved and deem it advisable and in
the best interests of their respective stockholders to consummate the
combination of the Company and Holdings upon the terms and subject to the
conditions of this Agreement; and
WHEREAS, it is intended that the combination be accomplished
by a merger of Holdings with and into the Company (the "Merger"); and
WHEREAS, as a condition and an inducement to Holdings'
entering into this Agreement and incurring the obligations set forth
herein, concurrently with the execution and delivery of this Agreement,
(i) Holdings is entering into a Stock Option Agreement with Varity
Corporation ("Varity"), a Delaware corporation, and its wholly-owned
subsidiary, K-H Corporation, a Delaware corporation and a holder of
approximately 46.3% of the outstanding shares of Company Common Stock (as
hereinafter defined), in the form of Exhibit A hereto (the "Stock Option<PAGE>
Agreement"), (ii) the Company and Varity are entering into a Registration
Rights Agreement, in the form of Exhibit B hereto (the "Registration
Rights Agreement") and (iii) the Company, Holdings and certain third-
party investors are entering into Stock Subscription Agreements, in the
form of Exhibit C hereto (the "Subscription Agreements"), pursuant to
which, among other things, the third-party investors have subscribed to
purchase immediately prior to the Effective Time (as hereinafter
defined), an aggregate of 200,000 shares of Company Preferred Stock (as
hereinafter defined) and warrants to purchase an aggregate of 150,000
shares of New Company Common Stock (as hereinafter defined) pursuant to a
warrant agreement, substantially in the form of Exhibit D hereto (the
"Warrant Agreement"); and
WHEREAS, as a condition and inducement to the Company
entering into this Agreement and incurring the obligations set forth
herein, Joseph Littlejohn & Levy Fund II L.P. ("JLL," which owns
approximately 74% of the outstanding voting stock of Holdings),
concurrently with the execution and delivery of this Agreement, has
granted a proxy, in the form of Exhibit E hereto, to Varity to vote JLL's
shares of Holdings Common Stock (as hereinafter defined) in favor of the
Merger at the meeting of Holdings' stockholders; and
WHEREAS, the Board of Directors of the Company has approved
the transactions contemplated by this Agreement, the Subscription
Agreements and the Stock Option Agreement in accordance with the
provisions of Section 203 and 251 of the Delaware General Corporation Law
(the "DGCL"), and has resolved, subject to the terms of this Agreement,
to recommend the approval of the Merger by its stockholders; and
WHEREAS, the Board of Directors of Holdings has approved the
transactions contemplated by this Agreement and the Subscription
Agreements, and has unanimously resolved, subject to the terms of this
Agreement, to recommend the approval of the Merger by its stockholders;
and
WHEREAS, this Agreement shall be submitted to the
stockholders of Holdings and the stockholders of the Company for their
approval.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set
forth herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions contained in this Agreement, and in accordance with the DGCL,
at the Effective Time (as hereinafter defined), Holdings shall be merged
with and into the Company, the separate corporate existence of Holdings
shall thereupon cease, and the Company shall continue as the surviving
corporation (sometimes hereinafter referred to as the "Surviving<PAGE>
Corporation") and shall continue its corporate existence under the laws
of the State of Delaware. In accordance with the DGCL, all of the
rights, privileges, powers, immunities, purposes and franchises of the
Company and Holdings shall vest in the Surviving Corporation and all of
the debts, liabilities, obligations and duties of the Company and
Holdings shall become the debts, liabilities, obligations and duties of
the Surviving Corporation.
Section 1.2 Closing. Subject to the terms and conditions of
this Agreement, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Skadden,
Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New York, at
10:00 a.m., local time, on the second business day after which all of the
conditions set forth in Article VII are satisfied or waived or on such
other date and at such other time and place as Holdings and the Company
shall agree (the date on which the Closing actually occurs being referred
to herein as the "Closing Date").
Section 1.3 Effective Time. The Merger shall become
effective at the time of filing of, or at such later time specified in, a
properly executed Certificate of Merger, in the form required by and
executed in accordance with the DGCL, filed with the Secretary of State
of the State of Delaware, in accordance with the provisions of Section
251 of the DGCL. Such filing shall be made contemporaneously with, or
immediately after, the Closing. When used in this Agreement, the term
"Effective Time" shall mean the date and time at which the Merger shall
become effective.
Section 1.4 Certificate of Incorporation and By-Laws. At
the Effective Time, the Certificate of Incorporation of the Company, as
in effect immediately prior to the Effective Time, shall be amended as
set forth in Exhibit F hereto. The Certificate of Incorporation of the
Company, as so amended at the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended in
accordance with applicable law. The By-Laws of the Company, in effect
immediately prior to the Effective Time, shall be amended as set forth in
Exhibit G hereto. The By-Laws of the Company, as so amended at the
Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended in accordance with applicable law.
Section 1.5 Directors and Officers. The nine individuals
whose names are set forth on Exhibit H hereto, as the same may be
supplemented or amended from time to time by Holdings prior to the
Effective Time (except that any such supplement or amendment shall not
increase the number of directors and Exhibit H shall include not less
than two independent directors and the Chief Executive Officer of the
Company), shall be the initial directors of the Surviving Corporation and
shall hold office from the Effective Time until their respective
successors are duly elected or appointed and qualified in the manner
provided in the Certificate of Incorporation or By-Laws of the Surviving
Corporation or as otherwise provided by law. The officers of the Company
at the Effective Time shall be the initial officers of the Surviving
Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualified in the<PAGE>
manner provided in the Certificate of Incorporation or By-Laws of the
Surviving Corporation or as otherwise provided by law.
ARTICLE II
CONVERSION OF SHARES
Section 2.1 Conversion of Shares. As of the Effective Time,
by virtue of the Merger and without any action on the part of any holder
of any shares of Company Common Stock or Company Preferred Stock or any
shares of capital stock of Holdings:
(a) Each share of common stock, par value $.01, of the
Company ("Company Common Stock" or "Shares") issued and outstanding
immediately prior to the Effective Time (other than Company Dissenting
Shares (as hereinafter defined) and Shares to be cancelled pursuant to
Section 2.1(d) hereof) shall be converted into the right to receive (i)
$28.80 per Share in cash (the "Cash Consideration"), without any interest
thereon and (ii) one-tenth of one share of duly authorized, validly
issued, fully paid and nonassessable shares of common stock, par value
$0.01, of the Surviving Corporation ("New Company Common Stock").
(b) Each share of preferred stock, par value $.01, of
the Company ("Company Preferred Stock") issued and outstanding
immediately prior to the Effective Time shall be converted into 31.25
shares of New Company Common Stock. To the extent any holder of Company
Preferred Stock is limited by Applicable Law (as hereinafter defined) in
owning voting New Company Common Stock, such holder may receive shares of
a class of non-voting or reduced-voting common stock, par value $.01 per
share, of the Company which shall be identical in all respects (other
than with respect to voting) to the New Company Common Stock, and
references to New Company Common Stock shall be deemed to refer to such
non-voting or reduced-voting common stock unless the context otherwise
requires. All such shares of Company Preferred Stock when so converted
shall automatically be cancelled and retired and cease to exist and
holders of such shares of Company Preferred Stock shall cease to have any
rights as preferred stockholders of the Company, except the right to
receive the consideration set forth in this Section 2.1(b) for each share
of Company Preferred Stock held by them. The Company Preferred Stock
shall have the terms set forth in the Certificate of Designations
substantially in the form of Exhibit I hereto, which shall be filed with
the Secretary of State of Delaware immediately prior to the Closing.
(c) Each share of common stock, par value $.01, of
Holdings ("Holdings Common Stock"), issued and outstanding immediately
prior to the Effective Time (other than Holdings Dissenting Shares (as
hereinafter defined) and shares of Holdings Common Stock to be cancelled
pursuant to Section 2.1(d) hereof) shall be converted into (i) 8,231.76
duly issued, validly authorized, fully paid and nonassessable shares of
New Company Common Stock and (ii) 3029.29 warrants ("Warrants") to
purchase New Company Common Stock. Each Warrant shall entitle the holder
to purchase one duly issued, validly authorized, fully paid and
nonassessable share of New Company Common Stock at a price of $48.00 per
share, subject to the terms and conditions set forth in the Warrant<PAGE>
Agreement. All such shares of Holdings Common Stock when so converted
shall automatically be cancelled and retired and cease to exist and
holders of such shares of Holdings Common Stock shall cease to have any
rights as stockholders of Holdings, except the right to receive the
consideration set forth in this Section 2.1(c) for each share of Holdings
Common Stock held by them.
(d) All Shares that are owned by the Company as
treasury stock, all shares of Holdings Common Stock that are owned by
Holdings as treasury stock, and any Shares, or shares of Holdings Common
Stock, owned by any direct or indirect wholly-owned Subsidiary of the
Company or Holdings, as applicable, shall automatically be cancelled and
retired and shall cease to exist and no cash, New Company Common Stock,
Warrants or other consideration shall be delivered or deliverable in
exchange therefor. As used in this Agreement, a "Subsidiary" of any
person means another person, an amount of the voting securities, other
voting ownership or voting partnership interests of which is sufficient
to elect at least a majority of its Board of Directors or other governing
body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first
person.
(e) All Shares to be converted pursuant to Section
2.1(a), issued and outstanding immediately prior to the Effective Time,
shall no longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist and each holder of a certificate which
immediately prior to the Effective Time represented outstanding Shares
(together with the certificates representing shares of Company Preferred
Stock and Holdings Common Stock, the "Certificates") shall cease to have
any rights as stockholders of the Company, except the right to receive
the consideration set forth in Section 2.1(a) (the "Merger
Consideration") for each Share held by them.
Section 2.2 Exchange Procedures.
(a) The Company shall designate a bank or trust
company reasonably acceptable to Holdings to act as Exchange Agent
hereunder (the "Exchange Agent"). Immediately following the Effective
Time, the Surviving Corporation shall deliver, in trust, to the Exchange
Agent, for the benefit of the holders of Shares and shares of Holdings
Common Stock and Company Preferred Stock, for exchange in accordance with
this Article II, through the Exchange Agent, (i) certificates evidencing
the shares of New Company Common Stock issuable pursuant to Section 2.1
in exchange for outstanding Shares and shares of Holdings Common Stock
and Company Preferred Stock, (ii) certificates evidencing the Warrants
issuable pursuant to Section 2.1(c) and (iii) cash in an amount
sufficient to make any cash payment due under Section 2.1(a) (the
"Exchange Fund").
(b) As soon as practicable after the Effective Time,
the Surviving Corporation shall cause the Exchange Agent to mail to each
holder of record of a Certificate or Certificates (i) a form of letter of
transmittal specifying that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon proper delivery of<PAGE>
the Certificates to the Exchange Agent and (ii) instructions for use in
surrendering such Certificates in exchange for certificates representing
shares of New Company Common Stock and, if applicable, cash or Warrants.
Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, the holder of
such Certificate shall be entitled to receive in exchange therefor (A)
certificates representing that number of whole shares of New Company
Common Stock or Warrants, if any, into which the Shares or shares of
Holdings Common Stock or Company Preferred Stock, as applicable,
represented by the surrendered Certificate have been converted at the
Effective Time pursuant to Section 2.1 hereof, (B) in the case of
Certificates representing Shares, cash in the amount equal to the number
of Shares represented by the surrendered Certificate multiplied by the
Cash Consideration pursuant to Section 2.1(a) hereof, (C) any dividends
or other distributions to which such holder is entitled pursuant to
Section 2.3 and (D) cash in lieu of any fractional shares of New Company
Common Stock to which such holder is entitled pursuant to Section 2.4
hereof, and any amounts to which the holder is entitled pursuant to
Section 2.3 hereof after giving effect to any required tax withholdings,
and the Certificate so surrendered shall forthwith be cancelled. Until
surrendered as contemplated by this Section 2.2(b), each Certificate
shall be deemed from and after the Effective Time to represent only the
right to receive upon such surrender the Cash Consideration and/or shares
of New Company Common Stock and, if applicable, Warrants in accordance
with Section 2.1 hereof, cash in lieu of any fractional shares of New
Company Common Stock in accordance with Section 2.4 hereof and any
dividends or distributions on New Company Common Stock in accordance with
Section 2.3 hereof. In no event shall the holder of any such surrendered
Certificates be entitled to receive interest on any of the Cash
Consideration or cash for fractional shares to be received in the Merger.
Neither the Exchange Agent nor any party hereto shall be liable to a
holder of Shares or shares of Holdings Common Stock or Company Preferred
Stock for any amount paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(c) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a
bond, in such reasonable amount as the Surviving Corporation may direct,
as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate the applicable certificate
representing shares of New Company Common Stock and Cash Consideration in
accordance with Section 2.1 hereof, any cash in lieu of fractional shares
of New Company Common Stock to which the holders thereof are entitled
pursuant to Section 2.4 hereof and any dividends or other distributions
to which the holders thereof are entitled pursuant to Section 2.3 hereof.
Section 2.3 Dividends; Transfer Taxes; Withholding. No
dividends or other distributions that are declared on or after the
Effective Time on New Company Common Stock, or are payable to the holders
of record thereof who became such on or after the Effective Time, shall
be paid to any person entitled by reason of the Merger to receive<PAGE>
certificates representing shares of New Company Common Stock, and no
distribution of Cash Consideration and no cash payment in lieu of any
fractional share of New Company Common Stock shall be paid to any person
pursuant to Section 2.4 hereof, until such person shall have surrendered
its Certificate(s) as provided in Section 2.2 hereof. Subject to
applicable law, there shall be paid to each person receiving a
certificate representing such shares of New Company Common Stock, at the
time of such surrender or as promptly as practicable thereafter, the
amount of any dividends or other distributions theretofore paid with
respect to the shares of New Company Common Stock represented by such
certificate and having a record date on or after the Effective Time but
prior to such surrender and a payment date on or subseuent to such
surrender. In no event shall the person entitled to receive such
dividends or other distributions be entitled to receive interest on such
dividends or other distributions. If any cash or certificate
representing shares of New Company Common Stock is to be paid to or
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of such exchange
that the Certificate so surrendered shall be properly endorsed and
otherise in proper form for transfer and that the person requesting such
exchange shall pay to the Exchange Agent any transfer or other taxes
required by reason of the issuance of such certificate representing
shares of New Company Common Stock and the distribution of such cash
payment in a name other than that of the registered holder of the
Certificate so surrendered, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable. The
Surviving Corporation or the Exchange Agent shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Company Common Stock, Holdings Common Stock or
Company Preferred Stock such amounts as the Surviving Corporation or the
Exchange Agent are required to deduct and withhold under the Internal
Revenue Code of 1986, as amended (the"Code"), or any provision of state,
local or foreign tax law, with respect to the making of such payment. To
the extent that amounts are so withheld by the Surviving Corporation or
the Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the
Company Common Stock, Holdings Common Stock or Company Preferred Stock in
respect of whom such deduction and withholding was made by the Surviving
Corporation or the Exchange Agent.
Section 2.4 Fractional Shares. No certificates or scrip
representing fractional shares of New Company Common Stock shall be
issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to shares shall be payable on or with respect
to any fractional share and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a stockholder
of the Surviving Corporation. In lieu of any such fractional share of
New Company Common Stock, the Surviving Corporation shall pay to each
former stockholder of the Company or Holdings who otherwise would be
entitled to receive a fractional share of New Company Common Stock an
amount in cash (without interest) rounded to the nearest whole cent,
determined by multiplying (i) $32.00 by (ii) the fractional interest in a
share of New Company Common Stock to which such holder would otherwise be
entitled.<PAGE>
Section 2.5 Return of Exchange Fund. Any portion of the
certificates representing shares of New Company Common Stock and Cash
Consideration issuable upon conversion of Company Common Stock, Holdings
Common Stock or Company Preferred Stock pursuant to Section 2.1 hereof,
together with any cash in lieu of fractional shares payable in respect
thereof pursuant to Section 2.4 hereof and any dividends or distributions
payable in respect thereof pursuant to Section 2.3 hereof, which remains
undistributed to the former holders of Company Common Stock, Holdings
Common Stock or Company Preferred Stock for one year after the Effective
Time shall be delivered to the Surviving Corporation, upon its request,
and any such former holders who have not theretofore surrendered to the
Exchange Agent their Certificate(s) in compliance with this Article II
shall thereafter look only to the Surviving Corporation for payment of
their claim for shares of New Company Common Stock and Cash
Consideration, any cash in lieu of fractional shares of New Company
Common Stock and any dividends or distributions with respect to such
shares of New Company Common Stock (in each case, without interest
thereon). The Exchange Agent shall invest any cash included in the
Exchange Fund, as directed by the Surviving Corporation, on a daily
basis. Any interest and other income resulting from such investments
shall be paid to the Surviving Corporation.
Section 2.6 Options. Prior to the Effective Time, each
holder of an option granted by the Company to purchase shares of Company
Common Stock (each a "Company Option") which is outstanding and
unexercised shall be entitled to elect to receive, in whole or in part,
either (a) an amount in cash equal to the difference between (i) the
product of (1) the number of shares of Company Common Stock subject to
such Company Option and (2) $32, and (ii) the aggregate exercise price of
such Company Option or (b) a vested option to purchase shares of New
Company Common Stock in the same amount and at the same exercise price as
applied to the Company Option, and otherwise subject to the terms (as in
effect as of the date hereof, other than with respect to vesting) of the
Company's 1992 Stock Incentive Plan and the agreements thereunder, and
except that all references to the Company shall be deemed to be
references to the Surviving Corporation (each such option, a "New Company
Option"); provided, however, that if a holder of a Company Option has (x)
held such Company Option for less than six months prior to the Effective
Time or (y) fails to make a timely election as provided in this Section
2.6, then in each such case such option holder shall receive a New
Company Option in accordance with clause (b) of this sentence.
Section 2.7 Closing of Transfer Books. At the Effective
Time, the stock transfer books of Holdings and the Company shall be
closed and no transfer of shares of Holdings Common Stock, Company Common
Stock or Company Preferred Stock shall thereafter be made. If, after the
Effective Time, Certificates are presented to the Surviving Corporation,
they shall be cancelled and exchanged as provided in this Article II.
Section 2.8 Dissenting Shares. Notwithstanding anything in
this Agreement to the contrary, shares of Company Common Stock
outstanding immediately prior to the Effective Time held by a holder (if
any) who is entitled to demand, and who properly demands, appraisal for
such shares in accordance with Section 262 of the DGCL ("Company<PAGE>
Dissenting Shares"), and shares of Holdings Common Stock outstanding
immediately prior to the Effective Time held by a holder (if any) who is
entitled to demand, and who properly demands, appraisal for such shares
in accordance with Section 262 of the DGCL ("Holdings Dissenting
Shares"), shall not be converted into a right to receive the Cash
Consideration and shares of New Company Common Stock or shares of New
Company Common Stock and Warrants, as the case may be, unless such holder
fails to perfect or otherwise loses such holder's right to appraisal, if
any. If, after the Effective Time, such holder fails to perfect or loses
any such right to appraisal, such Company Dissenting Shares or Holding
Dissenting Shares, as the case may be, shall be treated as if they had
been converted as of the Effective Time into a right to receive the Cash
Consideration and shares of New Company Common Stock or shares of New
Company Common Stock and Warrants, as the case may be. The Company shall
give prompt notice to Holdings of any demands received by the Company for
appraisal of shares of Company Common Stock and Holdings shall have the
right to participate in and direct all negotiations and proceedings with
respect to such demands. Prior to the Effective Time, the Company shall
not, except with the prior written consent of Holdings, which consent
shall not be unreasonably withheld, make any payment with respect to, or
settle or offer to settle, any such demands. Holdings shall give prompt
notice to the Company of any demands received by Holdings for appraisal
of shares of Holdings Common Stock.
Section 2.9 Further Assurances. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised
that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm
of record or otherwise in the Surviving Corporation its right, title or
interest in, to or under any of the rights, properties or assets of
Holdings or the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, the officers of the Surviving
Corporation shall be authorized to execute and deliver, in the name and
on behalf of each of Holdings and the Company or otherwise, all such
deeds, bills of sale, assignments and assurances and to take and do, in
such names and on such behalves or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any
and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry
out the purposes of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule
delivered by the Company to Holdings at or prior to the execution of this
Agreement (the "Company Disclosure Schedule") (each section of which
qualifies the correspondingly numbered representation and warranty), the
Company represents and warrants to Holdings as follows:
Section 3.1 Organization and Good Standing. The Company is
a corporation duly organized, validly existing and in good standing under<PAGE>
the laws of the State of Delaware and has the corporate power and
authority to carry on its business as it is now being conducted. The
Company is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities
makes such qualification necessary, except where the failure to be so
qualified or in good standing would not have a material adverse effect,
individually or in the aggregate, on the business, financial condition or
results of operations of the Company and its Subsidiaries taken as a
whole, or, if applicable, the ability of the Company to consummate the
Merger and the other transactions contemplated by this Agreement (a
"Company Material Adverse Effect").
Section 3.2 Certificate of Incorporation and By-Laws.
Complete and correct copies of the Certificates of Incorporation and By-
laws or equivalent organizational documents, each as amended to date, of
the Company and each of its Subsidiaries have been made available to
Holdings. The Certificates of Incorporation, By-laws and equivalent
organizational documents of the Company and each of its Subsidiaries are
in full force and effect. Neither the Company nor any of its
Subsidiaries is in violation of any material provision of its Certificate
of Incorporation, By-laws or equivalent organizational documents.
Section 3.3 Capitalization.
(a) As of the date hereof, the authorized capital
stock of the Company consisted of 50,000,000 Shares of Company Common
Stock, par value of $.01 per share and 25,000,000 shares of preferred
stock ("Company Preferred Stock"). As of the date hereof, (i) 17,574,000
Shares are issued and outstanding, (ii) no shares of Company Preferred
Stock are issued and outstanding, and (iii) options to acquire 478,900
Shares are outstanding, and 21,100 options to acquire Shares remain
reserved for issuance, under the Company 1992 Stock Incentive Plan. All
of the issued and outstanding Shares are, and all of the Company
Preferred Stock when issued and paid for pursuant to the Subscription
Agreements will be, validly issued, and are, and in the case of the
Company Preferred Stock will be, fully paid, nonassessable and free of
preemptive rights.
(b) Except as described in this Section 3.3 and as
contemplated by this Agreement or the Subscription Agreements: (i) no
shares of capital stock or other equity securities of the Company are
authorized, issued or outstanding, or reserved for issuance, and there
are no options, warrants or other rights (including registration rights),
agreements, arrangements or commitments of any character to which the
Company or any of its Subsidiaries is a party relating to the issued or
unissued capital stock or other equity interests of the Company or any of
its Subsidiaries, requiring the Company or any of its Subsidiaries to
grant, issue or sell any shares of the capital stock or other equity
interests of the Company or any of its Subsidiaries by sale, lease,
license or otherwise; (ii) the Company and its Subsidiaries have no
obligations, contingent or otherwise, to repurchase, redeem or otherwise
acquire any shares of the capital stock or other equity interests of the
Company or its Subsidiaries; (iii) except for any Company pension plan,<PAGE>
neither the Company nor any of its Subsidiaries, directly or indirectly,
owns, or has agreed to purchase or otherwise acquire, the capital stock
or other equity interests of, or any interest convertible into or
exchangeable or exercisable for such capital stock or such equity
interests, of any corporation, partnership, joint venture or other entity
which would be material in value to the Company; and (iv) there are no
voting trusts, proxies or other agreements or understandings to which the
Company or any of its Subsidiaries is a party or, to the knowledge of the
Company, is bound with respect to the voting of any shares of capital
stock or other equity interests of the Company or any of its
Subsidiaries.
Section 3.4 Company Subsidiaries. The Company Disclosure
Schedule sets forth a list of each Company Subsidiary; its authorized,
issued and outstanding capital stock or other equity interests; the
percentage of such capital stock or other equity interests owned by the
Company or any Company Subsidiary, and the identity of such owner; the
capital stock reserved for future issuance pursuant to outstanding
options or other agreements; and the identity of all parties to any such
option or other agreement. Each Subsidiary of the Company is a
corporation or partnership duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
organization. Each Subsidiary of the Company has all requisite corporate
power and authority to carry on its business as it is now being
conducted. Each Subsidiary of the Company is duly qualified as a foreign
corporation or organization authorized to do business, and is in good
standing, in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or
in good standing would not have a Company Material Adverse Effect. All
of the outstanding shares of capital stock or other ownership interests
in each of the Company's Subsidiaries have been validly issued, and are
fully paid, nonassessable and are owned by the Company or another
Subsidiary of the Company free and clear of all pledges, claims, options,
liens, charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens"), and are not subject to preemptive
rights created by statute, such Subsidiary's respective Certificate of
Incorporation or By-laws or equivalent organizational documents or any
agreement to which such Subsidiary is a party.
Section 3.5 Corporate Authority.
(a) The Company has the requisite corporate power and
authority to execute and deliver this Agreement and, subject to the
approval of the Company's stockholders with respect to the Merger, to
consummate the transactions contemplated hereby. The execution and
delivery by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby, have been duly
authorized by its Board of Directors and, except for the approval of the
Company's stockholders with respect to the Merger, no other corporate
action on the part of the Company is necessary to authorize the execution
and delivery by the Company of this Agreement and the consummation by it
of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding<PAGE>
agreement of the Company and is enforceable against the Company in
accordance with its terms, except that (i) such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other laws, now or hereafter in effect, relating
to or limiting creditors' rights generally and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief
may be subject to equitable defense, and to the discretion of the court
before which any proceeding therefor may be brought. The preparation of
the Proxy Statement (as hereinafter defined) and the Registration
Statement (as hereinafter defined) to be filed with the SEC has been duly
authorized by the Board of Directors of the Company.
(b) Prior to execution and delivery of this Agreement,
the Board of Directors of the Company (at a meeting duly called and
held) has (i) approved this Agreement, the Subscription Agreements, the
Stock Option Agreement and the Merger and the other transactions
contemplated hereby and thereby, and such approval is sufficient to
render inapplicable to the acquisition of Company Preferred Stock
pursuant to the Subscription Agreements, the acquisition of Company
Common Stock pursuant to the Stock Option Agreement, the Merger and all
of such other transactions the provisions of Section 203 of the DGCL,
(ii) determined that the transactions contemplated hereby are fair to and
in the best interests of the holders of the Company Common Stock and
(iii) except as may be required to comply with its fiduciary duties under
Applicable Law (as hereinafter defined) as advised by counsel, determined
to recommend this Agreement, the Merger and the other transactions
contemplated hereby to the Company's stockholders for approval and
adoption at the stockholders meeting contemplated by Section 6.5(a)
hereof. The affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock are the only votes of the
holders of any class or series of the Company's capital stock necessary
to approve the Merger.
Section 3.6 Compliance with Applicable Law. Except as
disclosed in the Company SEC Documents (as hereinafter defined), (i) each
of the Company and its Subsidiaries holds, and is in compliance with the
terms of, all permits, licenses, exemptions, orders and approvals of all
Governmental Entities (as hereinafter defined) necessary for the conduct
of their respective businesses ("Company Permits"), except for failures
to hold or to comply with such permits, licenses, exemptions, orders and
approvals which would not have a Company Material Adverse Effect, (ii)
with respect to the Company Permits, no action or proceeding is pending
or, to the knowledge of the Company, threatened, and, to the knowledge of
the Company, no fact exists or event has occurred, that would reasonably
be expected to have a Company Material Adverse Effect, (iii) the business
of the Company and its Subsidiaries is being conducted in compliance with
all applicable laws, ordinances, regulations, judgments, decrees or
orders ("Applicable Law") of any federal, state, local, foreign or
multinational court, arbitral tribunal, administrative agency or
commission or other governmental or regulatory authority or
administrative agency or commission (a "Governmental Entity"), except for
violations or failures to so comply that would not have a Company
Material Adverse Effect, and (iv) to the knowledge of the Company, no
investigation or review by any Governmental Entity with respect to the<PAGE>
Company or its Subsidiaries is pending or threatened, other than, in each
case, those which would not reasonably be likely to have a Company
Material Adverse Effect.
Section 3.7 Non-Contravention. The execution and delivery
of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not,
(i) result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a
material benefit under any loan, guarantee of indebtedness or credit
agreement, note, bond, mortgage, indenture, lease, agreement, contract,
instrument, permit, concession, franchise, right or license (any of the
foregoing, a "Contract") applicable to the Company or any of its
Subsidiaries, or result in the creation of any Lien upon any of the
properties or assets of the Company or any of its Subsidiaries, (ii)
conflict or result in any violation of any provision of the Certificate
of Incorporation or By-Laws or other equivalent organizational document,
in each case as amended, of the Company or any of its Subsidiaries, (iii)
subject to the governmental filings discussed in clause (i) of Section
3.8, conflict with or violate any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets (except for
any national or supranational Antitrust Laws (as hereinafter defined) as
to which no representation or warranty is being made), other than, in the
case of clauses (i) and (iii), any such violations, conflicts, defaults,
rights, losses or Liens that, individually or in the aggregate, would not
have a Company Material Adverse Effect.
Section 3.8 Government Approvals; Required Consents. No
filing or registration with, or authorization, consent or approval of,
any Governmental Entity is required by or with respect to the Company or
any of its Subsidiaries in connection with the execution and delivery of
this Agreement by the Company or is necessary for the consummation of the
transactions contemplated hereby (including, without limitation, the
Merger) except: (i) in connection, or in compliance, with the provisions
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), the Securities Act of 1933, as amended (the "Securities
Act"), the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), any state securities or "Blue Sky" law and any requirements of any
foreign or supranational Antitrust Law, (ii) for the filing of a
Certificate of Merger with the Secretary of State of the State of
Delaware, (iii) such consents, approvals, authorizations, permits,
filings and notifications listed in the Company Disclosure Schedule and
(iv) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to obtain or make would
not, individually or in the aggregate, have a Company Material Adverse
Effect.
Section 3.9 SEC Documents and Other Reports.
(a) The Company has filed all documents required to be
filed prior to the date hereof by it and its Subsidiaries with the
Securities and Exchange Commission (the "SEC") since January 31, 1993<PAGE>
(the "Company SEC Documents"). As of their respective dates, or if
amended as of the date of the last such amendment, the Company SEC
Documents complied, and all documents required to be filed by the Company
with the SEC after the date hereof and prior to the Effective Time (the
"Subsequent Company SEC Documents") will comply, in all material respects
with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the applicable rules and regulations promulgated
thereunder and none of the Company SEC Documents contained, and the
Subsequent Company SEC Documents will not contain, any untrue statement
of a material fact or omitted, or will omit, to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, or are
to be made, not misleading. The consolidated financial statements of the
Company included in the Company SEC Documents fairly present, and
included in the Subsequent Company SEC Documents will fairly present, the
consolidated financial position of the Company and its consolidated
Subsidiaries, as at the respective dates thereof and the consolidated
results of their operations and their consolidated cash flows for the
respective periods then ended (subject, in the case of the unaudited
statements, to normal year-end audit adjustments and to any other
adjustments described therein) in conformity with United States generally
accepted accounting principles ("GAAP") (except, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto). Since October 31, 1995, the Company
has not made any change in the accounting practices or policies applied
in the preparation of its financial statements, except as may be required
by GAAP.
Section 3.10 Absence of Certain Changes or Events. Except
to the extent disclosed in the Company SEC Documents filed with the SEC
prior to the date of this Agreement, since October 31, 1995 the Company
and its Subsidiaries have conducted its businesses and operations in the
ordinary and usual course consistent with past practice and there has not
occurred (i) any event, condition or occurrence having or that would
reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect; (ii) any damage, destruction or loss
(whether or not covered by insurance) having or which would reasonably be
expected to have, individually or in the aggregate, a Company Material
Adverse Effect; (iii) any declaration, setting aside or payment of any
dividend or distribution of any kind by the Company on any class of its
capital stock, except for regular quarterly dividends not exceeding $.015
per Share; and (iv) any event during the period from October 31, 1995
through the date of this Agreement that, if taken during the period from
the date of this Agreement through the Effective Time, would constitute a
breach of Section 5.1 hereof.
Section 3.11 Actions and Proceedings.
Except as set forth in the Company SEC Documents, there are
no outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against the Company or any of its Subsidiaries, any
of their properties, assets or business, or, to the knowledge of the
Company, any of the Company's or its Subsidiaries' current or former<PAGE>
directors or officers or any other person whom the Company or any of its
Subsidiaries has agreed to indemnify, as such, that would reasonably be
expected to have, individually or in the aggregate, a Company Material
Adverse Effect. Except as set forth in the Company SEC Documents, there
are no actions, suits or legal, administrative, regulatory or arbitration
proceedings pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries, any of their properties,
assets or business, or, to the knowledge of the Company, any of the
Company's or its Subsidiaries' current or former directors or officers or
any other person whom the Company or any of its Subsidiaries has agreed
to indemnify, as such, that relates to the transactions contemplated by
this Agreement or would reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.
Section 3.12 Absence of Undisclosed Liabilities. Except for
liabilities or obligations which are (i) accrued or reserved against in
the Company's consolidated financial statements (or reflected in the
notes thereto) included in the Company SEC Documents or (ii) disclosed in
the Company SEC Documents, since December 16, 1992, neither the Company
nor any of its Subsidiaries has any liabilities or obligations
(including, without limitation, Tax (as hereinafter defined) liabilities)
(whether absolute, accrued, contingent or otherwise) that were required
to be set forth on a balance sheet which is prepared in conformance with
GAAP, consistently applied and which (either individually or in the
aggregate) would reasonably be expected to have a Company Material
Adverse Effect.
Section 3.13 Contracts. Each Contract entered into by the
Company is valid, binding and enforceable and in full force and effect,
except where failure to be valid, binding and enforceable and in full
force and effect would not reasonably be expected to have a Company
Material Adverse Effect and there are no defaults thereunder, except
those defaults that would not reasonably be expected to have a Company
Material Adverse Effect. Except as set forth in the Company SEC
Documents, neither the Company nor any of its Subsidiaries is a party to
or bound by any non-competition agreement or any other agreement or
obligation which purports to limit in any material respect the manner in
which, or the localities in which, the Company or any such Subsidiary is
entitled to conduct all or any material portion of the business of the
Company and its Subsidiaries taken as a whole.
Section 3.14 Taxes. (a) The Company and each of its
Subsidiaries has timely filed, or been included in, all material Federal,
state, local and foreign income, franchise, sales and other Tax Returns
(as hereinafter defined) required to be filed by or with respect to the
Company or any of its Subsidiaries; (b) as of the time of filing, all
such Tax Returns were true, correct and complete, in all material
respects, and correctly reflected in all material respects the facts
regarding the income, business, assets, operations, activities and status
of the Company and its Subsidiaries and any other material information
required to be shown therein; (c) the Company and its Subsidiaries have
timely paid to the appropriate taxing authority, or have made provision
for, all material Taxes shown as due on such Tax Returns with respect to
the Company and any of its Subsidiaries; (d) the unpaid Taxes of the<PAGE>
Company and its Subsidiaries (x) do not, as of the date hereof,
materially exceed the reserves for Taxes (other than reserves for
deferred Taxes) reflected on the books and records of the Company and its
Subsidiaries and (y) will not materially exceed that reserve as adjusted
for operations and transactions through the Effective Time in accordance
with GAAP and the past custom and practice of the Company and its
Subsidiaries; (e) neither the Company nor any of its Subsidiaries has
requested any extension of time within which to file or send any Tax
Return, which Tax Return has not since been filed or sent; (f) no
material deficiency for Taxes has been proposed, asserted or assessed
against the Company or any of its Subsidiaries (or any member of any
affiliated or combined group of which the Company or any of its
Subsidiaries is or has been a member for which either the Company or any
of its Subsidiaries could be liable) other than those Taxes being
contested in good faith by appropriate proceedings and set forth in the
Company Disclosure Schedule (which shall set forth the nature of the
proceeding, the type of return, the deficiencies proposed, asserted or
assessed and the amount thereof, and the taxable year in question); (g)
to the knowledge of the Company, no material issue has been raised during
the past five years by any federal, state, local or foreign taxing
authority which, if raised with regard to any other period not so
examined, could reasonably be expected to result in a proposed material
deficiency for any other period not so examined; (h) neither the Company
nor any of its Subsidiaries has granted any extension or waiver of the
limitation period applicable to any Tax claims other than those being
contested in good faith by appropriate proceedings; (i) neither the
Company nor any of its Subsidiaries is subject to liability for Taxes of
any person (other than the Company or its Subsidiaries) including,
without limitation, liability arising from the application of U.S.
Treasury regulation section 1.1502-6 or any analogous provision of state,
local or foreign law; (j) neither the Company nor any of its Subsidiaries
is or has been a party to any tax sharing agreement with any corporation
which is not currently a member of the affiliated group of which the
Company is currently a member; (k) neither the Company nor any of its
Subsidiaries is a party to any agreement, contract or arrangement that
could result, separately or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of Section 280G of the
Code; (l) there are no liens for Taxes on any assets of the Company or of
any of its Subsidiaries (other than statutory liens for current Taxes not
yet due); (m) the Company and its Subsidiaries have withheld and paid
(and until the Effective Time will withhold and pay) all income, social
security, unemployment and all other material payroll Taxes required
(including, without limitation, pursuant to Sections 1441 and 1442 of the
Code or similar provisions under foreign law) to be withheld and paid in
connection with amounts paid to any employee, independent contractor,
creditor, stockholder or other third party; and (n) neither the Company
nor any of its Subsidiaries has participated in, or cooperated with, an
international boycott within the meaning of Section 999 of the Code.
Neither the Company nor any of its Subsidiaries has made an election
under Section 341(f) of the Code.
For purposes of this Agreement, the term "Tax" (or "Taxes)
shall mean with respect to any person (i) all taxes, charges, fees,
levies, duties, imposts or other assessments, including, without<PAGE>
limitation, net income, gross income, gross receipts, excise, property,
sales, use, ad valorem, profits, franchise, capital stock, registration,
transfer, gains, license, payroll, withholding, employment, excise,
severance, stamp, occupation, disability, premium, value-added, windfall
profits, social security (or similar), custom duty or other tax,
governmental fee, alternative or add-on minimum, estimated or other like
assessment or charge of any kind whatsoever, together with any interest,
or penalties or additions thereto imposed, or required to be withheld, by
a taxing authority of the United States, or any state, local or foreign
government or subdivision or agency thereof, and (ii) any liability of
such person for the payment of any amount of the type described in clause
(i) as a result of such person's being a member of an affiliated or
combined group. For purposes of this Agreement, the term "Tax Return"
shall mean any return, declaration, statement, report, schedule,
certificate, form, information return, or any other document (including
any related or supporting information) required to be supplied to, or
filed with, a taxing authority (foreign or domestic) in connection with
Taxes.
Section 3.15 Title to Properties; Encumbrances.
(a) Except as described in the following sentence,
each of the Company and its Subsidiaries has good, valid and, in the case
of real property, marketable title to, or a valid leasehold interest in,
all of its material properties and assets (real, personal, tangible and
intangible), including, without limitation, all such properties and
assets reflected in the consolidated balance sheet of the Company and its
Subsidiaries as of October 31, 1995 included in the Company SEC Documents
(except for properties and assets disposed of in the ordinary course of
business and consistent with past practices since October 31, 1995),
except for such title or interest the failure of which to have would not
have, individually or in the aggregate, a Company Material Adverse
Effect. None of such properties or assets are subject to any Liens
(whether absolute, accrued, contingent or otherwise), except (i) as set
forth in the Company SEC Documents or (ii) imperfections of title and
Liens, if any, which do not materially detract from the value of the
property or assets subject thereto and do not materially impair the
business or operations of the Company and its Subsidiaries taken as a
whole.
(b) Each of the Company and its Subsidiaries has
complied with the terms of all leases to which it is a party and under
which it is in occupancy, and all such leases are in full force and
effect except for failures to comply or be in full force and effect which
would not have, individually or in the aggregate, a Company Material
Adverse Effect.
Section 3.16 Intellectual Property. The Company and its
Subsidiaries own or have a valid license to use all inventions, patents,
trademarks, service marks, trade names, copyrights, trade secrets,
technology and know-how, software and other intellectual property rights
(collectively, the "Company Intellectual Property") necessary to carry on
their respective businesses as currently conducted; and neither the
Company nor any such Subsidiary has received any notice of infringement<PAGE>
of or conflict with, and, to the Company's knowledge, there are no
infringements of or conflicts with, the rights of others with respect to
the use of any of the Company Intellectual Property that, in either such
case, has had or would reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect.
Section 3.17 Information in Disclosure Documents and
Registration Statement. None of the information supplied or to be
supplied by the Company for inclusion in (i) the Registration Statement
to be filed with the SEC on Form S-4 under the Securities Act for the
purpose of registering the shares of New Company Common Stock and
Warrants to be issued in connection with the Merger (the "Registration
Statement") or (ii) the joint proxy statement/prospectus to be
distributed in connection with Holdings' and the Company's meeting of
stockholders to vote upon this Agreement (the "Proxy Statement") will, in
the case of the Registration Statement, at the time it becomes effective
or, in the case of the Proxy Statement or any amendments thereof or
supplements thereto, at the time of the initial mailing of the Proxy
Statement and any amendments or supplements thereto, and at the time of
the meeting of stockholders of Holdings and the Company to be held in
connection with the Merger, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The
Registration Statement, as of its effective date, will comply (with
respect to information relating to the Company) as to form in all
material respects with the requirements of the Securities Act, and the
rules and regulations promulgated thereunder, and as of the date of its
initial mailing and as of the date of the Company's stockholders'
meeting, the Proxy Statement will comply (with respect to information
relating to the Company) as to form in all material respects with the
applicable requirements of the Exchange Act, and the rules and
regulations promulgated thereunder. Notwithstanding the foregoing, the
Company makes no representations with respect to any statement in the
foregoing documents based upon information supplied by Holdings for
inclusion therein.
Section 3.18 Employee Benefit Plans; ERISA.
(a) The Company Disclosure Schedule sets forth a list
of each bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance or termination pay, hospitalization or
other medical, life or other insurance, supplemental unemployment
benefits, profit-sharing, pension, or retirement plan, program,
arrangement or agreement that is maintained or contributed to, or was
maintained or contributed to at any time on or after December 15, 1992,
by the Company or by any trade or business, whether or not incorporated
which together with the Company would be deemed a "single employer"
within the meaning of Section 4001 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (each, a "Company ERISA
Affiliate"), for the benefit of any employee or former employee of the
Company or any Company ERISA Affiliate, whether formal or informal and
whether legally binding or not, in connection with which the Company
would have liability (the "Company Plans"). Neither the Company nor any<PAGE>
Company ERISA Affiliate has any formal plan or commitment, whether
legally binding or not, to create any additional Company Plan or modify
or change any existing Company Plan in a way that would affect any
employee or former employee of the Company or any Company ERISA
Affiliate.
(b) With respect to each of the Company Plans, the
Company has heretofore delivered or made available to Holdings true and
complete copies of each of the following documents:
(i) a copy of the Company Plan (including
all amendments thereto);
(ii) a copy of the annual report, if
required under ERISA, with respect to each such Company Plan
for the last two years;
(iii) a copy of the actuarial report, if
required under ERISA, with respect to each such Company Plan
for the last two years;
(iv) a copy of the most recent Summary
Plan Description, together with each Summary of Material
Modifications, required under ERISA with respect to such
Plan, and all material employee communications relating to
such Company Plan;
(v) if the Company Plan is funded through
a trust or any third party funding vehicle, a copy of the
trust or other funding agreement (including all amendments
thereto) and the latest financial statements thereof;
(vi) all material contracts relating to
the Company Plans with respect to which the Company or any
ERISA Affiliate may have any liability, including, without
limitation, insurance contracts, investment management
agreements, subscription and participation agreements and
record keeping agreements; and
(vii) the most recent determination letter
received from the Internal Revenue Service (the "IRS") with
respect to each Company Plan that is intended to be qualified
under Section 401 of the Code.
(c) Each of the Company Plans that is subject to ERISA
is and has been in compliance with ERISA and the Code in all material
respects; with respect to each of the Company Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code either (i)
the Company reasonably believes that such Plan is so qualified or (ii)
the Company has received a favorable opinion of qualified counsel or
received a favorable determination letter from the IRS with respect to
such qualification; no Company Plan has an accumulated or waived funding
deficiency within the meaning of Section 412 of the Code; neither the
Company nor any Company ERISA Affiliate has incurred, directly or<PAGE>
indirectly, any material liability (including any material contingent
liability) to or on account of a Company Plan pursuant to Title IV of
ERISA; no proceedings have been instituted to terminate any Company Plan
that is subject to Title IV of ERISA; no "reportable event," as such term
is defined in Section 4043(b) of ERISA for which the thirty-day reporting
requirement has not been waived, has occurred with respect to any Company
Plan; and no condition exists that presents a material risk to the
Company or any Company ERISA Affiliate of incurring a liability to the
IRS, the Pension Benefit Guaranty Corporation (the "PBGC") or to any
multiemployer plan (as defined in Section 3(37) of ERISA) other than
payment of premiums pursuant to Title IV of ERISA.
(d) The current value of the assets of each of the
Company Plans that are subject to Title IV of ERISA, based upon the
actuarial assumptions (to the extent reasonable) presently used for
funding purposes in the most recent actuarial report prepared by such
Company Plan's actuary with respect to such Company Plan, exceeds the
present value of the accrued benefits under each such Company Plan; no
Company Plan is a multiemployer pension plan (within the meaning of
Section 4001(a)(3) of ERISA); no Company Plan is a multiple employer plan
as defined in Section 413 of the Code; and all material contributions or
other amounts payable by the Company as of the Effective Time with
respect to each Company Plan in respect of current or prior plan years
have been either paid or accrued on the balance sheet of the Company. To
the knowledge of the Company, there are no material pending, threatened
or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Company Plans or any trusts related
thereto.
(e) Neither the Company nor any Company ERISA
Affiliate, nor any Company Plan, nor any trust created thereunder, nor
any trustee or administrator thereof has engaged in a transaction in
connection with which the Company or any Company ERISA Affiliate, any
Company Plan, any such trust, or any trustee or administrator thereof, or
any party dealing with any Company Plan or any such trust could be
subject to either a civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the
Code which would result in a material liability to the Company. No
Company Plan provides death or medical benefits (whether or not insured),
with respect to current or former employees of the Company or any Company
ERISA Affiliate beyond their retirement or other termination of service
other than (i) coverage mandated by Applicable Law or (ii) death benefits
under any "employee pension plan," as that term is defined in Section
3(2) of ERISA).
Section 3.19 Environmental Matters.
(a) Definitions
(i) "Cleanup" means all actions required
to : (1) cleanup, remove, treat or remediate Hazardous
Materials in the indoor or outdoor environment; (2) prevent
the Release of Hazardous Materials so that they do not
migrate, endanger or threaten to endanger public health or<PAGE>
welfare of the indoor or outdoor environment; (3) perform
pre-remedial studies and investigations and post-remedial
monitoring and care; or (4) respond to any government
requests for information or documents in any way relating to
cleanup, removal, treatment or remediation or potential
cleanup, removal, treatment or remediation of Hazardous
Materials in the indoor or outdoor environment.
(ii) "Environmental Claim" means any
claim, action, cause of action, investigation or notice
(written or oral) by any person or entity alleging potential
liability (including, without limitation, potential liability
for investigatory costs, Cleanup costs, governmental response
costs, natural resources damages, property damages, personal
injuries, or penalties) arising out of, based on or resulting
from (a) the presence, or Release into the indoor or outdoor
environment, of any Hazardous Materials at any location,
whether or not owned or operated by the Company or any of its
Subsidiaries or Holdings or any of its Subsidiaries, as
applicable, or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
(iii) "Environmental Laws" means all
federal, state, local and foreign laws and regulations
relating to pollution or protection of human health or the
environment, including without limitation, laws relating to
Releases or threatened Releases of Hazardous Materials into
the indoor or outdoor environment (including, without
limitation, ambient air, surface water, ground water, land
surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, Release, disposal, transport or handling of
Hazardous Materials and all laws and regulations with regard
to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials, and all laws
relating to endangered or threatened species of fish,
wildlife and plants and the management or use of natural
resources.
(iv) "Hazardous Materials" means
"hazardous substance" (as defined by the Comprehensive
Environmental Response, Compensation, and Liability Act, as
amended), "hazardous waste" (as defined by the Resource
Conservation and Recovery Act, as amended), pesticides,
petroleum, crude oil or any fraction thereof, radioactive
material, and any pollutant, oil, contaminant, hazardous,
extremely hazardous, dangerous or toxic chemical, material,
waste or any other substance within the meaning of any
Environmental Law or which could pose a hazard to the
environment or the health and safety of any person.
(v) "Release" means any release, spill,
emission, discharge, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching or migration into<PAGE>
the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater and
surface or subsurface strata) or into or out of any property,
including the movement of Hazardous Materials through or in
the air, soil, surface water, groundwater or property.
(b) Representations and Warranties
(i) The Company and its Subsidiaries are
in compliance in all material respects with all applicable
Environmental Laws (which compliance includes, but is not
limited to, the possession by the Company and its
Subsidiaries of all permits and other governmental
authorizations required under applicable Environmental Laws,
and compliance with the terms and conditions thereof), except
for failures to comply which would not have, individually or
in the aggregate, a Company Material Adverse Effect. Neither
the Company nor any of its Subsidiaries has received any
communication (written or oral), whether from a governmental
authority, citizens group, employee or otherwise, that
alleges that the Company or any of its Subsidiaries is not in
such compliance, and there are no past or present (or to the
knowledge of the Company, future) actions, activities,
circumstances conditions, events or incidents that may
prevent or interfere with such compliance in the future. All
Permits and other governmental authorizations currently held
by the Company and its Subsidiaries pursuant to applicable
Environmental Laws are identified in the Company Disclosure
Schedule.
(ii) No transfers of permits or other
governmental authorizations under Environmental Laws, and no
additional permits or other governmental authorizations under
Environmental Laws, will be required to permit the Surviving
Corporation to conduct its business in full compliance with
all applicable Environmental Laws immediately following the
Closing Date, as conducted by the Company and its
Subsidiaries immediately prior to the Closing Date. To the
extent that such transfers or additional permits and other
governmental authorizations are required, the Company and its
Subsidiaries agree to cooperate with Holdings to effect such
transfers and obtain such permits and other governmental
authorizations prior to the Closing Date, to the extent
practicable and to the extent that such permits and
governmental authorizations may be obtained or transferred
pursuant to Applicable Law or regulation prior to the Closing
Date; provided, however, that obtaining or transferring such
permits and other governmental authorizations prior to the
Closing Date shall not be a condition to Closing.
(iii) There is no Environmental Claim
pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries or, to the
knowledge of the Company, against any person or entity whose<PAGE>
liability for any Environmental Claim the Company or any of
its Subsidiaries have or may have retained or assumed either
contractually or by operation of law which would reasonably
be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
(iv) To the knowledge of the Company,
there are no past or present actions, activities,
circumstances, conditions, events or incidents, including,
without limitation, the Release, emission, discharge,
presence or disposal of any Hazardous Material which could
form the basis of any Environmental Claim against the Company
or any of its Subsidiaries, or to the knowledge of the
Company, against any person or entity whose liability for any
Environmental Claim the Company or any of its Subsidiaries
has or may have retained or assumed either contractually or
by operation of law which would reasonably be expected to
have, individually or in the aggregate, a Company Material
Adverse Effect.
(v) The Company and its Subsidiaries have
not, and to the knowledge of the Company, no other person has
placed, stored, deposited, discharged, buried, dumped or
disposed of Hazardous Materials or any other wastes produced
by, or resulting from, any business, commercial or industrial
activities, operations or processes, on, beneath or adjacent
to any property currently or formerly owned, operated or
leased by the Company or any of its Subsidiaries, except for
inventories of such substances to be used, and wastes
generated therefrom, in the ordinary course of business of
the Company and its Subsidiaries (which inventories and
wastes, if any, were and are stored or disposed of in
accordance with applicable Environmental Laws and in a manner
such that there has been no Release of any such substances
into the indoor or outdoor environment), except where the
Company and its Subsidiaries have failed to comply with
Environmental Laws applicable to the above matters or have
failed to store such inventories and wastes in a manner
described above and such failures would not have,
individually or in the aggregate, a Company Material Adverse
Effect.
(vi) The Company has delivered or
otherwise made available for inspection to Holdings true,
complete and correct copies and results of any reports,
studies, analyses, tests or monitoring possessed or initiated
by the Company or any of its Subsidiaries pertaining to
Hazardous Materials in, on, beneath or adjacent to any
property currently or formerly owned, operated or leased by
the Company or any of its Subsidiaries, or regarding the
Company's or any of its Subsidiaries' compliance with
applicable Environmental Laws.<PAGE>
(vii) Without in any way limiting the
generality of the foregoing, any properties currently owned,
operated or leased by the Company and its Subsidiaries do
not, to the knowledge of the Company, contain any:
underground storage tanks; asbestos; polychlorinated
biphenyls ("PCBs"); underground injection wells; radioactive
materials; or septic tanks or waste disposal pits in which
process wastewater or any Hazardous Materials have been
discharged or disposed.
Section 3.20 Labor Matters. Except as disclosed in the
Company SEC Documents, neither the Company nor any of its Subsidiaries
has any labor contracts, collective bargaining agreements or material
employment or consulting agreements with any persons employed by the
Company or any persons otherwise performing services primarily for the
Company or any of its Subsidiaries (the "Company Business Personnel").
Neither the Company nor any of its Subsidiaries has engaged in any unfair
labor practice with respect to Company Business Personnel, and there is
no unfair labor practice complaint pending or, to the knowledge of the
Company, threatened, against the Company or any of its Subsidiaries with
respect to the Company Business Personnel which, in either such case,
would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. Except as set forth in the Company SEC
Documents, there is no labor strike, dispute, slowdown or stoppage
pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, and neither the Company nor any of
its Subsidiaries has experienced any primary work stoppage or other labor
difficulty involving its employees during the last three years, except
for any of the foregoing which would not have a Company Material Adverse
Effect.
Section 3.21 Affiliate Transactions. Except as set forth or
as disclosed in the Company SEC Documents or as contemplated by the
transactions contemplated hereby, there are no material Contracts or
other transactions between the Company or any of its Subsidiaries, on the
one hand, and any (i) officer or director of the Company or any of its
Subsidiaries, (ii) record or beneficial owner of five percent or more of
the voting securities of the Company or (iii) affiliate (as such term is
defined in Regulation 12b-2 promulgated under the Exchange Act) of any
such officer, director or beneficial owner, on the other hand.
Section 3.22 Opinion of Financial Advisor. The Company has
received the oral opinion of Goldman, Sachs & Co. ("Goldman Sachs"), to
the effect that the consideration to be received in the Merger by the
holders of Company Common Stock is fair to such holders. A copy of the
written opinion to be delivered by Goldman Sachs, which opinion shall be
included in the Proxy Statement, shall be delivered to Holdings promptly
after receipt by the Company. It is understood and agreed by the parties
hereto that such opinion is provided by Goldman Sachs solely for the
benefit of the Board of Directors of the Company and is not to be relied
upon by Holdings or its Affiliates.
Section 3.23 Brokers. Except for fees, commissions and
expenses payable to its financial advisors, Goldman Sachs, pursuant to a<PAGE>
letter agreement dated October 10, 1995 between the Company and Goldman
Sachs, a copy of which has been furnished to Holdings, no broker, finder
or financial advisor retained by the Company is entitled to any
brokerage, finder's or other fee or commission from the Company or
Holdings in connection with the transactions contemplated by this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
Except as set forth in the Holdings Disclosure Schedule
delivered by Holdings to the Company at or prior to the execution of this
Agreement (the "Holdings Disclosure Schedule") (each section of which
qualifies the correspondingly numbered representation and warranty),
Holdings represents and warrants to the Company as follows:
Section 4.1 Organization and Good Standing. Holdings is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the corporate power and
authority to carry on its business as it is now being conducted.
Holdings is duly qualified as a foreign corporation to do business, and
is in good standing, in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities
makes such qualification necessary, except where the failure to be so
qualified or in good standing would not have a material adverse effect,
individually or in the aggregate, on the business, financial condition or
results of operations of Holdings and its Subsidiaries taken as a whole,
or, if applicable, the ability of Holdings to consummate the Merger and
the other transactions contemplated by this Agreement (a "Holdings
Material Adverse Effect").
Section 4.2 Certificate of Incorporation and By-Laws.
Complete and correct copies of the Certificates of Incorporation and By-
laws or equivalent organizational documents, each as amended to date, of
Holdings and each of its Subsidiaries have been made available to the
Company. The Certificates of Incorporation, By-laws and equivalent
organizational documents of Holdings and each of its Subsidiaries are in
full force and effect. Neither Holdings nor any of its Subsidiaries is
in violation of any material provision of its Certificate of
Incorporation, By-laws or equivalent organizational documents.
Section 4.3 Capitalization.
(a) As of the date hereof, (i) the authorized capital
stock of Holdings consisted of 1,000,000 shares of Holdings Common
Stock, par value of $0.01 per share, of which 379.6275 shares are issued
and outstanding and no shares are held in the treasury of Holdings and
(ii) the authorized capital stock of Motor Wheel Corporation, a Ohio
corporation and wholly-owned subsidiary of Holdings ("MWC"), consists of
(A) 2,500 shares of Common Stock, no par value ("MWC Common Stock"), of
which 1,100 shares are issued and outstanding, and (B) 300,000 shares of
MWC Preferred Stock, no par value ("MWC Preferred Stock"), of which no<PAGE>
shares are issued and outstanding. All of the issued and outstanding
shares of Holdings Common Stock and MWC Common Stock and Preferred Stock
are validly issued, and are fully paid, nonassessable and free of
preemptive rights.
(b) Except as described in this Section 4.3 and as
contemplated by this Agreement: (i) no shares of capital stock or other
equity securities of Holdings or MWC are authorized, issued or
outstanding, or reserved for issuance and there are no options, warrants
or other rights (including registration rights), agreements, arrangements
or commitments of any character to which Holdings or MWC or any of their
respective Subsidiaries is a party relating to the issued or unissued
capital stock or other equity interests of Holdings or MWC, requiring
Holdings or MWC to grant, issue or sell any shares of the capital stock
or other equity interests of Holdings or MWC or any of their respective
Subsidiaries by sale, lease, license or otherwise; (ii) Holdings and MWC
and any of their respective Subsidiaries have no obligation, contingent
or otherwise, to repurchase, redeem or otherwise acquire any shares of
the capital stock or other equity interests of Holdings or MWC or any of
their respective Subsidiaries; (iii) none of Holdings or MWC or any of
their respective Subsidiaries, directly or indirectly, owns, or has
agreed to purchase or otherwise acquire, the capital stock or other
equity interests of, or any interest convertible into or exchangeable or
exercisable for such capital stock or such equity interests, of any
corporation, partnership, joint venture or other entity which would be
material in value to Holdings; and (iv) there are no voting trusts,
proxies or other agreements or understandings to which Holdings or MWC or
any of their respective Subsidiaries is a party or, to the knowledge of
Holdings or MWC, is bound with respect to the voting of any shares of
capital stock or other equity interests of Holdings or MWC or any of
their respective Subsidiaries.
Section 4.4 Holdings Subsidiaries. The Holdings Disclosure
Schedule sets forth a list of each Holdings Subsidiary; its authorized,
issued and outstanding capital stock or other equity interests; the
percentage of such capital stock or other equity interests owned by
Holdings or any Holdings Subsidiary, and the identity of such owner; the
capital stock reserved for future issuance pursuant to outstanding
options or other agreements; and the identity of all parties to any such
option or other agreement. Each Subsidiary of Holdings is a corporation
or partnership duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization.
Each Subsidiary of Holdings has all requisite corporate power and
authority to carry on its business as it is now being conducted. Each
Subsidiary of Holdings is duly qualified as a foreign corporation or
organization authorized to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified or in good standing would not
have a Holdings Material Adverse Effect. All of the outstanding shares
of capital stock or other ownership interests in each of Holdings'
Subsidiaries have been validly issued, and are fully paid, nonassessable
and are owned by Holdings or another Subsidiary of Holdings free and
clear of all Liens, and are not subject to preemptive rights created by<PAGE>
statute, such Subsidiary's respective Certificate of Incorporation or By-
laws or equivalent organizational documents or any agreement to which
such Subsidiary is a party.
Section 4.5 Corporate Authority.
(a) Holdings has the requisite corporate power and
authority to execute and deliver this Agreement and, subject to the
approval of Holdings' stockholders with respect to the Merger, to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Holdings and the consummation by Holdings
of the transactions contemplated hereby have been duly authorized by its
Board of Directors and, except for the approval of Holdings' stockholders
with respect to the Merger, no other corporate action on the part of
Holdings is necessary to authorize the execution and delivery by Holdings
of this Agreement and the consummation by it of the transactions
contemplated hereby. This Agreement has been duly executed and delivered
by Holdings and constitutes a valid and binding agreement of Holdings and
is enforceable against Holdings in accordance with its terms, except that
(i) such enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws, now or
hereafter in effect, relating to or limiting creditors' rights generally
and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defense, and to the
discretion of the court before which any proceeding therefor may be
brought. The preparation of the Proxy Statement and the Registration
Statement to be filed with the SEC has been duly authorized by the Board
of Directors of Holdings.
(b) Prior to the execution and delivery of this
Agreement, the Board of Directors of Holdings (at a meeting duly called
and held) has (i) approved this Agreement and the Merger and the other
transactions contemplated hereby, (ii) determined that the transactions
contemplated hereby are fair to and in the best interests of the holders
of Holdings Common Stock and (iii) except as may be required to comply
with its fiduciary duties under Applicable Law as advised by counsel,
determined to recommend this Agreement, the Merger and the other
transactions contemplated hereby to Holdings' stockholders for approval
and adoption at the stockholders meeting contemplated by Section 6.5(a)
hereof. The affirmative vote of the holders of a majority of the
outstanding shares of Holdings Common Stock are the only votes of the
holders of any class or series of Holdings' capital stock necessary to
approve the Merger.
Section 4.6 Compliance with Applicable Law. Except as
disclosed in the MWC SEC Documents (as hereinafter defined), (i) each of
Holdings and its Subsidiaries holds, and is in compliance with the terms
of, all permits, licenses, exemptions, orders and approvals of all
Governmental Entities necessary for the conduct of their respective
businesses ("Holdings Permits"), except for failures to hold or to comply
with such permits, licenses, exemptions, orders and approvals which would
not have a Holdings Material Adverse Effect, (ii) with respect to the
Holdings permits, no action or proceeding is pending or, to the knowledge
of Holdings, threatened and, to the knowledge of Holdings, no fact exists<PAGE>
or event has occurred that would reasonably be expected to have a
Holdings Material Adverse Effect, (iii) the business of Holdings and its
Subsidiaries is being conducted in compliance with all Applicable Laws,
except for violations or failures to so comply that would not have a
Holdings Material Adverse Effect, and (iv) to the knowledge of Holdings,
no investigation or review by any Governmental Entity with respect to
Holdings or its Subsidiaries is pending or threatened, other than, in
each case, those which would not reasonably be likely to have a Holdings
Material Adverse Effect.
Section 4.7 Non-contravention. The execution and delivery
of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not,
(i) result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a
material benefit under any Contract applicable to Holdings or any of its
Subsidiaries , or result in the creation of any Lien upon any of the
properties or assets of Holdings or any of its Subsidiaries, (ii)conflict
or result in any violation of any provision of the Certificate of
Incorporation or By-Laws or other equivalent organizational document, in
each case as amended, of Holdings or any of its Subsidiaries, (iii)
subject to the governmental filings discussed in clause (i) of Section
4.8, conflict with or violate any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Holdings or any of its
Subsidiaries or any of their respective properties or assets (except for
any national or supranational Antitrust Laws as to which no
representation or warranty is being made), other than, in the case of
clauses (i) and (iii), any such violations, conflicts, defaults, rights,
losses or Liens that, individually or in the aggregate, would not have a
Holdings Material Adverse Effect.
Section 4.8 Government Approvals; Required Consents. No
filing or registration with, or authorization, consent or approval of,
any Governmental Entity is required by or with respect to Holdings or any
of its Subsidiaries in connection with the execution and delivery of this
Agreement by Holdings or is necessary for the consummation of the
transactions contemplated hereby (including, without limitation, the
Merger) except: (i) in connection, or in compliance, with the provisions
of the HSR Act, the Securities Act, the Exchange Act, any state
securities or "Blue Sky" law and any requirements of any foreign or
supranational Antitrust Law, (ii) for the filing of a Certificate of
Merger with the Secretary of State of the State of Delaware, (iii) such
consents, approvals, authorizations, permits, filings and notifications
listed in the Holdings Disclosure Schedule and (iv) such other consents,
orders, authorizations, registrations, declarations and filings the
failure of which to obtain or make would not, individually or in the
aggregate, have a Holdings Material Adverse Effect.
Section 4.9 SEC Documents and Other Reports. MWC has filed
all documents required to be filed prior to the date hereof by it and its
Subsidiaries with the SEC since January 1, 1993 (the "MWC SEC
Documents"). As of their respective dates, or if amended as of the date
of the last such amendment, the MWC SEC Documents complied, and all<PAGE>
documents required to be filed by MWC with the SEC after the date hereof
and prior to the Effective Time ("Subsequent MWC SEC Documents") will
comply, in all material respects with the requirements of the Securities
Act or the Exchange Act, as the case may be, and the applicable rules and
regulations promulgated thereunder and none of the MWC SEC Documents
contained, and the Subsequent MWC SEC Documents will not contain, any
untrue statement of a material fact or omitted, or will omit, to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, or are to be made, not misleading. The consolidated financial
statements of MWC included in the MWC SEC Documents fairly present, and
included in the Subsequent MWC SEC Documents will fairly present, the
consolidated financial position of MWC and its consolidated Subsidiaries,
as at the respective dates thereof and the consolidated results of their
operations and their consolidated cash flows for the respective periods
then ended (subject, in the case of the unaudited statements, to normal
year-end audit adjustments and to any other adjustments described
therein) in conformity with GAAP (except, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated therein or
in the notes thereto). Since September 30, 1995, MWC has not made any
change in the accounting practices or policies applied in the preparation
of its financial statements, except as may be required by GAAP.
Section 4.10 Absence of Certain Changes or Events. Except
to the extent disclosed in the MWC SEC Documents filed with the SEC prior
to the date of this Agreement, since September 30, 1995 Holdings and its
Subsidiaries have conducted its businesses and operations in the ordinary
and usual course consistent with past practice and there has not occurred
(i) any event, condition or occurrence having or that would reasonably be
expected to have, individually or in the aggregate, a Holdings Material
Adverse Effect; (ii) any damage, destruction or loss (whether or not
covered by insurance) having or which would reasonably be expected to
have, individually or in the aggregate, a Holdings Material Adverse
Effect; (iii) any declaration, setting aside or payment of any dividend
or distribution of any kind by Holdings or MWC on any class of its
capital stock; and (iv) any event during the period from September 30,
1995 through the date of this Agreement that, if taken during the period
from the date of this Agreement through the Effective Time, would
constitute a breach of Section 5.2 hereof.
Section 4.11 Actions and Proceedings. Except as set forth
in the MWC SEC Documents, there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against
Holdings or any of its Subsidiaries, any of their properties, assets or
business, or, to the knowledge of Holdings, any of Holdings' or its
Subsidiaries' current or former directors or officers or any other person
whom Holdings or any of its Subsidiaries has agreed to indemnify, as
such, that would reasonably be expected to have, individually or in the
aggregate, a Holdings Material Adverse Effect. Except as set forth in
the MWC SEC Documents, there are no actions, suits or legal,
administrative, regulatory or arbitration proceedings pending or, to the
knowledge of Holdings, threatened against Holdings or any of its
Subsidiaries, any of their properties, assets or business, or, to the<PAGE>
knowledge of Holdings, any of Holdings' or its Subsidiaries' current or
former directors or officers or any other person whom Holdings or any of
its Subsidiaries has agreed to indemnify, as such, that relates to
transactions contemplated by this Agreement or would reasonably be
expected to have, individually or in the aggregate, a Holdings Material
Adverse Effect.
Section 4.12 Absence of Undisclosed Liabilities. Except for
liabilities or obligations which are (i) accrued or reserved against in
Holdings' consolidated financial statements (or reflected in the notes
thereto) included in the MWC SEC Documents or (ii) disclosed in the
Holdings SEC Documents, neither Holdings nor any of its Subsidiaries has
any liabilities or obligations (including, without limitation, Tax
liabilities) (whether absolute, accrued, contingent or otherwise) that
were required to be set forth on a balance sheet which is prepared in
conformance with GAAP, consistently applied, which (either individually
or in the aggregate) would reasonably be expected to have a Holdings
Material Adverse Effect.
Section 4.13 Contracts. Each Contract entered into by
Holdings is valid, binding and enforceable and in full force and effect,
except where failure to be valid, binding and enforceable and in full
force and effect would not reasonably be expected to have a Holdings
Material Adverse Effect and there are no defaults thereunder, except
those defaults that would not reasonably be expected to have a Holdings
Material Adverse Effect. Except as set forth in the MWC SEC Documents,
neither Holdings nor any of its Subsidiaries is a party to or bound by
any non-competition agreement or any other agreement or obligation which
purports to limit in any material respect the manner in which, or the
localities in which, Holdings or any such Subsidiary is entitled to
conduct all or any material portion of the business of Holdings and its
Subsidiaries taken as a whole.
Section 4.14 Taxes. (a) Holdings and each of its
Subsidiaries has timely filed, or been included in, all material Federal,
state, local and foreign income, franchise, sales and other Tax Returns
required to be filed by or with respect to Holdings or any of its
Subsidiaries; (b) as of the time of filing, all such Tax Returns were
true, correct and complete, in all material respects, and correctly
reflected in all material respects the facts regarding the income,
business, assets, operations, activities and status of Holdings and its
Subsidiaries and any other material information required to be shown
therein; (c) Holdings and its Subsidiaries have timely paid to the
appropriate taxing authority, or have made provision for, all material
Taxes shown as due on such Tax Returns with respect to Holdings and any
of its Subsidiaries; (d) the unpaid Taxes of Holdings and its
Subsidiaries (x) do not, as of the date hereof, materially exceed the
reserves for Taxes (other than reserves for deferred Taxes) reflected on
the books and records of Holdings and its Subsidiaries and (y) will not
materially exceed that reserve as adjusted for operations and
transactions through the Effective Time in accordance with GAAP and the
past custom and practice of Holdings and its Subsidiaries; (e) neither
Holdings nor any of its Subsidiaries has requested any extension of time
within which to file or send any Tax Return, which Tax Return has not<PAGE>
since been filed or sent; (f) no material deficiency for Taxes has been
proposed, asserted or assessed against Holdings or any of its
Subsidiaries (or any member of any affiliated or combined group of which
Holdings or any of its Subsidiaries is or has been a member for which
either Holdings or any of its Subsidiaries could be liable) other than
those Taxes being contested in good faith by appropriate proceedings and
set forth in the Holdings Disclosure Schedule (which shall set forth the
nature of the proceeding, the type of return, the deficiencies proposed,
asserted or assessed and the amount thereof, and the taxable year in
question); (g) to the knowledge of Holdings, no material issue has been
raised during the past five years by any federal, state, local or foreign
taxing authority which, if raised with regard to any other period not so
examined, could reasonably be expected to result in a proposed material
deficiency for any other period not so examined; (h) neither Holdings nor
any of its Subsidiaries has granted any extension or waiver of the
limitation period applicable to any Tax claims other than those being
contested in good faith by appropriate proceedings; (i) neither Holdings
nor any of its Subsidiaries is subject to liability for Taxes of any
person (other than Holdings or its Subsidiaries) including, without
limitation, liability arising from the application of U.S. Treasury
regulation section 1.1502-6 or any analogous provision of state, local or
foreign law; (j) neither Holdings nor any of its Subsidiaries is or has
been a party to any tax sharing agreement with any corporation which is
not currently a member of the affiliated group of which Holdings is
currently a member; (k) neither Holdings nor any of its Subsidiaries is a
party to any agreement, contract or arrangement that could result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code; (l) there are
no liens for Taxes on any assets of Holdings or of any of its
Subsidiaries (other than statutory liens for current Taxes not yet due);
(m) Holdings and its Subsidiaries have withheld and paid (and until the
Effective Time will withhold and pay) all income, social security,
unemployment and all other material payroll Taxes required (including,
without limitation, pursuant to Sections 1441 and 1442 of the Code or
similar provisions under foreign law) to be withheld and paid in
connection with amounts paid to any employee, independent contractor,
creditor, stockholder or other third party; and (n) neither Holdings nor
any of its Subsidiaries has participated in, or cooperated with, an
international boycott within the meaning of Section 999 of the Code.
Neither Holdings nor any of its Subsidiaries has made an election under
Section 341(f) of the Code.
Section 4.15 Title to Properties; Encumbrances.
(a) Except as described in the following sentence,
each of Holdings and its Subsidiaries has good, valid and, in the case of
real property, marketable title to, or a valid leasehold interest in, all
of its material properties and assets (real, personal, tangible and
intangible), including, without limitation, all such properties and
assets reflected in the consolidated balance sheet of MWC and its
Subsidiaries as of September 30, 1995 included in the MWC SEC Documents
(except for properties and assets disposed of in the ordinary course of
business and consistent with past practices since September 30, 1995),
except for such title or interest the failure of which to have would not<PAGE>
have, individually or in the aggregate, a Holdings Material Adverse
Effect. None of such properties or assets are subject to any Liens
(whether absolute, accrued, contingent or otherwise), except (i) as set
forth in the MWC SEC Documents or (ii) imperfections of title and Liens,
if any, which do not materially detract from the value of the property or
assets subject thereto and do not materially impair the business or
operations of Holdings and its Subsidiaries taken as a whole.
(b) Each of Holdings and its Subsidiaries has complied
with the terms of all leases to which it is a party and under which it is
in occupancy, and all such leases are in full force and effect except for
failures to comply or be in full force and effect which would not have,
individually or in the aggregate, a Holdings Material Adverse Effect.
Section 4.16 Intellectual Property. The Holdings Disclosure
Schedule, Holdings and its Subsidiaries own or have a valid license to
use all inventions, patents, trademarks, service marks, trade names,
copyrights, trade secrets, technology and know-how, software and other
intellectual property rights (collectively, the "Holdings Intellectual
Property") necessary to carry on their respective businesses as currently
conducted; and neither Holdings nor any such Subsidiary has received any
notice of infringement of or conflict with, and, to Holdings' knowledge,
there are no infringements of or conflicts with, the rights of others
with respect to the use of any of the Holdings Intellectual Property
that, in either such case, has had or would reasonably be expected to
have, individually or in the aggregate, a Holdings Material Adverse
Effect.
Section 4.17 Information in Disclosure Documents and
Registration Statement. None of the information supplied or to be
supplied by Holdings for inclusion in (i) the Registration Statement or
(ii) the Proxy Statement will, in the case of the Registration Statement,
at the time it becomes effective or, in the case of the Proxy Statement
or any amendments thereof or supplements thereto, at the time of the
initial mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of the meeting of stockholders of Holdings and
the Company to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement, as of its effective date, will
comply (with respect to information relating to Holdings) as to form in
all material respects with the requirements of the Securities Act, and
the rules and regulations promulgated thereunder, and as of the date of
its initial mailing and as of the date of Holdings' stockholders'
meeting, the Proxy Statement will comply (with respect to information
relating to Holdings) as to form in all material respects with the
applicable requirements of the Exchange Act, and the rules and
regulations promulgated thereunder. Notwithstanding the foregoing,
Holdings makes no representations with respect to any statement in the
foregoing documents based upon information supplied by the Company for
inclusion therein. <PAGE>
Section 4.18 Employee Benefit Plans; ERISA.
(a) The Holdings Disclosure Schedule sets forth a list
of each of the bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance or termination pay,
hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan,
program, arrangement or agreement that is maintained or contributed to,
or was maintained or contributed to at any time on or after January 1,
1993, by Holdings or by any trade or business, whether or not
incorporated, which together with Holdings would be deemed a "single
employer" within the meaning of Section 4001 of ERISA (each, a "Holdings
ERISA Affiliate") for the benefit of any employee or former employee of
Holdings or any Holdings ERISA Affiliate, whether formal or informal and
whether legally binding or not, in connection with which Holdings would
have liability (the "Holdings Plans"). Neither Holdings nor any Holdings
ERISA Affiliate has any formal plan or commitment, whether legally
binding or not, to create any additional Holdings Plan or modify or
change any existing Holdings Plan in a way that would affect any employee
or former employee of Holdings or any Holdings ERISA Affiliate.
(b) With respect to each of Holdings Plans, Holdings
has heretofore delivered or made available to the Company true and
complete copies of each of the following documents:
(i) a copy of the Holdings Plan (including
all amendments thereto);
(ii) a copy of the annual report, if
required under ERISA, with respect to each such Holdings Plan
for the last two years;
(iii) a copy of the actuarial report, if
required under ERISA, with respect to each such Holdings Plan
for the last two years;
(iv) a copy of the most recent Summary
Plan Description, together with each Summary of Material
Modifications, required under ERISA with respect to such
Plan, and all material employee communications relating to
such Holdings Plan;
(v) if the Holdings Plan is funded through
a trust or any third party funding vehicle, a copy of the
trust or other funding agreement (including all amendments
thereto) and the latest financial statements thereof;
(vi) all material contracts relating to
the Holdings Plans with respect to which Holdings or any
ERISA Affiliate may have any liability, including, without
limitation, insurance contracts, investment management
agreements, subscription and participation agreements and
record keeping agreements; and<PAGE>
(vii) the most recent determination letter
received from the IRS with respect to each Holdings Plan that
is intended to be qualified under Section 401 of the Code.
(c) Each of the Holdings Plans that is subject to
ERISA is and has been in compliance with ERISA and the Code in all
material respects; with respect to each of the Holdings Plans intended to
be "qualified" within the meaning of Section 401(a) of the Code either
(i) Holdings reasonably believes such Plan is so qualified or (ii)
Holdings has received a favorable opinion of qualified counsel or
received a favorable determination letter from the IRS with respect to
such qualification; no Holdings Plan has an accumulated or waived funding
deficiency within the meaning of Section 412 of the Code; neither
Holdings nor any Holdings ERISA Affiliate has incurred, directly or
indirectly, any material liability (including any material contingent
liability) to or on account of a Holdings Plan pursuant to Title IV of
ERISA; no proceedings have been instituted to terminate any Holdings Plan
that is subject to Title IV of ERISA; no "reportable event," as such term
is defined in Section 4043(b) of ERISA for which the 30 day reporting
requirement has not been waived, has occurred with respect to any
Holdings Plan; and no condition exists that presents a material risk to
Holdings or any Holdings ERISA Affiliate of incurring a liability to the
IRS, the PBGC or to any multiemployer plan (as defined in Section 3(37)
of ERISA) other than payment of premiums pursuant to Title IV of ERISA.
(d) The current value of the assets of each of the
Holdings Plans that are subject to Title IV of ERISA, based upon the
actuarial assumptions (to the extent reasonable) presently used for
funding purposes in the most recent actuarial report prepared by such
Holdings Plan's actuary with respect to such Holdings Plan, exceeds the
present value of the accrued benefits under each such Holdings Plan; no
Holdings Plan is a multiemployer pension plan (within the meaning of
Section 4001(a)(3) of ERISA); no Holdings Plan is a multiple employer
plan as defined in Section 413 of the Code; and all material
contributions or other amounts payable by Holdings as of the Effective
Time with respect to each Holdings Plan in respect of current or prior
plan years have been either paid or accrued on the balance sheet of
Holdings. To the knowledge of Holdings, there are no material pending,
threatened or anticipated claims (other than routine claims for benefits)
by, on behalf of or against any of the Holdings Plans or any trusts
related thereto.
(e) Neither Holdings nor any Holdings ERISA Affiliate,
nor any Holdings Plan, nor any trust created thereunder, nor any trustee
or administrator thereof has engaged in a transaction in connection with
which Holdings or any Holdings ERISA Affiliate, any Holdings Plan, any
such trust, or any trustee or administrator thereof, or any party dealing
with any Holdings Plan or any such trust could be subject to either a
civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a
tax imposed pursuant to Section 4975 or 4976 of the Code which would
result in a material liability to Holdings. No Holdings Plan provides
death or medical benefits (whether or not insured), with respect to
current or former employees of Holdings or any Holdings ERISA Affiliate
beyond their retirement or other termination of service other than (i)<PAGE>
coverage mandated by Applicable Law or (ii) death benefits under any
"employee pension plan," as that term is defined in Section 3(2) of
ERISA).
Section 4.19 Environmental Matters.
(a) Holdings and its Subsidiaries are in compliance in
all material respects with all applicable Environmental Laws (which
compliance includes, but is not limited to, the possession by Holdings
and its Subsidiaries of all permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the
terms and conditions thereof), except for failures to comply which would
not have, individually or in the aggregate, a Holdings Material Adverse
Effect. Neither Holdings nor any of its Subsidiaries has received any
communication (written or oral), whether from a governmental authority,
citizens group, employee or otherwise, that alleges that Holdings or any
of its Subsidiaries is not in such compliance, and there are no past or
present (or to the knowledge of Holdings, future) actions, activities,
circumstances conditions, events or incidents that may prevent or
interfere with such compliance in the future. All Permits and other
governmental authorizations currently held by Holdings and its
Subsidiaries pursuant to applicable Environmental Laws are identified in
the Holdings Disclosure Schedule.
(b) No transfers of permits or other governmental
authorizations under Environmental Laws, and no additional permits or
other governmental authorizations under Environmental Laws, will be
required to permit the Surviving Corporation to conduct its business in
full compliance with all applicable Environmental Laws immediately
following the Closing Date, as conducted by Holdings and its Subsidiaries
immediately prior to the Closing Date. To the extent that such transfers
or additional permits and other governmental authorizations are required,
Holdings and its Subsidiaries agree to cooperate with the Company to
effect such transfers and obtain such permits and other governmental
authorizations prior to the Closing Date, to the extent practicable and
to the extent that such permits and governmental authorizations may be
transferred or obtained pursuant to Applicable Law or regulation prior to
the Closing Date; provided, however, that transferring or obtaining such
permits and other governmental authorizations prior to the Closing Date
shall not be a condition to Closing.
(c) There is no Environmental Claim pending or, to the
knowledge of Holdings, threatened against Holdings or any of its
Subsidiaries or, to the knowledge of Holdings, against any person or
entity whose liability for any Environmental Claim Holdings or any of its
Subsidiaries have or may have retained or assumed either contractually or
by operation of law which would reasonably be expected to have,
individually or in the aggregate, a Holdings Material Adverse Effect.
(d) To the knowledge of Holdings there are no past or
present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the Release, emission,
discharge, presence or disposal of any Hazardous Material which could
form the basis of any Environmental Claim against Holdings or any of its<PAGE>
Subsidiaries, or to the knowledge of Holdings, against any person or
entity whose liability for any Environmental Claim Holdings or any of its
Subsidiaries has or may have retained or assumed either contractually or
by operation of law which would reasonably be expected to have,
individually or in the aggregate, a Holdings Material Adverse Effect.
(e) Holdings and its Subsidiaries have not, and to the
knowledge of Holdings, no other person has placed, stored, deposited,
discharged, buried, dumped or disposed of Hazardous Materials or any
other wastes produced by, or resulting from, any business, commercial or
industrial activities, operations or processes, on, beneath or adjacent
to any property currently or formerly owned, operated or leased by
Holdings or any of its Subsidiaries, except for inventories of such
substances to be used, and wastes generated therefrom, in the ordinary
course of business of Holdings and its Subsidiaries (which inventories
and wastes, if any, were and are stored or disposed of in accordance with
applicable Environmental Laws and in a manner such that there has been no
Release of any such substances into the indoor or outdoor environment),
except where Holdings and its Subsidiaries have failed to comply with
Environmental Laws applicable to the above matters or have failed to
store such inventories and wastes in a manner described above and such
failures would not have, individually or in the aggregate, a Holdings
Material Adverse Effect.
(f) Holdings has delivered or otherwise made available
for inspection to the Company true, complete and correct copies and
results of any reports, studies, analyses, tests or monitoring possessed
or initiated by Holdings or any of its Subsidiaries pertaining to
Hazardous Materials in, on, beneath or adjacent to any property currently
or formerly owned, operated or leased by Holdings or any of its
Subsidiaries, or regarding Holdings' or any of its Subsidiaries'
compliance with applicable Environmental Laws.
(g) Without in any way limiting the generality of the
foregoing, any properties currently owned, operated or leased by Holdings
and its Subsidiaries do not, to the knowledge of Holdings, contain any:
underground storage tanks; asbestos; PCBs; underground injection wells;
radioactive materials; or septic tanks or waste disposal pits in which
process wastewater or any Hazardous Materials have been discharged or
disposed.
Section 4.20 Labor Matters. Except as disclosed in the MWC
SEC Documents, neither Holdings nor any of its Subsidiaries has any labor
contracts, collective bargaining agreements or material employment or
consulting agreements with any persons employed by Holdings or any
persons otherwise performing services primarily for Holdings or any of
its Subsidiaries (the "Holdings Business Personnel"). Neither Holdings
nor any of its Subsidiaries has engaged in any unfair labor practice with
respect to Holdings Business Personnel, and there is no unfair labor
practice complaint pending or, to the knowledge of Holdings, threatened,
against Holdings or any of its Subsidiaries with respect to Holdings
Business Personnel which, in either such case, would reasonably be
expected to have, individually or in the aggregate, a Holdings Material
Adverse Effect. Except as set forth in the MWC SEC Documents, there is<PAGE>
no labor strike, dispute, slowdown or stoppage pending or, to the
knowledge of Holdings, threatened against Holdings or any of its
Subsidiaries, and neither Holdings nor any of its Subsidiaries has
experienced any primary work stoppage or other material labor difficulty
involving its employees during the last three years, except for any of
the foregoing which would not have a Holdings Material Adverse Effect.
Section 4.21 Affiliate Transactions. Except as set forth or
as disclosed in the MWC SEC Documents or as contemplated by the
transactions contemplated hereby, there are no material Contracts or
other transactions between Holdings or any of its Subsidiaries, on the
one hand, and any (i) officer or director of Holdings or any of its
Subsidiaries, (ii) record or beneficial owner of five percent or more of
the voting securities of Holdings or (iii) affiliate (as such term is
defined in Regulation 12b-2 promulgated under the Exchange Act) of any
such officer, director or beneficial owner, on the other hand.
Section 4.22 Financing.
(a) Holdings and the Company have previously received
a letter from Canadian Imperial Bank of Commerce and Merrill Lynch
Capital Corporation (the "Bank Commitment Letter") confirming their
commitment, subject to the terms and conditions thereof, to lend up to
$645 million to the Company. The proceeds from the financing pursuant to
the Bank Commitment Letter may be used by the Company for purposes of,
among other things, consummating the Merger and the transactions
contemplated hereby, refinancing outstanding indebtedness of Holdings and
the Company and providing working capital to the Company. Holdings and
the Company have received Subscription Agreements (together with the Bank
Commitment Letter, the "Financing Commitments") providing for
subscriptions, subject to the terms and conditions thereof, to purchase
an aggregate of 200,000 shares of Company Preferred Stock and warrants to
purchase 150,000 shares of New Company Common Stock for an aggregate
subscription price of $200 million. A true and complete copy of the
Financing Commitments have been delivered to the Company.
(b) At the Effective Time, the borrowings available to
the Company pursuant to the Bank Commitment Letter, together with the
amounts subscribed to purchase Company Preferred Stock pursuant to the
Subscription Agreements and $200 million of subordinated indebtedness
(the "Subordinated Debt") to be issued by the Company in a public
offering or private placement, will be sufficient to consummate the
Merger and the transactions contemplated hereby on the terms contemplated
hereby and to pay all expenses to be incurred by Holdings and the Company
in connection with the transactions contemplated by this Agreement.
Nothing contained herein shall preclude Holdings from causing the Company
to (i) incur an additional $50 million of senior debt or subordinated
debt or (ii) substitute an equal amount of senior debt for subordinated
debt or subordinated debt for senior debt if to do so, in Holdings'
reasonable judgement, would be in the best interests of the Company and
Holdings.
(c) As of the date hereof, Holdings, based on
conditions that are now prevailing and that have been brought to<PAGE>
Holdings' attention, knows of no circumstance or condition that it
expects will prevent the availability at the Closing of the requisite
financing to consummate the transactions contemplated by this Agreement
on the terms set forth herein, as provided in the Financing Commitments.
In the event any or all of the borrowings or amounts subscribed pursuant
to the Financing Commitments or to be made available pursuant to the
Subordinated Debt are unavailable for any reason in amounts sufficient to
permit consummation of the Merger under the terms of this Agreement,
Holdings will use its best efforts to obtain replacement financing from
alternative sources on terms and conditions that are commercially
reasonable.
Section 4.23 Brokers. No broker, finder or financial
adviser is entitled to any brokerage, finder's or other fee or commission
from the Company or Holdings in connection with the transactions
contemplated by this Agreement.
Section 4.24 Holdings Not an Interested Stockholder. As of
the date of this Agreement, neither Holdings nor any of its affiliates is
an "Interested Stockholder" of the Company as such term is defined in
Section 203 of the DGCL.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business by the Company Pending the
Merger. Prior to the Effective Time, unless Holdings shall otherwise
agree in writing (which agreement shall not be unreasonably withheld and
shall be deemed made if given by the Chief Executive Officer or any
director of Holdings), or as otherwise expressly contemplated by this
Agreement, including, without limitation, Article III hereof, or as set
forth in Section 5.1 of the Company Disclosure Schedule, the Company
shall conduct, and cause each of its Subsidiaries to conduct, its
business only in the ordinary and usual course consistent with past
practice, and the Company shall use, and cause each of its Subsidiaries
to use, its reasonable best efforts to preserve intact the present
business organization, keep available the services of its present
officers and key employees, and preserve their existing business
relationships. Without limiting the generality of the foregoing, unless
Holdings shall otherwise agree in writing (which agreement shall not be
unreasonably withheld and shall be deemed made if given by the Chief
Executive Officer or any director of Holdings), or as otherwise expressly
contemplated by this Agreement, including, without limitation,
Article III hereof, or as set forth in Section 5.1 of the Company
Disclosure Schedule, prior to the Effective Time the Company shall not,
nor shall it permit any of its Subsidiaries to:
(a)(i) amend its Certificate of Incorporation, as
amended, By-Laws or other organizational documents, (ii) split, combine
or reclassify any shares of its outstanding capital stock, (iii) declare,
set aside or pay any dividend (other than its normal quarterly cash
dividend not exceeding $.015 per share) or other distribution payable in<PAGE>
cash, stock or property, or (iv) directly or indirectly redeem or
otherwise acquire any shares of its capital stock or shares of the
capital stock of any of its Subsidiaries (except to the extent required
by Applicable Law with respect to director's qualifying shares);
(b) authorize for issuance, issue (except upon the
exercise of outstanding stock options) or sell or agree to issue or sell
any shares of, or rights to acquire or convertible into any shares of,
its capital stock or shares of the capital stock of any of its
Subsidiaries (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise),
except for the granting of options pursuant to the Company's 1992 Stock
Incentive Plan, as in effect on the date hereof, to current or new
employees in the ordinary course of business and consistent with past
practice;
(c) (i) merge, combine or consolidate with another
entity, (ii) acquire or purchase an equity interest in or a substantial
portion of the assets of another corporation, partnership or other
business organization or otherwise acquire any assets outside the
ordinary course of business and consistent with past practice or
otherwise enter into any material contract, commitment or transaction
outside the ordinary course of business and consistent with past practice
or (iii) sell, lease, license, waive, release, transfer, encumber or
otherwise dispose of any of its material assets outside the ordinary
course of business and consistent with past practice;
(d) (i) incur, assume or prepay any material
indebtedness or any other material liabilities other than in each case in
the ordinary course of business and consistent with past practice, (ii)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person other than a Subsidiary of the Company, in each case other
than in the ordinary course of business and consistent with past practice
or (iii) make any loans, advances or capital contributions to, or
investments in, any other person, other than to any Subsidiary of the
Company;
(e) pay, satisfy, discharge or settle any material
claim, liabilities or obligations (absolute, accrued, contingent or
otherwise), other than in the ordinary course of business and consistent
with past practice or pursuant to mandatory terms of any Company Contract
in effect on the date hereof;
(f) modify or amend, or waive any benefit of, any non-
competition agreement to which the Company or any of its Subsidiaries is
a party;
(g) authorize or make capital expenditures in excess
of $2,000,000 individually, or in excess of $5,000,000 in the aggregate,
except with respect to those already committed or those included in the
Company's 1996 budget as previously provided to Holdings;<PAGE>
(h) permit any insurance policy naming the Company or
any Subsidiary of the Company as a beneficiary or a loss payee to be
cancelled or terminated other than in the ordinary course of business;
(i) (i) adopt, enter into, terminate or amend in any
material respect (except as may be required by Applicable Law) any plan
for the current or future benefit or welfare of any director or officer,
(ii) increase in any manner the compensation or fringe benefits of, or
pay any bonus to, any director, officer or employee (except for normal
increases in salaried compensation and bonuses and payment of bonuses, in
each case in the ordinary course of business and consistent with past
practice or as otherwise approved by the Compensation Committee of the
Company's Board of Directors in an aggregate amount not in excess of the
amount set forth in Section 5.1 the Company Disclosure Schedule) or (iii)
take any action to fund or in any other way secure, or to accelerate or
otherwise remove restrictions with respect to, the payment of
compensation or benefits under any employee plan, agreement, contract,
arrangement or other Company Plan other than in the ordinary course of
business;
(j) make any material change in its accounting or tax
policies or procedures, except as required by law or to comply with GAAP;
or
(k) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing.
Section 5.2 Conduct of Business by Holdings Pending the
Merger. Prior to the Effective Time, unless the Company shall otherwise
agree in writing (which agreement shall not be unreasonably withheld and
shall be deemed made if given by the Chief Executive Officer of the
Company), or as otherwise expressly contemplated by this Agreement,
including, without limitation, Article III hereof, or as set forth in
Section 5.2 of the Holdings Disclosure Schedule, Holdings shall conduct,
and cause each of its Subsidiaries to conduct, its business only in the
ordinary and usual course consistent with past practice, and Holdings
shall use, and cause each of its Subsidiaries to use, its reasonable best
efforts to preserve intact the present business organization, keep
available the services of its present officers and key employees, and
preserve their existing business relationships. Without limiting the
generality of the foregoing, unless the Company shall otherwise agree in
writing (which agreement shall not be unreasonably withheld and shall be
deemed made if given by the Chief Executive Officer of the Company), or
as otherwise expressly contemplated by this Agreement, including, without
limitation, Article III hereof, or as set forth in Section 5.2 of the
Holdings Disclosure Schedule, prior to the Effective Time Holdings shall
not, nor shall it permit any of its Subsidiaries to:
(a)(i) amend its Certificate of Incorporation, as
amended, By-Laws or other organizational documents, (ii) split, combine
or reclassify any shares of its outstanding capital stock, (iii) declare,
set aside or pay any dividend or other distribution payable in cash,
stock or property, or (iv) directly or indirectly redeem or otherwise
acquire any shares of its capital stock or shares of the capital stock of<PAGE>
any of its Subsidiaries (except to the extent required by Applicable Law
with respect to redeeming director's qualifying shares);
(b) authorize for issuance, issue (except upon the
exercise of outstanding stock options) or sell or agree to issue or sell
any shares of, or rights to acquire or convertible into any shares of,
its capital stock or shares of the capital stock of any of its
Subsidiaries (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise);
(c) (i) merge, combine or consolidate with another
entity, (ii) acquire or purchase an equity interest in or a substantial
portion of the assets of another corporation, partnership or other
business organization or otherwise acquire any assets outside the
ordinary course of business and consistent with past practice or
otherwise enter into any material contract, commitment or transaction
outside the ordinary course of business and consistent with past practice
or (iii) sell, lease, license, waive, release, transfer, encumber or
otherwise dispose of any of its material assets outside the ordinary
course of business and consistent with past practice;
(d) (i) incur, assume or prepay any material
indebtedness or any other material liabilities other than in each case in
the ordinary course of business and consistent with past practice, (ii)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person other than a Subsidiary of Holdings, in each case other than
in the ordinary course of business and consistent with past practice or
(iii) make any loans, advances or capital contributions to, or
investments in, any other person, other than to any Subsidiary of
Holdings;
(e) pay, satisfy, discharge or settle any material
claim, liabilities or obligations (absolute, accrued, contingent or
otherwise), other than in the ordinary course of business and consistent
with past practice or pursuant to mandatory terms of any Holdings
Contract in effect on the date hereof;
(f) modify or amend, or waive any benefit of, any non-
competition agreement to which Holdings or any of its Subsidiaries is a
party;
(g) authorize or make capital expenditures in excess
of $2,000,000 individually, or in excess of $5,000,000 in the aggregate,
except with respect to those already committed or those included in
Holdings' 1996 budget as previously provided to the Company;
(h) permit any insurance policy naming Holdings or any
Subsidiary of Holdings as a beneficiary or a loss payee to be cancelled
or terminated other than in the ordinary course of business;
(i) (i) adopt, enter into, terminate or amend in any
material respect (except as may be required by Applicable Law) any plan
for the current or future benefit or welfare of any director or officer,<PAGE>
(ii) increase in any manner the compensation or fringe benefits of, or
pay any bonus to, any director, officer or employee (except for normal
increases in salaried compensation and bonuses and payment of bonuses, in
each case in the ordinary course of business and consistent with past
practice or as otherwise approved by the Compensation Committee of
Holdings' Board of Directors in an aggregate amount not in excess of the
amount set forth in Section 5.2 the Holdings Disclosure Schedule) or
(iii) take any action to fund or in any other way secure, or to
accelerate or otherwise remove restrictions with respect to, the payment
of compensation or benefits under any employee plan, agreement, contract,
arrangement or other Holdings Plan other than in the ordinary course of
business;
(j) make any material change in its accounting or tax
policies or procedures, except as required by law or to comply with GAAP;
or
(k) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Access and Information. Each party hereto shall
(and shall cause its Subsidiaries and its and their respective officers,
directors, employees, auditors and agents to) afford to the other party
and to such other party's officers, employees, financial advisors, legal
counsel, accountants, consultants and other representatives (except to
the extent not permitted under Applicable Law as advised by counsel and
except as may be limited by any confidentiality obligation contained in
any contract with a third party) reasonable access during normal business
hours throughout the period prior to the Effective Time to all of its
books and records and its properties, plants and personnel and, during
such period, shall furnish promptly to the other party a copy of each
report, schedule and other document filed or received by it pursuant to
the requirements of federal securities laws. Unless otherwise required
by law, each party hereto agrees that it shall hold in confidence all
non-public information so acquired in accordance with the terms of the
confidentiality agreements between the Company and Holdings, dated
November 9, 1995 and between JLL and the Company dated October 27, 1995.
Section 6.2 No Solicitation.
(a) Prior to the Effective Time, the Company agrees
that neither it, any of its respective Subsidiaries or affiliates, nor
any of the respective directors, officers, employees, agents or
representatives of the foregoing, will, directly or indirectly, (i)
solicit or initiate (including by way of furnishing or disclosing non-
public information) any inquiries or the making of any proposal with
respect to any merger, consolidation or other business combination
involving the Company or any Subsidiary of the Company or the acquisition
of all or any significant part of the assets or capital stock of the<PAGE>
Company or any Subsidiary of the Company (an "Acquisition Transaction")
or (ii) negotiate, explore or otherwise engage in discussions with any
person (other than Holdings and its representatives) with respect to any
Acquisition Transaction, or which may reasonably be expected to lead to a
proposal for an Acquisition Transaction or enter into any agreement,
arrangement or understanding with respect to any such Acquisition
Transaction or which would require it to abandon, terminate or fail to
consummate the Merger or any other transaction contemplated by this
Agreement; provided, however, that, the Company may, in response to an
unsolicited written proposal from a third party regarding a Superior
Proposal (as hereinafter defined), furnish information to, negotiate or
otherwise engage in discussions with such third party, if the Board of
Directors of the Company determines in good faith, after consultation
with its financial advisors and based upon the advice of outside counsel
that such action is required for the Board of Directors to comply with
its fiduciary duties under Applicable Law.
(b) Except as may be required pursuant to the
fiduciary duties of the Company's Board of Directors under Applicable
Law, the Company agrees that, as of the date hereof, it, its Subsidiaries
and affiliates, and the respective directors, officers, employees, agents
and representatives of the foregoing, shall immediately cease and cause
to be terminated any existing activities, discussions or negotiations
with any person (other than Holdings and its representatives) conducted
heretofore with respect to any Acquisition Transaction. The Company
agrees to promptly advise Holdings of any inquiries or proposals received
by, any such information requested from, or any negotiations or
discussions sought to be initiated or continued with, the Company, its
Subsidiaries or affiliates, or any of the respective directors, officers,
employees, agents or representatives of the foregoing, in each case from
a person (other than Holdings and its representatives) with respect to an
Acquisition Transaction, and the terms thereof, including the identity of
such third party and the general terms of any financing arrangement or
commitment in connection with such Acquisition Transaction, and, except
as may otherwise be required pursuant to the fiduciary duties of the
Company's Board of Directors under Applicable Law, to update on an
ongoing basis or upon Holdings' reasonable request, the status thereof,
as well as any actions taken or other developments pursuant to this
Section 6.2. As used herein, "Superior Proposal" means a bona fide,
written and unsolicited proposal or offer made by any person (or group)
(other than Holdings or any of its Subsidiaries) with respect to an
Acquisition Transaction (i) on terms which the Board of Directors of the
Company determines in good faith, and in the exercise of reasonable
judgment (based on the advice of independent financial advisors and legal
counsel), to be more favorable to the Company and its stockholders than
the transactions contemplated hereby (including taking into account the
financing thereof).
Section 6.3 Third-Party Standstill Agreements. During the
period from the date of this Agreement through the Effective Time, except
to the extent the Board of Directors of the Company determines in good
faith in consultation with outside counsel, that such action is required
for the Board of Directors to comply with its fiduciary duties under
Applicable Law, the Company shall not terminate, amend, modify or waive<PAGE>
any provision of any confidentiality or standstill agreement to which it
or any of its Subsidiaries is a party.
Section 6.4 Registration Statement. As promptly as
practicable, Holdings and the Company shall in consultation with each
other prepare and file with the SEC the Proxy Statement in preliminary
form. Each of the Company and Holdings shall use its reasonable best
efforts to have the Proxy Statement cleared by the SEC and the
Registration Statement declared effective as soon as practicable. The
Company shall furnish Holdings with all information concerning the
Company and the holders of its capital stock and shall take such other
action Holdings may reasonably request in connection with the
Registration Statement and the issuance of shares of New Company Common
Stock. If at any time prior to the Effective Time any event or
circumstance relating to the Company, any Subsidiary of the Company or
Holdings, any of their respective Subsidiaries, or their respective
officers or directors, should be discovered by such party which should be
set forth in an amendment or a supplement to the Registration Statement
or Proxy Statement, such party shall promptly inform the other thereof
and take appropriate action in respect thereof.
Section 6.5 Proxy Statements; Stockholder Approvals.
(a) The Company, acting through its Board of
Directors, shall, subject to and in accordance with Applicable Law and
its Certificate of Incorporation, as amended, and its By-Laws, promptly
and duly call, give notice of, convene and hold as soon as practicable
following the date upon which the Registration Statement becomes
effective a meeting of the holders of Company Common Stock for the
purpose of voting to approve and adopt this Agreement and the
transactions contemplated hereby, and, (i) except as required to comply
with the fiduciary duties of the Board of Directors as advised by outside
counsel, recommend approval and adoption of this Agreement and the
transactions contemplated hereby, by the stockholders of the Company and
include in the Proxy Statement such recommendation and (ii) except as
required to comply with the fiduciary duties of the Board of Directors as
advised by outside counsel, take all reasonable action to solicit and
obtain such approval. Holdings, acting through its Board of Directors,
shall, subject to and in accordance with Applicable Law and its
Certificate of Incorporation, as amended, and its By-Laws, promptly and
duly call, give notice of, convene and hold as soon as practicable
following the date upon which the Registration Statement becomes
effective a meeting of the holders of Holdings Common Stock for the
purpose of voting to approve and adopt this Agreement and the
transactions contemplated hereby, and, (i) except as required to comply
with the fiduciary duties of the Board of Directors of Holdings as
advised by outside counsel, recommend approval and adoption of this
Agreement and the transactions contemplated hereby, by the stockholders
of Holdings and include in the Proxy Statement such recommendation and
(ii) except as required to comply with the fiduciary duties of the Board
of Directors of Holdings as advised by outside counsel, take all
reasonable action to solicit and obtain such approval.<PAGE>
(b) Each of Holdings and the Company, as promptly as
practicable (or with such other timing as they mutually agree), shall
cause the definitive Proxy Statement to be mailed to their respective
stockholders.
Section 6.6 Compliance with the Securities Act.
(a) At least 30 days prior to the Effective Time, the
Company shall cause to be delivered to Holdings a list identifying all
persons who are "Affiliates" as that term is used in paragraphs (c) and
(d) of Rule 145 under the Securities Act (such person with respect to any
party hereto, collectively the "Affiliates") of the Company.
(b) The Company shall use its reasonable best efforts
to cause each person who is identified as one of its Affiliates in its
list referred to in Section 6.6(a) above to deliver to Holdings, at least
10 days prior to the Effective Time, a written agreement, in the form
attached hereto as Exhibit J.
(c) At least 30 days prior to the Effective Time,
Holdings shall cause to be delivered to the Company a list identifying
all persons who are Affiliates of Holdings.
(d) Holdings shall use its reasonable best efforts to
cause each person who is identified as one of its Affiliates in its list
referred to in Section 6.6(c) above to deliver to the Company, at least
10 days prior to the Effective Time, a written agreement, in the form
attached hereto as Exhibit K.
Section 6.7 Reasonable Best Efforts.
(a) Subject to the terms and conditions herein
provided and applicable legal requirements, each of the parties hereto
agrees to use its reasonable best efforts to take, or cause to be taken,
all action, and to do, or cause to be done, consistent with the fiduciary
duties of its Board of Directors, and to assist and cooperate with the
other parties hereto in doing, as promptly as practicable, all things
necessary, proper or advisable under applicable laws and regulations to
ensure that the conditions set forth in Article VII are satisfied and to
consummate and make effective the transactions contemplated by this
Agreement.
(b) Each of the parties will use its reasonable best
efforts to obtain as promptly as practicable all consents, waivers,
approvals, authorizations or permits of, or registration or filing with
or notification to (any of the foregoing being a "Consent"), of any
Governmental Entity or any other person required in connection with, and
waivers of any violations, defaults or breaches that may be caused by,
the consummation of the transactions contemplated by this Agreement.
(c) In furtherance and not in limitation of the
foregoing, Holdings shall use its best efforts to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated by this Agreement under any antitrust, competition or trade<PAGE>
regulatory laws, rules or regulations of any domestic or foreign
government or governmental authority or any multinational authority
("Antitrust Laws"); provided, however, that neither Holdings nor the
Company shall be required to dispose of any assets, or commit to any
divestiture transaction, which in Holdings' reasonable judgment would
reasonably be expected to cause a material adverse effect on the
business, results of operations or financial condition of the Company and
Holdings and their respective Subsidiaries taken as a whole or materially
limit the ability of the Surviving Corporation to operate its business
following the Closing.
(d) Each party hereto shall promptly inform the other
of any material communication from the United States Federal Trade
Commission, the Department of Justice, the European Economic Area or any
other Governmental Entity regarding any of the transactions contemplated
by this Agreement. If any party or any affiliate thereof receives a
request for additional information or documentary material from any such
government or authority with respect to the transactions contemplated by
this Agreement, then such party will cause to be made, as soon as
reasonably practicable and after consultation with the other party, an
appropriate response in compliance with such request. Holdings will
advise the Company promptly in respect of any understandings,
undertakings or agreements (oral or written) which Holdings proposes to
make or enter into with the Federal Trade Commission, the Department of
Justice, the European Economic Area or any other Governmental Entity in
connection with the transactions contemplated by this Agreement.
(e) From and after the date of this Agreement, and
through the Effective Time, the Company and Holdings shall cause their
respective employees, accountants, counsel and other representatives to
reasonably cooperate with each other and the employees, accountants,
counsel and other representatives in carrying out the transactions
contemplated in this Agreement and in delivering all documents and
instruments deemed reasonably necessary by Holdings (including providing
standard accountants' "comfort" letters and legal opinions and otherwise
cooperating and assisting in satisfying the conditions to the Financing
Commitments and assisting with the syndication or marketing of the
financing contemplated thereby) and taking all other actions reasonably
necessary in connection with the issuance of the Subordinated Debt.
Section 6.8 Employee Benefits. Holdings agrees to cause the
Surviving Corporation and its Subsidiaries to honor and assume, and the
Surviving Corporation agrees to honor and assume, the Company's employee
benefit plans and employee programs, arrangements and agreements listed
in the Company Disclosure Schedule, copies of which have previously been
made available to Holdings. Nothing in this Agreement shall prohibit
Holdings, the Surviving Corporation or its Subsidiaries from amending or
terminating any such plan, program, arrangement or agreement at any time
in accordance with Applicable Law (except as to benefits already vested
thereunder) and subject to the terms of such plans, programs or
arrangements or other agreements between the Company and its employees;
provided, however, that any such amendment or termination prior to the
first anniversary of the Closing Date shall not result in employee
benefit plans and employee programs, arrangements and agreements for the<PAGE>
benefit of the employees of the Surviving Corporation which are less
favorable, in the aggregate, than the Company's employee benefit plans
and employee programs, arrangements and agreements listed in the Company
Disclosure Schedule. The Surviving Corporation shall honor the terms of,
and assume, the severance agreements, dated as of November 6, 1995,
between the Company and twelve officers of the Company.
Section 6.9 Public Announcements. Each of Holdings and the
Company agrees that, except as may be required by Applicable Law as
advised by counsel, it will not issue any press release or otherwise make
any public statement with respect to this Agreement (including the
Exhibits hereto) or the transactions contemplated hereby (or thereby)
without having consulted the other party.
Section 6.10 Directors' and Officers' Indemnification and
Insurance.
(a) Holdings and the Company agree that all rights to
indemnification now existing in favor of any employee, agent, director or
officer of the Company and its Subsidiaries (the "Indemnified Parties")
as provided in their respective charters or by-laws, or in an agreement
between an Indemnified Party and the Company or one of its Subsidiaries
set forth in Section 6.10 of the Company Disclosure Schedule shall
survive the Merger and shall continue in full force and effect for a
period of eight years from the Effective Time; provided that in the event
any claim or claims are asserted or made within such eight-year period,
all rights to indemnification in respect of any such claim or claims
shall continue until final disposition of any and all such claims. The
Surviving Corporation shall agree to indemnify all Indemnified Parties to
the fullest extent permitted by Applicable Law with respect to all acts
and omissions arising out of such individuals' services as officers,
directors, employees or agents of the Company or any of its subsidiaries
or as trustees or fiduciaries of any plan for the benefit of employees,
or otherwise on behalf of, the Company or any of its Subsidiaries,
occurring prior to the Effective Time including, without limitation, the
transactions contemplated by this Agreement. Without limitation of the
foregoing, in the event any such Indemnified Party is or becomes involved
in any capacity in any action, proceeding or investigation in connection
with any matter, including, without limitation, the transactions
contemplated by this Agreement, occurring prior to, and including, the
Effective Time, the Surviving Corporation will pay as incurred such
Indemnified Party's legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith so long
as such party shall enter into an undertaking with the Surviving
Corporation to reimburse the Surviving Corporation, to the extent
required by Applicable Law, for all amounts advanced if a court of
competent jurisdiction shall ultimately determine that indemnification of
such officer or director is prohibited by Applicable Law. The Surviving
Corporation shall pay all expenses, including reasonable attorneys' fees,
that may be incurred by any Indemnified Party in enforcing the indemnity
and other obligations provided for in this Section 6.10.
(b) Holdings agrees that the Company, and from and
after the Effective Time, the Surviving Corporation shall cause to be<PAGE>
maintained in effect for three years from the Effective Time the current
policies of the directors' and officers' liability insurance maintained
by the Company; provided that the Surviving Corporation may substitute
therefor policies of at least the same coverage containing terms and
conditions which are no less advantageous to the Indemnified Parties and
provided that such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time;
and provided, further, that the Surviving Corporation shall not be
required to pay an annual premium in excess of 200% of the last annual
premium paid by the Company prior to the date hereof (which premium is
disclosed in Section 6.10 of the Company Disclosure Schedule) and if the
Surviving Corporation is unable to obtain the insurance required by this
Section 6.11(b) it shall obtain as much comparable insurance as possible
for an annual premium equal to such maximum amount.
Section 6.11 Expenses. Except as otherwise
set forth in
Section 8.2(b), each party hereto shall bear its own costs and expenses
in connection with this Agreement and the transactions contemplated
hereby, except that (a) Holdings shall be responsible for any commitment
fees (and any related costs, expenses and reimbursements) required to be
paid pursuant to the Bank Commitment Letter and (b) the Company shall pay
all SEC filing fees, printing and mailing costs for the Registration
Statement, Proxy Statement and the registration statement to be filed in
connection with the Subordinated Debt, and all other filing fees incurred
in connection with this Agreement and the transactions contemplated
hereby (but not more than $90,000 relating to filing fees under the HSR
Act); provided, however, that, upon consummation of the Merger, the
Surviving Corporation will reimburse Holdings, its Affiliates and the
third party investors who have entered into Subscription Agreements for
all unreimbursed and documented costs and expenses.
Section 6.12 Listing Application. The Company and Holdings
shall each use its reasonable best efforts to cause the shares of New
Company Common Stock to be issued pursuant to this Agreement in the
Merger to be listed for trading on the NYSE.
Section 6.13 Supplemental Disclosure. The Company shall
give prompt notice to Holdings, and Holdings shall give prompt notice to
the Company, of (i) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which would be likely to cause (x) any
representation or warranty contained in this Agreement to be untrue or
inaccurate or (y) any covenant, condition or agreement contained in this
Agreement not to be complied with or satisfied and (ii) any failure of
the Company or Holdings, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant
to this Section 6.13 shall not have any effect for the purpose of
determining the satisfaction of the conditions set forth in Article VII
of this Agreement or otherwise limit or affect the remedies available
hereunder to any party.
Section 6.14 Holdings' Stockholders Agreement. Holdings
shall use its best efforts to cause the current Stockholders Agreement,
dated as of November 7, 1995, among the stockholders of Holdings to be<PAGE>
terminated by all of the parties thereto on or prior to the Effective
Time.
Section 6.15 Obligations Upon Exercise of Stock Option
Agreement.
(a) In the event that Holdings exercises its right to
purchase Shares from K-H pursuant to the Stock Option Agreement, Holdings
agrees, and in the event of the assignment by Holdings of any of its
rights under the Stock Option Agreement, Holdings will cause any assignee
thereof to agree, that: (i) it will, within one year from the date of
the purchase of the Shares pursuant to the Stock Option Agreement (the
"Purchase"), commence an offer pursuant to Section 13(e)(4) or 14(d) of
the Exchange Act (the "Offer") to purchase all of the then outstanding
Shares not owned by Holdings for consideration with a fair market value
of not less than $32 per share and will consummate such offer within 60
days from the date of commencement thereof; (ii) neither Holdings nor any
of its Affiliates will acquire (or propose to acquire other than pursuant
to clause (i) above) beneficial ownership (as the term "beneficial
ownership" is used in Rule 13d-3 under the Exchange Act) of any
additional Shares (and shall dispose of any other Shares beneficially
owned by Holdings or its Affiliates other than the Shares acquired
pursuant to the Purchase) unless and until it has consummated the Offer
and purchased all Shares validly tendered pursuant thereto; and (iii) in
the event that (x) the Offer is not commenced and consummated within 425
days following the Purchase and (y) the Company increases the Board of
Directors by two members and appoints one designee of Holdings to the
Company's Board of Directors (provided, that in no event will Holdings or
its Affiliates have more than one representative on the Company's Board
of Directors if the event in clause (x) above occurs), Holdings will, for
the 365-day period following the 425-day period referred to above (the
"Standstill Period"), (I) vote all of its Shares in favor of any
transaction proposed by the Company's Board of Directors pursuant to
which each stockholder of the Company will receive consideration with a
fair market value of not less than $32 per Share (as adjusted for any
stock splits, stock dividends, reclassifications or the like occurring
after the date hereof) (an "Alternative Transaction"), (II) cooperate
with the Company in connection with any Alternative Transaction and (III)
not influence or control or seek or propose to influence or control the
management or the policies of the Company (other than through its
designee on the Board of Directors) or seek to obtain additional
representation on the Board of Directors of the Company, or solicit, or
participate in the solicitation of, any proxies or consents with respect
to any securities of the Company, or make any public announcement with
respect to any of the foregoing or request permission to do any of the
foregoing.
(b) The Company agrees that in the event that an Alternative
Transaction is not consummated during the Standstill Period, upon the
expiration of the Standstill Period, all restrictions on Holdings and its
Affiliates pursuant to this Section 6.15 shall automatically terminate
and be of no further force or effect.<PAGE>
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the
Merger shall be subject to the satisfaction or waiver at or prior to the
Closing Date of the following conditions:
(a) Stockholder Approval. This Agreement and the
transactions contemplated hereby shall have been approved and adopted by
the requisite vote (as described in Section 6.6) of the stockholders of
Holdings and the Company in accordance with Applicable Law.
(b) HSR and Other Antitrust Approvals. The waiting
periods (and any extension thereof) applicable to the consummation of the
Merger and the transactions contemplated hereby under the HSR Act shall
have expired or been terminated.
(c) Registration Statement. The Registration
Statement shall have become effective in accordance with the provisions
of the Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no
proceedings for that purpose shall have been initiated by the SEC.
(d) No Injunction. No Governmental Entity having
jurisdiction over the Company or Holdings, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is then
in effect and has the effect of making the Merger or the Stock Option
Agreement illegal or otherwise prohibiting consummation of the Merger.
(e) Litigation. There shall not have been instituted
or be pending any suit, action or proceeding by any Governmental Entity
as a result of this Agreement or any of the transactions contemplated
hereby which questions the validity or legality of the transactions
contemplated by this Agreement or the Stock Option Agreement.
(f) Financing. The Company shall have obtained,
pursuant to the Financing Commitments or otherwise, the funds necessary
to consummate the transactions contemplated by this Agreement on the
terms set forth herein, except this condition shall not be applicable to
Holdings with respect to any portion of the Financing Commitment
represented by the Subscription Agreements if any party to a Subscription
Agreement shall be in breach of its commitment with respect to the
portion of the Financing that such party shall have committed to provide.
(g) Solvency Opinion. Holdings and the Company shall
have received a solvency opinion, in form and substance reasonably
satisfactory to Holdings and the Company, from a nationally recognized
investment banking or valuation firm, with respect to the solvency of the
Surviving Corporation after giving effect to the Merger and the
transactions contemplated by this Agreement.<PAGE>
Section 7.2 Conditions to Obligations of Holdings to Effect
the Merger. The obligations of Holdings to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the
following additional conditions, unless waived in writing by Holdings:
(a) Representations and Warranties. The
representations and warranties of the Company that are qualified with
reference to a Company Material Adverse Effect shall be true and correct
and the representations and warranties that are not so qualified shall be
true and correct except where the failure to be true and correct would
not have a Company Material Adverse Effect, in each case as of the date
hereof, and, except to the extent such representations and warranties
speak as of an earlier date, as of the Effective Time as though made at
and as of the Effective Time, and Holdings shall have received a
certificate signed on behalf of the Company by the chief executive
officer or the chief financial officer of the Company to such effect.
(b) Performance of Obligations of the Company. The
Company shall have performed all obligations required to be performed by
it under this Agreement at or prior to the Effective Time except where
the failure to so perform would not have a Company Material Adverse
Effect, and Holdings shall have received a certificate signed on behalf
of the Company by the chief executive officer or the chief financial
officer of the Company to such effect.
(c) Opinion of Company Counsel. Holdings shall have
received an opinion of outside counsel to the Company reasonably
acceptable to Holdings, dated the Effective Time, in form and substance
reasonably acceptable to Holdings.
(d) Material Adverse Change. Since the date of this
Agreement, there shall have been no event or occurrence which has had, or
would reasonably be expected to have, a Company Material Adverse Effect;
and Holdings shall have received a certificate signed on behalf of the
Company by the chief executive officer or the chief financial officer of
the Company to such effect.
Section 7.3 Conditions to Obligation of the Company to
Effect the Merger. The obligation of the Company to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of
the following additional conditions, unless waived in writing by the
Company:
(a) Representations and Warranties. The
representations and warranties of Holdings that are qualified with
reference to a Holdings Material Adverse Effect shall be true and correct
and the representations and warranties that are not so qualified shall be
true and correct except where the failure to be true and correct would
not have a Holdings Material Adverse Effect, in each case as of the date
hereof, and, except to the extent such representations and warranties
speak as of an earlier date, as of the Effective Time as though made on
and as of the Effective Time, and the Company shall have received a
certificate signed on behalf of Holdings by the chief executive officers
or the chief financial officers of Holdings to such effect.<PAGE>
(b) Performance of Obligations of Holdings. Holdings
shall have performed all obligations required to be performed by it under
this Agreement at or prior to the Effective Time except where the failure
to so perform would not have a Holdings Material Adverse Effect, and the
Company shall have received a certificate signed on behalf of Holdings by
the chief executive officer or the chief financial officer of Holdings to
such effect.
(c) Opinion of Holdings' Counsel. The Company shall
have received an opinion of outside counsel to Holdings reasonably
acceptable to the Company, dated the Effective Time, in form and
substance reasonably acceptable to the Company.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated,
and the Merger and the other transactions contemplated hereby may be
abandoned, at any time prior to the Effective Time, whether before or
after approval by the stockholders of the Company or Holdings:
(a) by mutual written consent of Holdings and the
Company;
(b) by either Holdings or the Company, if (i) the
Merger shall not have been consummated on or before August 15, 1996 or
(ii) the stockholders of the Company or the Stockholders of Holdings do
not approve this Agreement by the requisite vote at a meeting duly
convened therefor or any adjournment thereof (unless, in the case of any
such termination pursuant to this Section 8.1(b), the failure of such
event to occur shall have been caused by the action or failure to act of
the party seeking to terminate this Agreement, which action or failure to
act constitutes a breach of such party's obligations under this
Agreement);
(c) by either Holdings or the Company, if any
permanent injunction, order, decree or ruling by any Governmental Entity
of competent jurisdiction preventing the consummation of the Merger shall
have become final and nonappealable; provided, however, that the party
seeking to terminate this Agreement pursuant to this Section 8.1(c) shall
have used reasonable best efforts to remove such injunction or overturn
such action;
(d) by Holdings, if (i) there has been a breach of any
of the representation or warranties, covenants or agreements the effect
of which is a Company Material Adverse Effect set forth in this Agreement
on the part of the Company, which breach is not curable or, if curable,
is not cured within 45 days after written notice of such breach is given
by Holdings to the Company, or (ii) the Board of Directors of the Company
(x) fails to recommend the approval of this Agreement and the Merger to
the Company's stockholders in accordance with Section 6.5(a) hereof, or
(y) withdraws or amends or modifies in a manner adverse to Holdings its<PAGE>
recommendation or approval in respect of this Agreement or the Merger or
fails to reconfirm such recommendation within 5 business days of a
reasonable written request for such confirmation by Holdings;
(e) by the Company if the Board of Directors of the
Company shall reasonably determine that a proposal for an Acquisition
Transaction constitutes a Superior Proposal; provided, however, that the
Company may not terminate this Agreement pursuant to this clause (e)
unless (i) 5 business days shall have elapsed after delivery to Holdings
of a written notice of such determination by such Board of Directors and,
during such 5-business-day period, the Company shall have informed
Holdings of the material terms and conditions and financing arrangements
of such proposal for an Acquisition Transaction and the identity of the
person or group making such proposal for an Acquisition Transaction and
(ii) at the end of such 5-day-business period, such Board of Directors
shall continue reasonably to believe that such proposal for an
Acquisition Transaction constitutes a Superior Proposal and promptly
thereafter the Company shall enter into a definitive acquisition, merger
or similar agreement to effect such Superior Proposal; and
(f) by the Company, if there has been a breach of any
of the representations or warranties, covenants or agreements the effect
of which is a Holdings Material adverse Effect set forth in this
Agreement on the part of Holdings, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such breach
is given by the Company to Holdings.
Section 8.2 Effect of Termination.
(a) In the event of termination of this Agreement
pursuant to this Article VIII, the Merger shall be deemed abandoned and
this Agreement shall forthwith become void, except that the provisions of
the last sentence of Section 6.1, Section 6.11 and Section 6.15 shall
survive any termination of this Agreement; provided, however, that
nothing in this Agreement shall relieve any party from liability for any
breach of this Agreement.
(b) If (x) Holdings shall have
terminated this
Agreement pursuant to Section 8.1(d)(ii) or (y) the Company shall have
terminated this Agreement pursuant to Section 8.1(e), or (z) Holdings or
the Company shall have terminated this Agreement pursuant to Section
8.1(b) and such termination was not solely the result of any action or
inaction by Holdings which resulted in the failure of the conditions in
Section 7.1(b),(d),(e),(f) or (g) or Section 7.3, and, prior to or within
six months after any termination described in this clause (z), the
Company (or any of its Subsidiaries) shall have directly or indirectly
entered into a definitive agreement for, or shall have consummated, an
Acquisition Transaction, in which the equivalent per Share consideration
received by the Company or its stockholders is equal to or greater than
$30 then, in any of such cases, the Company shall pay Holdings (A) a
termination fee of $20 million, plus (B) an amount equal to Holdings'
actual, documented out-of-pocket expenses, not exceeding $5 million, in
connection with this Agreement (including, without limitation, attorneys'
fees and fees of financial advisors); provided, however, no fees shall be<PAGE>
payable or expenses reimbursed pursuant to this Section 8.2(b) if at the
time of termination of this Agreement pursuant to Section 8.1(b)(i)
either (aa) the waiting period under the HSR Act (including any voluntary
extension of such period) shall not have expired or (bb) any Governmental
Entity is asserting an objection under the Antitrust Laws to the
transactions contemplated by this Agreement. Any fees or amounts payable
under this Section 8.2(b) shall be paid in same day funds contemporaneous
with a termination described in either clause (x) or (y) of this Section
8.2(b), and no notice of termination pursuant to such sections shall be
effective and this Agreement shall not terminate, until such termination
fee is received by Holdings, or concurrently with or prior to the
entering into of the definitive agreement for, or the consummation of,
such Acquisition Transaction, in the case of a termination described in
clause (y) of this Section 8.2(b).
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Amendment and Modification. At any time prior
to the Effective Time, this Agreement may be amended, modified or
supplemented only by written agreement (referring specifically to this
Agreement) of Holdings and the Company with respect to any of the terms
contained herein; provided, however, that after any approval and adoption
of this Agreement by the stockholders of the Company, no such amendment,
modification or supplementation shall be made which under Applicable Law
requires the approval of such stockholders, without the further approval
of such stockholders.
Section 9.2 Waiver. At any time prior to the Effective
Time, Holdings, on the one hand, and the Company, on the other hand, may
(i) extend the time for the performance of any of the obligations or
other acts of the other, (ii) waive any inaccuracies in the
representations and warranties of the other contained herein or in any
documents delivered pursuant hereto and (iii) waive compliance by the
other with any of the agreements or conditions contained herein which may
legally be waived. Any such extension or waiver shall be valid only if
set forth in an instrument in writing specifically referring to this
Agreement and signed on behalf of such party.
Section 9.3 Survivability; Investigations. The respective
representations and warranties of Holdings, on the one hand, and the
Company, on the other hand, contained herein or in any certificates or
other documents delivered prior to or as of the Effective Time (i) shall
not be deemed waived or otherwise affected by any investigation made by
any party hereto and (ii) shall not survive beyond the Effective Time.
The covenants and agreements of the parties hereto (including the
Surviving Corporation after the Merger) shall survive the Effective Time,
without limitation (except for those which, by their terms, contemplate a
shorter survival period).
Section 9.4 Notices. All notices and other communications
hereunder shall be in writing and shall be delivered personally or by
next-day courier or telecopied with confirmation of receipt, to the<PAGE>
parties at the addresses specified below (or at such other address for a
party as shall be specified by like notice; provided that notices of a
change of address shall be effective only upon receipt thereof). Any
such notice shall be effective upon receipt, if personally delivered or
telecopied, or one day after delivery to a courier for next-day delivery.
(a) If to Holdings to:
MWC Holdings, Inc.
2501 Woodlake Circle
Okemos, Michigan 48864
Attention: General Counsel
Telecopier: (517) 337-5886
with copies to:
Joseph Littlejohn & Levy
450 Lexington Avenue
New York, New York 10022
Attention: Paul S. Levy
Telecopier: (212) 286-8626
and
Skadden, Arps, Slate, Meagher & Flom
One Rodney Square
Wilmington, Delaware 19801
Attention: Robert B. Pincus, Esq.
Telecopier: (302) 651-3001
(b) if to the Company, to:
Hayes Wheels International, Inc.
38481 Huron River Drive
Romulus, Michigan 48174
Attention: General Counsel
Telecopier: (313) 942-5199
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: David A. Katz, Esq.
Telecopier: (212) 403-2000
Section 9.5 Descriptive Headings; Interpretation. The
headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. References in this Agreement to Sections, Exhibits or
Articles mean a Section, Exhibit or Article of this Agreement unless
otherwise indicated. References to this Agreement shall be deemed to
include the Exhibits hereto, unless the context otherwise requires. The
term "person" shall mean and include an individual, a partnership, a<PAGE>
joint venture, a corporation, a trust, a Governmental Entity or an
unincorporated organization.
Section 9.6 Entire Agreement; Assignment. This Agreement
(including the Exhibits and other documents and instruments referred to
herein), together with the three Confidentiality Agreements, constitute
the entire agreement and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them,
with respect to the subject matter hereof. This Agreement is not
intended to confer upon any person not a party hereto any rights or
remedies hereunder. This Agreement shall not be assigned by operation of
law or otherwise.
Section 9.7 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware
without giving effect to the provisions thereof relating to conflicts of
law.
Section 9.8 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State of
Delaware or in Delaware state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and
(c) agrees that it will not bring any action relating to this Agreement
or any of the transactions contemplated by this Agreement in any court
other than a federal or state court sitting in the State of Delaware.
Section 9.9 Severability. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect against a party hereto, the validity,
legality and enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby and such invalidity,
illegality or unenforceability shall only apply as to such party in the
specific jurisdiction where such judgment shall be made.
Section 9.10 Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same agreement.
Section 9.11 Third-Party Beneficiaries. Nothing in this
Agreement, except for the provisions of Section 6.10 to the extent they
apply to directors and officers of the Company, is intended to confer
upon any person other than the parties hereto any rights or remedies
hereunder.<PAGE>
<PAGE>
IN WITNESS WHEREFORE, each of Holdings and the Company has
caused this Agreement to be executed on its behalf by its officers
thereunto duly authorized, all as of the date first above written.
MWC HOLDINGS, INC.
By: /s/ Richard W. Tuley
Name: Richard W. Tuley
Title: President/CEO
HAYES WHEELS INTERNATIONAL, INC.
By: /s/ Daniel M. Sandberg
Name: Daniel M. Sandberg
Title: Vice President
<PAGE>
EXHIBIT 10.1
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT, dated as of March 28, 1996 (the
"Agreement"), among MWC Holdings, Inc., a Delaware corporation
("Holdings"), Hayes Wheels International, Inc., a Delaware corporation
(the "Company"), and _________ (the "Subscriber").
WHEREAS, pursuant to the Agreement and Plan of Merger, dated
as of March 28, 1996, by and between Holdings and the Company (the
"Merger Agreement"), Holdings will be merged with and into the Company
(the "Merger").
WHEREAS, upon consummation of the Merger, each share of
common stock, par value $.01, of the Company issued and outstanding
immediately prior to the effective time of the Merger shall be converted
into (i) the Cash Consideration (as defined in the Merger Agreement), and
(ii) one-tenth of one share of duly authorized, validly issued, fully
paid and nonassessable shares of common stock, par value $.01 (the "New
Company Common Stock," which, for purposes of this Agreement, shall be
deemed to include any shares of non-voting or reduced voting capital
stock of the surviving corporation of the Merger which may be issued
because of any applicable governmental regulations limiting the ownership
of voting stock by the Subscriber), of the Company as the surviving
corporation of the Merger.<PAGE>
WHEREAS, upon consummation of the Merger, each share of
preferred stock, par value $.01 per share (the "Company Preferred
Stock"), issued and outstanding immediately prior to the effective time
of the Merger shall be converted into 31.25 shares of New Company Common
Stock. The Certificate of Designations relating to the Company Preferred
Stock shall be in the form of Appendix I hereto.
WHEREAS, certain investors, including the Subscriber
(collectively, the "Investors"), intend to execute Subscription
Agreements (the "Subscription Agreements") resulting in an aggregate
investment in the Company of $200,000,000.
WHEREAS, in furtherance of the transactions contemplated by
the Merger Agreement, the Subscriber desires to subscribe for and acquire
from the Company, and Holdings and the Company desire that immediately
prior to and subject to the consummation of the Merger the Company issue
and sell to the Subscriber, on the terms set forth herein, (i) an
aggregate of ____ shares of Company Preferred Stock, and (ii) warrants
("Warrants" and, collectively with the Company Preferred Stock, the
"Securities") to purchase an aggregate of ___ shares of New Company
Common Stock. The Warrant Agreement relating to the Warrants shall be
substantially in the form of Exhibit 10.2 hereto.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the
receipt of which is hereby acknowledged, the parties agree as follows:
1. Subscription for and Purchase of Company Preferred Stock and
Warrants.
1.1 Purchase of Company Preferred Stock and Warrants. Upon
the terms and subject to the conditions set forth in this Agreement, the
Subscriber hereby subscribes for and agrees to purchase, and the Company
hereby agrees to issue and sell to the Subscriber, (i) ____ shares of
Company Preferred Stock, and (ii) Warrants to purchase ___ shares of New
Company Common Stock. The aggregate purchase price to be paid by the
Subscriber for the Securities to be purchased hereunder is $___________.
1.2 The Closing. The closing (the "Closing") of the
purchase of the Securities by the Subscriber shall take place at the
date, time and location of the closing under the Merger Agreement.
Holdings and the Company shall specify the date, time and location of the
Closing by notice to the Subscriber at least five (5) business days prior
thereto. On the date of the Closing, payment of the agreed purchase
price for the Securities to be purchased hereunder shall be made by the
Subscriber by wire transfer (to the account of the Company as shall have
been furnished to the Subscriber with the notice of the Closing) of
immediately available funds.
On the date of the Closing, the Company shall deliver to the
Subscriber and subject to the consummation of the Merger, against payment
of the purchase price therefor, (i) a certificate or certificates
registered in the Subscriber's name, representing ___ shares of Company
Preferred Stock, and (ii) a certificate or certificates registered in the<PAGE>
Subscriber's name representing ____ Warrants. Following the Merger,
certificates formerly representing shares of Company Preferred Stock may
be exchanged for certificates representing the shares of New Company
Common Stock into which they have been converted pursuant to the terms of
Section 2.2 of the Merger Agreement.
1.3 Expenses. The Company shall bear all expenses of
shipping any of the Securities (including, without limitation, insurance
expenses) to any place within the United States of America as any
Subscriber shall specify. Any tax on the issuance of the Securities
shall be paid by the Company.
2. Representations and Warranties.
2.1 Representations and Warranties of the Company. The
Company represents and warrants to the Subscriber as follows:
(a) The representations and warranties of the Company
contained in Article III of the Merger Agreement (the "Company
Representations and Warranties") are true and correct in all material
respects as of the date hereof, except where made as of a specified date.
The Company Representations and Warranties are hereby incorporated by
reference into this Agreement and may be relied upon by the Subscriber as
if made to the Subscriber.
(b) The Company has all requisite corporate power and
authority to enter into, execute, deliver and consummate the transactions
contemplated by this Agreement, and this Agreement has been duly
authorized, executed and delivered by the Company and is a valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except that (i) such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other laws, now or hereafter in effect, relating
to or limiting creditors' rights generally and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief
may be subject to equitable defense, and to the discretion of the court
before which any proceeding therefor may be brought.
(c) The shares of Company Preferred Stock, when issued
and delivered in accordance with the terms hereof, will be duly and
validly issued and, upon receipt by the Company of the purchase price
therefor, will be fully paid and nonassessable. Upon consummation of the
Merger, the shares of New Company Common Stock issued upon conversion of
the shares of Company Preferred Stock pursuant to the terms of the Merger
Agreement will be duly and validly issued, fully paid and nonassessable.
(d) The Warrants, when issued and delivered in
accordance with the terms hereof, will be duly and validly issued. The
Company has reserved 1,300,000 shares of New Company Common Stock for
issuance upon exercise of the Warrants. Upon receipt by the Company of
the exercise price therefor, the New Company Common Stock issued upon
exercise of the Warrants will be duly and validly issued, fully paid and
nonassessable.<PAGE>
(e) Upon consummation of the transactions contemplated
by the Merger Agreement and the Subscription Agreements and based upon
the number of shares of Company Common Stock and Holdings Common Stock
outstanding as of the date hereof, the ownership of each Subscriber of
New Company Common Stock (counting the New Company Preferred Stock on an
as if converted basis and the Warrants on an as if exercised basis but
excluding any employee options) shall be as follows:
<PAGE>
<TABLE>
<CAPTION>
Subscriber Number of Shares Percentage Ownership
of New Company of New Company
Common Stock Common Stock
<C> <C> <C>
JLL 5,729,774 46.1%
TSG Capital
Fund II, L.P. 1,440,000 11.6
CIBC WG Argosy
Merchant Fund
II, LLC 1,280,000 10.3
Chemical Equity
Associates, A
California Limited
Partnership 640,000 5.1
Nomura Holding
America, Inc. 480,000 3.9
</TABLE>
This representation and warranty shall also be deemed to be a
representation and warranty of Holdings for all purposes hereof.
(f) Neither the execution and delivery by the Company
of this Agreement nor the consummation by the Company of the transactions
contemplated hereby will violate any provision of the Certificate of
Incorporation or By-laws of the Company, any law or regulation applicable
to the Company or to which its properties are subject or result in any
breach of the terms or provisions of, or constitute a default under, any
material contract, agreement or instrument to which the Company is a
party or by which the Company is bound.
(g) Appendix III hereto sets forth a true, correct and
complete list (the "Investment List") of all investments held under any
"employee benefit plan" (as such term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") of
the Company (each such plan, an "ERISA Plan") that is not a
"multiemployer plan" within the meaning of Section 3(37) of ERISA, as a
result of which any interest in the Subscriber could be deemed, either
directly or indirectly, to constitute assets of any ERISA Plan that is
not such a "multiemployer plan." With respect to any ERISA Plan which is<PAGE>
a "multiemployer plan" within the meaning of Section 3(37) of ERISA, the
Company shall use its reasonable best efforts prior to the Closing to
receive from such multiemployer plan a true, correct and complete list of
all investments held thereunder, as a result of which any interest in the
Subscriber could be deemed, directly or indirectly, to constitute assets
of an ERISA Plan. To the knowledge of the Company, the execution and
delivery of this Agreement and the issuance and sale of the Securities
hereunder will be exempt from, or will not involve any transaction which
is subject to, the prohibitions of Section 406 of ERISA and Section 4975
of the Internal Revenue Code of 1986, as amended (the "Code"), and will
not involve any transaction in connection with which a penalty could be
imposed under Section 502(i) of ERISA or a tax could be imposed pursuant
to Section 4975 of the Code.
(h) The Company does not as of the date hereof, and
shall not through the term of the Stockholders' Agreement (as defined
below), participate in any anti-Israeli boycott within the scope of
Chapter 7 of Part 2 of Division 4 of Title 2 of the California Government
Code as in effect on the date hereof.
2.2 Representations and Warranties of Holdings. Holdings
represents and warrants to the Subscribers as follows:
(a) The representations and warranties of Holdings
contained in Article IV of the Merger Agreement (the "Holdings
Representations and Warranties") are true and correct in all material
respects as of the date hereof, except where made as of a specified date.
The Holdings Representations and Warranties are hereby incorporated by
reference into this Agreement and may be relied upon by the Subscriber as
if made to the Subscriber.
(b) Holdings has all requisite corporate power and
authority to enter into, execute, deliver and consummate the transactions
contemplated by this Agreement, and this Agreement has been duly
authorized, executed and delivered by Holdings and is a valid and binding
obligation of Holdings enforceable against Holdings in accordance with
its terms, except that (i) such enforcement may be subject to any
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
or other laws, now or hereafter in effect, relating to or limiting
creditors' rights generally and (ii) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defense, and to the discretion of the court before which any
proceeding therefor may be brought.
(c) Neither the execution and delivery by Holdings of
this Agreement nor the consummation by Holdings of the transactions
contemplated hereby will violate any provision of the Certificate of
Incorporation or By-laws of Holdings, any law or regulation applicable to
Holdings or to which its properties are subject or result in any breach
of the terms or provisions of, or constitute a default under, any
material contract, agreement or instrument to which Holdings is a party
or by which Holdings is bound.<PAGE>
(d) Holdings does not as of the date hereof, and shall
not through the consummation of the Merger, participate in any anti-
Israeli boycott within the scope of Chapter 7 of Part 2 of Division 4 of
Title 2 of the California Government Code as in effect on the date
hereof.
2.3 Representations and Warranties of the Subscriber. The
Subscriber represents and warrants to the Company and Holdings, as
follows:
(a) The Subscriber has all requisite power and
authority to enter into, execute, deliver and consummate the transactions
contemplated by this Agreement, and this Agreement has been duly
authorized, if applicable, executed and delivered by the Subscriber and
is a valid and binding obligation of the Subscriber enforceable against
the Subscriber in accordance with its terms.
(b) Neither the execution and delivery by the
Subscriber of this Agreement nor the consummation by the Subscriber of
the transactions contemplated hereby will violate any provision of the
organizational documents of the Subscriber, any law or regulation
applicable to the Subscriber or to which its properties are subject or
result in any breach of any terms or provisions of, or constitute a
default under any material contract, agreement or instrument to which the
Subscriber is a party or by which the Subscriber is bound.
(c) The Subscriber has made, or will make as promptly as possible, but
in any case within seven (7) days hereof, all necessary filings in
connection, and in compliance, with the provisions of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") and
any applicable foreign antitrust laws. The Company and Holdings agree to
cooperate with the Subscriber in the preparation and filing of the
Subscriber's filings under the HSR Act.
(d) Either (i) the Subscriber will not be entering into this Agreement
or funding the purchase of its Securities hereunder with plan assets of
any "employee benefit plan" as defined in Section 3(3) of ERISA or any
"plan" as defined in Section 4975 of the Code or (ii) to the Subscriber's
knowledge, the execution and delivery of this Agreement and the issuance
and sale of the Securities hereunder will be exempt from, or will not
involve any transaction which is subject to, the prohibitions of Section
406 of ERISA and Section 4975 of the Code, and will not involve any
transaction in connection with which a penalty could be imposed under
Section 502(i) of ERISA or a tax could be imposed pursuant to Section
4975 of the Code.
3. Investment Representations of the Subscriber.
3.1 Investment Intention. The Subscriber represents and
warrants to the Company and Holdings that the Securities to be acquired
by it pursuant to this Agreement are being acquired for its own account
(or on behalf of managed accounts who are purchasing for their own
accounts) and with no intention of distributing or reselling the
Securities or any part thereof in any transaction which would be in<PAGE>
violation of the securities laws of the United States of America or any
State, without prejudice, however, to the Subscriber's rights at all
times to sell or otherwise dispose of all or any part of the Securities
under a registration under the Securities Act of 1933, as amended (the
"Act") or under an exemption from such registration available under the
Act, and subject, nevertheless, to the disposition of the Subscriber's
property being at all times within its control. If the Subscriber should
in the future decide to dispose of any of the Securities, the Subscriber
understands and agrees that it may do so only in compliance with the Act,
as then in effect, and that stop-transfer instructions to that effect
will be in effect with respect to the Securities. If the Subscriber
should decide to dispose of Securities, the Subscriber will have the
privilege in connection with such disposition, at the Subscriber's
expense, of appointing counsel of recognized standing in securities laws
including in-house or special counsel in connection with such disposition
and the Company and Holdings will accept the opinion of such counsel to
the effect that the proposed disposition of the Securities would not be
in violation of the Act, assuming such counsel and opinion are reasonably
acceptable to the Company and Holdings and their counsel and such counsel
has undertaken the necessary investigation to render such opinion, as the
case may be, under the circumstances. The Subscriber agrees to the
imprinting, so long as appropriate in the view of the Company, of the
following legend on certificates representing all of the Securities and
the New Company Common Stock issuable (i) upon conversion of the Company
Preferred Stock pursuant to the Merger and (ii) upon exercise of the
Warrants: "These securities have not been registered under the
Securities Act of 1933 and may be reoffered and sold only if so
registered or if an exemption from the registration is available."
3.2 Additional Investment Representations. The Subscriber
hereby further represents and warrants that either (i) it is an
"Accredited Investor" (as such term is defined in Rule 501 of Regulation
D under the Act) or (ii) (A) its financial situation is such that it can
afford to bear the economic risk of holding the Securities for an
indefinite period of time, (B) it can afford to suffer complete loss of
its investment in the Securities, (C) its knowledge and experience in
financial and business matters are such that it is capable of evaluating
the merits and risks of investment in the Securities as contemplated by
this Agreement, and (D) it understands and has taken cognizance of all
the risk factors related to purchase of the Securities.
3.3Access to Information. The Subscriber represents and warrants that
(a) it has been granted the opportunity to ask questions of, and receive
answers from, representatives of the Company and Holdings concerning the
terms and conditions of the acquisition of the Securities and any
additional information about the Company and Holdings, (b) its knowledge
and experience in financial and business matters is such that it is
capable of evaluating the risks of the investment in the Securities and
(c) in making its decision to purchase the Securities hereby subscribed
for, it has relied upon the independent investigations made by it and, to
the extent believed by it to be appropriate, its representatives,
including its own professional, tax and other advisors.
4. Certain Covenants.<PAGE>
4.1 Waiver of Appraisal Rights. The Subscriber hereby
irrevocably waives and shall not seek any appraisal rights it may have
under Delaware law with respect to the shares of Company Preferred Stock
as a result of the consummation of the Merger.
4.2 ERISA Matters. If, prior to the Closing, any party
determines that the consummation of the transactions contemplated
hereunder will constitute a non-exempt "prohibited transaction" under
Section 406 of ERISA or Section 4975 of the Code, the affected party and
the Company shall take any and all actions which are reasonable to
eliminate or remedy the circumstance or condition which would cause the
consummation of such transactions to be a "prohibited transaction."
4.3 Ancillary Agreements. Upon execution hereof, the
Company shall provide the Subscriber with copies of (i) all other
Subscription Agreements, (ii) the Bank Commitment Letter (as defined in
the Merger Agreement) and (iii) the Merger Agreement.
4.4 Use of Proceeds. The Company shall use the proceeds
from the sale of the Securities hereunder to consummate the Merger, repay
certain outstanding indebtedness of the Company and Holdings and to pay
related fees and expenses.
4.5 Most Favorable Terms. If the terms or provisions of any
of the other Subscription Agreements are amended, supplemented or
otherwise modified after the date hereof for the benefit of the
subscriber under such Subscription Agreement, then such amendment,
supplement or modification shall be offered by the Company and Holdings
to the Subscriber with respect to this Agreement.
4.6 Stockholders' Agreement. The Subscriber and the Company
shall enter into a Stockholders' Agreement with substantially the terms
set forth on Appendix IV hereto.
5. Conditions Precedent to Closing.
5.1 Conditions to Each Party's Obligations. The respective
obligations of each party to effect the transactions contemplated
hereunder shall be subject to the satisfaction or waiver at or prior to
the date of the Closing of the following conditions:
(a) The Merger Agreement shall be in full force and
effect.
(b) The waiting period (and any extensions thereof)
applicable to the purchase of Securities hereunder under the HSR Act and
any applicable foreign antitrust laws shall have expired or been
terminated.
(c) No governmental entity having jurisdiction over
the Company, Holdings or the Subscriber, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or<PAGE>
other order (whether temporary, preliminary or permanent) which is then
in effect and has the effect of making the issuance and sale of the
Securities or any of the transactions contemplated hereby illegal or
otherwise prohibiting consummation of such transactions.
(d) Except for the conditions set forth in Section
7.1(f) of the Merger Agreement, all of the conditions to the consummation
of the Merger set forth in Article VII of the Merger Agreement shall have
been satisfied or waived by Holdings or the Company, as the case may be.
(e) All of the conditions relating to the funding of
the loan proceeds contemplated by (i) the Bank Commitment Letter and (ii)
the Subordinated Debt (as such terms are defined in the Merger Agreement)
shall have been satisfied or waived by the applicable lenders, Holdings
or the Company as the case may be, other than those conditions relating
to the funding of the Subscription Agreements.
(f) The Company shall have received Subscription
Agreements, including this Agreement, representing Commitments to
purchase an aggregate of 200,000 shares of Company Preferred Stock and
each Subscription Agreement shall be in full force and effect and each of
the Subscribers thereunder shall be prepared to funds its commitment
thereunder.
5.2 Conditions Precedent to Obligations of the Subscriber.
The obligation of the Subscriber to purchase the Securities to be
purchased by it hereunder shall be subject to the satisfaction or waiver,
on or prior to the date of the Closing, of the following conditions:
(a) The representations and warranties of the Company
that are qualified with reference to a Company Material Adverse Effect
(as defined in the Merger Agreement) shall be true and correct and the
representations and warranties that are not so qualified shall be true
and correct, except where the failure to be true and correct would not
have a Company Material Adverse Effect, in each case as of the date
hereof, and, except to the extent such representations and warranties
speak as of an earlier date, as of the date of the Closing as though made
at and as of the date of the Closing. The Subscriber shall have received
a certificate signed on behalf of the Company by the chief executive
officer or the chief financial officer of the Company to such effect.
(b) The representations and warranties of Holdings
that are qualified with reference to a Holdings Material Adverse Effect
(as defined in the Merger Agreement) shall be true and correct and the
representations and warranties that are not so qualified shall be true
and correct, except where the failure to be true and correct would not
have a Holdings Material Adverse Effect, in each case as of the date
hereof, and, except to the extent such representations and warranties
speak as of an earlier date, as of the date of the Closing as though made
on and as of the date of the Closing, Subscriber shall have received a
certificate signed on behalf of Holdings by the chief executive officer
or the chief financial officer of Holdings to such effect.<PAGE>
(c) Each of the Company and Holdings shall have
performed all obligations required to be performed by it under this
Agreement at or prior to the date of the Closing, except where the
failure to so perform would not have a Company Material Adverse Effect or
a Holdings Material Adverse Effect, as the case may be, and the
Subscriber shall have received a certificate to such effect signed on
behalf of each of the Company and Holdings by the chief executive officer
or the chief financial officer of each of the Company and Holdings,
respectively.
5.3 Conditions Precedent to the Obligations of the Company
and Holdings. The obligations of the Company to issue and sell the
Securities to the Subscriber shall be subject to the satisfaction or
waiver, prior to or on the date of the Closing of the following
conditions:
(a) The Representations and Warranties set forth in
Sections 2.3, 3.1, 3.2 and 3.3 hereof shall be true and correct on the
date hereof and the Company and Holdings shall have received a
certificate signed on the behalf of the Subscriber by the appropriate
officer or representative of the Subscriber to such effect.
(b) The Subscriber shall have performed in all
material respects all obligations required to be performed by it under
this Agreement at or prior to the date of the Closing, and the Company
and Holdings shall have received a certificate to such effect signed on
behalf of the Subscriber by the appropriate officer or representative of
the Subscriber.
6. Miscellaneous.
6.1 Blue Sky. The Company, Holdings and the Subscriber
agree to use their reasonable best efforts to comply with all state
securities and "blue sky" laws which might be applicable to the sale of
the Securities to the Subscriber.
6.2 Binding Effect. The provisions of this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, successors and assigns.
6.3 Severability. The invalidity, illegality or
unenforceability of one or more of the provisions of this Agreement in
any jurisdiction shall not affect the validity, legality or
enforceability of the remainder of this Agreement in such jurisdiction or
the validity, legality or enforceability of this Agreement, including any
such provision, in any other jurisdiction, it being intended that all
rights and obligations of the parties hereunder shall be enforceable to
the fullest extent permitted by law.
6.4 Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Company,
Holdings and the Subscriber.<PAGE>
6.5 Disclosure. Each of the parties hereto agrees that it
will not disclose the terms of this Subscription Agreement nor the fact
that it has been entered into to any person without the prior written
consent of the Subscriber, except that the Company and Holdings may
disclose this Subscription Agreement to Varity Corporation and to any of
their respective officers, directors, accountants, employees, attorneys
or advisors on a confidential basis and as required by applicable law or
compulsory legal process, including, without limitation, in any proxy
statement, registration statement or similar document issued in
connection with the transactions contemplated hereby or by the Merger
Agreement.
6.6 Notices. All notices and other communications hereunder
shall be in writing and shall be delivered personally or by next-day
courier or telecopied with confirmation of receipt, to the parties at the
addresses specified below (or at such other address for a party as shall
be specified by like notice; provided, that notices of change of address
shall be effective only upon receipt thereof). Any such notice shall be
effective upon receipt, if personally delivered or telecopied, or one day
after delivery to a courier for next-day delivery.
(a) If to Holdings, to:
MWC Holdings, Inc.
2501 Woodlake Circle
Okemos, Michigan 48864
Attention: General Counsel
Telecopier: (517) 337-5886
with copies to:
Joseph Littlejohn & Levy
450 Lexington Avenue
New York, New York 10022
Attention: Paul S. Levy
Telecopier: (212) 286-8626
and
Skadden, Arps, Slate, Meagher & Flom
One Rodney Square
Wilmington, Delaware 19801
Attention: Robert B. Pincus, Esq.
Telecopier: (302) 651-3001
(b) If to the Company, to:
Hayes Wheels International, Inc.
38481 Huron River Drive
Romulus, Michigan 48174
Attention: General Counsel
Telecopier: (313) 942-5199
with a copy to:<PAGE>
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: David A. Katz, Esq.
Telecopier: (212) 403-2000
(c) If to the Subscriber, to:
Attention:
Telecopier:
with a copy to:
Attention:
Telecopier:
6.7 Applicable Law. The laws of the State of New York shall
govern the interpretation, validity and performance of the terms of this
Agreement, regardless of the law that might be applied under applicable
principles of conflicts of law. THE PARTIES HERETO WAIVE THEIR RIGHT TO
A JURY TRIAL WITH RESPECT TO DISPUTES HEREUNDER, ALL SUCH DISPUTES SHALL
BE SETTLED BY BINDING ARBITRATION PURSUANT TO THE RULES OF THE AMERICAN
ARBITRATION ASSOCIATION IN NEW YORK CITY, NEW YORK AND THE ORDER OF SUCH
ARBITRATORS SHALL BE FINAL AND BINDING ON ALL PARTIES HERETO.
6.8 Integration. This Agreement constitutes the entire
agreement and understanding of the parties hereto in respect of the
subject matter contained herein and therein. There are no restrictions,
agreements, promises, representations, warranties, conditions, covenants,
or undertakings with respect to the subject matter hereof or thereof
other than those expressly set forth herein or therein. This Agreement
supersedes all prior agreements and understandings between the parties
with respect to the subject matter hereof.
6.9 Descriptive Headings. The headings in this Agreement
are for convenience of reference only and shall not limit or otherwise
affect the meaning of terms contained herein.
6.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same instrument.
6.11 Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such cost or expense; provided,
however, that subject to and upon consummation of the Merger, the Company<PAGE>
will promptly reimburse the Subscriber for all costs and expenses
incurred in connection herewith.
6.12 Indemnification. The Company and Holdings agree to
indemnify, to the fullest extent permitted by law, the Subscriber, its
officers, directors, employees, advisors, affiliates and agents from and
against all losses, damages and liabilities which arise in connection
with any action or proceeding relating to the Merger, the Subscription
Agreement or the loan documents executed pursuant to the Bank Commitment
Letter and the Subordinated Debt issuance.
6.13 Rights Cumulative; Waiver. The rights and remedies of
each of the Subscriber, the Company and Holdings under this Agreement
shall be cumulative and not exclusive of any rights or remedies which it
would otherwise have hereunder or at law or in equity or by statute, and
no failure or delay by such party in exercising any right or remedy shall
impair any such right or remedy or operate as a waiver of such right or
remedy, nor shall any single or partial exercise of any power or right
preclude its other or further exercise or the exercise of any other power
or right. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any
preceding or succeeding breach and no failure by either party to exercise
any right or privilege hereunder shall be deemed a waiver of such party's
rights or privileges hereunder or shall be deemed a waiver of such
party's rights to exercise the same at any subsequent time or times
hereunder.
6.14 Non-Survival of Representations and Warranties. All
representations and warranties made by any party hereto shall not survive
beyond the effective time of the Merger or termination of this Agreement.
6.15 Termination. This Agreement shall terminate and be of
no force or effect immediately upon termination or expiration of the
Merger Agreement, and may be terminated by the Subscriber at any time
after August 15, 1996, if the transactions contemplated by the Merger
Agreement shall not have been consummated prior to such date; provided,
however that the provisions of Section 6.12 hereof shall survive any
termination of this Agreement.
6.16 Assignability. This Agreement and the Subscriber's
rights hereunder may be assigned by the Subscriber to any other entity or
entities reasonably acceptable to the Company and Holdings; provided,
however, that no such assignment shall relieve the Subscriber from
liability for its obligations hereunder.
<PAGE>
IN WITNESS WHEREOF, each of the Company, Holdings and the
Subscriber has caused this Agreement to be executed on its behalf by its
officers thereunto duly authorized, all as of the date first above
written.
MWC HOLDINGS, INC.<PAGE>
By:
Name:
Title:
HAYES WHEELS INTERNATIONAL, INC.
By:
Name:
Title:
SUBSCRIBER
By:
Name:
Title:
<PAGE>
EXHBIT 10.2
HAYES WHEELS INTERNATIONAL, INC.
AND
[ ]
WARRANT AGENT
WARRANT AGREEMENT
DATED AS OF , 1996
<PAGE>
WARRANT AGREEMENT, dated as of , 1996,
between HAYES WHEELS International, Inc., a Delaware corporation (the<PAGE>
"Company"), and [ ], a corporation, as Warrant
Agent (the "Warrant Agent").
WHEREAS, the Company proposes to issue warrants (the
"Warrants") to purchase up to an aggregate of 1,300,000 shares of common
stock, par value $.01 per share, of the Company (the "Common Stock"),
upon consummation of the merger (the "Merger") of MWC Holdings, Inc., a
Delaware corporation ("Holdings"), with and into the Company, pursuant to
the Agreement and Plan of Merger (the "Merger Agreement") dated March 28,
1996 by and between Holdings and the Company;
WHEREAS, pursuant to the Merger Agreement, the holders of
record of shares of common stock, par value $.01 per share, of Holdings
(the "Holdings Stockholders") will receive an aggregate of 1,150,000
Warrants and, pursuant to Subscription Agreements dated March 28, 1996,
the parties to that certain Stockholders Agreement of the Company dated
as of March 28, 1996 (collectively, the "Investors") will receive an
aggregate of 150,000 Warrants; and
WHEREAS, the Company wishes the Warrant Agent to act on
behalf of the Company and the Warrant Agent is willing to act in
connection with the issuance, division, transfer, exchange and exercise
of Warrants.
NOW, THEREFORE, in consideration of the foregoing and for the
purpose of defining the terms and provisions of the Warrants and the
respective rights and obligations thereunder of the Company and the
registered owners of the Warrants (the "Holders"), the Company and the
Warrant Agent hereby agree as follows:
1. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the
Company in accordance with the instructions hereinafter
set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.
2. Form of Warrant. The text of the Warrant shall be
substantially as set forth in Exhibit A attached
hereto. The price per share of Common Stock issuable
on exercise of the Warrants (the "Warrants Shares") and
the number of Warrant Shares issuable upon exercise of
each Warrant are subject to adjustment upon the
occurrence of certain events, all as hereinafter
provided. The Warrants shall be executed on behalf of
the Company by its Chairman of the Board, President or
one of its Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or an
Assistant Secretary. The signature of any such
officers on the Warrants may be manual or facsimile.
Warrants bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any one of<PAGE>
them shall have ceased to hold such offices prior to the delivery of such
Warrants or did not hold such offices on the date of this Agreement.
Warrants shall be dated as of the date of countersignature
thereof by the Warrant Agent either upon initial issuance or upon
division, exchange, substitution or transfer.
3. Countersignature of Warrants. The Warrants shall be
countersigned by the Warrant Agent (or any successor to
the Warrant Agent then acting as warrant agent under
this Agreement) and shall not be valid for any purpose
unless so countersigned. Warrants may be
countersigned, however, by the Warrant Agent (or by its
successor as warrant agent hereunder) and may be
delivered by the Warrant Agent, notwithstanding that
the persons whose manual or facsimile signatures appear
thereon as proper officers of the Company shall have
ceased to be such officers at the time of such
countersignature, issuance or delivery.
4. Exchange of Warrant Certificates. Each Warrant
certificate may be exchanged for another certificate or
certificates entitling the Holder thereof to purchase a
like aggregate number of Warrant Shares as the
certificate or certificates surrendered then entitle
each Holder to purchase. Any Holder desiring to
exchange a Warrant certificate or certificates shall
make such request in writing delivered to the Warrant
Agent, and shall surrender, properly endorsed, the
certificate or certificates to be so exchanged.
Thereupon, the Warrant Agent shall countersign and
deliver to the person entitled thereto a new Warrant
certificate or certificates, as the case may be, as so
requested, in such name or names as such Holder shall
designate.
5. Term of Warrants; Exercise of Warrants;
Transferability.
5.1 Term of Warrants. Subject to the terms of
this Agreement, each Holder shall have the right, which may be exercised
commencing at any time on or after the fourth anniversary of the
consummation of the Merger (the "Effective Time") until the seventh
anniversary of the consummation of the Merger (the "Expiration Date"), to
purchase from the Company the number of fully paid and nonassessable
Warrant Shares which the Holder may at the time be entitled to purchase
upon exercise of such Warrants pursuant to Section 5.2.
5.2 Exercise of Warrants. Each Warrant
initially entitles the Holder thereof to purchase one share of Common
Stock upon payment of the Warrant Price. A Warrant may be exercised upon
surrender to the Warrant Agent at its principal office in of
the certificate or certificates evidencing the Warrants to be exercised,
together with the form of election to purchase on the reverse thereof<PAGE>
duly filled in and signed, which signature shall be guaranteed by a bank
or trust company or a broker or dealer which is an approved member of a
Guarantee Signature Medallion Program and upon payment to the Warrant
Agent for the account of the Company of the Warrant Price (as defined in
and determined in accordance with the provisions of Sections 9 and 10
hereof), or in the manner provided in Section 5.3, for the number of
Warrant Shares in respect of which such Warrants are then exercised.
Payment of the aggregate Warrant Price shall be made in cash or by
certified or official bank check payable to the Warrant Agent, or in the
manner provided in Section 5.3. As soon as the Warrant Agent receives a
form of election to purchase Warrant Shares, it shall immediately notify
the Company.
No adjustment shall be made for any dividends on any shares
of stock issuable upon exercise of a Warrant.
Subject to Section 6 hereof, upon the surrender of
certificate or certificates representing the Warrants and payment of the
Warrant Price as aforesaid, the Warrant Agent shall cause to be issued
and delivered with all reasonable dispatch to or upon the written order
of the Holder and in such name or names as the Holder may designate, a
certificate or certificates for the number of full Warrant Shares so
purchased upon the exercise of such Warrants, together with cash, as
provided in Section 11 hereof, in respect of any fractional Warrant
Shares otherwise issuable upon such surrender. If permitted by
applicable law, such certificate or certificates shall be deemed to have
been issued and any person so designated to be named therein shall be
deemed to have become a Holder of record of such Warrant Shares as of the
date of the surrender of such Warrants and payment of the Warrant Price,
as aforesaid. The rights of purchase represented by the Warrants shall
be exercisable, at the election of the Holders thereof, either in full or
from time to time in part and, in the event that a certificate evidencing
Warrants is exercised in respect of less than all of the Warrant Shares
purchasable on such exercise at any time prior to the date of expiration
of the Warrants, a new certificate evidencing the remaining Warrant or
Warrants will be issued, and the Warrant Agent is hereby irrevocably
authorized to countersign and to deliver the required new Warrant
certificate or certificates pursuant to the provisions of this Section
and of Section 3 hereof, and the Company, whenever required by the
Warrant Agent, will supply the Warrant Agent with Warrant certificates
duly executed on behalf of the Company for such purpose.
5.3 Payment by Application of Shares Otherwise
Issuable. Upon any exercise of the Warrants, the Holder may, at its
option and in lieu of paying the aggregate Warrant Price in cash,
certified check or official bank check, instruct the Company, by written
notice accompanying the surrender of the Warrants at the time of such
exercise, that such Holder elects to receive that number of Warrant
Shares which is equal to the number of Warrant Shares for which the
Warrants are being exercised less the number of Warrant Shares having a
current market price (as defined in Section 10.1(d) hereof) equal to the
aggregate Warrant Price.
5.4 Transfer of Warrants.<PAGE>
(a) Except as set forth in Section 5.4(b) below, the
Warrants shall be freely transferable upon issuance.
(b) The Investors shall not be permitted, for a period
of two years from the date of the consummation of the Merger, to transfer
the Warrants other than to a Permitted Transferee (as defined in the
Stockholders Agreement of the Company dated as of , 1996).
Subsequent to such two year period, in addition to transfers to Permitted
Transferees, the Warrants held by the Investors may be transferred only
pursuant to (i) Rule 144 of the Securities Act of 1933, as amended (the
"Securities Act") or (ii) an exemption from registration under the
Securities Act as set forth in an opinion of counsel in form and
substance reasonably acceptable to the Company.
5.5 Compliance with Government Regulations. The
Company covenants that if any shares of Common Stock required to be
reserved for purposes of exercise of Warrants require, under any Federal
or state law or applicable governing rule or regulation of any national
securities exchange, registration with or approval of any governmental
authority, or listing on any such national securities exchange before
such shares may be issued upon exercise, the Company will in good faith
and as expeditiously as possible endeavor to cause such shares to be duly
registered, approved or listed on the relevant national securities
exchange, as the case may be; provided, however, that in no event shall
such shares of Common Stock be issued, and the Company is hereby
authorized to suspend the exercise of all Warrants, for the period, and
only for such period, during which such registration, approval or listing
is required but not in effect.
6. Payment of Taxes. The Company will pay all
documentary stamp taxes, if any, attributable to the
initial issuance of Warrant Shares upon the exercise of
Warrants; provided, however, that the Company shall not
be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the
issue or delivery of any Warrants or certificates for
Warrant Shares in a name other than that of the
registered Holder of such Warrants.
7. Mutilated or Missing Warrants. In case any of the
certificates evidencing the Warrants shall be
mutilated, lost, stolen or destroyed, the Company may
in its discretion issue, and the Warrant Agent shall
countersign and deliver in exchange and substitution
for and upon cancellation of the mutilated Warrant
certificate, or in lieu of and substitution for the
Warrant certificate lost, stolen or destroyed, a new
Warrant certificate of like tenor and representing an
equivalent right or interest, but only upon receipt of
evidence satisfactory to the Company and the Warrant
Agent of such loss, theft or destruction of such
Warrant and an indemnity or bond, if requested, also
satisfactory to them. An applicant for such a
substitute Warrant certificate shall also comply with<PAGE>
such other reasonable regulations and pay such other
reasonable charges as the Company or the Warrant Agent
may prescribe.
8. Reservation of Warrant Shares, Purchase and
Cancellation of Warrants; Registration of Warrant
Shares.
8.1 Reservation of Warrant Shares. There have
been reserved, and the Company shall at all times keep reserved, out of
its authorized Common Stock, a number of shares of Common Stock
sufficient to provide for the exercise of the rights of purchase
represented by the outstanding Warrants. The Transfer Agent for the
Common Stock and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights
of purchase aforesaid will be irrevocably authorized and directed at all
times to reserve such number of authorized shares as shall be required
for such purpose. The Company will keep a copy of this Agreement on file
with the Transfer Agent for the Common Stock and with every subsequent
transfer agent for any shares of the Company's capital stock issuable
upon the exercise of the rights of purchase represented by the Warrants.
The Warrant Agent is hereby irrevocably authorized to requisition from
time to time from such Transfer Agent the stock certificates required to
honor outstanding Warrants upon exercise thereof in accordance with the
terms of this Agreement. The Company will supply such Transfer Agent
with duly executed stock certificates for such purposes and will provide
or otherwise make available any cash which may be payable as provided in
Section 11 hereof. The Company will furnish such Transfer Agent a copy
of all notices of adjustments and certificates related thereto,
transmitted to each Holder pursuant to subsection 10.2 hereof. All
Warrants surrendered in the exercise of the rights thereby evidenced
shall be cancelled by the Warrant Agent and shall thereafter be delivered
to the Company.
8.2 Purchase of Warrants by the Company. The
Company shall have the right, except as limited by law, other agreements
or herein, to purchase or otherwise acquire Warrants at such times, in
such manner and for such consideration as it may deem appropriate.
8.3 Cancellation of Warrants. In the event the
Company shall purchase or otherwise acquire Warrants, the same shall
thereupon be delivered to the Warrant Agent and be cancelled by it and
retired. The Warrant Agent shall cancel any Warrant surrendered for
exchange, substitution, transfer or exercise in whole or in part.
8.4 Registration of Warrant Shares. The Company
shall use its best efforts to prepare and file a registration statement
on Form S-3 or another appropriate form to register the Warrant Shares.
The Company shall use its best efforts to (i) cause such registration
statement to be declared effective by the SEC prior to or contemporaneous
with the Effective Time; and (ii) cause such registration statement to
remain effective through the Expiration Date.<PAGE>
9. Warrant Price. The price per share at which Warrant
Shares shall be purchasable upon the exercise of
Warrants (the "Warrant Price") shall be $48.00, subject
to adjustment pursuant to Section 10 hereof.
10. Adjustment of Warrant Price and Number of Warrant
Shares. The number and kind of securities purchasable
upon the exercise of each Warrant and the Warrant Price
shall be subject to adjustment from time to time upon
the happening of certain events, as hereinafter
defined.
10.1 Mechanical Adjustments. The number of
Warrant Shares purchasable upon the exercise of each Warrant and the
Warrant Price shall be subject to adjustment as follows.
(a) In case the Company shall (i) pay a dividend in
shares of Common Stock or make a distribution in shares of Common Stock,
(ii) subdivide its outstanding shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock or (iv) issue by reclassification of its shares of Common
Stock other securities of the Company (including any such
reclassification in connection with a consolidation or merger in which
the Company is the surviving corporation), the number of Warrant Shares
purchasable upon exercise of each Warrant shall be adjusted so that the
Holder of each Warrant shall be entitled to purchase the kind and number
of Warrant Shares or other securities of the Company determined by
multiplying the number of Warrant Shares purchasable upon exercise of
each Warrant immediately prior to such event by a fraction (i) the
numerator of which shall be the total number of outstanding shares of
Common Stock immediately after such event, and (ii) the denominator of
which shall be the total number of outstanding shares of Common Stock
immediately prior to such event. An adjustment made pursuant to this
paragraph (a) shall become effective immediately after the effective date
of such event retroactive to the record date, if any, for such event.
(b) In case the Company shall issue rights, options or
warrants to all Holders of its outstanding Common Stock, without any
charge to such Holders, entitling them (for a period within 45 days after
the record date mentioned below) to subscribe for or purchase shares of
Common Stock at a price per share which is lower at the record date
mentioned below than the then current market price per share of Common
Stock, the number of Warrant Shares thereafter purchasable upon the
exercise of each Warrant shall be determined by multiplying the number of
Warrant Shares theretofore purchasable upon exercise of each Warrant by a
fraction, of which the numerator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights, options or
warrants plus the number of additional shares of Common Stock offered for
subscription or purchase in connection with such rights, options or
warrants, and of which the denominator shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights, options
or warrants plus the number of shares which the aggregate offering price
of the total number of shares of Common Stock so offered would purchase
at the current market price per share of Common Stock at such record<PAGE>
date. Such adjustment shall be made whenever such rights, options or
warrants are issued, and shall become effective immediately after the
record date for the determination of stockholders entitled to receive
such rights, options or warrants.
(c) In case the Company shall distribute to all
Holders of its shares of Common Stock evidences of its indebtedness or
assets (excluding cash dividends or distributions payable out of
consolidated earnings or earned surplus and dividends or distributions
referred to in paragraph (a) above or in the paragraph immediately
following this paragraph) or rights, options or warrants, or convertible
or exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock (excluding those referred to in paragraph
(b) above), then in each case the number of Warrant Shares thereafter
purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of Warrant Shares theretofore purchasable upon the
exercise of each Warrant by a fraction, of which the numerator shall be
the then current market price per share of Common Stock on the record
date for such distribution, and of which the denominator shall be the
then current market price per share of Common Stock, less the then fair
value (as determined by the Board of Directors of the Company, whose
determination shall be conclusive) of the portion of the assets or
evidences of indebtedness so distributed or of such subscription rights,
options or warrants, or of such convertible or exchangeable securities
applicable to one share of Common Stock. Such adjustment shall be made
whenever any such distribution is made, and shall become effective on the
date of distribution retroactive to the record date for the determination
of stockholders entitled to receive such distribution.
In the event of a distribution by the Company to all Holders
of its shares of Common Stock of stock of a subsidiary or securities
convertible into or exercisable for such stock, then in lieu of an
adjustment in the number of Warrant Shares purchasable upon the exercise
of each Warrant, the Holder of each Warrant, upon the exercise thereof at
any time after such distribution, shall be entitled to receive from the
Company, such subsidiary or both as the Company shall determine, the
stock or other securities to which such Holder would have been entitled
if such Holder had exercised such Warrant immediately prior thereto, all
subject to further adjustment as provided in this subsection 10.1;
provided, however, that no adjustment in respect of dividends or interest
on such stock or other securities shall be made during the term of a
Warrant or upon the exercise of a Warrant.
(d) For the purpose of any computation under
paragraphs (b) and (c) of this Section, the current market price per
share of Common Stock at any date shall be the average of the daily
closing prices for 20 consecutive trading days commencing 30 trading days
before the date of such computation, which closing price for each day
shall be the last reported sales price regular way or, in case no such
reported sale takes place on such day, the average of the closing bid and
asked prices regular way for such day, in each case on the principal
national securities exchange on which the shares of Common Stock are
listed or admitted to trading or, if not listed or admitted to trading,
the average of the closing bid and asked prices of the Common Stock in<PAGE>
the over-the-counter market as reported on NASDAQ. In the absence of one
or more such quotations, the current market price of the Common Stock
shall be determined in good faith by the Board of Directors on the basis
of such information as it considers appropriate.
(e) No adjustment in the number of Warrant Shares
purchasable hereunder shall be required unless such adjustment would
require an increase or decrease of at least one percent (l%) in the
number of Warrant Shares purchasable upon the exercise of each Warrant;
provided, however, that any adjustments which by reason of this paragraph
(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations shall be made to
the nearest one-thousandth of a share.
(f) Whenever the number of Warrant Shares purchasable
upon the exercise of each Warrant is adjusted, as provided in Section
10.1 only, the Warrant Price payable upon exercise of each Warrant shall
be adjusted by multiplying such Warrant Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of
Warrant Shares purchasable upon the exercise of each Warrant immediately
prior to such adjustment, and of which the denominator shall be the
number of Warrant Shares purchasable immediately thereafter. No
adjustments in the Warrant Price need be made for changes in the number
of Warrant Shares purchasable upon the exercise of each Warrant as
provided in Section 10.2.
(g) No adjustment in the number of Warrant Shares
purchasable upon the exercise of each Warrant need be made under
paragraphs (b) and (c) if the Company issues or distributes to each
Holder of Warrants the rights, options, warrants, or convertible or
exchangeable securities, or evidences of indebtedness or assets referred
to in those paragraphs which each Holder of Warrants would have been
entitled to receive had the Warrants been exercised prior to the
happening of such event or the record date with respect thereto. No
adjustment in the number of Warrant Shares purchasable upon the exercise
of each Warrant need be made for sales of Warrant Shares pursuant to a
Company plan for reinvestment of dividends or interest. No adjustment
need be made for a change in the par value of the Warrant Shares.
(h) For the purpose of this subsection 10.1, the term
"shares of Common Stock" shall mean (i) the class of stock designated as
the Voting Common Stock of the Company at the date of this Agreement, any
other class of stock resulting from successive changes or
reclassification of such shares above consisting solely of changes in par
value, or from par value to no par value, or from no par value to par
value. In the event that at any time, as a result of an adjustment made
pursuant to paragraph (a) above, the Holders shall become entitled to
purchase any securities of the Company other than shares of Common Stock,
thereafter the number of such other shares so purchasable upon exercise
of each Warrant and the Warrant Price of such shares shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant
Shares contained in paragraphs (a) through (g), inclusive, above, and the
provisions of Section 5 and subsections 10.2 through 10.3, inclusive,<PAGE>
with respect to the Warrant Shares, shall apply on like terms to any such
other securities.
(i) Upon the expiration of any rights, options,
warrants or conversion or exchange privileges, if any thereof shall not
have been exercised, the Warrant Price and the number of shares of
Common Stock purchasable upon the exercise of each Warrant shall, upon
such expiration, be readjusted and shall thereafter be such as it would
have been had it been originally adjusted (or had the original adjustment
not been required, as the case may be) as if (A) the only shares of
Common Stock so issued were the shares of Common Stock, if any, actually
issued or sold upon the exercise of such rights, options, warrants or
conversion or exchange rights and (B) such shares of Common Stock, if
any, were issued or sold for the consideration actually received by the
Company upon such exercise plus the aggregate consideration, if any,
actually received by the Company for the issuance, sale or grant of all
of such rights, options, warrants or conversion or exchange rights
whether or not exercised; provided, further, that no such readjustment
shall have the effect of increasing the Warrant Price or decreasing the
number of shares of Common Stock purchasable upon the exercise of each
Warrant by an amount in excess of the amount of the adjustment initially
made in respect to the issuance, sale or grant of such rights, options,
warrants or conversion or exchange rights.
10.2 Notice of Adjustment. Whenever the number
of Warrant Shares purchasable upon the exercise of each Warrant or the
Warrant Price of such Warrant Shares is adjusted, as herein provided, the
Company (a) shall cause the Warrant Agent promptly to mail by first
class, postage prepaid, to each Holder notice of such adjustment or
adjustments and (b) shall deliver to the Warrant Agent a certificate of
the Chief Financial Officer of the Company setting forth the number of
Warrant Shares purchasable upon the exercise of each Warrant and the
Warrant Price of such Warrant Shares after such adjustment, setting forth
a brief statement of the facts requiring such adjustment and setting
forth the computation by which such adjustment was made. Such
certificate, in the absence of manifest error, shall be conclusive
evidence of the correctness of such adjustment. The Warrant Agent shall
be entitled to rely on such certificate and shall be under no duty or
responsibility with respect to any such certificate, except to exhibit
the same, from time to time, to any Holder desiring an inspection thereof
during reasonable business hours. The Warrant Agent shall not at any
time be under any duty or responsibility to any Holders to determine
whether any facts exist which may require any adjustment of the Warrant
Price or the number of Warrant Shares or other stock or property
purchasable on exercise thereof, or with respect to the nature or extent
of any such adjustment when made, or with respect to the method employed
in making such adjustment. The Warrant Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained
and shall not be deemed to have knowledge of any such adjustment unless
and until it shall have received such certificate.
10.3 No Adjustment for Dividends. Except as
provided in subsection 10.1, no adjustment in respect of any dividends<PAGE>
shall be made during the term of a Warrant or upon the exercise of a
Warrant.
10.4 Preservation of Purchase Rights Upon
Merger, Consolidation, etc. In case of any consolidation of the Company
with or merger of the Company into another corporation or in case of any
sale, transfer or lease to another corporation of all or substantially
all the property of the Company, the Company or such successor or
purchasing corporation, as the case may be, shall execute with the
Warrant Agent an agreement that each Holder shall have the right
thereafter upon payment of the Warrant Price in effect immediately prior
to such action to purchase upon exercise of each Warrant the kind and
amount of shares and other securities and property which he would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had such Warrant been
exercised immediately prior to such action; provided, however, that no
adjustment in respect of dividends, interest or other income on or from
such shares or other securities and property shall be made during the
term of a Warrant or upon the exercise of a Warrant. The Company shall
mail by first class mail, postage prepaid, to each Holder, notice of the
execution of any such agreement. Such agreement shall provide for
adjustments, which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 10. The provisions of this
subsection 10.4 shall similarly apply to successive consolidations,
mergers, sales, transfers or leases. The Warrant Agent shall be under no
duty or responsibility to determine the correctness of any provisions
contained in any such agreement relating to the kind or amount of shares
of stock or other securities or property receivable upon exercise of
Warrants or with respect to the method employed and provided therein for
any adjustments and shall be entitled to rely upon the provisions
contained in any such agreement.
10.5 Statement on Warrants. Irrespective of any
adjustments in the Warrant Price or the number or kind of shares
purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and
kind of shares as are stated in the Warrants initially issuable pursuant
to this Agreement.
11. Fractional Interests. The Company shall not be
required to issue fractional Warrant Shares on the
exercise of Warrants. If any fraction of a Warrant
Share would, except for the provisions of this Section
11, be issuable on the exercise of any Warrant (or
specified portion thereof), the Company shall pay an
amount in cash equal to the closing price for one share
of the Common Stock, as defined in paragraph (d) of
subsection 10.1, on the trading day immediately
preceding the date the Warrant is presented for
exercise, multiplied by such fraction.
12. No Rights as Stockholders, Notices to Holders.
Nothing contained in this Agreement or in any of the
Warrants shall be construed as conferring upon the<PAGE>
Holders or their transferees the right to vote or to
receive dividends or to consent or to receive notice as
stockholders in respect of any meeting of stockholders
for the election of directors of the Company or any
other matter, or any rights whatsoever as stockholders
of the Company. If, however, at any time prior to the
expiration of the Warrants and prior to their exercise,
any of the following events shall occur:
(a) the Company shall declare any dividend payable in
any securities upon its shares of Common Stock or make any distribution
(other than a cash dividend) to the Holders of its shares of Common
Stock; or
(b) the Company shall offer to the Holders of its
shares of Common Stock any additional shares of Common Stock or
securities convertible into or exchangeable for shares of Common Stock or
any right to subscribe for or purchase any thereof; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger, sale,
transfer or lease of all or substantially all of its property, assets,
and business as an entirety) shall be proposed,
then, in any one or more of said events, the Company shall give notice in
writing of such event to the Warrant Agent and the Warrant Agent shall
give notice to the Holders as provided in Section 18 hereof, such giving
of notice to be completed at least 10 days prior to the date fixed as a
record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend,
distribution, or subscription rights, or for the determination of
stockholders entitled to vote on such proposed dissolution, liquidation
or winding up. Such notice shall specify such record date or the date of
closing the transfer books, as the case may be. Failure to publish, mail
or receive such notice or any defect therein or in the publication or
mailing thereof shall not affect the validity of any action taken in
connection with such dividend, distribution or subscription rights, or
such proposed dissolution, liquidation or winding up.
13. Disposition of Proceeds on Exercise of Warrants;
Inspection of Warrant Agreement. The Warrant Agent
shall account promptly to the Company with respect to
Warrants exercised and concurrently pay to the Company
all monies received by the Warrant Agent for the
purchase of the Warrant Shares through the exercise of
such Warrants.
The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the
Holders during normal business hours at its principal office in
. The Company shall supply the Warrant Agent from time to time with
such numbers of copies of this Agreement as the Warrant Agent may
request.<PAGE>
14. Merger or Consolidation or Change of Name of Warrant
Agent. Any corporation into which the Warrant Agent
may be merged or with which it may be consolidated, or
any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a
party, or any corporation succeeding to the corporate
trust business of the Warrant Agent, shall be the
successor to the Warrant Agent hereunder without the
execution or filing of any paper or any further act on
the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a
successor Warrant Agent under the provisions of Section
16 hereof. In case at the time such successor to the
Warrant Agent shall succeed to the agency created by
this Agreement, any of the Warrants shall have been
countersigned but not delivered, any such successor to
the Warrant Agent may adopt the countersignature of the
original Warrant Agent and deliver such Warrants so
countersigned; and in case at that time any of the
Warrants shall not have been countersigned, any
successor to the Warrant Agent may countersign such
warrants either in the name of the predecessor Warrant
Agent or in the name of the successor Warrant Agent;
and in any such cases Warrants shall have the full
force provided in the Warrants and in this Agreement.
In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrants shall have been
countersigned but not delivered, the Warrant Agent may adopt the
countersignatures under its prior name and deliver such Warrants so
countersigned; and in case at that time any of the Warrants shall not
have been countersigned, the Warrant Agent may countersign such Warrants
either in its prior name or in its changed name; and in all such cases
such Warrants shall have the full force provided in the Warrants and in
this Agreement.
15. Concerning the Warrant Agent. The Warrant Agent
undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by
all of which the Company and the Holders, by their
acceptance of Warrants, shall be bound:
15.1 Correctness of Statements. The statements
contained herein and in the Warrants shall be taken as statements of the
Company and the Warrant Agent assumes no responsibility for the
correctness of any of the same except such as described the Warrant Agent
or action taken by it. The Warrant Agent assumes no responsibility with
respect to the distribution of the Warrants except as herein otherwise
provided.
15.2 Breach of Covenants. The Warrant Agent
shall not be responsible for any failure of the Company to comply with
any of the covenants contained in this Agreement or in the Warrant to be
complied with by the Company.<PAGE>
15.3 Performance of Duties. The Warrant Agent
may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its
attorneys or agents (which shall not include its employees) and shall not
be responsible for the misconduct or negligence of any agent appointed
with due care.
15.4 Reliance on Counsel. The Warrant Agent may
consult at any time with legal counsel satisfactory to it (who may be
counsel for the Company) and the Warrant Agent shall incur no liability
or responsibility to the Company or to any Holder in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with the opinion or the advice of such counsel.
15.5 Proof of Actions Taken. Whenever in the
performance of its duties under this Agreement the Warrant Agent shall
deem it necessary or desirable that any fact or matter be proved or
established by the Company prior to taking or suffering or omitting any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed conclusively to
be proved and established by a certificate signed by the Chairman of the
Board or President, a Vice President, the Treasurer or the Controller of
the Company and delivered to the Warrant Agent; and such certificate
shall be full authorization to the Warrant Agent for any action taken or
suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
15.6 Compensation. The Company agrees to pay
the Warrant Agent reasonable compensation for all services rendered by
the Warrant Agent in the performance of its duties under this Agreement,
to reimburse the Warrant Agent for all expenses, taxes and governmental
charges and other charges of any kind and nature incurred by the Warrant
Agent in the performance of its duties under this Agreement, and to
indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, costs and counsel fees, for anything
done or omitted by the Warrant Agent in the performance of its duties
under this Agreement except as a result of the Warrant Agent's gross
negligence or bad faith.
15.7 Legal Proceedings. The Warrant Agent shall
be under no obligation to institute any action, suit or legal proceeding
or to take any other action likely to involve expense unless the Company
or any one or more Holders shall furnish the Warrant Agent with
reasonable security and indemnity for any costs and expenses which may be
incurred, but this provision shall not affect the power of the Warrant
Agent to take such action as the Warrant Agent may consider proper,
whether with or without any such security or indemnity. All rights of
action under this Agreement or under any of the Warrants may be enforced
by the Warrant Agent without the possession of any of the Warrants or the
production thereof at any trial or other proceeding relative thereto, and
any such action, suit or proceeding instituted by the Warrant Agent shall
be brought in its name as Warrant Agent, and any recovery of judgment
shall be for the ratable benefit of the Holders, as their respective
rights or interests may appear.<PAGE>
15.8 Other Transactions in Securities of
Company. The Warrant Agent and any stockholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any of the
Warrants, or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested or
contract with or lend money to the Company or otherwise act as fully and
freely as though it were not Warrant Agent under this Agreement. Nothing
herein shall preclude the Warrant Agent from acting in any other capacity
for the Company or for any other legal entity.
15.9 Liability of Warrant Agent. The Warrant
Agent shall act hereunder solely as agent, and its duties shall be
determined solely by the provisions hereof. The Warrant Agent shall not
be liable for anything which it may do or refrain from doing in
connection with this Agreement except for its own gross negligence or bad
faith.
15.10 Reliance on Documents. The Warrant Agent
will not incur any liability or responsibility to the Company or to any
Holder for any action taken in reliance on any notice, written statement,
resolution, waiver, consent, order, certificate, or other paper, document
or instrument reasonably believed by it to be genuine and to have been
signed, sent, presented or made by the proper party or parties.
15.11 Validity of Agreement. The Warrant Agent
shall not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution
hereof by the Warrant Agent) or in respect of the validity or execution
of any Warrant (except its countersignature thereof); nor shall the
Warrant Agent by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any Warrant Shares
(or other stock) to be issued pursuant to this Agreement or any Warrant,
or as to whether any Warrant Shares (or other stock) will, pursuant to
this Agreement or any Warrant, or as to whether any Warrant Shares (or
other stock) will, when issued, be validly issued, fully paid and
nonassessable, or as to the Warrant Price or the number or amount of
Warrant Shares or other securities or other property issuable upon
exercise of any Warrant.
15.12 Instructions from Company. The Warrant
Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from the Chairman of
the Board, the President, a Vice President, the Controller or the
Treasurer of the Company, and to make an application to such officers for
advice or instructions in connection with its duties, and shall not be
liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer or officers. The
Warrant Agent shall not be liable for any action taken by, or omission of
any action, by the Warrant Agent in accordance with a proposal included
in any such application to such officers on or after the date specified
in such application (which date shall not be less than five Business Days
after the date of any such officer of the Company actually receives such
application, unless any such officer shall have consented in writing to
an earlier date) unless, prior to taking any such action (or the<PAGE>
effective date in the case of an omission), the Warrant Agent shall have
received written instructions in response to such application specifying
the action to be taken or omitted.
16. Change of Warrant Agent. The Warrant Agent may
resign and be discharged from its duties under this
Agreement by giving to the Company 30 days' notice in
writing. The Warrant Agent may be removed by like
notice to the Warrant Agent from the Company. If the
Warrant Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall
appoint a successor to the Warrant Agent. If the
Company shall fail to make such appointment within a
period of 30 days after such removal or after it has
been notified in writing of such resignation or
incapacity by (i) the resigning or incapacitated
Warrant Agent or (ii) by any Holder (who shall with
such notice submit his Warrant for inspection by the
Company), then any Holder may apply to any court of
competent jurisdiction for the appointment of a
successor to the Warrant Agent. After appointment, the
successor warrant agent shall be vested with the same
powers, rights, duties and responsibilities as if it
had been originally named as Warrant Agent without
further act or deed; but the former Warrant Agent shall
deliver and transfer to the successor warrant agent any
property at the time held by it hereunder, and execute
and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Failure to file any
notice provided for in this Section 16, however, or any
defect therein, shall not affect the legality or
validity of the resignation or removal of the Warrant
Agent or the appointment of the successor warrant
agent, as the case may be. In the event of such
resignation or removal, the successor warrant agent
shall mail, by first-class mail, postage prepaid, to
each Holder, written notice of such removal or
resignation and the name and address of such successor
warrant agent.
17. Identity of Transfer Agent. Forthwith upon the
appointment of any subsequent transfer agent for the
Common Stock, or any other shares of the Company's
capital stock issuable upon the exercise of the
Warrants, the Company will file with the Warrant Agent
a statement setting forth the name and address of such
subsequent transfer agent.
18. Notices. Any notice pursuant to this Agreement by
the Company or by any Holder to the Warrant Agent, or
by the Warrant Agent or by any Holder to the Company,
shall be in writing and shall be delivered in person or
by facsimile transmission, or mailed first class,
postage prepaid, (a) to the Company, at its offices at <PAGE>
, Attention: Secretary, or
(b) to the Warrant Agent, at its offices at
. Each party hereto may from time to
time change the address to which notices to it are to
be delivered or mailed hereunder by notice to the other
party.
Any notice mailed pursuant to this Agreement by the Company
or the Warrant Agent to the Holders shall be in writing and shall be
mailed first class, postage prepaid, or otherwise delivered, to such
Holders at their respective addresses on the books of the Warrant Agent.
19. Supplements and Amendments. The Company and the
Warrant Agent may from time to time supplement or amend
this Agreement without the approval of any Holder, in
order to cure any ambiguity or to correct or supplement
any provision contained herein which may be defective
or inconsistent with any other provision herein, or to
make any other provisions in regard to matters or
questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which
shall not be inconsistent with the provisions of the
Warrants and which shall not adversely affect the
interests of the Holders.
20. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the
Warrant Agent shall bind and inure to the benefit of
their respective successors and assigns hereunder.
21. Merger or Consolidation of the Company. The Company
will not merge or consolidate with or into, or sell,
transfer or lease all or substantially all of its
property to, any other corporation unless the successor
or purchasing corporation, as the case may be (if not
the Company), shall expressly assume, by supplemental
agreement reasonably satisfactory in form to the
Warrant Agent and executed and delivered to the Warrant
Agent, the due and punctual performance and observance
of each and every covenant and condition of this
Agreement to be performed and observed by the Company.
22. Applicable Law. This Agreement and each Warrant
issued hereunder shall be governed by and construed in
accordance with the laws of the State of Delaware,
without giving effect to principles of conflict of
laws.
23. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or
corporation other than the Company, the Warrant Agent,
and the Holders any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be<PAGE>
for the sole and exclusive benefit of the Company, the
Warrant Agent and the Holders of the Warrants.
24. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one
and the same instrument.
25. Captions. The captions of the Sections and
subsections of this Agreement have been inserted for
convenience only and shall have no substantive effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first above
written.
HAYES WHEELS INTERNATIONAL, INC.
(Seal) By:
Name:
Title:
Attest:
Title:
[ ]
As Warrant Agent
(Seal) By:
Name:
Title:
Attest:
Title:
PAGE
<PAGE>
EXHIBIT A
VOID AFTER 5:00 P.M. [ , 2003]
Warrants to Purchase
Shares of Common Stock
HAYES WHEELS INTERNATIONAL, INC.
COMMON STOCK PURCHASE WARRANTS
This certifies that, for value received,
or registered assigns (the "Holder"), is entitled to purchase from Hayes
Wheels International, Inc., a Delaware corporation (the "Company"), at
any time from 9:00 a.m., New York City time, on
, 2000 until 5:00 p.m., New York time, on , 2003 (the
"Expiration Date"), at the purchase price of $48.00 per share (the
"Warrant Price"), the number of shares of Common Stock of the Company,
par value $.01 per share ("Common Stock"), shown above. The number of
shares purchasable upon exercise of the Common Stock Purchase Warrants
(the "Warrants") and the Warrant Price are subject to adjustment from
time to time as set forth in the Warrant Agreement referred to below.
Warrants may be exercised in whole or in part by presentation
of this Warrant certificate with the Purchase Form on the reverse side
hereof duly executed and simultaneous payment of the Warrant Price at the
principal office of [ ] (the "Warrant Agent"). Payment
of such price shall be made, at the option of the Holder hereof, (i) in
cash or by certified or official bank check payable to the Warrant Agent
or (ii) by electing to receive that number of shares which is equal to
the number of shares for which the Warrants are being exercised, less the
number of shares having a current market value (as determined by Section
10.1(d) of the Warrant Agreement referred to below) equal to the
aggregate Warrant Price. As provided in the Warrant Agreement referred
to below, the Warrant Price and the number or kind of shares which may be
purchased upon the exercise of the Warrants evidenced by this Warrant
certificate are, at the option of the Company or upon the happening of
certain events, subject to modification and adjustment.
This Warrant certificate is issued under and in accordance
with a Warrant Agreement dated as of , 1996, between the
Company and the Warrant Agent and is subject to the terms and provisions
contained in the Warrant Agreement (the "Warrant Agreement"), to all of
which the Holder of this Warrant certificate by acceptance hereof
consents. A copy of the Warrant Agreement may be obtained by the Holder
hereof upon written request to the Company.<PAGE>
Upon any partial exercise of the Warrants evidenced by this
Warrant certificate, there shall be countersigned and issued to the
Holder hereof a new Warrant certificate in respect of the shares of
Common Stock as to which the Warrants evidenced by this Warrant
certificate shall not have been exercised. This Warrant certificate may
be exchanged at the office of the Warrant Agent by surrender of this
Warrant certificate properly endorsed either separately or in combination
with one or more other Warrant certificates for one or more new Warrant
certificates evidencing the right of the Holder thereof to purchase the
same aggregate number of shares as were purchasable on exercise of the
Warrants evidenced by the Warrant certificate or certificates exchanged.
No fractional shares will be issued upon the exercise of any Warrant, but
the Company will pay the cash value thereof determined as provided in the
Warrant Agreement.
This Warrant is freely transferrable; provided, however, that
if the Holder hereof is a party to that certain stockholders agreement of
the Company dated as of , 1996 (the "Stockholders Agreement"),
this Warrant may not be transferred, until the second anniversary of the
consummation of the merger of Holdings Holdings, Inc. with and into the
Company, to any person other than a Permitted Transferee (as defined in
the Stockholders Agreement). Subsequent to such two year period, the
Warrants held by the Investors may be transferred only pursuant to (i)
Rule 144 of the Securities Act of 1933, as amended (the "Securities Act")
or (ii) an exemption from registration under the Securities Act as set
forth in an opinion of counsel in form and substance reasonably
acceptable to the Company.
The Holder hereof may be treated by the Company, the Warrant
Agent and all other persons dealing with this Warrant certificate as the
absolute owner hereof for any purpose and as the person entitled to
exercise the rights represented hereby, or to the transfer hereof on the
books of the Company, any notice to the contrary notwithstanding, and
until such transfer on such books, the Company may treat the Holder
hereof as the owner for all purposes.
Neither the Warrants nor this Warrant certificate entitles
any Holder hereof to any of the rights of a stockholder of the Company.
<PAGE>
This Warrant certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Warrant Agent.
Dated: , 1996
HAYES WHEELS INTERNATIONAL, INC.
By: <PAGE>
[Seal]
Attest:
Countersigned:
[ ]
Warrant Agent
By:
Authorized Signature
<PAGE>
PURCHASE FORM
(To be executed upon exercise of Warrant)
To: HAYES WHEELS INTERNATIONAL, INC.
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the within Warrant certificate for, and
to purchase thereunder, shares of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), as provided for therein, and
tenders herewith payment of the purchase price in full in the form of
cash or a certified or official bank check in the amount of $
.
The Purchase Price shall be paid:
in cash, certified check or official bank check;
or
by electing to receive that number of shares
which is equal to the number of shares for which
the Warrants are being exercised, less the number
of shares having a current market value (as
determined by Section 10.1(d) of the Warrant
Agreement between the Company and [ ],
as Warrant Agent, dated , 1996).
Please issue a certificate or certificates for such shares of
Common Stock in the name of, and pay any cash for any fractional share
to:
PLEASE INSERT SOCIAL SECURITY NAME
OR OTHER IDENTIFYING NUMBER (Please Print Name and Address)
OF ASSIGNEE
Address
Signature
<PAGE>
NOTE: The above signature
should correspond exactly
with the name on the face
of this Warrant
certificate or with the
name of the assignee
appearing in the
assignment form below and
must be guaranteed by an
eligible guarantor
institution with
membership in an approved
Signature Guarantee
Medallion Program.
And, if said number of shares shall not be all the shares purchasable
under the within Warrant certificate, a new Warrant certificate is to be
issued in the name of said undersigned for the balance remaining of the
shares purchasable thereunder less any fraction of a share paid in cash.
<PAGE>
ASSIGNMENT
(To be executed only upon assignment of Warrant certificate to the
extent such assignment is permissible under the terms of the Warrant
Agreement)
For value received, hereby sells, assigns and
transfers unto the within Warrant certificate, together with
all right, title and interest therein, and does hereby irrevocably
constitute and appoint attorney, to transfer said Warrant
certificate on the books of the within-named Company, with full power of
substitution in the premises.
Dated: , 19
NOTE: The above signature should correspond
exactly with the name on the face of this
Warrant certificate and must be guaranteed
by an eligible guarantor institution with
membership in an approved Signature
Guarantee Medallion Program.
<PAGE>
EXHIBIT 10.3
STOCK OPTION AGREEMENT<PAGE>
STOCK OPTION AGREEMENT (this "Agreement"), dated as of March
28, 1996 by and among VARITY CORPORATION, a Delaware corporation
("Stockholder"), its wholly-owned subsidiary, K-H CORPORATION, a Delaware
corporation ("K-H"), and MWC HOLDINGS, INC., a Delaware corporation
("Holdings").
WHEREAS, concurrently herewith, Holdings and Hayes Wheels
International, Inc. a Delaware corporation (the "Company"), are entering
into an Agreement and Plan of Merger of even date herewith (such
Agreement in the form attached hereto as Exhibit A being the "Merger
Agreement"), pursuant to which Holdings will merge with and into the
Company (the "Merger"); and
WHEREAS, Stockholder owns indirectly and K-H owns directly,
as of the date hereof, 8,144,000 shares of common stock, $.01 par value
per share (the "Common Stock") of the Company (the "Existing Shares",
together with any shares of Common Stock acquired after the date hereof
and prior to the termination hereof, hereinafter collectively referred to
as the "Shares"); and
WHEREAS, Holdings has entered into the Merger Agreement in
reliance on Stockholder's and K-H's representations, warranties,
covenants and agreements hereunder.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration,
and intending to be legally bound hereby, it is agreed as follows:
1. Option to Purchase.
1.1 Grant of Option. Stockholder agrees that K-H grant, and
K-H hereby grants, to Holdings an irrevocable option (the "Option") to
purchase all of the Shares on the terms and subject to the conditions set
forth herein, at any time after the earlier of (i) Stockholder's or K-H's
breach of any of its material obligations under this Agreement, (ii)
Holdings' discovery of any material misrepresentation or breach of a
material warranty made by Stockholder or K-H hereunder and (iii) the
public disclosure of, or Holdings shall have learned of, the earliest
event to occur of the following: (a) any person or group other than
Stockholder or K-H or Holdings or its affiliates shall have acquired or
become the beneficial owner (within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
more than 15% of the outstanding shares of Common Stock, or shall have
been granted any option or right, conditional or otherwise, to acquire
more than 15% of the outstanding shares of Common Stock; (b) any person
other than Holdings and its affiliates shall have made a bona fide
proposal with respect to a tender offer or exchange offer for at least
15% of the then outstanding shares of Common Stock or with respect to a
merger, consolidation or other business combination with or involving the
Company or any other acquisition of a material portion of the assets of
the Company; (c) the Company shall have entered into a written definitive
agreement or written agreement in principle, other than with Holdings, in
connection with a liquidation, dissolution, recapitalization, merger,
consolidation or acquisition or purchase of all or a material portion of<PAGE>
the assets or all or a material portion of the equity interest in the
Company, or other similar transaction or business combination involving
the Company; or (d) the Board of Directors of the Company shall have
publicly withdrawn or modified its recommendation of acceptance of the
Merger or shall have failed publicly to reconfirm such recommendation
within 2 business days of a written request for such reconfirmation by
Holdings.
1.2 Exercise of Option. Subject to Section 1.1, at any time
prior to the termination of this Agreement, Holdings may exercise the
Option, in whole but not in part, by sending a written notice of such
exercise (the "Exercise Notice") to Stockholder specifying a date (not
less than two business days nor more than ten days from the later of (i)
the date such Exercise Notice is given and (ii) the expiration or
termination of any waiting period, and any extensions thereof, under the
HSR Act (as hereinafter defined)) (the "Option Closing Date") for the
closing of such purchase (the "Closing"). The Closing shall take place
at the offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue,
New York, New York, at 10:00 a.m., local time, on the day specified in
such notice or at such other place, and at such other time or date as the
parties hereto may agree. At the Closing, Stockholder shall cause K-H
to, and K-H shall, deliver to Holdings all of the Shares by delivery of
certificates evidencing such Shares, properly endorsed by K-H and
accompanied by such stock powers and other documents as may be necessary
to transfer record ownership of K-H's Shares into Holdings' name on the
stock transfer books of the Company, against payment therefore as
specified in Section 1.3. All applicable transfer and documentary taxes
and other fees shall be paid by Holdings.
1.3 Purchase Price. The purchase and sale of the Shares
pursuant to Section 1.1 of this Agreement shall be at a purchase price
equal to $32.00 per Share in cash, or such higher price as may be paid to
holders of Common Stock pursuant to the Merger (combining the Cash
Consideration (as defined in the Merger Agreement) with the shares of New
Company Common Stock (as defined in the Merger Agreement) issued per
share of Common Stock in the Merger, valuing each share of New Company
Common Stock at $32.00 per share) (the "Purchase Price"). At the
Closing, Holdings shall pay to K-H in immediately available funds by wire
transfer payable to the order of K-H an amount equal to the product of
the Purchase Price multiplied by the number of Shares sold pursuant to
this Section 1.
1.4 Adjustments. If at any time the outstanding shares of
Common Stock are changed into a different number of shares or a different
class by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment or if a stock dividend
thereon is declared with a record date prior to the termination of this
Agreement, then the number of Shares subject to the Option and the
applicable per share consideration to be paid by Holdings upon exercise<PAGE>
of the Option (but not the total purchase price) shall be appropriately
and equitably adjusted so that Holdings shall receive upon exercise of
the Option the number and class of shares or other securities or property
that Holdings would have received in respect of the Shares that Holdings
would have been entitled to purchase upon exercise of the Option if the
Option had been exercised immediately prior to such event. The rights of
Holdings under this Section 1.4 shall be in addition to, and shall in no
way limit, its rights against the Company for breach by the Company of
the Merger Agreement.
2. Irrevocable Proxy of K-H. Stockholder shall cause K-H to revoke,
and K-H hereby revokes, any and all previous proxies with respect to the
Shares and irrevocably appoints Paul S. Levy and Marcos A. Rodriguez, and
each of them, the attorneys and proxies of K-H, each with full power of
substitution, to vote and otherwise act (including pursuant to written
consent) with respect to all of the Shares, for the approval and the
adoption of the Merger Agreement (in the form attached hereto as Exhibit
A and, except to the extent agreed to in writing by Stockholder, without
any modification, amendment, alteration or supplement thereto or any
waiver of the terms thereof by either party thereto), all agreements
related to the Merger and any actions approved by Stockholder and K-H
related thereto, and against any proposal or transaction which could
prevent or delay the consummation of the transactions contemplated by
this Agreement or the Merger Agreement, at any meeting or meetings of the
stockholders of the Company, and at any adjournment, postponement or
continuation thereof, at which the Merger Agreement and other related
agreements (or any amended version or versions thereof), or such other
actions are submitted for the consideration and vote of the stockholders
of the Company. The foregoing appointments and proxies shall be
irrevocable, and shall remain in effect with respect to the Shares, until
the termination of this Agreement and shall be deemed coupled with an
interest (in that Holdings has the right to purchase the Shares
hereunder). In respect of all other matters K-H shall retain the right
to vote the Shares in its sole discretion. Stockholder hereby agrees to
cause K-H to, and K-H hereby agrees, to execute such additional documents
as Holdings may reasonably request to effectuate the foregoing. Holdings
hereby agrees to cause the above-named proxies to attend any meeting or
meetings of the stockholders to which this Section 2 applies, and to vote
the Shares in accordance with the terms hereof.
3. Representations and Warranties of Stockholder and K-H. Each of
Stockholder and K-H represents and warrants to Holdings as follows:
3.1 Ownership of Shares. On the date hereof the Existing
Shares are all of the Shares currently beneficially owned by K-H. On the
Closing Date, the Shares will constitute all of the shares of Common
Stock owned beneficially by Stockholder and K-H. Neither Stockholder nor
K-H has any rights to acquire any additional shares of Common Stock. K-H
currently has, and at Closing will have, good, valid and marketable title<PAGE>
to the Shares, free and clear of all liens, encumbrances, restrictions,
options, warrants, rights to purchase and claims of every kind (other
than the encumbrances created by this Agreement and other than
restrictions on transfer under applicable Federal and State securities
laws). The sale of the Shares to Holdings upon exercise of the Option
will transfer to Holdings good, valid and marketable title to the Shares,
free of all liens, encumbrances, restrictions and claims of every kind
other than restrictions on transfer under applicable Federal and State
securities laws.
3.2 Authority; Binding Agreement. Each of Stockholder and
K-H has the full legal right, power and authority to enter into and
perform all of its obligations under this Agreement. The execution and
delivery of this Agreement by Stockholder and K-H will not violate any
other agreement to which Stockholder or K-H is a party including, without
limitation, any voting agreement, stockholders agreement or voting trust.
This Agreement has been duly executed and delivered by Stockholder and K-
H and constitutes a legal, valid and binding agreement of Stockholder and
K-H, enforceable in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws, now or hereafter in effect affecting
creditors' rights and remedies generally or general principles of equity.
Neither the execution and delivery of this Agreement nor the consummation
by Stockholder or K-H of the transactions contemplated hereby will (i)
violate, or require any consent, approval or notice under, any provision
of any judgment, order, decree, statute, law, rule or regulation
applicable to Stockholder or K-H or the Shares, except for the filings
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), or (ii) constitute a violation of, conflict
with or constitute a default under, any material contract, commitment,
agreement, understanding, arrangement or other restriction of any kind to
which Stockholder or K-H is a party or by which Stockholder or K-H is
bound.
3.3 Broker's Fees. No broker, investment banker, financial
advisor or any other person engaged by Stockholder or K-H is, or will be,
entitled to any brokerage, finder's fee or commission from the Company or
Holdings in connection with this Agreement or the transactions
contemplated hereby exclusive of any brokerage, finder's fee or
commission referred to in the Merger Agreement.
3.4 Reliance on Agreement. Stockholder and K-H each
understands and acknowledges that Holdings is entering into the Merger
Agreement in reliance upon Stockholder's and K-H's execution and delivery
of this Agreement. Stockholder and K-H each acknowledges that the
irrevocable stock option set forth in Section 1 is granted in
consideration for the execution and delivery of the Merger Agreement by
Holdings.<PAGE>
3.5 Rule 145; Affiliate Sales. In the event that
Stockholder or K-H receives any shares of common stock (the "New Company
Common Stock") of the surviving corporation in the Merger (the "Surviving
Corporation") as a result of the Merger:
(a) It shall not make any sale, transfer or other
disposition of the New Company Common Stock that it receives pursuant to
the Merger in violation of the Securities Act of 1933, as amended (the
"Act") or the rules and regulations promulgated thereunder (the "Rules
and Regulations") and any applicable state securities laws;
(b) It has been advised that the issuance of the New
Company Common Stock to it pursuant to the Merger will be registered with
the Securities and Exchange Commission (the "Commission") under the Act
on a Registration Statement on Form S-4. However, it has also been
advised that because it may be deemed to have been an affiliate of the
Company at the time the Merger is submitted for a vote of the
stockholders of the Company, it may not sell, transfer or otherwise
dispose of New Company Common Stock issued to it in the Merger unless (i)
such sale, transfer or other disposition has been registered under the
Act, (ii) to the extent applicable, such sale, transfer or other
disposition is made in conformity with the volume and other limitations
of Rule 145 promulgated by the Commission under the Act or is made in a
transaction which, as described in a "no-action" or interpretive letter
from the Commission relating specifically to such transaction, is not
required to be registered under the Act or (iii) in the opinion of
counsel reasonably acceptable to the Surviving Corporation, such sale,
transfer or other disposition is otherwise exempt from registration under
the Act;
(c) It also understands that unless the transfer by it
of its New Company Common Stock has been registered under the Act or, to
the extent applicable, is a sale made in conformity with the provisions
of Rule 145, the Surviving Corporation reserves the right to put the
following legend on the certificates issued to its transferee:
The shares represented by this certificate have not been
registered under the Securities Act of 1933 and were acquired
from a person who received such shares in a transaction to
which Rule 145 promulgated under the Securities Act of 1933
applies. The shares may not be sold, pledged or otherwise
transferred except in accordance with an exemption from the
registration requirements of the Securities Act of 1933 or
pursuant to a registration statement under the Securities Act
of 1933.
4. Representations and Warranties of Holdings. Holdings represents
and warrants to Stockholder and K-H as follows:<PAGE>
4.1 Authority; Binding Agreement. Holdings has full legal
right, power and authority to enter into and perform all of its
obligations under this Agreement. The execution and delivery of this
Agreement by Holdings will not violate any other agreement to which
Holdings is a party. This Agreement has been duly executed and delivered
by Holdings and constitutes a legal, valid and binding agreement of
Holdings, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws, nor or hereafter in effect,
affecting creditors' rights and remedies generally or general principles
of equity. Neither the execution and delivery of this Agreement nor the
consummation by Holdings of the transactions contemplated hereby will (i)
violate, or require any consent, approval or notice under, any provision
of any judgment, order, decree, statute, law, rule or regulation
applicable to Holdings or the Shares, except for the filings under the
HSR Act or (ii) constitute a violation of, conflict with or constitute a
default under, any contract, commitment, agreement, understanding,
arrangement or other restriction of any kind to which Holdings is a party
or by which it is bound.
4.2 Private Purchase. Holdings is acquiring the Option and
will acquire the Shares upon the exercise of the Option for its own
account and not with a view to the distribution or resale thereof in any
manner not in accordance with applicable law.
4.3 Broker's Fees. No broker, investment banker, financial
advisor or any other person is, or will be, entitled to any brokerage,
finder's fee or commission from Holdings in connection with this
Agreement or the transactions contemplated hereby.
5. Certain Covenants of Stockholder and K-H. Except in accordance
with the provisions of this Agreement, Stockholder and K-H each agrees
with, and covenants to, Holdings as follows:
5.1 Transfer. Stockholder and K-H each shall not (i)
transfer (which term shall include, without limitation, for the purposes
of this Agreement, any sale, gift, pledge, assign, encumber or other
disposition) or consent to any transfer of, any or all of the Shares or
any interest therein, except pursuant to the Merger, (ii) enter into any
contract, option or other agreement or understanding with respect to any
transfer of any or all such Shares or any interest therein, (iii) grant
any proxy, power-of-attorney or other authorizations in or with respect
to such Shares or (iv) deposit such Shares into a voting trust or enter
into a voting agreement or arrangement with respect to the Shares. K-H
will submit to the Company, promptly after the execution of this
Agreement, any and all certificates representing the Shares and
Stockholder and K-H each agrees with, and consents to (i) the inscription
on all such certificates prior to their prompt return to Stockholder of
the following legend by the Company on such certificates: "The shares of<PAGE>
Common Stock, $.01 par value, of the Company, represented by this
certificate are subject to a Stock Option Agreement, dated as of March
28, 1996, and may not be sold or otherwise transferred, except in
accordance therewith. Copies of such Agreement may be obtained at the
principal executive office of Hayes Wheels International, Inc. Such
restrictions on sale or other transfer expire and terminate, whether or
not this legend remains on any certificate representing such shares of
Common Stock and without any notice, action or demand of any person, on
the date such Agreement terminates"; and (ii) the entering of stop
transfer orders with the transfer agent and the registrar of the Company
against the transfer of the Shares other than in compliance with the
requirements of this Agreement, such stop transfer orders to expire by
their terms on the date this Agreement terminates with no notice, action
or demand by K-H, Stockholder, Holdings or the Company. Upon termination
of this Agreement, Stockholder's and K-H's obligations under this Section
5.1 shall immediately, and without any action by Holdings, terminate and,
notwithstanding the termination of this Agreement for other purposes, if
requested by Stockholder or K-H, Holdings will join any demand made on
the Company or the transfer agent for the Common Stock, that such legend
be removed from such certificates.
5.2 Solicitation. Stockholder and K-H each shall not, and
shall direct their investment bankers, attorneys or other advisers or
representatives not to, directly or indirectly, (i) solicit, initiate or
encourage the submission of, any takeover proposal or (ii) participate in
any discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or making of any proposal that constitutes, or may reasonably
be expected to lead to, any takeover proposal. Stockholder and K-H
shall immediately provide Holdings with notice of any takeover proposal,
including the identity of the bidder and the terms and conditions of such
takeover proposal and any related financing. For all purposes hereof,
"takeover proposal" means any proposal for a merger or other business
combination involving the Company or any of its subsidiaries or any
proposal or offer to acquire in any manner, directly or indirectly, an
equity interest of more than 15% of the outstanding shares of Common
Stock of, or a substantial portion of the assets of, the Company or any
of its subsidiaries, other than the Merger and the other transactions
contemplated by the Merger Agreement.
5.3 Indemnification Arrangements. Promptly after the date
hereof, Stockholder and K-H agree to cause Kelsey-Hayes Corporation to
enter into a mutually satisfactory agreement with the Company clarifying
the indemnification arrangements between them to reflect the current
course of conduct of the parties.
6. Certain Covenants of Holdings. Holdings agrees that, and covenants
to, Stockholder and K-H as follows:<PAGE>
6.1 No Amendment of Merger Agreement. Holdings shall not,
without the prior written consent of Stockholder and K-H, modify, amend,
alter or supplement the Merger Agreement in any manner. In the event
Holdings has a right to terminate the Merger Agreement pursuant to
Section 8.1(b) or (c) thereof, Holdings shall immediately terminate the
Merger Agreement unless Stockholder and K-H consent in writing to
Holdings not to terminate the Merger Agreement.
6.2 Make Whole. In the event that the Option is exercised,
the Merger is not consummated pursuant to the Merger Agreement and
Holdings shall at any time or times within 12 months of the date of such
exercise dispose of any of the Shares for consideration in excess of the
Purchase Price theretofore paid by Holdings hereunder ("Increase
Events"), then in each such case the Purchase Price shall be increased to
the highest price per Share applicable in any such Increase Event.
Within two business days after the occurrence of any such Increase Event,
Holdings shall pay (in the manner set forth in Section 1.3) to K-H, in
respect of each Share acquired upon exercise of the Option and
subsequently disposed of, the excess of such highest per Share price over
the Purchase Price theretofore paid by Holdings hereunder. Non-cash
consideration shall be valued at fair market value.
7. Termination. This Agreement, to the extent an Exercise Notice has
not previously been given after the occurrence of an event described in
Section 1.1(a), (b), (c) or (d) hereof, shall terminate on the earlier of
(i) the Effective Time (as defined in the Merger Agreement), (ii) five
business days after the termination of the Merger Agreement in accordance
with its terms, (iii) the termination of the Merger Agreement pursuant to
its terms if as or by reason of such termination Holdings is not entitled
to the payment of termination fees (as specified in Section 8.2(b) of the
Merger Agreement), (iv) any modification, amendment, alteration or
supplement of the Merger Agreement, or any failure of Holdings to
terminate the Merger Agreement, in violation of Section 6.1 hereof, or
(v) 12:01 a.m. on August 16, 1996; provided, however, that the provisions
of Section 3.5 (but only the case of termination under Section 7(i)), the
last sentence of Section 5.1, 8 and 9 hereof shall survive any
termination of this Agreement.
8. Expenses. Each party hereto will pay all of its expenses in
connection with the transactions contemplated by this Agreement,
including, without limitation, the fees and expenses of its counsel and
other advisers.
9. Restrictive Legends. It is understood and agreed that any legend
set forth in Section 3.5(c) above shall be removed by delivery of
substitute certificates without such legend, and the related stop
transfer instructions shall be revoked, (i) if it has delivered to the
Surviving Corporation a copy of a letter from the staff of the Commission
relating specifically to the shares evidenced thereby, or an opinion of<PAGE>
counsel in form and substance reasonably satisfactory to the Surviving
Corporation, to the effect that such legend is not required for purposes
of the Act or (ii) upon registration of such shares under the Act.
10. Conditions to Closing. (a) The obligations of the parties to
close hereunder shall be subject to the conditions that (i) there shall
be no preliminary or permanent injunction or other order issued by any
court of competent jurisdiction in effect which prohibits the sale of the
Shares and (ii) all applicable waiting periods, and any extensions
thereof, under the HSR Act shall have expired or been terminated.
Stockholder, K-H and Holdings agree not to seek any such injunction or
order and agree that they will oppose and will seek the immediate lifting
of any such injunction or order.
(b) The obligations of Holdings to close hereunder,
and the obligations of Stockholder to cause K-H, and K-H, to close
hereunder, shall be subject to the additional condition that all
representations and warranties of Stockholder and K-H, in the case of
Holdings, and Holdings, in the case of Stockholder and K-H, shall be true
and correct in all material respects as of the date hereof and at and as
of the Closing, with the same force and effect as though made on and as
of the Closing.
(c) Stockholder and K-H each agrees, while this
Agreement is in effect, to notify Holdings promptly of the number of any
shares of Common Stock acquired by Stockholder after the date hereof.
11. Miscellaneous.
11.1 Survival of Representations and Warranties. All
representations, warranties, covenants and agreements made by
Stockholder, K-H and Holdings in this Agreement shall survive the Closing
hereunder and any investigation at any time made by or on behalf of any
party.
11.2 Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall
be delivered personally or by next-day courier or telecopied with
confirmation of receipt, to the parties at the addresses specified below
(or at such other address for a party as shall be specified by like
notice; provided that notices of a change of address shall be effective
only upon receipt thereof). Any such notice shall be effective upon
receipt, if personally delivered or telecopied or one day after delivery
to a courier for next-day delivery.
If to Holdings:
MWC Holdings, Inc.<PAGE>
2501 Woodlake Circle
Okemos, Michigan 48864
Attention: General Counsel
Telecopier: (517) 337-5886
with copies to:
Joseph Littlejohn & Levy
450 Lexington Avenue
Suite 3350
New York, New York 10022
Attention: Paul S. Levy
Telecopier: (212) 286-8626
and
Skadden, Arps, Slate, Meagher & Flom
One Rodney Square
Wilmington, Delaware 19801
Attention: Robert B. Pincus, Esq.
Telecopier: (302) 651-3001
If to Stockholder or K-H:
Varity Corporation
672 Delaware Avenue
Buffalo, New York 14209
Attention: Kenneth L. Walker
Telecopier: (716) 888-8065
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Immanuel Kohn, Esq.
Telecopier: (212) 269-5420
11.3 Entire Agreement. This Agreement, together with the
documents expressly referred to herein, constitute the entire agreement
and supersede all other prior agreements and understandings, both written
and oral, among the parties or any of them, with respect to the subject
matter contained herein.
11.4 Amendments. This Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery
of a written agreement executed by the parties hereto.<PAGE>
11.5 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors, assigns and personal representatives, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto without the prior written
consent of the other parties.
11.6 Public Announcements. Each of Holdings, Stockholder
and K-H agrees that it will not issue any press release or otherwise make
any public statement with respect to this Agreement, the Merger Agreement
or the transactions contemplated hereby or thereby without the prior
consent of the other party, which consent shall not be unreasonably
withheld or delayed.
11.7 Governing Law. This Agreement, and all matters
relating hereto, shall be governed by, and construed in accordance with
the laws of the State of Delaware without giving effect to the principles
of conflicts of laws thereof.
11.8 Injunctive Relief; Jurisdiction. Stockholder and K-H
each agrees that irreparable damage would occur and that Holdings would
not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that
Holdings shall be entitled to an injunction or injunctions to prevent
breaches by Stockholder or K-H of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of
the United States located in the State of Delaware or in Delaware state
court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto
(i) consents to submit such party to the personal jurisdiction of any
Federal court located in the State of Delaware or in the Court of
Chancery in the State of Delaware in the event any dispute arises out of
this Agreement or any of the transactions contemplated hereby, (ii)
agrees that such party will not attempt to deny or defeat such party to
the personal jurisdiction by motion or other request for leave from any
such court and (iii) agrees that such party will not bring any action
relating to this Agreement or any of the transactions contemplated hereby
in any court other than a Federal court sitting in the State of Delaware
or the Court of Chancery.
11.9 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original
and all of which together shall constitute one and the same document.
11.10 Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement.<PAGE>
11.11 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to
be unenforceable, such provision shall be interpreted to be only so broad
as is enforceable.
11.12 Further Assurances. Each party hereto shall execute
and deliver such additional documents as may be necessary or desirable to
consummate the transactions contemplated by this Agreement.
11.13 Third-Party Beneficiaries. Nothing in this Agreement,
expressed or implied, shall be construed to give any person other than
the parties hereto any legal or equitable right, remedy or claim under or
by reason of this Agreement or any provision contained herein.
<PAGE>
IN WITNESS WHEREOF, Holdings, Stockholder and K-H have caused
this Agreement to be executed by their duly authorized officers, as of
the date and year first above written.
MWC HOLDINGS, INC.
By: /s/ Richard W. Tuley
Name: Richard W. Tuley
Title: President/CEO
VARITY CORPORATION
By: /s/ Kenneth L. Walker
Name: Kenneth L. Walker
Title: Vice President, Legal &
Secretary
K-H CORPORATION<PAGE>
By: /s/ Kenneth L. Walker
Name: Kenneth L. Walker
Title: Secretary
<PAGE>
EXHIBIT 10.4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of March 28, 1996
(the "Agreement"), among Hayes Wheels International, Inc., a Delaware
corporation (the "Company"), Varity Corporation, a Delaware corporation,
and K-H Corporation, a Delaware corporation and wholly owned subsidiary
of Varity Corporation. Varity Corporation and K-H Corporation are
hereinafter collectively referred to as the "Holder".
WHEREAS, on the date hereof, the Holder owns of record and
beneficially 8,144,000 shares of common stock, par value $.01, of the
Company (the "Common Stock"), representing approximately 46.3% of the
outstanding Common Stock; and
WHEREAS, pursuant to the Agreement and Plan of Merger, dated
as of March 28, 1996, by and between MWC Holdings, Inc., a Delaware
corporation ("Holdings") and the Company (the "Merger Agreement"),
Holdings will be merged with and into the Company (the "Merger"); and
WHEREAS, upon consummation of the Merger, each share of
Common Stock issued and outstanding immediately prior to the effective
time of the Merger shall be converted into (i) the Cash Consideration (as
defined in the Merger Agreement), and (ii) one-tenth of one share of duly
authorized, validly issued, fully paid and nonassessable shares of common
stock, par value $.01 (the "New Common Stock"), of the Company as the
surviving corporation of the Merger; and
WHEREAS, upon consummation of the Merger, the Holder shall
receive 814,400 shares of New Common Stock; and
WHEREAS, in order to induce the Holder to enter into a Stock
Option Agreement with Holdings of even date herewith, the Company has
agreed to provide registration rights with respect to the shares of New
Common Stock to be issued to the Holder upon consummation of the Merger.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the
receipt of which is hereby acknowledged, the parties agree as follows:<PAGE>
Section 1. Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
The term "Company" shall have the meaning ascribed to it in
the Preamble.
The term "Company Offering" shall mean the sale of New Common
Stock pursuant to a registration statement filed by the Company under the
Securities Act (other than (i) a registration statement filed on Form S-4
or any successor form or (ii) a registration statement filed on Form S-8
or any successor form) respecting an underwritten offering, whether
primary or secondary, that is declared effective by the SEC.
The term "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the SEC
promulgated thereunder.
The term "Form S-4" shall mean the registration statement
filed with the SEC by the Company on Form S-4 containing a proxy
statement describing the Merger to the Company's stockholders and
registering certain shares of New Common Stock to be issued upon
consummation of the Merger.
The term "Initial Shelf Registration" shall have the meaning
ascribed to it in Section 2(c).
The term "Losses" shall have the meaning ascribed to it in
Section 7(a).
The term "Person" shall mean an individual, trustee,
corporation, partnership, joint stock company, trust, unincorporated
association, union, business association, firm or other entity.
The term "Registrable Securities" shall mean (i) the 814,400
shares of New Common Stock to be issued to the Holder upon consummation
of the Merger. As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities when such securities
have been sold or otherwise transferred by the Holder pursuant to the
Shelf Registration Statement or pursuant to Rule 144 under the Securities
Act.
The term "Rule 144" shall have the meaning ascribed to it in
Section 2(c).
The term "Rule 415 Offering" shall have the meaning ascribed
to it in Section 2(a).<PAGE>
The term "SEC" shall mean the Securities and Exchange
Commission.
The term "Securities Act" shall mean the Securities Act of
1933, as amended, and the rules and regulations of the SEC promulgated
thereunder.
The term "Shelf Registration Statement" shall have the
meaning ascribed to it in Section 2(d).
Section 2. Required Registration.
(a) Form S-4. The Company shall
use its best efforts to register with the SEC the Registrable Securities
for resale on the Form S-4. If the Registrable Securities are registered
pursuant to the Form S-4, immediately following consummation of the
Merger, the Company shall file with the SEC a post-effective amendment to
the Form S-4 causing the Registrable Securities to be registered on Form
S-3 or another appropriate form so as to permit promptly the resale of
the Registrable Securities by the Holder pursuant to an offering on a
delayed or continuous basis pursuant to Rule 415 (or any successor rule)
under the Securities Act (a "Rule 415 Offering").
(b) Form S-3. If the Company is
unable to register the Registrable Securities with the SEC for resale on
the Form S-4, the Company shall use its best efforts to prepare and file
with the SEC prior to or contemporaneously with the consummation of the
Merger a registration statement on Form S-3 or another appropriate form
permitting registration of the Registrable Securities so as to permit
promptly the resale of the Registrable Securities by the Holder in a Rule
415 Offering.
(c) Effectiveness. As used herein,
the term "Shelf Registration Statement" means either (i) a post-effective
amendment to the Form S-4 filed by the Company with the SEC pursuant to
Section 2(a) above, or (ii) a registration statement filed by the Company
with the SEC pursuant to Section 2(b) above, as the case may be. The
Company shall use its best efforts to cause the Shelf Registration
Statement to be declared effective under the Securities Act as promptly
as practicable following consummation of the Merger and to keep the Shelf
Registration continuously effective under the Securities Act until the
termination of this Agreement pursuant to Section 8(m) hereof.
(d) Supplements. The Company shall
supplement and amend the Shelf Registration Statement if required by the
rules, regulations or instructions applicable to the registration form
used by the Company for such Shelf Registration Statement, if required by
the Securities Act, or if reasonably requested by the Holder or by any
underwriter of the Registrable Securities.<PAGE>
(e) Offerings. At any time after
the effective date of the Shelf Registration Statement, the Holder,
subject to the terms and conditions herein, shall have the right to
dispose of all or any portion of the Registrable Securities.
(f) Availability of Form S-3. The Company shall use its
best efforts to be eligible for and to comply with the requirements for
use of Form S-3 or any similar short form under the Securities Act for
the registration and sale of the Registrable Securities.
Section 3. Holdback Agreements.
(a) By the Holder. The Holder agrees not to effect any
public sale or distribution (including sales pursuant to Rule 144) of
equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities during the ten (10) day
period prior to the date which the Company has notified the Holder that
it intends to commence a Company Offering through the sixty (60) day
period immediately following the closing date of such Company Offering;
provided, however, that (i) the Holder shall not be obligated to comply
with this Section 3(a) until the first anniversary of the Merger, and
(ii) the Holder shall not be obligated to comply with this Section 3(a)
on more than one occasion in any nine month period.
(b) By the Company. The Company agrees not to effect,
whether for itself or any other Person, any public sale or distribution
of equity securities of the Company, or any securities convertible into
or exchangeable or exercisable for such securities during the ten (10)
day period prior to which the Holder has notified the Company that it
intends to commence a firm commitment underwritten Rule 415 Offering
through the sixty (60) day period immediately following the closing date
of such offering; provided, however, that the Company shall not be
obligated to comply with this Section 3(b) on more than one occasion.
Section 4. Blackout Provisions.
In the event that, at any time while the Shelf Registration
Statement remains effective, the Company determines in its reasonable
judgment and in good faith that the sale of Registrable Securities would
require disclosure of material information which the Company has a bona
fide business purpose for preserving as confidential or that the Company
is unable to comply with SEC requirements, the Holder shall, upon written
notice of such good faith determination, suspend sales of the Registrable
Securities for a period beginning on the date of receipt of such notice
and expiring on the earlier of (x) the date upon which such material
information is disclosed to the public or ceases to be material or the
Company is able to comply with SEC requirements, as the case may be, and
(y) thirty (30) days after the receipt of such notice from the Company.<PAGE>
Section 5. Registration Procedures.
(a) Procedures. In connection with the registration
of the Registrable Securities, pursuant to this Agreement, the Company
shall use its best efforts to effect the registration and the sale of
such Registrable Securities in accordance with the Holder's intended
method of disposition thereof and, in connection therewith, the Company
shall as expeditiously as possible:
(1) prepare and file with SEC the
Shelf Registration Statement in accordance with Section 2
hereof and use its best efforts to cause the Shelf
Registration Statement to become effective and remain
continuously effective under the Securities Act until the
termination of this Agreement pursuant to Section 8(m)
hereof;
(2) in accordance with Section 2
hereof, prepare and file with the SEC such amendments and
supplements to the Shelf Registration Statement and the
prospectuses used in connection therewith as may be necessary
to keep such Shelf Registration Statement effective for a
continuous period until the termination of this Agreement
pursuant to Section 8(m) hereof; and comply with the
provisions of the Securities Act with respect to the
disposition of all securities covered by such Shelf
Registration Statement during such period in accordance with
the intended methods of disposition by the Holder as set
forth in such Shelf Registration Statement (including,
without limitation, by incorporating in a prospectus
supplement or post-effective amendment the terms of the sale
of the Registrable Securities);
(3) before filing with the SEC the
Shelf Registration Statement or prospectus or any amendments
or supplements thereto, the Company shall furnish to counsel
selected by the Holder and counsel for the underwriter or
sales or placement agent, if any, in connection therewith,
drafts of all such documents proposed to be filed and provide
such counsel with a reasonable opportunity for review thereof
and comment thereon, such review to be conducted and such
comments to be delivered with reasonable promptness;
(4) promptly (i) notify the Holder
of each of (x) the filing and effectiveness of the Shelf
Registration Statement and each prospectus and any amendment
or supplements thereto, (y) the receipt of any comments from
the SEC or any state securities law authorities or any other
governmental authorities with respect to any such Shelf<PAGE>
Registration Statement or prospectus or any amendments or
supplements thereto, and (z) any oral or written stop order
with respect to such registration, any suspension of the
registration or qualification of the sale of the Registrable
Securities in any jurisdiction or any initiation or
threatening of any proceedings with respect to of the
foregoing and (ii) use its best efforts to obtain the
withdrawal of any order suspending the registration or
qualification (or the effectiveness thereof) or suspending or
preventing the use of any related prospectus in any
jurisdiction with respect thereto;
(5) furnish to the Holder, the
underwriters and the sales or placement agent, if any, and
counsel for each of the foregoing, a conformed copy of the
Shelf Registration Statement and each amendment and
supplement thereto (in each case, including all exhibits
thereto and documents incorporated by reference therein) and
such additional number of copies of such Shelf Registration
Statement, each amendment and supplement thereto (in such
case without such exhibits and documents), the prospectus
(including each preliminary prospectus) included in such
Shelf Registration Statement and prospectus supplements and
all exhibits thereto and documents incorporated by reference
therein and such other documents as the Holder, underwriter,
agent or counsel may reasonably request in order to
facilitate the disposition of the Registrable Securities by
the Holder.
(6) if requested by the Holder or
the managing underwriter or underwriters of a Rule 415
Offering, subject to approval of counsel to the Company in
its reasonable judgment, promptly incorporate in a
prospectus, supplement or post-effective amendment to the
Shelf Registration Statement such information concerning
underwriters and the plan of distribution of the Registrable
Securities as such managing underwriter or underwriters or
the Holder reasonably shall furnish to the Company in writing
and request be included therein, including, without
limitation, information with respect to the number of
Registrable Securities being sold by the Holder to such
underwriter or underwriters, the purchase price being paid
therefor by such underwriter or underwriters and with respect
to any other terms of the underwritten offering of the
Registrable Securities to be sold in such offering; and make
all required filings of such prospectus, supplement or post-
effective amendment as soon as possible after being notified
of the matters to be incorporated in such prospectus,
supplement or post-effective amendment;<PAGE>
(7) use its best efforts to
register or qualify such Registrable Securities under such
securities or "blue sky" laws of such jurisdictions as the
Holder reasonably requests and do any and all other acts and
things which may be reasonably necessary or advisable to
enable the Holder to consummate the disposition in such
jurisdictions of the Registrable Securities to be sold and
keep such registration or qualification in effect for so long
as the Shelf Registration Statement remains effective under
the Securities Act (provided that the Company shall not be
required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to
qualify but for this paragraph, (ii) subject itself to
taxation in any such jurisdiction where it would not
otherwise be subject to taxation but for this paragraph or
(iii) consent to the general service of process in any
jurisdiction where it would not otherwise be subject to
general service of process but for this paragraph);
(8) notify the Holder, at any time
when a prospectus relating to the Shelf Registration
Statement is required to be delivered under the Securities
Act, upon the discovery that, or of the happening of any
event as a result of which, the Shelf Registration Statement,
as then in effect, contains an untrue statement of a material
fact or omits to state any material fact required to be
stated therein or any fact necessary to make the statements
therein not misleading, and promptly prepare and furnish to
the Holder a supplement or amendment to the prospectus
contained in the Shelf Registration Statement so that the
Shelf Registration Statement shall not, and such prospectus
as thereafter delivered to the purchasers of such Registrable
Securities shall not, contain an untrue statement of a
material fact or omit to state any material fact required to
be stated therein or any fact necessary to make the
statements therein not misleading;
(9) cause all the Registrable
Securities to be listed on each national securities exchange
and included in each established over-the-counter market on
which or through which similar securities of the Company are
then listed or traded;
(10) make available for
inspection by the Holder, any underwriter participating in
any disposition pursuant to the Shelf Registration Statement,
and any attorney, accountant or other agent retained by the
Holder or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company,<PAGE>
and cause the Company's officers, directors, employees,
attorneys and independent accountants to supply all
information reasonably requested by the Holder, underwriters,
attorneys, accountants or agents in connection with the Shelf
Registration Statement. Information which the Company
determines, in good faith, to be confidential shall not be
disclosed by such persons unless (i) the disclosure of such
information is necessary to avoid or correct a misstatement
or omission in such Shelf Registration Statement or (ii) the
release of such information is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction. The
Holder agrees, on its own behalf and on behalf of all of its
underwriters, accountants, attorneys and agents, that the
information obtained by any of them as a result of such
inspections shall be deemed confidential unless and until
such is made generally available to the public. The Holder
further agrees, on its own behalf and on behalf of all of its
underwriters, accountants, attorneys and agents, that it
will, upon learning that disclosure of such information is
sought in a court of competent jurisdiction, give notice to
the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of the
information deemed confidential;
(11) use its best efforts to
comply with all applicable laws related to the Shelf
Registration Statement and offering and sale of securities
and all applicable rules and regulations of governmental
authorities in connection therewith (including, without
limitation, the Securities Act and the Exchange Act, and the
rules and regulations promulgated by the Commission) and make
generally available to its security holders as soon as
practicable (but in any event not later than fifteen (15)
months after the effectiveness of the Shelf Registration
Statement) an earnings statement of the Company and its
subsidiaries complying with Section 11(a) of the Securities
Act;
(12) use reasonable best
efforts to furnish to the Holder a signed counterpart of (x)
an opinion of counsel for the Company and (y) a "comfort"
letter signed by the independent public accountants who have
certified the Company's financial statements included or
incorporated by reference in such registration statement,
covering such matters with respect to such registration
statement and, in the case of the accountants' comfort
letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions
of issuer's counsel and in accountants' comfort letters<PAGE>
delivered to the underwriters in underwritten public
offerings of securities for the account of, or on behalf of,
an issuer of common stock, such opinion and comfort letters
to be dated the date of such opinions and comfort letters are
customarily dated in such transactions, and covering in the
case of such legal opinion, such other legal matters and, in
the case of such comfort letter, such other financial
matters, as the Holder may reasonably request; and
(13) take all such other
actions as the Holder or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of
such Registrable Securities.
(b) Further Agreements. Without limiting any of the
foregoing, in the event that the sale of Registrable Securities is to be
made by or through an underwriter, the Company shall enter into an
underwriting agreement with a managing underwriter or underwriters
selected by the Holder containing representations, warranties,
indemnities and agreements customarily included (but not inconsistent
with the agreements contained herein) by an issuer of common stock in
underwriting agreements with respect to offerings of common stock for the
account of, or on behalf of, such issuers. In connection with the sale
of Registrable Securities hereunder, the Holder may, at its option,
require that any and all representations and warranties by, and
indemnities and agreements of, the Company to or for the benefit of such
underwriter or underwriters (or which would be made to or for the benefit
of such an underwriter or underwriter if such sale of Registrable
Securities were pursuant to a customary underwritten offering) be made to
and for the benefit of the Holder and that any or all of the conditions
precedent to the obligations of such underwriter or underwriters (or
which would be so for the benefit of such underwriter or underwriters
under a customary underwriting agreement) be conditions precedent to the
obligations of the Holder in connection with the disposition of its
securities pursuant to the terms hereof. In connection with any offering
of Registrable Securities registered pursuant to this Agreement, the
Company shall (x) furnish to the underwriter, if any (or, if no
underwriter, the Holder), unlegended certificates representing ownership
of the Registrable Securities being sold, in such denominations as
requested and (y) instruct any transfer agent and registrar of the
Registrable Securities to release any stop transfer order with respect
thereto.
The Holder agrees that upon receipt of any notice from the
Company of the happening of any event of the kind described in paragraph
(8) of Section 5(a), the Holder shall forthwith discontinue its
disposition of Registrable Securities pursuant to the Shelf Registration
Statement and prospectus relating thereto until its receipt of the copies
of the supplemented or amended prospectus contemplated by paragraph (8)<PAGE>
of Section 5(a) and, if so directed by the Company, deliver to the
Company all copies, other than permanent file copies, then in the
Holder's possession of the prospectus current at the time of receipt of
such notice relating to such Registrable Securities.
Section 6. Registration Expenses.
All expenses incident to the Company's performance of, or
compliance with, its obligations under this Agreement including, without
limitation, all registration and filing fees, all fees and expenses of
compliance with securities and "blue sky" laws (including, without
limitation, the fees and expenses of counsel for underwriters or
placement or sales agents in connection therewith), all printing and
copying expenses, all messenger and delivery expenses, all fees and
expenses of underwriters and sales and placement agents in connection
therewith (excluding discounts and commissions and the fees and expenses
of counsel therefor), all fees and expenses of the Company's independent
certified public accountants and counsel (including, without limitation,
with respect to "comfort" letters and opinions) and other Persons
retained by the Company in connection therewith (collectively, the
"Registration Expenses") shall be borne by the Company. The Company
shall be responsible for the fees and expenses of one (1) legal counsel
retained by the Holder in connection with the sale of the Registrable
Securities. Notwithstanding the foregoing, the Company shall not be
responsible for the fees and expenses of any additional counsel,
accountants, agents or experts retained by the Holder in connection with
the sale of Registrable Securities. The Company will pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties, the expense
of any annual audit and the expense of any liability insurance) and the
expenses and fees for listing the Registrable Securities on each
securities exchange and included in each established over-the-counter
market on which similar securities issued by the Company are then listed
or traded.
Section 7. Indemnification.
(a) By the Company. The Company agrees to indemnify,
to the fullest extent permitted by law, the Holder, its officers,
directors, employees and agents and each Person who controls (within the
meaning of the Securities Act) the Holder or such an other indemnified
Person against all losses, claims, damages, liabilities and expenses
(collectively, the "Losses") caused by, resulting from or relating to any
untrue or alleged untrue statement of material fact contained in the
Shelf Registration Statement, any prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or a fact
necessary to make the statements therein not misleading, except insofar
as the same are caused by and contained in any information furnished in<PAGE>
writing to the Company by the Holder expressly for use therein or by the
Holder's failure to deliver a copy of the Shelf Registration Statement or
prospectus or any amendments or supplements thereto after the Company has
furnished the Holder with a sufficient number of copies of the same. In
connection with an underwritten offering and without limiting any of the
Company's other obligations under this Agreement, the Company shall
indemnify such underwriters, their officers, directors, employees and
agents and each Person who controls (within the meaning of the Securities
Act) such underwriters or such other indemnified Person to the same
extent as provided above with respect to the indemnification of the
Holder.
(b) By the Holder. In connection with the Shelf
Registration Statement the Holder will furnish to the Company in writing
information regarding the Holder's ownership of Registrable Securities
and its intended method of distribution thereof and, to the fullest
extent permitted by law, shall indemnify the Company, its directors,
officers, employees and agents and each Person who controls (within the
meaning of the Securities Act) the Company or such an other indemnified
Person against all Losses caused by, resulting from or relating to any
untrue or alleged untrue statement of material fact contained in the
Shelf Registration Statement, any prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading, but only to the extent that
such untrue statement or omission is caused by and contained in such
information so furnished in writing by the Holder.
(c) Notice. Any Person entitled to indemnification
hereunder shall give prompt written notice to the indemnifying party of
any claim with respect to which it seeks indemnification; provided,
however, the failure to give such notice shall not release the
indemnifying party from its obligation, except to the extent that the
indemnifying party has been materially prejudiced by such failure to
provide such notice.
(d) Defense of Actions. In any case in which any such
action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not (so long as it shall continue to have the
right to defend, contest, litigate and settle the matter in question in
accordance with this paragraph) be liable to such indemnified party
hereunder for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof other than<PAGE>
reasonable costs of investigation, supervision and monitoring (unless
such indemnified party reasonably objects to such assumption on the
grounds that there may be defenses available to it which are different
from or in addition to the defenses available to such indemnifying party,
in which event the indemnified party shall be reimbursed by the
indemnifying party for the reasonable expenses incurred in connection
with retaining one separate legal counsel). An indemnifying party shall
not be liable for any settlement of an action or claim effected without
its consent. The indemnifying party shall lose its right to defend,
contest, litigate and settle a matter if it shall fail to diligently
contest such matter (except to the extent settled in accordance with the
next following sentence). No matter shall be settled by an indemnifying
party without the consent of the indemnified party (which consent shall
not be unreasonably withheld or delayed).
(e) Survival. The indemnification provided for under
this Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified Person and will
survive the transfer of the Registrable Securities.
(f) Contribution. If recovery is not available under
the foregoing indemnification provisions for any reason or reasons other
than as specified therein, any Person who would otherwise be entitled to
indemnification by the terms thereof shall nevertheless be entitled to
contribution with respect to any Losses with respect to which such Person
would be entitled to such indemnification but for such reason or reasons.
In determining the amount of contribution to which the respective Persons
are entitled, there shall be considered the Persons' relative knowledge
and access to information concerning the matter with respect to which the
claim was asserted, the opportunity to correct and prevent any statement
or omission, and other equitable considerations appropriate under the
circumstances. It is hereby agreed that it would not necessarily be
equitable if the amount of such contribution were determined by pro rata
or per capita allocation. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not found
guilty of such fraudulent misrepresentation.
Section 8. Miscellaneous.
(a) Effectiveness of Agreement. The provisions of
this Agreement shall not become effective unless and until the Merger
Agreement is executed. In the event that the transactions contemplated
by the Merger Agreement are not consummated, this Agreement shall
automatically terminate and all provisions herein shall be null and void
on the date of the termination of the Merger Agreement.
(b) Specific Performance. Each of the Holder and the
Company acknowledges and agrees that in the event of any breach of this<PAGE>
Agreement, the non-breaching party or parties would be irreparably harmed
and could not be made whole by monetary damages. Each of the Holder and
the Company hereby agrees that in addition to any other remedy to which
it may be entitled at law or in equity, it shall be entitled to compel
specific performance of this Agreement in any action instituted in any
court of the United States or any state thereof having subject matter
jurisdiction for such action.
(c) Headings. The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning
or construction of any provisions hereof.
(d) Entire Agreement. This Agreement constitutes the
entire agreement and understanding of the parties hereto in respect of
the subject matter contained herein, and there are no restrictions,
promises, representations, warranties, covenants, conditions or
undertakings with respect to the subject matter hereof, other than those
expressly set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings between the parties hereto with
respect to the subject matter hereof.
(e) Notices. Any notice, request, instruction or
other document to be given hereunder by any party hereto to another party
hereto shall be in writing, shall be delivered by hand, by facsimile (if
confirmed) or by registered mail, postage prepaid, return receipt
requested, to the address of the party set forth below, or to such other
address as the party to whom notice is to be given may provide in a
written notice to the Company, a copy of which written notice shall be on
file with the Secretary of the Company. No notice shall be effective
except upon actual delivery.
If to the Company, to:
Hayes Wheels International, Inc.
38481 Huron River Drive
Romulus, Michigan 48174
Attention: General Counsel
Telecopier: (313) 942-5199
with a copy to (prior to the consummation of the Merger):
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: David A. Katz, Esq.
Telecopier: (212) 403-2000
with copies to (subsequent to the consummation of the Merger):<PAGE>
Joseph Littlejohn & Levy
450 Lexington Avenue
New York, New York 10022
Attention: Paul S. Levy
Telecopier: (212) 286-8626
and
Skadden, Arps, Slate, Meagher & Flom
One Rodney Square
Wilmington, Delaware 19801
Attention: Robert B. Pincus, Esq.
Telecopier: (302) 651-3001
If to the Holder, to:
Varity Corporation
672 Delaware Avenue
Buffalo, New York 14209
Attention: Kenneth L. Walker
Telecopier: (716) 888-8065
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Attention: Immanuel Kohn
Telecopier: (212) 269-5420
(f) Applicable Law. The substantive laws of the State
of Delaware shall govern the interpretation, validity and performance of
the terms of this Agreement, regardless of the law that might be applied
under applicable principles of conflicts of laws.
(g) Severability. The invalidity, illegality or
unenforceability of one or more of the provisions of this Agreement in
any jurisdiction shall not affect the validity, legality or
enforceability of the remainder of this Agreement in such jurisdiction or
the validity, legality or enforceability of this Agreement, including any
such provision, in any other jurisdiction, it being intended that all
rights and obligations of the parties hereunder shall be enforceable to
the fullest extent permitted by law.
(h) Successors; Assigns. The provisions of this
Agreement shall be binding upon and accrue to the benefit of the parties
hereto and their respective heirs, successors and permitted assigns.
Neither this Agreement nor the rights or obligations of the Holder
hereunder may be assigned, except in connection with the transfer by the<PAGE>
Holder of shares of New Common Stock in accordance with the terms of this
Agreement. Any such attempted assignment in contravention of this
Agreement shall be void and of no effect.
(i) Amendments. This Agreement may not be amended,
modified or supplemented unless such modification is in writing and
signed by the Company, and the Holder.
(j) Waiver. Any waiver (express or implied) by any of
any default or breach of this Agreement shall not constitute a waiver of
any other or subsequent default or breach.
(k) Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same Agreement.
(l) Recapitalization. In the event that any capital
stock or other securities are issued in respect of, in exchange for, or
in substitution of, any Registrable Securities such securities shall be
deemed to be Registrable Securities.
(m) Termination; Restrictive Legend. This Agreement
shall terminate on the date that is the earliest to occur of (i) the date
that all Registrable Securities covered by the Shelf Registration
Statement have been sold, and (ii) the third anniversary of the
consummation of the Merger; provided, however that unless this Agreement
is terminated pursuant to Section 8(a) hereof, the provisions of Section
7 hereof shall survive termination of this Agreement. It is understood
and agreed that any restrictive legends set forth on any Registrable
Securities shall be removed by delivery of substitute certificates
without such legends upon the registration under the Securities Act of
such Registrable Securities or, if not theretofore removed, on the third
anniversary of the consummation of the Merger.
<PAGE>
IN WITNESS WHEREOF, the undersigned hereby agrees to be bound
by the terms and provisions of this Registration Rights Agreement as of
the date first above written.
HAYES WHEELS INTERNATIONAL, INC.
By: /s/ Daniel M. Sandberg
Name: Daniel M. Sandberg
Title:<PAGE>
Vice President
VARITY CORPORATION
By: /s/ Kenneth L. Walker
Name: Kenneth L. Walker
Title: Vice President, Legal & Secretary
K-H CORPORATION
By: /s/ Kenneth L. Walker
Name: Kenneth L. Walker
Title: Secretary<PAGE>
