SCHEDULE 14C INFORMATION STATEMENT
Information Statement Pursuant to Section 14c of
the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Information Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14c-5(d)(2))
|_| Definitive Information Statement
|_| Definitive Additional Materials
HILITE INDUSTRIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on the table below per Exchange Act Rules 14a-6(I)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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HILITE INDUSTRIES, INC.
1671 S. BROADWAY
CARROLLTON, TEXAS 75006
(972) 466-0475
INFORMATION STATEMENT
This Information Statement is being furnished to holders of shares
(the "Stockholders") of common stock, par value $.01 per share (the "Common
Stock"), of Hilite Industries, Inc., a Delaware corporation (the "Company") as
of December 30, 1997 (the "Record Date"). This Information Statement is being
furnished in order to notify the Stockholders that on or about December 24, 1997
the Company received written consents (the "Written Consents") in lieu of a
meeting of the Stockholders from the holders of 3,706,700 shares of Common Stock
representing approximately 75.7% of the total issued and outstanding shares of
voting stock of the Company, adopting a resolution creating a holding company
structure for the Company by transferring substantially all of the Company's
operating, manufacturing, sales, marketing, tangible, intangible, and real
assets; excluding the stock of North American Spring & Stamping Corp., ("NASS"),
a Delaware corporation and a wholly-owned subsidiary of the Company (the
"Assets"), to one or more direct or indirect wholly-owned subsidiaries (the
"Subsidiaries") of the Company (the "Corporate Reorganization"). Certain of the
principal Stockholders of the Company described under the caption "Written
Consent in Lieu of Meeting" delivered Written Consents in favor of the Corporate
Reorganization.
On November 21, 1997, the Board of Directors unanimously approved the
Corporate Reorganization and recommended that the Stockholders grant their
approval thereto. The Board of Directors has determined that the Corporate
Reorganization would be in the best interests of the Company and its
shareholders, since, with a holding company structure, the Company will have the
flexibility to transfer its assets among direct or in-direct wholly-owned
subsidiaries. The Corporate Reorganization changes the Company's internal
corporate structure and establishes the Company as a publicly-held holding
company, having no direct business operations other than the ownership and
management of its subsidiaries. With this more favorable and flexible corporate
structure, the Company will have the ability to better carry out its business
purposes, including without limitation, making future acquisitions and engaging
in capital raising activities as well as providing a structure which is tax
efficient to the Company.
This Information Statement describing the Corporate Reorganization is
first being mailed or furnished to Stockholders on or about January , 1998 and
the Corporate Reorganization shall not become effective until at least 20 days
thereafter.
THIS INFORMATION STATEMENT IS FURNISHED FOR
INFORMATION PURPOSES ONLY.
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THE COMPANY IS NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND A PROXY.
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATION OTHER THAN THOSE CONTAINED, OR INCORPORATED BY
REFERENCE, IN THIS INFORMATION STATEMENT AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON. ALL
INFORMATION CONTAINED IN THIS INFORMATION STATEMENT RELATING TO
THE COMPANY HAS BEEN SUPPLIED BY THE COMPANY, AND ALL INFORMATION
CONTAINED IN THIS INFORMATION STATEMENT RELATING TO HILITE
INDUSTRIES-TEXAS, INC., HILITE INDUSTRIES-DELAWARE, INC. OR HILITE
INDUSTRIES, LP HAS BEEN SUPPLIED BY THE COMPANY.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. The reports, proxy statements and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material also
can be obtained from the Public Reference Section of the Commission, Washington,
D.C. 20549 at prescribed rates. Reports and other information concerning the
Company may be inspected at the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006. The Commission maintains a
World Wide Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address of the Commission's web site is http://www.sec.gov.
INCORPORATION BY REFERENCE
This Information Statement incorporates by reference the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 1997 (the "Company
10-K") and the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1997 (the "Company 10-Q"), which were previously filed with the
Commission. The Company 10-K and Company 10-Q are not presented herein or
delivered herewith, but they are available (without exhibits, unless such
exhibits are specifically incorporated herein by reference) to any person,
including any beneficial owner, to whom this Information Statement is delivered,
without charge on written request directed to Hilite Industries, Inc., 1671 S.
Broadway, Carrollton, Texas 75006, or by calling (972) 466-0475. Copies of the
Company 10-K and Company 10-Q so requested will be sent by First Class Mail,
postage paid.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Information Statement and
prior to the date of the Corporate Reorganization shall be deemed to be
incorporated by reference in this Information Statement and to be a part hereof
from the respective dates of filing such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Information Statement to the extent that a statement contained in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Information Statement.
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INTRODUCTION
The Company designs, manufactures and sells a diversified line of
highly-engineered products primarily for automotive applications. These products
include brake valves such as proportioning valves, power transmission components
such as stampings, specialty springs and automated assemblies. Some of the
Company's products are engineered in close cooperation with the Company's
customers to meet their specific performance requirements. Approximately 75% of
the sales of the Company are to automotive companies and their suppliers for
passenger cars and light trucks sold in the United States. The Company's
customers include all three domestic automotive companies: Ford Motor Company,
General Motors Corporation, and Chrysler Corporation as well as other automotive
companies such as Mitsubishi Motor Sales of America, Inc., Honda of America
Mfg., Inc., Toyota Motor Sales, U.S.A., Inc. and Navistar International
Transportation Corporation. The Company also sells products to first-tier
suppliers including Borg-Warner Corporation, Bosch Braking Systems Corporation,
Denso of Los Angeles, Inc., Motivair Corporation and ITT Automotive of North
America, Inc. Significant non-automotive customers include Crane National
Vendors, the Blance Systems Division of Amesburg Group, Inc., Motorola, Inc. and
a variety of distributors of industrial/hydraulic clutches.
The Company currently operates as a consolidated operating entity,
holding the majority of its operating assets directly and principally conducting
its operations through Hilite Industries, Inc. The Board of Directors has
unanimously approved the adoption of the Corporate Reorganization, authorizing
the Company to transfer the Assets to Hilite Industries-Texas, Inc., a Delaware
corporation ("Hilite Texas"), a wholly-owned subsidiary of the Company.
Following the transfer of the Assets to Hilite Texas and Hilite Texas'
assumption of the related liabilities, Hilite Texas will transfer 99% of the
Assets to Hilite Industries-Delaware, Inc., a newly formed Delaware corporation
("Hilite Delaware") in exchange for all of the issued and outstanding shares of
common stock of Hilite Delaware. Hilite Texas and Hilite Delaware will then form
a Texas limited partnership, Hilite Industries, LP ("Hilite LP") whereby Hilite
Texas will contribute to the partnership its ownership of 1% of the Assets and
will receive a 1% general partnership interest, and Hilite Delaware will
contribute to the partnership its ownership of 99% of the Assets and will
receive a 99% limited partnership interest. Under the Corporate Reorganization,
the Company would retain indirect ownership of all of the Assets through the
Company's 100% ownership of the capital stock of Hilite Texas. The Company would
then confine its activities to owning stock in and supervising the management of
its Subsidiaries and will have no direct business operations, other than its
ownership and management of its Subsidiaries. Under the Corporate
Reorganization, Hilite LP would perform all of the manufacturing, sales and
product development activities performed by the Company. All but two (2) of the
Company's employees, both of which are not residents of Texas, would become
employees of Hilite LP. The Company would receive from Hilite Texas dividend
payments to the extent that such dividends are paid by Hilite Texas or Hilite
Delaware, based on partnership distributions they receive from Hilite LP. The
Company intends to continue its previously announced program of paying
dividends; however, as a holding company, the Company's ability to pay dividends
as well as meet other obligations will depend upon the receipt of dividends or
other payments, as described above, from the Subsidiaries. In addition, the
Subsidiaries may be restricted in their ability to make distributions to the
Company based upon restrictive covenants which
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the Subsidiaries may be required to enter into in accordance with various
financing or other agreements. Hilite LP will operate under the trade name
"Hilite Industries."
REASONS FOR THE RESTRUCTURING
The Board of Directors believes that the proposed holding company
structure would create a more favorable and flexible corporate structure through
which the Company will have the ability to carry out its business purposes,
including without limitation, making future acquisitions and engaging in capital
raising activities as well as providing a structure which is tax efficient to
the Company.
WRITTEN CONSENT IN LIEU OF MEETING
Under Delaware law, the affirmative vote of holders of a majority of
the outstanding Common Stock entitled to vote thereon is required to approve the
Assignment and Assumption Agreement (as defined herein) and the transactions
contemplated thereby. The James E. Lineberger, Jr. Trust, the Geoffry S.
Lineberger Trust, the Christopher Lineberger Trust (collectively the "Trusts"),
the Brady Family Limited Partnership (the "Brady Partnership") and Samuel M.
Berry together own approximately 75.7% of the outstanding Common Stock. The
Trusts, the Brady Partnership and Mr. Berry have executed and delivered to the
Company Written Consents in lieu of a meeting of Stockholders approving and
adopting the Assignment and Assumption Agreement and authorizing the
consummation of the Corporate Reorganization. Accordingly, no vote of any
Stockholder is necessary and Stockholder votes are not being solicited. Such
Written Consents provide that the Corporate Reorganization will become effective
no earlier than twenty (20) calendar days after this Information Statement is
first mailed to Stockholders.
THE PROPOSED CORPORATE REORGANIZATION
The Company intends to transfer 100% of its right, title and interest
to the Assets to Hilite Texas in exchange for all of the issued and outstanding
shares of common stock of Hilite Texas. Hilite Texas will assume all of the
liabilities of the Company and, as a result of the Corporate Reorganization,
Hilite Texas will become a wholly-owned subsidiary of the Company.
Following the transfer of the Assets to Hilite Texas and Hilite
Texas' assumption of the related liabilities, Hilite Texas will transfer 99% of
the Assets to Hilite Delaware in exchange for all of the issued and outstanding
shares of common stock of Hilite Delaware. Hilite Texas and Hilite Delaware will
then form a Texas limited partnership, Hilite LP, and Hilite Texas will
contribute to the partnership its ownership of 1% of the Assets and will receive
a 1% general partnership interest and Hilite Delaware will contribute to the
partnership its ownership of 99% of the Assets and will receive a 99% limited
partnership interest. The transactions described above shall be collectively
referred to as the "Reorganization Transactions."
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Following the Reorganization Transactions, all of the Assets will be
owned and operated by Hilite LP which will conduct its business under the trade
name "Hilite Industries." Hilite Texas will remain a wholly-owned subsidiary of
the Company. Hilite Delaware will be an indirect wholly-owned subsidiary of the
Company, and the Company will indirectly own all of the partnership interests of
Hilite LP.
The discussion in this Information Statement of the Corporate
Reorganization and the description of the principal terms thereof are subject to
and qualified in their entirety by reference to the agreement entered into
between the Company and Hilite Texas (the "Assignment and Assumption
Agreement"). The Assignment and Assumption Agreement is attached hereto as an
exhibit to this Information Statement and is incorporated herein by reference.
Stockholders are urged to read the Assignment and Assumption Agreement in its
entirety.
Approval by the Board of Directors. The Board of Directors of the
Company believes that the Reorganization Transactions are in the best interests
of the Company and the Stockholders and has unanimously approved the Corporate
Reorganization. The Board of Directors' approval of the Corporate Reorganization
is based upon the factors described in this Information Statement.
Conduct of the Business Following the Proposed Corporate
Reorganization. The Company's operations will not be affected by the Corporate
Reorganization. The Company's operating assets will be transferred from the
Company, ultimately to Hilite LP. However, with the Company owning, indirectly,
all of the partnership interests of Hilite LP, the Company will retain ultimate
control of its operating assets.
Use of Assets Following Restructuring. Although pursuant to the
Corporate Reorganization the Company would transfer legal ownership of
substantially all of its operating, manufacturing, sales, marketing, tangible,
intangible and real assets to Hilite LP, such assets will continue to be
utilized for the same purposes as at present.
Effect on the Company's Financial Statements. The implementation of
the Corporate Reorganization will not have a material effect on the presentation
of the consolidated financial statements of the Company. Notwithstanding the new
structure of the Company, the Company will continue to report its financial
operations and condition on a consolidated basis.
No Effect on a Pro Forma Basis. The Company has not prepared pro
forma consolidated financial statements reflecting the Corporate Reorganization
because no pro forma adjustments are required to account for the effects of the
Corporate Reorganization. The Corporate Reorganization will not affect the
Company's financial statements on a consolidated basis. On an unconsolidated
basis, the Company's principal source of revenue will be the receipt from Hilite
Texas of dividend payments. Such dividend payments shall be dependent upon
partnership distributions made by Hilite LP to Hilite Texas and partnership
distributions made by Hilite LP to Hilite Delaware, to the extent Hilite Texas
receives such distributions as a dividend from Hilite Delaware.
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Assumption of Liabilities. The assets of the Company transferred to
any Subsidiary will be transferred subject to all related liabilities and
obligations.
Effect on Stockholders. The outstanding stock of the Company would
not be affected by consummation of the Corporate Reorganization. Stockholders of
the Company would continue to have the same voting, dividend and liquidation
rights in the Company after the Corporate Reorganization. However, Stockholders
of the Company would not be entitled to elect the directors of Hilite Texas or
Hilite Delaware. Instead, Stockholders of the Company would elect the directors
of the Company, who would have overall responsibility for the management of the
Company and the Subsidiaries. Directors of any Subsidiary would be elected by
the Board of Directors of the Company or the board of directors of an immediate
parent of any such Subsidiary.
The Corporate Reorganization will impair Stockholders' rights to
approve dispositions of all or substantially all of the Assets. Upon
implementation of the Corporate Reorganization, the Company will directly or
indirectly own all of the respective voting stock and partnership interests of
the Subsidiaries, but will have no direct right, title or interest to the
Assets. Although Hilite Texas has no present intention to transfer the ownership
interest of Hilite LP in the Assets, no assurance can be given that Hilite LP
will not sell, transfer or otherwise convey ownership of the Assets without the
approval of the Stockholders of the Company.
Although Hilite Texas has no present plan to sell or issue its stock
to anyone other than the Company, no assurance can be given that Hilite Texas
will continue to be wholly-owned by the Company in the future. In the event
Hilite Texas were to issue shares of its voting stock to third parties, the
percentage ownership interest of the Company in Hilite Texas would be subject to
dilution.
Although Hilite Delaware has no present plan to sell or issue its
stock to anyone other than Hilite Texas, no assurance can be given that Hilite
Delaware will continue to be wholly-owned by Hilite Texas in the future. In the
event Hilite Delaware were to issue shares of its voting stock to third parties,
the percentage ownership interest of Hilite Texas in Hilite Delaware, and
consequently the effective control of Hilite Delaware by the Company, would be
subject to dilution.
Although Hilite Texas has no present plans to sell or grant
partnership interests of Hilite LP to any third parties, no assurance can be
given that Hilite LP will continue to be owned solely by Hilite Texas and Hilite
Delaware in the future. In the event Hilite Texas were to grant partnership
interests to third parties, the percentage ownership interests of Hilite Texas
and Hilite Delaware, and the effective control of Hilite LP by the Company,
would be subject to dilution.
Furthermore, under Delaware law, following the consummation of the
Corporate Reorganization, the statutory right of the Company's Stockholders to
inspect the books and records of the Company may not extend to the books and
records of Hilite Texas, Hilite Delaware and Hilite LP, which are separate legal
entities from the Company. However, because the Company is a public company
subject to the reporting requirements of the Securities and Exchange Act of
1934, as
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amended, and the Rules of The NASDAQ National Market, certain information
regarding the Company and the Subsidiaries is available to Stockholders. See
"Available Information."
Certain Federal Income Tax Consequences. All assets transferred
pursuant to the Corporate Reorganization will be conveyed to the appropriate
Subsidiary on a tax-free basis pursuant to Sections 351 and 721 of the Internal
Revenue Code of 1986, as amended. The Company will experience an increase in its
Federal income tax obligations due to a decrease in income tax credits derived
from the payment of state income taxes. There will be no change in Federal
income tax obligations to holders of the Company's Common Stock.
No Dissenters' Appraisal Rights. Delaware law does not provide
dissenters' rights for the disposition of all or substantially all of a Delaware
corporation's assets. Consequently, if the Corporate Reorganization is
consummated, Stockholders objecting to the terms of or voting against the
implementation of the Corporate Reorganization will not be entitled to any
appraisal or similar rights under Delaware law.
OUTSTANDING VOTING SECURITIES
On the Record Date there were 4,900,000 outstanding shares of Common
Stock. Only holders of record of the Common Stock at the close of business on
the Record Date were entitled to participate in the Written Consents. Each
holder of Common Stock is entitled to one vote for each share held by such
holder. Certain affiliates of Mr. James E. Lineberger, the Company's Chairman of
the Board of Directors, control approximately 61.8% of the Company's outstanding
stock and, together with the officers and directors of the Company, control
approximately 76.3% of the Company's stock. Mr. Lineberger disclaims beneficial
ownership of these shares. Nevertheless, in the event these affiliates vote
similarly in connection with matters submitted to a vote by the Company's
Stockholders, such as election of the Company's Board of Directors, these
affiliates would be able to control the outcome of these matters and control the
direction and future operations of the Company. The presence, in person or by
proxy, of the holders of a majority of the outstanding shares of Common Stock is
necessary to constitute a quorum.
The Delaware General Corporation Law ("DGCL") provides in substance
that unless the Company's certificate of incorporation provides otherwise,
stockholders may take action without a meeting and without prior notice if a
consent or consents in writing, setting forth the action so taken, is signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to take such action at a meeting at which all
shares entitled to vote thereon were present. Under the applicable provisions of
the DGCL, such action is effective when written consents from holders of record
of a majority of the outstanding shares of voting stock are executed and
delivered to the Company within 60 days of the earliest dated consent delivered
in accordance with the DGCL.
In compliance with the provisions of the DGCL and the Company's
certificate of incorporation, certain Stockholders on or about December 24, 1997
executed and delivered to the
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Company the Written Consents in lieu of a meeting of the Stockholders
representing approximately 75.7% of the total issued and outstanding shares of
voting stock, approving and adopting the Assignment and Assumption Agreement and
authorizing the consummation of the Corporate Reorganization.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of the Record Date, the ownership
of the Company's Common Stock by (i) each person who is known by the Company to
own of record or beneficially more than five percent (5%) of the Company's
Common Stock, (ii) each of the Company's directors, (iii) the Company's Chief
Executive Officer and the most highly compensated executive officers with
aggregate compensation which exceeds $100,000 and (iv) all directors and
officers as a group. Except as otherwise indicated, the shareholders listed in
the table have sole voting and investment powers with respect to the shares
indicated and their addresses are the address of the Company.
NUMBER OF
SHARES
BENEFICIALLY PERCENTAGE
OWNED OF CLASS
James E. Lineberger.......................... 3,169,287(1) 61.8%
James E. Lineberger, Jr. Trust............... 1,056,429 20.6
1120 Boston Post Road
Darien, Connecticut 06820
Geoffry S. Lineberger Trust.................. 1,056,429 20.6
1120 Boston Post Road
Darien, Connecticut 06820
Christopher Lineberger Trust................. 1,056,429 20.6
1120 Boston Post Road
Darien, Connecticut 06820
The Brady Family Limited Partnership......... 358,143 7.0
Daniel. W. Brady............................. 358,143(2) 7.0
Samuel M. Berry.............................. 197,670(3) 3.9
James D. Gerson ............................. 56,000(4) 1.1
Ronald G. Assaf.............................. 45,000 *
Arthur D. Johnson............................ 26,200(5) *
Donald M. Maher.............................. 26,200(5) *
Ronald E. Reinke............................. 17,000(6) *
All officers and directors as a group
(9 persons)....................... 3,909,300(7) 76.3
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* Less than 1%
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(1) Includes 1,056,429 shares of Common Stock owned by each of the James
E. Lineberger, Jr. Trust, the Geoffry S. Lineberger Trust and the
Christopher Lineberger Trust for which H.J. Lineberger, Mr.
Lineberger's wife, is a trustee and which may therefore be deemed to
be beneficially owned by Mr. Lineberger. Mr. Lineberger disclaims
beneficial ownership of these shares.
(2) Held by The Brady Family Limited Partnership, of which Mr. Brady is
the sole general partner.
(3) Includes 18,400 shares of Common Stock issuable upon the exercise of
options granted pursuant to the 1993 Stock Option Plan.
(4) Includes 31,000 shares of Common Stock issuable upon the exercise of
warrants and 5,000 shares of Common Stock owned by Mr. Gerson's wife,
as custodian for their children, which may therefore be deemed to be
beneficially owned by Mr. Gerson. Mr. Gerson disclaims beneficial
ownership of these shares.
(5) Includes 26,200 shares of Common Stock issuable upon the exercise of
options granted pursuant to the 1993 Stock Option Plan.
(6) Includes 17,000 shares of Common Stock issuable upon the exercise of
options granted pursuant to the 1993 Stock Option Plan.
(7) Includes 102,000 shares of Common Stock issuable upon the exercise of
options granted pursuant to the 1993 Stock Option Plan.
If you have any questions regarding this information statement or the
Corporate Reorganization, please contact the Company at:
Hilite Industries, Inc.
1671 S. Broadway
Carollton, Texas 75006
(972) 466-0475
By Order of the Board of Directors
Samuel M. Berry
President and Chief Operating Officer
January ___, 1998
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EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of December 24,
1997, (the "Agreement"), between Hilite Industries, Inc., a Delaware corporation
("Transferor"), and Hilite Industries-Texas, Inc., a Delaware corporation and a
wholly-owned subsidiary of Transferor ("Transferee").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of this Agreement, Transferor is
agreeing to transfer and Transferee is agreeing to accept all of the Assets (as
hereinafter defined) and assume all of the liabilities of Transferor, except for
those assets and liabilities expressly excluded herein;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Transferee and Transferor hereby
agree as follows:
1. ASSIGNMENT. Transferor agrees to transfer, convey and assign to
Transferor, and Transferee agrees to accept from Transferor, all of
the assets and properties owned by Transferor, of every kind and
description, real, personal and mixed, tangible and intangible,
wherever located, except for the Excluded Assets (as hereinafter
defined) (collectively, the "Assets") at the Closing (as hereinafter
defined). The Assets shall include, but not be limited to:
a. all machinery, equipment, computers, computer hardware,
tools, inventory, supplies, construction in progress,
furniture, automobiles and all other tangible assets of
Transferor whether located at the Transferor's facilities
in Carrollton, Texas (the "Real Property") or elsewhere;
b. all the interest of and the rights and benefits accruing
to Transferor as lessee under all leases or rental
agreements covering the Fixed Assets;
c. all of the rights and benefits accruing to Transferor
under all written or oral contracts, agreements,
arrangements or understandings, including without
limitation any loan agreement or indenture, purchase,
sales, supply or service order or agreement, real
property, equipment or other lease, or license of trade
rights, to which the Transferor is a party or by which the
Transferor or any of the Assets are bound (the
"Contracts");
d. all operating data and records of Transferor, including
without limitation client lists and records, referral
sources, mailing lists, equipment logs, operating guides
and manuals, copies of financial, accounting and personnel
records, correspondence and other similar documents and
records;
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e. all of Transferor's rights to any intellectual property;
f. the Real Property and all other real property owned by
Transferor;
g. all prepaid expenses; and
h. all receivables of the Transferor.
2. EXCLUDED ASSETS. Anything contained in Section 1 hereof to the
contrary notwithstanding, the Assets shall exclude and Transferee
shall not accept the following property and assets (collectively, the
"Excluded Assets"):
a. the shares of common stock of Transferee received by
Transferor in consideration for the transfer of the Assets
to Transferee;
b. the corporate minute books, stock books, tax returns or
other records (other than the records relating to the
Business included in the Assets of Transferor;
c. the shares of common stock of North American Spring &
Stamping Corp., a Delaware corporation and a wholly-owned
subsidiary of Transferor ("NASS"); and
d. the rights which accrue or will accrue to Transferor under
this Agreement.
3. ASSUMPTION.
3.1 Transferee agrees to assume and shall discharge in accordance
with their terms, all of the obligations and liabilities of Transferor relating
to the Assets to the extent that they shall remain uncompleted and outstanding
as of the Closing. Such liabilities and obligations shall include but not be
limited to all liabilities and obligations of Transferor under the Contracts.
3.2 Transferee and Transferor further agree that Transferee shall
assume and become liable for or perform when due all liabilities (contingent or
otherwise), debts, contracts, commitments and other obligations of Transferor of
any nature other than those related to the Excluded Assets.
3.3 To the extent that any Contract shall not be assignable from
Transferor to Transferee because a party to such Contract shall not have
consented to such assignment ("Non-Assignable Contract"), Transferor
acknowledges and agrees that Transferee will be granted at the Closing, to the
fullest extent permitted by law, the same rights and privileges enjoyed by
Transferor under the Non-Assignable Contracts and Transferee will assume all
liabilities under the Non-Assignable Contracts.
4. CONSIDERATION. Subject to the terms and conditions of this Agreement,
in consideration of the sale, conveyance, assignment, transfer and
delivery of the Assets, the Transferee shall issue
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one hundred (100) shares (the "Shares") of its common stock
("Transferee's Common Stock") to Transferor as set forth in paragraph
6 below.
5. CLOSING. The closing (the "Closing") of the transaction contemplated
by this Agreement shall take place at the offices of counsel to the
Transferor, Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the
Americas, New York, New York 10036, at 6:00 p.m. local time on
January 31, 1998 or on a date designated by Transferor which shall be
after all requisite approvals have been received by Transferor. The
execution and/or delivery of each document to be executed and/or
delivered at the Closing and each other action to be taken at the
Closing shall be subject to the condition that every other document
to be executed and/or delivered at the Closing is so executed and/or
delivered and every other action to be taken at the Closing is so
taken, and all such documents and actions shall be deemed to be
executed and/or delivered or taken, as the case may be,
simultaneously.
6. DELIVERY OF CONSIDERATION. Upon signing of this Agreement, Transferee
shall issue and deliver one (1) Share to Transferor. At the Closing,
Transferee shall issue and deliver the remaining ninety nine (99)
authorized Shares to Transferor. If the Closing does not occur on or
before March 31, 1998, the Share delivered upon signing of this
Agreement shall be returned by Transferor to Transferee.
7. UNREGISTERED SHARES.
7.1 Transferor understands that (i) the Shares have not been
registered under the Securities Act of 1933, as amended (the "Act") or the
securities laws of any state by reason of their issuance in a transaction exempt
from the registration requirements of the Act, (ii) the Shares must be held
indefinitely unless a subsequent disposition thereof is registered under the Act
and any applicable state securities law or is exempt from such registration,
(iii) all of the Shares will bear a legend to such effect as set forth in
Section 7.2 hereof, and (iv) the Transferee will make notation on its transfer
books to such effect.
7.2 Each certificate representing Shares and each certificate issued
upon exchange or transfer of any Shares shall be stamped or otherwise imprinted
with a legend substantially in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED OR THE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES
MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF ABSENT SUCH
REGISTRATION OR THE RECEIPT BY HILITE INDUSTRIES-TEXAS, INC. OF AN
OPINION OF COUNSEL FOR THE HOLDER HEREOF, WHICH COUNSEL AND OPINION
SHALL BE REASONABLY ACCEPTABLE TO HILITE INDUSTRIES-TEXAS, INC. THAT
SUCH REGISTRATION IS NOT REQUIRED.
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<PAGE>
8. FURTHER ASSURANCES. Each party hereto covenants and agrees promptly
to execute, deliver, file or record such agreements, instruments,
certificates and other documents and to perform such other and
further acts as the other party hereto may reasonably request or as
may otherwise be necessary or proper to consummate and perfect the
transactions contemplated hereby.
9. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal
representatives, successors and permitted assigns.
10. CHOICE OF LAW. This Agreement shall be governed by, and interpreted
and enforced in accordance with, the laws of the State of Delaware.
11. MULTIPLE COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
12. HEADINGS. All section titles or captions in this Agreement are for
convenience. They shall not be deemed part of this Agreement and
shall in no way define, limit, extend or describe the scope or intent
of provisions herein.
13. SEPARABILITY. Inapplicability or unenforceability of any provision of
this Agreement shall not impair the operation or validity of any
other provision hereof.
14. ENTIRE AGREEMENT. This Agreement, and all other agreements delivered
contemporaneously with this Agreement, collectively constitute the
entire agreement between the parties hereto with respect to the
matter addressed herein.
IN WITNESS WHEREOF, Transferee and Transferor have caused this
Assignment and Assumption Agreement to be duly executed as of the date first
written above.
HILITE INDUSTRIES, INC.
By: /s/ Samuel M. Berry
-------------------
Samuel M. Berry
President, Chief Operating
Officer and Director
HILITE INDUSTRIES-TEXAS, INC.
By: /s/ Daniel W. Brady
-------------------
Daniel W. Brady
Vice Chairman of the
Board of Directors and
Chief Operating Officer
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