STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of
April 8, 1998, by and among Dura Automotive Systems (U.K.), Ltd., a private
United Kingdom corporation ("BUYER"), and each of the Persons listed on the
signature pages hereto (collectively, "SELLERS"). Capitalized terms used but
not otherwise defined herein are defined in SECTION 10 hereof.
Sellers and the Other Sellers collectively either legally and
beneficially own, or are entitled to transfer (or otherwise able to procure
the transfer of) the legal and beneficial ownership of, all of the
outstanding ordinary shares of US$1 each (the "DOLLAR ORDINARY SHARES") and
ordinary shares of L1 each (the "STERLING ORDINARY SHARES" and, collectively
with the Dollar Ordinary Shares, the "COMPANY STOCK") of Trident Automotive
plc, registered in England No. 3437197 (the "COMPANY"). This Agreement
contemplates a transaction in which, pursuant to the terms and subject to the
conditions set forth herein, Buyer will purchase from Sellers, and Sellers
will sell to Buyer, all of the outstanding shares of Company Stock held by
such Sellers in exchange for cash, as set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
Section 1. PURCHASE AND SALE OF COMPANY STOCK.
1.1 PURCHASE AND SALE. Pursuant to the terms and subject to the
conditions set forth herein, at the Closing (as defined below), each Seller
shall sell and transfer to Buyer and Buyer shall purchase from such Seller
(i) all of the outstanding Dollar Ordinary Shares that such Seller holds free
and clear of all Liens, for an aggregate purchase price for all Sellers of
(x) $85,000,000, less (y) the aggregate amount, expressed in Dollars, of
payments made to the Other Sellers in respect of the purchase price for their
Company Stock pursuant to the separate stock purchase agreements dated the
date hereof (which for the avoidance of doubt, shall not include payments to
be made in connection with the cancellation of options granted by the
Company) and (ii) all of the outstanding Sterling Ordinary Shares that such
Seller holds free and clear of all Liens for an aggregate purchase price for
all Sellers of $93,312 (the payments set forth in clauses (i) and (ii), the
"PURCHASE PRICE"). The Purchase Price shall be divided among Sellers in
proportion to their respective ownership of the Company Stock outstanding as
of the Closing Date as set opposite such Sellers' name on the signature pages
hereto.
1.2 THE CLOSING.
(a) THE CLOSING DATE. The closing of the purchase and sale of the
Company Stock (the "CLOSING") shall take place at the offices of Xxxxxxxx &
Xxxxx in Chicago, at 9:00 a.m. local time on the later of (i) April 30, 1998
or (ii) the fifth Business Day following the satisfaction or waiver of all
conditions set forth in SECTIONS 3 and 4 hereof, or at such other place or on
such other date as is mutually acceptable to Buyer, on the one hand, and UBS
Capital BV and Canven (C.I.) Limited, as managing general partner of The
Phildrew Ventures Fourth Fund (the "DESIGNATED SELLERS"), on the other hand.
The date and time of the Closing hereunder is referred to herein as the
"CLOSING DATE."
(b) THE CLOSING TRANSFERS. Subject to the terms and conditions
set forth herein:
(i) at the Closing, each Seller shall deliver to Buyer or its nominee
(i) executed transfers in respect of the Company Stock to be sold and
transferred by such Seller and (ii) certificates representing all of the
shares of the Company Stock held by such Seller; and
(ii) at the Closing, Buyer shall pay an aggregate amount equal to the
Purchase Price to Sellers apportioned between Sellers in accordance with
SECTION 1.1, by wire transfer of immediately available funds to accounts
designated by the Designated Sellers at least two Business Days prior to
the Closing Date.
Section 2. COVENANTS OF SELLER.
2.1 AFFIRMATIVE COVENANTS OF SELLERS. Between the date hereof and
the Closing, unless Buyer otherwise agrees in writing, each Seller will cause
the Company and its Subsidiaries to:
(a) except as set forth in SCHEDULE 2.1(a), maintain the Company's
and each Subsidiary's books and records, pay expenses and payables, xxxx
customers, collect receivables, purchase inventory, perform all maintenance and
repairs necessary to maintain its facilities and equipment in good operating
condition (normal wear and tear excepted), maintain insurance, continue to make
capital expenditures substantially in accordance with its budget to support the
Company and each Subsidiary's ongoing business operation and otherwise conduct
its business, in each case in the ordinary course of business;
(b) except as set forth in SCHEDULE 2.1(b), use reasonable best
efforts to (i) preserve, in all material respects, present business
relationships with all customers, suppliers and distributors of the Company and
its Subsidiaries, to the extent
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such relationships are beneficial to the Company and its Subsidiaries and
their business, and (ii) keep available the services of current employees of
the Company and its Subsidiaries both before and after the Closing; and
(c) comply in all material respects with all material Legal
Requirements and Material Contracts applicable to its operations and business.
2.2 CERTAIN ADDITIONAL AFFIRMATIVE COVENANTS OF SELLERS. Between the
date hereof and the Closing, unless Buyer otherwise agrees in writing, each
Seller will, and will cause the Company and its Subsidiaries to, take actions
required to effect the following:
(a) at or prior to the Closing, terminate (without any Liability to
the Company or any of its Subsidiaries) all Contracts designated with a single
asterisk on SCHEDULE 5.9;
(b) permit, and cause its officers, directors, employees and
agents (including attorneys and accountants) to permit, Buyer and their
lenders and their respective authorized representatives to have reasonable
access at reasonable times (during normal business hours upon reasonable
advance notice) to the Company and each Subsidiary's books, records,
invoices, contracts, leases, personnel, facilities, equipment and other
things reasonably related to the business and assets of the Company and its
Subsidiaries, wherever located, and provide to the foregoing Persons such
financial and other information and assistance, all as the foregoing Persons
may from time to time reasonably request;
(c) (i) promptly (upon Sellers' Knowledge thereof and without any
duty of inquiry) inform Buyer in writing if, at any time it believes it would
be unable to comply with its obligations under SECTION 3.12 to deliver a
certificate to the effect that the conditions specified in SECTIONS 3.1, 3.2,
the second sentence of 3.7 and 3.10 have been satisfied and (ii) within 10
days following the date hereof, deliver a revised SCHEDULE 5.4, SCHEDULE
5.13(a) and SCHEDULE 5.13(b) to Buyer which is updated to give effect to the
removal of the reference to "Sellers' Knowledge" in SECTION 5.4, SECTION
5.13(a) and SECTION 5.13(b), respectively;
(d) cooperate with Buyer and use their reasonable best efforts to
make all registrations, filings, submissions and applications, to give all
notices and to obtain all other waivers, approvals, non-actions and other
Consents that are required, or reasonably requested by Buyer, to be made or
obtained by a Seller, the Company or a Subsidiary of the Company to satisfy
the condition set forth in SECTION 3.4 (including by providing all
information and documents required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvement Act of 1976 ("HSR ACT") and similar Legal Requirements of any
other applicable jurisdictions) and use its reasonable best efforts to cause
the other conditions to Buyer's obligation to
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close that are within its control to be satisfied; PROVIDED, that, Sellers
will not, and will cause the Company and its Subsidiaries to not, offer or
pay any consideration in order to obtain any such Consents, and will not make
any arrangement or understanding affecting the Company or any Subsidiary of
the Company as a condition for obtaining any such Consents, without the prior
written approval of Buyer (and shall not be required to make any such payment
if approval of Buyer is not obtained);
(e) provide to Buyer for its review prior to the transmission
thereof copies of all financial statements, proxy statements, offering
memoranda, registration statements, all regular, special or periodic reports
and other correspondence which the Company or any of its officers or
directors (x) proposes to file with the Securities and Exchange Commission or
with any securities exchange on which any of its securities are proposed to
be (or in the process of being) listed or (y) proposes to distribute to its
current or prospective holders of the 10% Senior Subordinated Notes;
(f) comply in all material respects with all of its obligations
under the Registration Rights Agreement, dated as of December 12, 1997 (the
"REGISTRATION RIGHTS AGREEMENT"), relating to the 10% Senior Subordinated
Notes and the Indenture, dated as of December 12, 1997, pursuant to which
the 10% Senior Subordinated Notes were issued, among the Company, the
Guarantors named therein and the Initial Purchasers (as defined in the
Registration Rights Agreement) and use its reasonable best efforts to avoid a
Registration Default (as defined therein);
(g) not prepay or repay any principal amount of any Indebtedness
other than outstanding Indebtedness under the Company's Revolver and the
Company's swingline under the Credit Facility, intercompany Indebtedness and
scheduled repayments of third party Indebtedness, in each case in the
ordinary course of business; and
(h) use reasonable efforts to continue to take such actions as are
necessary to complete the matters referred to on SCHEDULE 5.12(b), EXCEPT AS
OTHERWISE PROVIDED ON SUCH SCHEDULE, including filing in the appropriate
patent and trademark offices those assignment documents executed pursuant to
and in connection with the FKI Acquisition Agreement and the filing of any
change of name certificates or merger certificates.
2.3 NEGATIVE COVENANTS OF SELLERS. Between the date hereof and
the Closing without Buyer's prior written consent, no Seller will take any
action to, and each Seller shall cause the Company or any of its Subsidiaries
to not:
(a) pay any dividend or make any similar distribution, redeem,
purchase or otherwise acquire, directly or indirectly, any
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shares of its capital stock, or make any loan or enter into any transaction
with or distribute any assets or property to or on behalf of, or otherwise
make any payment to or on behalf of, any of its officers, directors,
shareholders, Affiliates or other Insiders (as defined in SECTION 5.9) (other
than (i) base compensation, accrued bonuses, benefit payments and expense
reimbursement, in each case, paid to its officers or directors that are not
affiliated with a Designated Seller in the ordinary course of business, (ii)
inter-company loans among the Company and its Subsidiaries made and repaid in
the ordinary course of business and (iii) dividends or other distributions
paid by any Subsidiary of the Company to the Company or Subsidiary thereof in
the ordinary course of business);
(b) sell, lease, license or otherwise dispose of any interest in
any of the material, tangible or intangible, assets of the Company or its
Subsidiaries (other than sales of inventory and obsolete equipment in the
ordinary course of business), or permit any of the assets or property of the
Company or its Subsidiaries to be subjected to any new Lien (other than in
the ordinary course of business);
(c) (i) enter into, terminate, modify or amend in any material
respect any Material Contract except in the ordinary course of business, (ii)
terminate, modify or amend in any material respect any Consent of, with or to
any Governmental Entity or (iii) modify or amend the Company's or any
Subsidiary's charter documents or bylaws;
(d) (i) except for items 6 and 7 of SCHEDULE 5.16, grant any bonus
or increase in the compensation or benefits of any employee or officer of the
Company or any Subsidiary thereof, except as contemplated by SECTION 2.3(a)
(other than in the ordinary course of business, and not in contemplation of
this transaction contemplated hereby) or (ii) except as contemplated by
SECTION 2.2(h), enter into, amend, modify or terminate any Plan or
Compensation Commitment (as defined below);
(e) except as contemplated by this Agreement, disclose any
proprietary confidential information to any Person except in the ordinary
course of business or where required by applicable Legal Requirements, or
waive any rights of material value, except in the ordinary course of
business or where required by applicable Legal Requirements;
(f) institute or settle any claim or lawsuit involving equitable
or injunctive relief or more than $500,000 in the aggregate;
(g) acquire any other business or entity (or any significant
portion or division thereof), whether by merger,
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consolidation or reorganization or by the purchase of its assets or stock; or
(h) commit to do any of the foregoing.
2.4 COVENANTS OF THE BUYER. Buyer will:
(a) promptly (once it has knowledge thereof and without any duty
of inquiry) inform the Designated Sellers in writing, if at any time it
believes it would be unable to comply with its obligations under SECTION 4.5
to deliver a certificate that the conditions specified in SECTIONS 4.1 and
4.2 have been satisfied; and
(b) cooperate with Sellers and use their reasonable best efforts
to make all registrations, filings, submissions and applications, to give all
notices and to obtain all other waivers, approvals, non-actions and other
Consents that are required, or reasonably requested by the Designated
Sellers, to be made or obtained or obtained by Buyer to satisfy the condition
set forth in SECTION 4.4 (including by providing all information and
documents required under the HSR Act and similar Legal Requirements of any
other applicable jurisdictions) and use its reasonable best efforts to cause
the other conditions to Sellers' obligations to close that are within its
control to be satisfied.
Section 3. CONDITIONS TO OBLIGATION OF BUYER. The obligation of
Buyer to consummate the transactions to be performed by it in connection with
the Closing is subject to the satisfaction or waiver of the following
conditions as of the Closing:
3.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each Seller set forth in SECTION 5 that are qualified by
materiality shall be true and correct at and as of the Closing in all
respects as though then made. The representations and warranties of each
Seller set forth in SECTION 5 that are not qualified by materiality shall be
true and correct at and as of the Closing in all material respects as though
then made. For purposes hereof, the references of "Sellers' Knowledge" in
SECTION 5.4, SECTION 5.13(a) and SECTION 5.13(b) shall be disregarded and the
updated SCHEDULE 5.4, SCHEDULE 5.13(a) and SCHEDULE 5.13(b), respectively,
delivered pursuant to SECTION 2.2(c)(II) shall be effective.
3.2 PERFORMANCE OF COVENANTS. Each Seller shall have performed in
all respects all of its covenants and agreements required to be performed by
it pursuant to this Agreement prior to the Closing Date that are qualified by
materiality. Each Seller shall have performed in all material respects all of
its covenants and agreements required to be performed by it pursuant to this
Agreement prior to the Closing Date that are not qualified by materiality.
3.3 COMPLIANCE WITH LEGAL REQUIREMENTS. The consummation of the
transactions contemplated by this Agreement shall not be prohibited by any
Legal Requirement or subject Buyer
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or the Company to any penalty or liability or other onerous condition arising
under any Legal Requirement or imposed by any Governmental Entity excluding,
for greater certainty, the provisions of the Competition Act (Canada)) which
permits the Director (as defined below) to review the transactions
contemplated in this Agreement for a period of three years after the Closing
Date.
3.4 CONSENTS. Buyer shall have received copies of all filings,
notices, licenses and other Consents of, to or with, any Governmental Entity
or any other Person (including any lender) that are identified by an asterisk
on SCHEDULE 5.4 or 6.3, and, in the case of Consents of, to or with a
Governmental Entity, they shall, except with respect to the Competition Act
(Canada), no longer be subject to administrative or judicial appeal, review
or reconsideration, if any. For greater certainty and notwithstanding any
provision of this Agreement, in respect of Canadian Legal Requirements, the
only conditions to Closing shall be that the applicable waiting period under
Section 123 of the Competition Act (Canada) will have expired and that the
Director of Investigation and Research (the "DIRECTOR") under the Competition
Act (Canada) shall not have stated in writing that he intends or is likely to
challenge the transactions contemplated hereby.
3.5 DIRECTORS AND OFFICERS. Each of the Company and its
Subsidiaries shall have received resignations effective as of the Closing, of
each current director and officer of the Company and its Subsidiaries that is
listed as holding such position on SCHEDULE 3.5.
3.6 OPINION OF COUNSEL TO SELLERS. Buyer shall have received from
special counsel for Sellers, an opinion with respect to the matters set forth
in SCHEDULE 3.6 attached hereto, which shall be addressed to Buyer and the
lenders providing debt financing as contemplated by SECTION 3.8 and dated as
of the Closing Date.
3.7 PAYOFF LETTERS AND RELEASE; MAXIMUM AMOUNT OF INDEBTEDNESS.
All payoff letters relating to any Indebtedness listed on SCHEDULE 3.7 and
releases from third parties of any and all Liens securing such Indebtedness
will have been obtained by Sellers. Buyer shall have received satisfactory
evidence from the Company that the principal amount of consolidated
Indebtedness of the Company and its Subsidiaries immediately prior to the
Closing Date, less all outstanding cash balances, shall not exceed $132.5
million.
3.8 DEBT FINANCING. Buyer shall have received proceeds of the
debt financing pursuant to the Bank of America National Trust and Savings
Association's commitment letter previously delivered to Sellers dated March
12, 1998, or from other sources.
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3.9 OPTION AGREEMENT. Buyer and the Company shall have entered
into an Option Agreement (each, an "OPTION AGREEMENT") with all holders of
rights or options to acquire capital stock of the Company in form and
substance as satisfactory to the Parties.
3.10 NO MATERIAL ADVERSE CHANGE. There will have been no material
adverse change in the business, operations, financial condition or assets of
the Company or any of its Subsidiaries taken as a whole (a "MATERIAL ADVERSE
EFFECT") except for general industry and economic conditions.
3.11 TRANSFER OF DIRECTOR QUALIFYING SHARE; SIMULTANEOUS CLOSING.
If Buyer so requests in writing at least five Business Days prior to the
Closing Date, each individual that holds shares of a Subsidiary of the
Company (other than the minority shareholders of Industrias Metalurgria
Xxxxxx Ltda.) and identified by Buyer within such request shall have
transferred such shares to an individual designated by Buyer and Buyer shall
have received evidence of such transfers. The Other Sellers shall have,
simultaneously with the Closing, sold and transferred to Buyer all of the
outstanding shares of Company Stock held by them pursuant to terms of their
stock purchase agreements with Buyer (collectively, the "OTHER CLOSING").
3.12 TERMINATION OF CERTAIN CONTRACTS. At or prior to the Closing,
all Contracts designated with an single asterisk on SCHEDULE 5.9 shall have
been terminated without any liability to the Company.
3.13 OTHER CLOSING DOCUMENTS. Each of the Sellers shall have
delivered (or in the case of the Phildrew Ventures Fourth Fund, Canven (C.I.)
Limited shall have delivered on behalf such Seller) to Buyer (A) a
certificate to the effect that each of the conditions specified in SECTIONS
3.1, 3.2, THE SECOND SENTENCE OF 3.7 AND 3.10 have been fully satisfied
without duplication to the extent required by such Seller or the Company to
be so satisfied (in the case of SECTION 3.1 and 3.2), in all material
respects, and attaching thereto (i) certified copies of the charter and
by-laws of the Company and its Subsidiaries, (ii) certified copies of the
resolutions duly adopted by each non-individual Seller's respective governing
body and, to the extent required, equityholders, authorizing such Seller's
execution, delivery and performance of this Agreement and the transactions
contemplated hereby, and (iii) certified copies of the resolutions duly
adopted by the Company's board of directors and shareholders authorizing the
Company's execution, delivery and performance of this Agreement and the
transactions contemplated hereby; and (B) all books, ledgers, files and
business records and reports of every kind (including all financial, business
and marketing plans and information), in each case whether evidenced in
writing, electronic data (including by computer) or otherwise, of the Company
and its Subsidiaries in the possession or control of any Seller.
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3.14 PROCEEDINGS, ETC. All proceedings to be taken by any of
Sellers and the Company in connection with the consummation of the
transactions contemplated by this Agreement and all certificates, opinions,
Contracts and other documents received by Buyer in connection therewith
(including pursuant to this SECTION 3) will be satisfactory in form and
substance to Buyer in its reasonable discretion.
Buyer may waive any condition specified in this SECTION 3 if it executes a
writing so stating at or prior to the Closing.
Section 4. CONDITIONS TO OBLIGATION OF SELLERS. The obligation
of Sellers to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction or waiver of the
following conditions as of the Closing:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in SECTION 6 that are qualified by materiality shall be
true and correct at and as of the Closing in all respects as though then
made. The representations and warranties set forth in SECTION 6 that are not
qualified by materiality shall be true and correct at and as of the Closing
in all material respects as though then made.
4.2 PERFORMANCE OF COVENANTS. Buyer shall have performed in all
respects all of its covenants and agreements required to be performed by it
pursuant to this Agreement prior to the Closing Date that are qualified by
materiality. Buyer shall have performed in all material respects all of its
covenants and agreements required to be performed by it pursuant to this
Agreement prior to the Closing Date that are not qualified by materiality.
4.3 COMPLIANCE WITH LEGAL REQUIREMENTS. The consummation of the
transactions contemplated by this Agreement will not be prohibited by any
Legal Requirement, or subject any Seller to any penalty or liability or other
onerous conditions arising under any Legal Requirement or imposed by any
Governmental Entity, excluding for greater certainty the provisions of the
Competition Act (Canada) which may permit the Director to review the
transaction as contemplated by this Agreement for a period of three years
after the Closing Date.
4.4 CONSENTS. Seller shall have received copies of all filings,
notices, licenses and other Consents of, to or with, any Governmental Entity
or any other Person (including any lender) identified by an asterisk on
SCHEDULE 6.3, and, in the case of Consents of, to or with a Governmental
Entity, they shall (except with respect to the Competition Act (Canada)), no
longer be subject to administrative or judicial appeal, review or
reconsideration, if any. In particular, Buyer shall have filed, as soon as
reasonably possible and within any statutory time requirements, pursuant to
Sections
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114 and 121 of the Competition Act (Canada) a pre-merger notification in
respect of the transactions contemplated by this Agreement.
4.5 OPINION OF COUNSEL TO BUYER. Sellers shall have received from
Xxxxxxxx & Xxxxx, special counsel for Buyer, an opinion with respect to the
matters set forth on SCHEDULE 4.5.
4.6 OFFICER'S CERTIFICATE. Buyer shall have delivered to Sellers
a certificate to the effect that each of the conditions specified in SECTIONS
4.1 and 4.2 have been fully satisfied without duplication in all material
respects.
4.7 PROCEEDINGS, ETC. All proceedings to be taken by Buyer in
connection with the consummation of the transactions contemplated by this
Agreement and all certificates, opinions, Contracts and other documents
received by Seller in connection therewith (including pursuant to this
SECTION 3) will be satisfactory in form and substance to Designated Sellers
in their reasonable discretion.
The Designated Sellers may waive any condition specified in this
SECTION 4 (on behalf of all Sellers) if they jointly execute a waiver in
writing so stating at or prior to the Closing.
Section 5. REPRESENTATIONS AND WARRANTIES OF SELLERS. As a
material inducement to Buyer to enter into and perform its obligations under
this Agreement, each Seller severally represents and warrants to Buyer that
the following statements contained in this SECTION 5 are true and correct as
of the date hereof.
5.1 ORGANIZATION, CORPORATE POWER AND LICENSES . The Company is a
limited company incorporated under English law and has been in continuous
existence since its incorporation. The Company possesses all requisite
corporate power and authority and all material licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and to carry out the transactions contemplated
by this Agreement. Copies of the Company's Articles of Association and its
Subsidiaries charter documents, previously provided to Buyer are accurate and
complete in all material respects and reflect all amendments made thereto at
any time prior to the Closing Date.
5.2 CAPITAL STOCK AND RELATED MATTERS. As of the Closing, the
capital stock of the Company shall consist of the number of authorized and
issued ordinary shares set forth in SCHEDULE 5.2(a), and the number of
issued and outstanding ordinary shares held either beneficially and of record
by such Seller or the transfer of the beneficial ownership of which is
entitled to be made by such Seller are as set forth on SCHEDULE 5.2(a). At
the Closing, except as disclosed on SCHEDULE 5.2(b), the Company shall not
have outstanding any stock or securities convertible or
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exchangeable for any shares of its capital stock or containing any profit
participation features, nor shall it have outstanding any rights or options
to subscribe for or to purchase its capital stock or any stock or securities
convertible into or exchangeable for its capital stock or any stock
appreciation rights or phantom stock plans. At the Closing, all of the
issued shares described in SCHEDULE 5.2 shall be validly issued and fully
paid. At the Closing (and after giving effect to the Other Closing (as
defined in SECTION 3.11)), Buyer shall have acquired 100% of the issued and
outstanding capital stock of the Company free and clear of any Liens, other
than Liens created by Buyer or resulting from Buyer's actions. Such Seller
is the only legal and beneficial owner of (or is entitled to transfer (or
otherwise able to procure the transfer of) the full legal and beneficial
ownership of) the shares of Company Stock held by it without the consent of
any third party. Other than as disclosed in SCHEDULE 5.2(b), there are no
statutory or contractual shareholders preemptive rights or rights of refusal
with respect to the capital stock of the Company. The Company has complied
in all material respects with applicable federal or state securities laws in
connection with the offer, sale or issuance of any of its capital stock.
Except as disclosed on SCHEDULE 5.2(c), such Seller is not a party to
agreements with respect to the voting or transfer of capital stock of the
Company.
5.3 SUBSIDIARIES; INVESTMENTS. The attached SCHEDULE 5.3(a)
correctly sets forth the name of each of the Company's Subsidiaries, the
jurisdiction of its incorporation and the Persons owning the outstanding
capital stock or the equity interests of such Subsidiary immediately prior to
the Closing. Except as set forth on the attached SCHEDULE 5.3(b), neither
the Company nor any of its Subsidiaries owns or holds the right to acquire
any shares of stock or any other partnership, joint venture, security or
other equity interest in any other Person (an "AFFILIATED ENTITY"). Each
such Subsidiary of the Company is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation and is
qualified to do business in every jurisdiction, except where the failure to
so qualify would not reasonably be expected to have a Material Adverse
Effect. All jurisdictions in which each such Person is qualified are set
forth on SCHEDULE 5.3(c) attached hereto. Each such Person possesses all
requisite material licenses, permits and authorizations necessary to own and
operate its properties, to carry on its businesses as now conducted and to
carry out the transactions contemplated by this Agreement. All of the
outstanding shares of capital stock or other equity interests of each such
Subsidiary are validly issued, fully paid and nonassessable, and all such
shares and equity interests are owned by the Company or another Subsidiary of
the Company, and at the Closing will be free and clear of all Liens, other
than Liens created by Buyer or directly resulting from Buyer's actions.
Immediately prior to the Closing, no Subsidiary of the Company shall have
outstanding any equity interests or securities convert-
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ible or exchangeable for any shares of its equity interests or containing any
profit participation features, nor shall it have outstanding any rights or
options to subscribe for or to purchase its capital stock or equity interests
or securities convertible into or exchangeable for its capital stock or
equity interests or any equity appreciation rights or phantom stock or other
equity plans, except as indicated on the attached SCHEDULE 5.3(d). As of the
Closing, no Person shall be subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any equity interests
of any Subsidiary or any warrants, options or other rights to acquire its
equity interests, except as indicated on the attached SCHEDULE 5.3(e). To
the best of Sellers' Knowledge, immediately prior to the Closing there are no
agreements between the equityholders of any Subsidiary or Affiliated Entity
of the Company with respect to the voting or transfer of the equity interests
of any Subsidiary or Affiliated Entity of the Company to which the Company or
any Subsidiary thereof is a party, except as set forth on the attached
SCHEDULE 5.3(f). To the Sellers' Knowledge, the aggregate fair value of the
Company's interest in the Affiliated Entities of the Company is less than
$100,000.
5.4 AUTHORIZATION; NO BREACH. The execution, delivery and
performance by such Seller of this Agreement has been duly authorized by such
Seller (in the case of Sellers who are entities), or is within the legal
right, powers and authority (in the case of the individual Sellers) and
constitutes a valid and binding obligation of such Person, enforceable in
accordance with its terms. The execution and delivery by such Seller of this
Agreement, and the fulfillment of and compliance with the respective terms
hereof and thereof, do not and shall not, except as set forth on SCHEDULE
5.4, (i) conflict with or result in a breach of the terms, conditions or
provisions of, (ii) constitute a default under, (iii) result in the creation
of any Lien upon the Company Stock held by such Seller or any asset or
property of the Company pursuant to, (iv) give any third party the right to
modify, terminate or accelerate any obligation under, (v) result in a
violation of or (vi) require any exemption or other action by or notice or
declaration to, or filing with, or other Consent from, any Governmental
Entity pursuant to, the charter or bylaws or other constituent documents of
the Company or any of its Subsidiaries or any Legal Requirement to which the
Company or such Seller or any Affiliate or any of their assets or properties
is subject, or any order judgment or decree to which the Company, Seller or
any Affiliate or any of their assets or properties is subject, or to Sellers'
Knowledge, any Material Contract.
5.5 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 5.5 are (i)
the unaudited consolidated balance sheet of the Company as at February 28,
1998 (the "LATEST BALANCE SHEET"), and (ii) the unaudited consolidated
statements of income and cash flow of the Company for the Company for the
period commencing from the FKI Acquisition Date through
12
and including February 28, 1998. Each of the foregoing financial statements
presents fairly the financial condition, results of operations and cash flows
in accordance with GAAP, subject to (i) the absence of footnote disclosures,
(ii) to changes resulting from normal year-end adjustments and any adjustment
resulting from a review made by, or comment of, any Governmental Entity both
before and after the consummation of the transactions contemplated hereby and
(iii) the provisions of this SECTION 5.5 pertaining to the allocations of the
FKI purchase price. The financial statements have been prepared based on a
preliminary allocation of the purchase price paid in connection with the
transactions contemplated by the FKI Acquisition Agreement. The allocation
was based upon available information and assumptions that management of the
Company considered reasonable under the circumstances and is subject to
further adjustment based on (i) further analysis by management of the
Company, (ii) formal appraisals not yet available and (iii) any adjustment
resulting from a review made by, or comment of, any Governmental Entity both
before and after consummation of the transactions contemplated hereby.
Subject to the outcome of matters discussed in this SECTION 5.5, to Sellers'
Knowledge, the final allocation of purchase price will not materially differ
from the preliminary determination.
5.6 NO PRIOR BUSINESS. Prior to the FKI Acquisition Date, none of
the Purchasers (as defined in the FKI Acquisition Agreement) (i) had engaged
in any business, (ii) entered into any Contract (except for the FKI
Acquisition Agreement and activities in connection therewith), Contracts
expressly contemplated thereby and documents pertaining to the financing and
formation thereof or (iii) incurred or suffered to exist any Liabilities
except for those Liabilities related to such activities already paid prior to
February 28, 1998, described on SCHEDULE 5.6 or reflected in the Latest
Balance Sheet.
5.7 LITIGATION, ETC. Except as set forth in Schedule 5.7, there
are no actions, suits, proceedings, orders, investigations, claims or
complaints pending, or to Sellers' Knowledge threatened in writing against,
or affecting such Seller or the Company or any Subsidiary, which could
reasonably be expected to affect a Seller's performance under this Agreement
or the consummation of the transactions contemplated by this Agreement.
5.8 BROKERS, ETC. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any Contract binding upon such
Seller, the Company or any Subsidiary of the Company.
5.9 AFFILIATED TRANSACTIONS. Except as set forth on the attached
SCHEDULE 5.9 and except for contracts and employment agreements entered into
by the Company or its Subsidiaries and its employees thereof in the ordinary
course of business, since the FKI Acquisition Date, no officer, director,
employee, shareholder or Affiliate of the Company or any Subsidiary thereof
or any immediate family member thereof (an "INSIDER"), has, become a party
to any Contract with the
13
Company or any Subsidiary thereof or acquired any interest in any property,
asset or right used by the Company or any Subsidiary thereof or necessary or
desirable for its business or has directly or indirectly received any funds
from the Company or any Subsidiary thereof.
5.10 INDEBTEDNESS. As of the date hereof, each of the Company and
its Subsidiaries has, and immediately prior to the Closing Date, each of the
Company and its Subsidiaries will have, no outstanding Indebtedness other
than such Indebtedness as is disclosed on SCHEDULE 5.10(a) attached hereto or
with respect to periods after the date hereof, intercompany Indebtedness and
other Indebtedness resulting from transactions in the ordinary course of
business under existing credit facilities in effect as of the date hereof.
5.11 COMPLIANCE WITH LAWS. To Sellers' Knowledge, each of the
Company and its Subsidiaries have, since the FKI Acquisition Date, complied
in all material respects with all applicable material Legal Requirements
relating to the operation and conduct of its business or any of its
properties or facilities and have not received any notice in writing to the
contrary or with respect to any Liability thereunder.
5.12 THE FKI TRANSACTIONS.
(a) Except as disclosed on SCHEDULE 5.12(a) hereto, during the
Seller Ownership Period, no action has been taken, no event has occurred and
no fact has arisen which, if such action had been taken, event had occurred,
or fact had arisen immediately prior to the date of the FKI Acquisition
Agreement, would have resulted in a breach of any representation or warranty
contained (x) Schedules 3 or (y) the Canadian asset purchase agreements
between FKI Industries Canada Limited and 1261744 Ontario Limited of even
date therewith relating to the subject matter of the FKI Acquisition
Agreement (excluding for purposes of greater certainty the option agreement
among the parties to the FKI Acquisition Agreement of even date therewith to
the extent such option was not exercised, the "CANADIAN ASSET PURCHASE
AGREEMENT"), in each case as modified by Exhibit 5.12(a) hereof and the
Schedules referred to herein (assuming for this purpose that each
representation and warranty made provision for exceptions thereto to be
disclosed in the Schedules and that the Disclosure Letter referred to in the
FKI Acquisition Agreement did not refer to documents contained in the
"bundles," as to which Sellers have no obligation to update or verify). For
purposes of this SECTION 5.12(a), all capitalized terms contained in the FKI
Acquisition Agreement and the Canadian Asset Purchase Agreement shall have
the meanings set forth therein, except that references contained therein (i)
to the "Vendor" shall refer to the "Sellers," the Company or any Subsidiary,
as appropriate, (ii) to the "Target Companies" shall refer to the "Company
and its Brazilian, Canadian, French and German Subsidiaries" and to the
"Company" or the "Target Company" shall refer to any one of such companies,
as appropriate, (iii) to the "Accounts" shall refer to the financial
statements attached as SCHEDULE 5.5, (iv) to the "Last Accounting Date" shall
refer to the "FKI Acquisition Date," (v) to the "Shares" shall refer to the
"shares of Company Stock," (vi) to the "Specified
14
Intellectual Property" shall have the meaning set forth in the FKI
Acquisition Agreement and shall include the Intellectual Property acquired
subsequent to the FKI Acquisition Date. (vii) to the "Properties" shall refer
to the "real property owned or leased by the Company or any Subsidiary (other
than the Stourport facility)," (viii) to the "Business" shall refer to "the
business of the Company and its United States, United Kingdom and Canadian
Subsidiaries," and to the Business shall refer to any one of such companies,
as appropriate (ix) to Vendor's knowledge, information, belief, awareness or
similar language shall mean "Sellers' Knowledge," (x) to the "Completion"
shall refer to the "Closing," and (xi) "Permitted Encumbrances" means (a)
mortgages or security interests incurred in connection with the purchase of
property or assets after the Latest Balance Sheet in the ordinary course of
business, (b) statutory liens for current taxes or assessments not yet due or
delinquent or the validity of which are being contested in good faith by
appropriate proceedings, (c) mechanics', carriers', workers', repairmen's and
other similar liens arising or incurred in the ordinary course of business
with respect to charges not yet due and payable or the validity of which are
being contested in good faith by appropriate proceedings, (d) such other
Liens which do not materially detract from the value of, or interfere with
the present use of, or with any use presently anticipated by the Company or
its Subsidiaries of, the property subject thereto or affected thereby, (e)
any Liens created or incurred under the Credit Facility and (f) Liens created
by Buyer. Buyer acknowledges that in respect to the representations and
warranties contained in Schedule 3, Part 2 of the FKI Acquisition Agreement,
as incorporated and modified by the Canadian Asset Purchase Agreement, and as
they relate to the business carried on in Canada, no specific disclosure was
contained in the Disclosure Letter (as defined in the FKI Acquisition
Agreement) relating to those representations and warranties.
(b) Except as disclosed on SCHEDULE 5.12(b) hereto, to Sellers'
Knowledge (i) all of the transactions contemplated by the FKI Acquisition
Agreement have been consummated without reliance on any written waiver
thereof, (ii) the Purchasers (as defined in the FKI Acquisition Agreement)
have fully, faithfully and timely complied in all material respects with all
of their obligations thereunder and under asset and stock purchase and
transfer agreements of even date herewith, (iii) all material actions
contemplated to be taken after the Completion Date by the Purchasers'
thereunder have been taken and (iv) the Purchasers do not have any known
claims to indemnification thereunder and the Purchasers have not received
written notice from the vendors under the FKI Acquisition Agreement of any
known claims to indemnification thereunder.
(c) Except as set forth on the attached SCHEDULE 5.12(c) or for
any payment of purchase price made or to be made under the FKI Acquisition
Agreement, no Vendor (as defined in the FKI Acquisition Agreement) (an "FKI
INSIDER"), has, from or after the FKI Acquisition Date, become a party to any
Contract with the Company or any Subsidiary thereof or, to Sellers'
Knowledge, acquired or retained any interest in any material property, asset
or right used by the Company or any Subsidiary thereof or necessary
15
or desirable for its business or has directly or indirectly received any
funds from the Company or any Subsidiary.
5.13 EMPLOYEE BENEFITS.
(a) SCHEDULE 5.13(a) contains an accurate and complete list of
each material retirement, savings, thrift, deferred compensation, severance,
stock ownership, stock purchase, stock option, performance, bonus, incentive,
vacation or holiday pay, travel, fringe benefit, hospitalization or other
medical, disability, life or other insurance, and any other welfare benefit
policy, trust, understanding or arrangement of any kind, whether written or
oral, contributed to, maintained or sponsored by the Company or any of its
Subsidiaries in the United States or, to the Sellers' Knowledge in any
location outside the United States for the benefit of any present or former
employee, officer or director of the Company or its Subsidiaries or with
respect to which the Company or its Subsidiaries has any liability or
potential liability. Each item listed on SCHEDULE 5.13(a) is referred to
herein as a "PLAN."
(b) SCHEDULE 5.13(b) contains an accurate and complete list of
each collective bargaining agreement and each other material Contract,
including each other material agreement, arrangement, commitment,
understanding, plan, or policy of any kind, whether written or oral, with or
for the benefit of any current or former employee, officer, director or
consultant of the Company or its Subsidiaries (including, each employment,
compensation, termination or consulting Contract), in each case that have
been (or are in the process of being) established or maintained by the
Company or any of its Subsidiaries in the United States or, to the Sellers'
Knowledge in any location outside the United States on or after the FKI
Acquisition Date. Each item listed on SCHEDULE 5.13(b) is referred to herein
as a "COMPENSATION COMMITMENT."
(c) With respect to each Plan and Compensation Commitment, all
required (in accordance with historical practices to the extent of the
Sellers' Knowledge of such practice), payments, premiums, contributions or
accruals for all periods from the FKI Acquisition Date to the Closing shall
have been made or properly accrued.
(d) Except as disclosed on SCHEDULE 5.13(d), none of the Plans or
Compensation Commitments obligates the Company to pay any separation,
severance, termination, bonus or similar benefit solely as a result of any
transaction contemplated by this Agreement or solely as a result of a change
in control or ownership.
(e) Except as set forth on SCHEDULE 5.13(e), each Plan and any
related trust, insurance contract or fund has been
16
maintained, funded and administered since the FKI Acquisition Date in
material compliance with its respective terms and the terms of any applicable
collective bargaining agreements and in material compliance with all
applicable Legal Requirements. Since the FKI Acquisition Date, no pending or
threatened actions, suits, investigations or claims with respect to any Plan
or Compensation Commitment (other than routine claims for benefits) have been
brought, or, to Sellers' Knowledge, threatened in writing which could
reasonably be expected to result in Liability to the Company or its
Subsidiaries (whether direct or indirect), and the Sellers have no Knowledge
of any facts which could reasonably be expected to give rise to any action,
suit or claim.
(f) With respect to each Plan and each Compensation Commitment,
the Company and its Subsidiaries shall have provided the Buyer prior to the
Closing Date with true, complete and correct copies of (to the extent
applicable) all documents pursuant to which the Plan or Compensation
Commitment is maintained, funded and administered, including all actuarial
reports relating to the Plans dated within the past 3 years and the actuarial
reports or other actuarial materials relating to transfers of assets from any
plan sponsored by a Vendor (as such term is defined under the FKI Acquisition
Agreement) to any current or future plan which is or will be sponsored by the
Company or any of its Subsidiaries.
5.14 UNITED STATES REAL PROPERTY HOLDING CORPORATION. None of the
Company or any of its Subsidiaries is a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code.
5.15 BANK ACCOUNTS. SCHEDULE 5.15 lists all of the bank accounts
(designating each authorized signatory) of the Company as of the Closing Date.
5.16 NO DIVIDENDS, ETC.
(a) Since the FKI Acquisition Date through the date hereof, except
as described on SCHEDULE 5.16, neither the Company nor any of its
Subsidiaries has paid any dividend or made any similar distribution or
redeemed, purchased or otherwise acquired, directly or indirectly, any shares
of its capital stock, or made any loan or entered into any transaction with
or distributed any assets or property to or on behalf of, or otherwise made
any payment to or on behalf of, any of its officers, directors, shareholders,
Affiliates or other Insiders (as defined in SECTION 5.9) (other than (i) base
compensation, accrued bonuses, benefit payments and expense reimbursement
paid, in each case to its officers or directors not affiliated with a
Designated Seller in the ordinary course of business, (ii) inter-company
loans among the Company and its Subsidiaries made and repaid in the ordinary
course of business and (iii) dividends or other distribution paid by any
Subsidiary of the Company to the Company or Subsidiary thereof in the
ordinary course of business).
17
(b) From the date hereof to the Closing Date, except as described
on items 6 and 7 of SCHEDULE 5.16, the Company and each of its Subsidiaries
will not have paid any dividend or made any similar distribution or redeemed,
purchased or otherwise acquired, directly or indirectly, any shares of its
capital stock, or made any loan or entered into any transaction with or
distributed any assets or property to or on behalf of, or otherwise made any
payment to or on behalf of, any of its officers, directors, shareholders,
Affiliates or other Insiders (as defined in SECTION 5.9) (other than (i) base
compensation, accrued bonuses, benefit payments and expense reimbursement
paid, in each case to its officers or directors not affiliated with a
Designated Seller in the ordinary course of business, (ii) inter-company
loans among the Company and its Subsidiaries made and repaid in the ordinary
course of business and (iii) dividends or other distribution paid by any
Subsidiary of the Company to the Company or Subsidiary thereof in the
ordinary course of business).
5.17 TAX MATTERS. To Sellers' Knowledge, (a) all material Tax
Returns required to be filed by the Company or its Subsidiaries from the FKI
Acquisition Date have been timely filed, taking into account all extensions
of time permitted by law, and (b) the Company or its Subsidiaries have paid,
or made provision for the payment of, all Taxes shown to be due on such Tax
Returns, except for amounts that are reserved on the books thereof or that
are being contested in good faith by appropriate proceedings.
5.18 SELLERS' ACTIONS. With respect to each Seller, from the date
hereof until the Closing Date, no such Seller will take any action in its or
his capacity as a shareholder or director of the Company to cause the Company
or its Subsidiary to violate any covenant set forth in SECTION 2 of this
Agreement.
5.19 STOURPORT BUILDING. The Stourport facility is substantially
complete, structurally sound, and will be, to Sellers' Knowledge, suitable
for its intended purposes upon completion thereof.
Section 6. REPRESENTATIONS AND WARRANTIES OF BUYER. As a material
inducement to Sellers to enter into and perform their respective obligations
under this Agreement, Buyer represents and warrants that the statements
contained in this SECTION 6 are true and correct as of the date hereof.
6.1 ORGANIZATION OF BUYER. Buyer is a limited company
incorporated under English law and has been in existence since its
incorporation.
6.2 AUTHORIZATION OF TRANSACTION. Buyer has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance
of this Agreement has been duly authorized
18
by Buyer and constitutes a valid and binding obligation of Buyer, enforceable
in accordance with its terms.
6.3 NONCONTRAVENTION. The execution and delivery by Buyer of this
Agreement, and the fulfillment of and compliance with the respective terms
hereof, do not and shall not, except as set forth on SCHEDULE 6.3, (i)
conflict with or result in a breach of the terms, conditions or provisions
of, (ii) constitute a default under, (iii) give any third party the right to
modify, terminate or accelerate any obligation under, (iv) result in a
violation of or (v) require any exemption or other action by or notice or
declaration to, or filing with, or other Consent from, any Governmental
Entity pursuant to, the charter or bylaws or other constituent documents of
Buyer, or any Legal Requirement to which Buyer or any of its assets or
properties is subject, or any order, judgment or decree to which Buyer or any
of its assets or properties is subject or any Material Contract to which
Buyer is a party.
6.4 LITIGATION, ETC. Except as set forth in SCHEDULE 6.4, there
are no actions, suits, proceedings, orders, investigations, claims or
complaints pending, threatened against in writing, or affecting Buyer, which
could reasonably be expected to affect Buyer's performance under this
Agreement or the consummation of the transactions contemplated by this
Agreement.
6.5 BROKERS, ETC. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any Contract binding upon the Buyer.
6.6 FINANCING. Buyer has commitments for credit facilities in an
aggregate amount, which, upon receipt of such funds, will be sufficient to
pay all of the consideration payable to Sellers as required by this
Agreement, and to make all other necessary payments in connection with the
purchase the Company Stock, including all related fees and expenses.
Immediately after giving effect to the transactions contemplated hereby,
neither the Company nor the Buyer (in each case on a consolidated basis) will
(i) be insolvent (either because its financial condition is such that the sum
of its debts is greater than the fair value of its assets or because the fair
sealable value of its assets is less than the amount required to pay its
probably liability on its exiting debts as they mature), (ii) have
unreasonably small capital with which to engage in business, or (iii) have
incurred debts beyond its ability to pay them as they become due.
6.7 INVESTMENT INTENT. Buyer is acquiring the Company Stock for
its own account and not with a view to their distribution within the meaning
of Section 2(11) of the Securities Act. Buyer confirms that (i) it has such
knowledge sophistication and
19
experience that it is capable of evaluating the merits and risks of an
investment in the Company Stock, (ii) it can bear the economic risk of an
investment in the Company Stock and can afford a complete loss of such
investment, (iii) Sellers have made available to Buyer and its
representatives and agents the opportunity to ask questions of the officers
and management employee of the Company and to acquire such additional
information about the business and financial condition of the Company as
Buyer has requested, and all such information has been received and (v) it
understands that the Company has not been registered under the Securities Act.
Section 7. ADDITIONAL AGREEMENTS.
7.1 PUBLIC ANNOUNCEMENTS. Except as the Designated Sellers and
Buyer shall mutually agree (or after the Closing Date, as Buyer may otherwise
approve), each of Sellers, Buyer and their Affiliates shall not issue any
report, statement or press release or otherwise make any public statements or
make any public filings with respect to this Agreement or the transactions
contemplated hereby(collectively "PUBLIC COMMENTS"), except to the extent
that the party issuing or making such Public Comments is advised by its legal
counsel that it is required by applicable Legal Requirements or in connection
with the obligations of a publicly-held, exchange-listed company (including
any requirements of any stock exchange), in which case the party making such
report, statement or press release shall (i) allow the other party at least
five days to review and comment on such Public Comment prior to its issuance
and (ii) make reasonable efforts to accommodate the reasonable comments of
the other party.
7.2 EXPENSES. Except for expenses incurred as a result of a
breach of SECTION 5.8, Buyer agrees to pay its own (or, if the Closing
occurs, and Buyer so requests, a Subsidiary of the Company incorporated
outside of Europe (a "Non-European Subsidiary") or any other designee of
Buyer shall pay Buyer's) and a Non-European Subsidiary shall pay, or if the
Closing occurs, Buyer shall (or shall cause a Non-European Subsidiary to)
pay, Sellers', its and the Company's Subsidiaries' expenses (including fees
and expenses of legal counsel, investment bankers, brokers or other
representatives and consultants and appraisal fees and expenses) incurred in
connection with the negotiation of this Agreement, the performance of its
obligations hereunder, and the consummation of the transactions contemplated
hereby and Buyer shall pay the initial filing fee required under the HSR Act
and other similar applicable Legal Requirements. Notwithstanding the
foregoing, if the Closing shall fail to occur solely as a result of the
condition contained in SECTION 3.4 (as such condition relates to Consents of,
to or with a Governmental Entity only) or SECTION 3.8 not being fully
satisfied (assuming for this purpose only, that the conditions set forth in
Sections 3.6 and 3.12(b) shall be deemed to have been waived by Buyer), Buyer
shall pay Sellers in the aggregate the lesser of (x) $500,000 or (y) all of
the expenses which a Buyer or Non-European Subsidiary is otherwise obligated
to pay on Sellers' behalf pursuant to the first sentence of this SECTION 7.2.
20
7.3 FURTHER ASSURANCES. Each of the Parties shall execute and
deliver such further instruments of conveyance and transfer and take such
additional actions as such other Party may reasonably request to effect,
consummate, confirm or evidence the transactions contemplated pursuant to the
FKI Acquisition Agreement and this Agreement so far as these relate to
obligations of that Party or prior to Closing, the Company or its
Subsidiaries. Without limiting the foregoing, to the extent that Buyer and
its Subsidiaries shall not have acquired and obtained the benefit of, all of
the rights of the Purchasers (as defined in the FKI Acquisition Agreement)
pursuant to the FKI Acquisition Agreement and the other acquisition Contracts
expressly contemplated thereby, including, but not limited to, any rights to
indemnification, Sellers shall, for a period through and including the
one-year anniversary of the date of Closing, take such actions as are
reasonably requested by Buyer, at the Company's expense, to afford Buyer and
its Subsidiaries such rights.
7.4 CONFIDENTIALITY. Without in any way limiting any parties
obligations with respect to confidentiality under the Confidentiality
Agreement, each Party and each of its shareholders, partners, officers,
directors and Affiliates shall keep confidential all information and
materials regarding all other Parties as is reasonably designated by such
Parties as confidential at the time of disclosure thereof. If the
transactions contemplated by this Agreement are consummated, however, each of
the Sellers will and will cause their Affiliates to, maintain, at all times
the confidentiality of all proprietary and other non-public information
regarding the Company and its Subsidiaries, except as necessary to file Tax
Returns and other reports to Governmental Entities (in which case disclosure
of such confidential information shall be to the minimum extent necessary to
comply with the requirements of such Governmental Entities).
7.5 LITIGATION SUPPORT. In the event that, and for so long as,
any Party is actively pursuing, contesting or defending against any charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
in connection with (i) any transaction contemplated by this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act, or transaction on
or prior to the Closing Date involving the Company or any Subsidiary or
Affiliated Entity thereof, each of the other Parties will cooperate with such
pursuing, contesting or defending Party and its counsel in the contest or
defense, make available their personnel, and provide such testimony and
access to their books and records as shall be necessary in connection with
the contest or defense, all to the extent reasonably requested by, and at the
sole cost and expense of the pursuing, contesting or defending Party (unless
the pursuing, contesting or defending Party is entitled to indemnification
therefor under the provisions of this Agreement).
21
7.6 EXCLUSIVITY. Except as otherwise set forth in a letter
delivered to the Buyer on the date hereof from J. Xxxxxxx Xxxxx on behalf of
the Sellers, Sellers shall, and shall cause the Company and its officers,
directors, employees and Affiliates of the Company and its Subsidiaries to,
not discuss a possible sale or other disposition (whether by merger,
reorganization, recapitalization or otherwise) of all or any part of the
capital stock or assets of the Company or any of its Subsidiaries or
Affiliated Entities with any other Person (an "ACQUISITION PROPOSAL") or
provide any information to any third party other than information which is
traditionally provided in the regular course of such entity's business
operations to third parties where such entity and its officers, directors and
Affiliates have no reason to believe that such information may be utilized to
evaluate any such possible sale or other disposition of the capital stock or
assets of the Company or any of its Subsidiaries or Affiliated Entities.
Sellers and the Company shall, and shall cause the officers, directors,
employees and Affiliates of the Company to, (i) immediately cease and cause
to be terminated any and all contacts, discussions and negotiations with
third parties regarding the foregoing and (ii) promptly notify Buyer if any
Acquisition Proposal, or any inquiry or contact with any Person with respect
thereto, is subsequently made.
7.7 EMPLOYEES. Buyer does not have any current intention to
terminate any employee of the Company immediately following the Closing Date.
7.8 280G AND RELATED MATTERS. Buyer hereby agrees that none of
the non-management Sellers (or any of such Seller's officers, employees,
directors or shareholderS) shall have any responsibility, liability or
obligation (i) for, or with respect to, any letter or other agreements
entered into between Buyer or any affiliate of Buyer and any employee of the
Company prior to, or contemporaneously with, the Closing Date relating to the
cancellation of stock options, the payment of "stay" bonuses or other
employment matters, or (ii) for any obligation arising under, or relating to,
Section 280G of the Code that may arise in connection with any payment to an
employee of the Company in connection with this transaction, including,
without limitation, the loss of any income tax deductions. Buyer
acknowledges that it has not requested that the Sellers take any action
pursuant to Section 280G(b)(5) of the Code.
Section 8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Parties contained in this Agreement
shall survive the Closing and shall in no event be affected by any
investigation, inquiry or examination made for or on behalf of any Party
hereto and irrespective of the knowledge of any of its or the Company's or
any of its Subsidiaries' officers,
22
directors, shareholders, employees or agents, or the acceptance of any
certificate or opinion.
8.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER GROUP.
(a) Subject to SECTION 8.2(b), in accordance with SECTION 11.16,
Sellers shall severally indemnify (but without duplication of payment) Buyer
and its officers, directors, shareholders, members, employees, Affiliates,
successors, heirs, executors, personal representatives and assigns
(including, after the Closing, the Company and its Subsidiaries)
(collectively, the "BUYER PARTIES") against, and hold them harmless from, and
pay on behalf of or reimburse them as and when incurred for, any Adverse
Consequences, which they may suffer, sustain or become subject to as the
result of, arising out of, relating to, allocable to, or caused by: (i) the
breach (or third-party allegation of a breach) by Sellers of any
representation or warranty contained in ARTICLE 5 of this Agreement; PROVIDED
THAT with respect to any claim made relating to each of SECTION 5.4, SECTION
5.13(a) and SECTION 5.13(b), the SCHEDULE 5.4, SCHEDULE 5.13(a) and SCHEDULE
5.13(b) respectively delivered on the date hereof shall be considered in
conjunction with any claim relating to the reference to "Sellers' Knowledge"
within such Section and the updated SCHEDULE 5.4, SCHEDULE 5.13(a) and
SCHEDULE 5.13(b) delivered pursuant to SECTION 2.2(c)(IV) shall be considered
in conjunction with any claim relating to the absence of "Sellers' Knowledge"
under such Section, removed pursuant to SECTION 3.1 ; or (ii) the breach or
non-fulfillment by Sellers of (or, any third party alleges facts that, if
true, would mean Sellers have breached or non-fulfilled) any other
representation, warranty, covenant or agreement contained in this Agreement
or any other instrument or document furnished to Buyer by any of Sellers, the
Designated Sellers or the Management Representative pursuant to this
Agreement at the Closing (in each case, without giving effect to any
materiality qualifiers (including, without limitation materiality qualifiers
incorporated herein by reference) that are for the benefit of the Company or
any of Sellers). The sole remedy after the Closing for any breach referred
to in this SECTION 8.2(a) (except for intentional misrepresentation by a
Seller) shall be the indemnification provided in SECTION 8.2(b).
(b) The indemnification provided for in SECTION 8.2(a) shall be
subject to the following limitations:
(A) Sellers will be liable to Buyer only if Buyer gives the
Designated Sellers written notice thereof within one (1) year after
the Closing Date, except with respect to those (i) representations and
warranties set forth in SECTION 5.1 (Organization) (but only the first
sentence thereof), 5.2 (Capitalization), 5.4 (Authorization) (but only
the first sentence thereof) and 5.8 (Brokers), and (ii) covenants and
agreements set forth in SECTIONS 7.1, 7.3, 7.4, 7.5 and all of SECTION
11, as to which claims may be made at any time; and
23
(B) Sellers will not be liable to Buyer for any Adverse
Consequences unless the amount of any such Adverse Consequences
relating to any such breach exceeds $100,000 and then only if the
aggregate amount of such Adverse Consequences relating to all such
breaches exceeds $2,500,000 (and in such event Sellers shall be liable
for the full amount of such Adverse Consequences and not just the
excess) and will not be liable for any Adverse Consequences exceeding
$10,000,000 in the aggregate, except for Adverse Consequences as a
result of, arising out of, relating to, allocable to or caused by, and
breaches of (i) the representations and warranties set forth in
SECTION 5.1 (Organization) (but only the first sentence thereof), 5.2
(Capitalization), 5.4 (Authorization) (but only the first sentence
thereof), 5.8 (Brokers, etc.), 5.9 (Affiliated Transactions), 5.10
(Indebtedness), 5.16 (No Dividends, etc.) and 5.18 (Sellers' Actions)
(ii) covenants and agreements set forth in Sections 7.1, 7.3, 7.4, 7.5
and all of SECTION 11; notwithstanding the foregoing Sellers' shall
not be liable to Buyer for any Adverse Consequences in a breach of
SECTION 5.10 unless the amount thereof exceeds $100,000 and then shall
be liable only for the excess thereof.
(C) Nothing in the foregoing clauses (A) or (B) shall
affect any party's rights under this SECTION 8 which shall remain
enforceable in accordance with its terms.
(D) Notwithstanding the foregoing, Sellers shall have no
liability to Buyer with respect to any claim for indemnification or
other recovery hereunder arising out of any breach of the
representations and warranties contained in SECTION 5.12(a) to the
extent such claim relates to events occurring, actions taken, or facts
existing on, or prior to, the FKI Acquisition Date; PROVIDED that, if
any such claim relates to events which occurred, actions which were
taken, or fact which arose both on or prior to, and after, the FKI
Acquisition Date and the total amount of Adverse Consequences arising
therefrom are unrecoverable under the FKI Acquisition Agreement,
Sellers shall, subject to the limits in the foregoing clause (A) and
(B), only be liable for that portion of such Adverse Consequences that
Buyer can demonstrate (with Buyer having the burden of proof)
resulted, from, arose out of, related to, was allocable to or caused
by Sellers' breach of its representations and warranties set forth in
SECTION 5.12(a).
8.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLERS. Following
the Closing, Buyer shall indemnify (but without duplication of payment)
Sellers and, as applicable, its officers, directors, members, employees,
Affiliates, successors, heirs, executors, personal representatives and
assigns (collectively, the
24
"SELLER PARTIES"), and hold the Seller Parties harmless against, and pay on
behalf of or reimburse them as and when incurred for, any Adverse
Consequences (other than Adverse Consequences in their capacity as, or as a
result of being, a shareholder of Buyer or any Affiliate thereof (including
the Company and its Subsidiaries after the Closing)) that they may suffer,
sustain or become subject to as the result of, arising out of, relating to,
allocable to, or caused by: (i) the breach (or third-party allegation of a
breach) by Buyer of any representation or warranty contained in ARTICLE 6 of
this Agreement; (ii) the breach or non-fulfillment by Buyer of (or, in the
event any third party alleges facts that, if true, would mean Buyer has
breached or non-fulfilled) any other representation, warranty, covenant or
agreement contained in this Agreement or any other instrument or document
furnished to Sellers by Buyer pursuant to this Agreement at the Closing
(without giving effect to any materiality qualifiers for the benefit of
Buyer); provided that, (x) Buyer will not be liable to Seller under this
SECTION 8.3 for any Adverse Consequences other than those relating to a
breach of SECTION 6.1, 6.5, SECTIONS 7.1, 7.3, 7.4, 7.5 and all of SECTION 11
of which Seller has not given Buyer written notice thereof within one (1)
year after the Closing Date; and (y) Buyer will not be liable to Sellers for
any Adverse Consequences other than those relating to a breach of SECTION
6.1, 6.5, SECTIONS 7.1, 7.3, 7.4, 7.5, 7.8 and all of SECTION 11 unless and
until the aggregate amount of such Adverse Consequences relating to all such
breaches exceeds $2,500,000 and then for the full amount of such Adverse
Consequences and shall not be liable for more than $10,000,000 of Adverse
Consequences in the aggregate. The sole remedy after Closing for any breach
referred to in this SECTION 8.3, except for intentional misrepresentation,
shall be the indemnification provided for in this SECTION 8.3.
8.4 MATTERS INVOLVING THIRD PARTIES.
(a) If a Seller Party or a Buyer Party seeks indemnification under
this SECTION 8, such Person (the "INDEMNIFIED PARTY") shall give written notice
to Buyer, if such notice is from a Seller Party, or the Designated Sellers, if
such notice is from a Buyer Party (the "INDEMNIFYING PARTY") specifying in
reasonable detail the basis for the claim (to the extent known). In that
regard, if any Liability shall be brought or asserted by any third party which,
if adversely determined, may entitle the Indemnified Party to indemnity pursuant
to this SECTION 8 (a "THIRD PARTY CLAIM"), the Indemnified Party shall promptly
notify the Indemnifying Party of the same in writing, specifying in detail the
basis of such Liability and the material facts pertaining thereto (to the extent
known); PROVIDED, HOWEVER, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party or any
other Person from any Liability or Adverse Consequences hereunder, except to the
extent that (and only to the extent that) such failure shall have caused the
Adverse Consequences for which the Indemnifying Party or such other Person is
obligated to be greater than such Adverse Consequences would have been had the
Indemnified Party given the
25
Indemnifying Party prompt notice hereunder or to the extent that such failure
materially prejudices such action.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party (which, in the case of Sellers as the Indemnifying Party,
shall be the Designated Sellers) notifies the Indemnified Party in writing
within 15 days after the Indemnified Party has given notice of the Third
Party Claim that the Indemnifying Party and, if the Indemnifying Party are
the Designated Sellers, all of the Sellers, will indemnify the Indemnified
Party from and against the Third Party Claim pursuant to this SECTION 8, and
(B) the Indemnifying Party conducts the defense of the Third Party Claim
actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with SECTION 8.4(b) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in (but not control) the defense of the Third Party Claim,
(B) the Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (which consent shall not be
withheld unreasonably) and (C) the Indemnifying Party will not consent to the
entry or any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party (which
consent shall not be withheld unreasonably), except that with respect to
clause (c), that no prior written consent from the Indemnified Party shall be
required if (i) there is no finding or admission of violations of Legal
Requirements or the rights of another person and (ii) the sole relief is
monetary damage which shall be paid in full by the Indemnifying Party.
(d) In the event that any of the conditions in SECTION 8.4(b)
above is or becomes unsatisfied, however, (A) the Indemnified Party may
defend against, the Third Party Claim in any manner it may deem appropriate,
(B) the Indemnifying Party and, if the Indemnifying Party are the Designated
Sellers, all of the Sellers, will reimburse the Indemnified Party promptly
and periodically for the reasonable costs of defending against the Third
Party Claim (including attorneys' fees and expenses), (C) the Indemnifying
Party and, if the Indemnifying Party are the Designated Sellers, all of the
Sellers, will remain responsible for any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of, relating to, in the nature
of, or caused by the Third Party Claim to the fullest extent provided in this
SECTION 8 and (D) the Indemnified Party will not consent to the entry or any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the
26
Indemnifying Party (which consent shall not be withheld unreasonably).
8.5 MANNER OF PAYMENT. Any indemnification of a Buyer Party or a
Seller Party pursuant to this SECTION 8 shall be effected by cashier's or
certified check or by wire transfer of immediately available funds from Buyer
or a Seller, as the case may be, to an account designated by such Seller or
Buyer, as the case may be, within five days after the determination of
indemnification amounts. All indemnification payments shall be made in the
same currency in which the Indemnified Party has suffered Adverse
Consequences to which such indemnification payments relate. The obligation of
the Indemnifying Party and the other Persons to make each payment in the
required currency shall not be discharged or satisfied by any tender, or any
recovery, which is expressed in or converted into another currency, except,
and solely, to the extent that the such tender or recovery shall result in
the actual receipt by the Indemnified Party of the full amount in the
required currency expressed to be payable hereunder. The Indemnifying Party
and the other Persons hereby authorizes the Indemnified Party on any tender
or recovery in a currency other than the required currency to purchase at
prevailing exchange rates obtained by the Indemnified Party the required
currency with the amount of such other currency so tendered or recovered. The
Indemnifying Party and the other Persons agree that its obligation to make
each payment in the required currency in the appropriate amount shall be
enforceable as an additional or alternative claim for recovery in such
currency of the amount (if any) by which such actual receipt shall fall short
of the full amount of such required currency expressed to be payable
hereunder, and shall not be affected by any judgment being obtained for such
amount or for any other sums due hereunder or for any other reason other than
full payment of the appropriate amount in the required currency. Any
indemnification payments made pursuant to this Agreement shall be deemed to
be adjustments to the Purchase Price for tax purposes.
8.6 DETERMINATION OF ADVERSE CONSEQUENCES, ETC. The amount of any
Adverse Consequences for which indemnification is provided under this SECTION
8.6 shall be (A) increased to take account of any actual net Tax cost
incurred by the Indemnified Party arising from the receipt of indemnity
payments hereunder and of any increase required to be paid under this Section
8.6(A) and (B) reduced to take account of any actual net Tax benefit realized
by the Indemnified Party arising from the incurrence or payment of any such
Adverse Consequences. In computing the amount of any such Tax cost or
benefit, the Indemnified Party shall be deemed to recognize all other items
of income, gain, loss, deduction or credit before recognizing any item
arising from the receipt of any indemnity payment hereunder or the incurrence
or payment of any indemnified Adverse Consequences. Any indemnification
payment hereunder shall initially be made without regard to this SECTION 8.6
and shall be reduced to reflect any such net Tax benefit or
27
increased to reflect any such net Tax cost only after the Indemnified Party
has actually realized such benefit or cost. For purposes of this Agreement,
an Indemnified Party shall be deemed to have "ACTUALLY REALIZED" a net Tax
benefit or net Tax cost on the date of filing of the Tax Return for the
period in which such Tax cost or benefit is realized and reflected on such
Tax Return.
8.7 INSURANCE. No Indemnified Party shall be entitled to
indemnification for any Adverse Consequences under this SECTION 8.7 to the
extent that such Indemnified Party has made a recovery (net of all
out-of-pocket costs directly related to such recovery, including increases in
past or future insurance premiums proximately caused thereby) under any
insurance policy covering such Adverse Consequences, and if such Indemnified
Party has received an indemnification payment for any Adverse Consequences
under SECTION 8.2 or 8.3 and subsequently receives a payment for such Adverse
Consequences under any insurance policy covering such Adverse Consequences,
such party shall refund a portion of the indemnification payment to the party
making such payment equal to the excess (the "EXCESS"), if any, of the sum of
the indemnification payment received by such party and the insurance recovery
(net of all directly related out-of-pocket costs, including increases in past
or future insurance premiums proximately caused thereby) received by such
party over the amount of such Adverse Consequences.
Section 9. TERMINATION.
9.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing only as follows:
(a) by mutual written consent of Buyer and the Designated Sellers;
(b) by Buyer if there has been a breach in any material respect on
the part of the Company or Sellers, or by the Designated Sellers if there has
been a breach in any material respect on the part of Buyer, in the
representations and warranties or covenants set forth in this Agreement, or
if events have occurred which have made it impossible to satisfy a condition
precedent to the terminating party's obligations (and such condition has not
been waived) to consummate the transactions contemplated hereby, unless such
terminating party's (or in the case of Sellers, the Company's or its
Subsidiary's or any of Sellers') willful breach of this Agreement has caused
the condition to be unsatisfied; or
(c) by either Buyer or the Designated Sellers if the Closing has
not occurred on or prior June 15, 1998 by reason of the failure of any
condition precedent under SECTION 3 or 4 hereof; provided that neither Buyer
nor Designated Sellers will be entitled to terminate this Agreement pursuant
to this SECTION 9.1(c) if such person's (or, in the case of Sellers, the
Company's or any
28
Seller's) willful breach of this Agreement has prevented satisfaction of the
conditions or the consummation of the transactions contemplated hereby at or
prior to such time.
9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Buyer or Seller as provided in SECTION 9.1, this
Agreement will forthwith become void and there will be no Liability on the
part of any Party to any other Party or its officers directors or employees,
except for the Liabilities of the Parties hereto set forth in SECTIONS 7.1
(press releases), 7.2 (expenses), 7.4 (confidentiality) and 11.11 (remedies),
and except that nothing herein will relieve any party from any breach of this
Agreement prior to such termination.
Section 10. CERTAIN DEFINITIONS.
"ADVERSE CONSEQUENCES" means, with respect to any Person, any
damage, Liability, demand, cost, whether or not arising out of a third party
claim, including all interest, penalties, reasonable fees, expenses and
disbursements of legal representatives and consultants and all amounts paid
or incurred in connection with any action, demand, proceeding, investigation
or claim by any third party (including any Governmental Entity) against such
Person and the investigation, defense or settlement of any of the foregoing,
which may include, if appropriate and without duplication, interest from the
date which Adverse Consequences is suffered or sustained until the date paid.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with, such Person.
"BUSINESS DAY" means any day that is not a Saturday or Sunday or a
day on which bank located in New York City are authorized or required to be
closed.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
"CONFIDENTIALITY AGREEMENT" means that certain confidentiality
letter agreement, dated February 5, 1998, among Hidden Creek Industries, Dura
Automotive Systems, Inc. and the Company.
"CONSENT" means permits, filings, notices, licenses, consents,
authorizations, waivers, approvals and the like of, to or with any
Governmental Entity or any other Person.
"CONTRACT" means any agreement, contract, instrument, commitment,
lease, guaranty, indenture, license, or other arrangement or understanding
between parties or by one party in favor of another party, whether written or
oral.
29
"CREDIT FACILITY" means the Credit Agreement, dated December 12,
1997, among the Company, various Subsidiary borrowers, various lending
institutions, Gleacher NatWest, Inc., as Arranger, Dresdner Bank, AG, LaSalle
National Bank and Xxxxxx Financial Inc., as Co-Agents, Union Bank of
Switzerland, Zurich, as Documentation Agent, and National Westminister Bank
plc, as Administrative Agent, as in effect as of the date hereof.
"FKI ACQUISITION AGREEMENT" means the Agreement for the Sale and
Purchase of the Automotive Division of FKI plc, dated as of November 12,
1997, between FKI Industries Inc., Xxxxxxx Chain Europe S.A., Rhombus Rollen
GmbH & Co. KG, Xxxxxx Brass Company, Acco Cables Control Limited, Xxxxxxx
Chain Company Limited, and FKI Mining Limited, and Ashercroft Limited, Acco
Cable Controls, Inc., Dominion Controls Inc., Finnacco S.A., Spricebright
Limited and Orion Automotive plc.
"FKI ACQUISITION DATE" means December 12, 1997.
"GAAP" means United States generally accepted accounting principles.
"GOVERNMENTAL ENTITY" means the United States of America or any
other nation, any state or other political subdivision thereof, the European
Union or any entity exercising executive, legislative, judicial, statutory,
regulatory or administrative functions of government.
"INDEBTEDNESS" means (x) all liabilities of the Company and its
Subsidiaries with respect to the outstanding principal amount of indebtedness
for borrowed money and guarantees thereof PLUS (y) that portion of the
obligations of the Company with respect to capital leases that are properly
classified as a liability on the balance sheet prepared in accordance with
GAAP.
"LIABILITY" means any liability, debt, obligation, deficiency, Tax,
penalty, fine, claim, cause of action or other loss, cost or expense of any
kind or nature whatsoever.
"LEGAL REQUIREMENT" means any requirement arising under any law,
rule, regulation, directive, decision, by-law, ordinance, circular, code,
order, notice, demand, decree, injunction, resolution, judgment,
recommendation or any determination or direction of any arbitrator or any
Governmental Entity.
"LIEN" means any security interest, pledge, bailment (in the nature
of a pledge or for purposes of security), mortgage, deed of trust, the grant
of a power to confess judgment, conditional sales and title retention
agreement (including any lease in the nature thereof), charge, encumbrance,
option, restriction, preemptive rights, rights of first refusal or other
similar
30
arrangement or interest or any other type of preferential arrangement having
a similar effect.
"MATERIAL CONTRACT" means, with respect to any Person, any Contract
(i) that involves or could involve consideration in excess of $500,000 in any
one year, (ii) that is not terminable without premium or penalty within one
year from the date hereof, (iii) the loss of which would reasonably be
expected to have a Material Adverse Effect, or (iv) any Contract providing
the principle terms of indebtedness (or security therefor), real property,
leases and deeds or documents pertaining to the formation or management of
joint ventures.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of the
Company's business substantially consistent with past custom and practice.
"OTHER SELLERS" means Xxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxx Xxxxxxx,
Xxxxxx Xxxxxx, Xxxxxx Sing, D. Xxxxxxx Xxxxx and Xxxxxxx Xxxxxxxx.
"PARTY" means any party hereto.
"PERSON" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization, or a Governmental Entity.
"REVOLVER" means the revolving credit facility under the Credit
Facility, as in effect as of the date hereof.
"SECURITIES ACT" means the United States Securities Act of 1933, as
amended from time to time, and the rules promulgated thereunder.
"SELLER OWNERSHIP PERIOD" means the period commencing immediately
following the FKI Acquisition Date to and including the Closing Date.
"SELLERS' KNOWLEDGE" means the actual knowledge of Xxx Xxxxx,
Xxxxxx Xxxxxxxxx, Xxxxxxx X. Xxxxx, J. Xxxxxxx Xxxxx, Xxxxxxxxxxx Xxxxxxx,
Xxxxxx Xxxxxx and Xxxxxxx Xxxxxxx.
"SUBSIDIARY" means, with respect to any Person, any corporation a
majority of the total voting power of shares of stock of which is entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof, or any
partnership, association or other business entity a majority of the
partnership or other similar ownership interest of which is at the time owned
or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes of this
definition, a Person is deemed to have a majority ownership interest in a
partnership, association or other business entity if such Person is allocated
a majority of the
31
gains or losses of such partnership, association or other business entity or
is or controls the managing director or general partner of such partnership,
association or other business entity.
"TAX" means any federal, state, local, provincial, municipal or
foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental,
customs, duties, capital stock, franchise, profits, withholding, social
security, unemployment, disability, real property, business, personal
property, sales, goods and services, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax, levy or
governmental charge or assessment of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not, and
including any obligation to indemnify or otherwise assume or succeed to the
Tax liability of any other Person.
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof required
to be filed with any Taxing Authority.
"TAXING AUTHORITY" shall mean any Governmental Entity having
jurisdiction over the assessment, determination, collection or other
imposition of any Tax.
"10% SENIOR SUBORDINATED NOTES" means the Company's 10% Senior
Subordinated Notes due 2005 issued pursuant to an Indenture, dated as of
December 12, 1997, among the Company, the Guarantors named therein and The
Chase Manhattan Bank, as trustee.
Section 11. MISCELLANEOUS.
11.1 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties (and with
respect to SECTION 8, Buyer Parties) and their respective successors and
permitted assigns.
11.2 ENTIRE AGREEMENT. This Agreement (including the
representations and warranties made herein and documents referred to herein)
constitutes the entire agreement between the Parties and supersedes any prior
understandings, agreements representations or warranties by or between the
Parties, written or oral, that may have related in any way to the subject
matter hereof; PROVIDED, HOWEVER that the Confidentiality Agreement (as
incorporated pursuant to SECTION 7.4) and the FKI Acquisition Agreement (to
the extent the provisions thereof are incorporated pursuant to SECTION 5.12)
shall remain in full force and effect and shall be deemed to form a part of
this Agreement.
11.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights or obligations hereunder may be assigned by any Seller without the
prior written consent of Buyer, or by Buyer (except as otherwise provided in
this Agreement) without the prior written consent of
32
the Designated Sellers, except to its Affiliates. Buyer may also assign all
or any portion of this Agreement (including rights hereunder and thereunder),
including its rights to indemnification, to any of its or its Affiliates'
(whether prior to or subsequent to the Closing) lenders as collateral
security.
11.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
11.5 HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
11.6 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly given when
delivered personally to the recipient or sent to the recipient by telecopy
(receipt confirmed) or two Business Days after sent by reputable overnight
express courier service (charges prepaid), and addressed to the intended
recipient as set forth below:
33
IF TO SELLERS:
UBS Capital BV
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
Canven (C.I.) Limited
00 Xxxxx Xxxxxx
Xx. Xxxxxx, Xxxxxx XX00XX (Channel Island)
Xxxxxx Financial Inc
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn:
Fax:
J. Xxxxxxx Xxxxx
Trident Automotive plc
00000 Xxxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attn:
Fax:
WITH A COPY TO:
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
The Phildrew Ventures Fourth Fund
Triton Court
00 Xxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Attn: Xxx Xxxxx
Fax: 000-00-000-000-0000
34
IF TO BUYER:
c/o Dura Operating Corp.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxxx
Fax: (000) 000-0000
WITH A COPY TO (WHICH SHALL NOT CONSTITUTE NOTICE):
Hidden Creek Industries
0000 XXX Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000
and:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx, P.C.
Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means, but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any Party may change the
address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in the manner
herein set forth.
11.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York
without giving effect to any choice or conflict of law provision or rule that
would cause the application of the laws of any jurisdiction other than the
State of New York. EACH OF THE PARTIES HEREBY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK, AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY, OVER ANY
LAWSUIT UNDER THIS AGREEMENT AND WAIVES ANY OBJECTION BASED ON VENUE OR FORUM
NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN. EACH OF THE
PARTIES HEREBY WAIVES THE NECESSITY FOR PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED
35
MAIL (RETURN RECEIPT REQUESTED), WITH A COPY ALSO BEING SENT BY FACSIMILE
(WITH RECEIPT CONFIRMED), IN EACH CASE DIRECTED TO SELLERS OR BUYER AT ITS
ADDRESS SET FORTH IN, AND WITH COPIES SENT AS REQUIRED BY, SECTION 11.6
ABOVE, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED ON THE DATE OF
ACTUAL RECEIPT. EACH OF THE PARTIES HEREBY CONSENTS TO SERVICE OF PROCESS AS
AFORESAID. NOTHING IN THIS SECTION 11.7 WILL PROHIBIT PERSONAL SERVICE IN
LIEU OF THE SERVICE BY MAIL CONTEMPLATED HEREIN.
11.8 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
the Parties hereto. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.
11.9 INCORPORATION OF SCHEDULES; ETC.. The Schedules identified in
this Agreement are incorporated herein by reference and made a part hereof.
In addition, SECTIONS 1.9 and 1.10 of the FKI Acquisition Agreement are
hereby incorporated by reference with respect to SECTIONS 5.1 and 5.3 of this
Agreement.
11.10 CONSTRUCTION. Where specific language is used to clarify
by example a general statement contained herein, such specific language shall
not be deemed to modify, limit or restrict in any manner the construction of
the general statement to which it relates. The language used in this
Agreement shall be deemed to be the language chosen by the Parties to express
their mutual intent, and no rule of strict construction shall be applied
against any Party. Whenever required by the context, any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns, pronouns and verbs shall include the
plural and vice versa. The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance.
If any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
11.11 REMEDIES. Each Party acknowledges that the Company's
businesses are unique and recognize and affirm that in the event of a breach
of this Agreement by any other Party, money damages may be inadequate and
such other Party may have no adequate remedy at law.
36
Accordingly, each Party agrees that each other Party shall have the right, in
addition to any other rights and remedies existing in its favor, to enforce
its rights and such other Party's obligations hereunder not only by an action
or actions for damages but also by an action or actions for specific
performance, injunctive and/or other equitable relief (without the
requirement of posting any bonds or additional security whatsoever).
11.12 SEVERABILITY OF PROVISIONS. If any covenant, agreement,
provision or term of this Agreement is held to be invalid for any reason
whatsoever, then such covenant, agreement, provision or term will be deemed
severable from the remaining covenants, agreements, provisions and terms of
this Agreement and will in no way affect the validity or enforceability of
any other provision of this Agreement.
11.13 CURRENCY. Unless otherwise stated, all dollar amounts
set forth herein are expressed in United States currency and "Dollars" shall
refer to "Unites States Dollars".
11.14 SUCCESSOR LAWS. Any reference to any particular Code
section or any other Legal Requirement will be interpreted to include any
revision of or successor to that section or Legal Requirements regardless of
how it is numbered or classified.
11.15 RELEASE OF THE COMPANY. Effective upon the Closing, each of
the Sellers hereby irrevocably waives, releases and discharges forever the
Company and its Subsidiaries and each of their respective directors, officers
and employees from any and all (x) Liabilities and (y) Contracts entered
into prior to the date hereof with such Seller whether in its capacity as a
Seller hereunder, as a shareholder of the Company or otherwise, including in
respect of rights of contribution or indemnification, in each case whether
arising hereunder or under any other Contract or otherwise at law or equity,
and each of Sellers hereby covenants and agrees that it will not seek to
recover any amounts in connection therewith or thereunder from the Company or
any of its Subsidiaries, except, in each case to the extent that, in the case
of a Management Seller, such Seller is entitled (i) to accrued and unpaid
payments of compensation, bonuses and employee benefits and employment
related expenses and (ii) to indemnification under the Company's Articles of
Association and is not entitled to indemnify a Buyer Party pursuant to
SECTION 8 (without giving effect to any baskets, caps, survival periods or
other limitations set forth therein).
11.16 LIABILITY AS AMONG SELLERS. Notwithstanding anything
contained herein to the contrary, the Liability of the Sellers to the Buyer
Parties under this Agreement shall be several (including, but not limited to,
SECTIONS 7, 8 and 11), based upon their proportionate ownership of the Dollar
Ordinary Shares of Company Stock as set forth on SCHEDULE 5.2(a), except that
the Liability of the Sellers comprising the Phildrew Ventures Fourth Fund and
its Affiliates
37
(other than UBS Capital B.V.) to the Buyer Parties under this Agreement shall
be joint and several. Notwithstanding the foregoing, (A) Buyer acknowledges
and agrees that a Seller shall be solely liable for any liability to Buyer
under this Agreement that results from:
(a) a breach by such Seller of Section 5.2, 5.4, 5.8 and 5.18
(solely to the extent the representations set forth in such sections relate
solely to such Seller);
(b) a breach by such Seller of any of the covenants set forth in
Sections 7.1, 7.3, 7.4, 7.5 and 11; and
(c) a fraudulent misrepresentation by such Seller in relation to
the representations set out in Section 8;
PROVIDED THAT, for the avoidance of doubt, a Seller shall not be liable for
any other Seller's breach of those Sections referred to sub-sections (a) and
(b) above or for the fraudulent misrepresentation of any other Seller, except
that, notwithstanding the foregoing, the liability of the Sellers comprising
the Phildrew Ventures Fourth Fund which shall be joint and several and (B)
several Liability of Sellers under this Agreement with respect to matters not
covered by clause (A) shall mean that each Seller shall bear only its pro
rata portion (based on its percent of ownership of the Dollar Ordinary Shares
owned by all Sellers) of the liability payable under this Agreement with
respect to such matter.
11.17 DELIVERY BY FACSIMILE. This Agreement and any signed
Contract entered into in connection herewith or contemplated hereby, and any
amendments hereto or thereto, to the extent signed and delivered by means of
a facsimile machine, shall be treated in all manner and respects as an
original Contract and shall be considered to have the same binding legal
effects as if it were the original signed version thereof delivered in
person. At the request of any party hereto or to any such Contract, each
other party hereto or thereto shall re-execute original forms thereof and
deliver them to all other parties. No party hereto or to any such Contract
shall raise the use of a facsimile machine to deliver a signature or the fact
that any signature or Contract was transmitted or communicated through the
use of facsimile machine as a defense to the formation of a Contract and each
such party forever waives any such defense.
* * * * *
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
DURA AUTOMOTIVE SYSTEMS (UK) Limited
By: /s/ XXXXX XXXXX
________________________________
Name: Xxxxx Xxxxx
Its: Director
By: /s/ XXXX XXXXXXX
________________________________
Name: Xxxx Xxxxxxx
Its: Director
No. of Dollar/Sterling % of the Total UBS CAPITAL B.V.
Shares of Company Amount of
STOCK Outstanding Shares By: /s/ XXXXXXX XXXXX
of Company Stock _________________
---------------------- ------------------ Name: Xxxxxxx Xxxxx
Its: Attorney-in-fact
8,224,460 Dollar 48.38%
Ordinary Shares
By: /s/ XXXXXX XXXXXXXXX
25,000 Sterling 50.00% ____________________
Ordinary Shares Name: Xxxxxx Xxxxxxxxx
Its: Attorney-in-fact
No. of Dollar/Sterling % of the Total PHILDREW VENTURES FOURTH FUND
Shares of Company Amount of (LP 4907)
Stock Outstanding Shares
of Company Stock By: Canven (CI) Limited,
---------------------- ------------------- Managing General
Partner
4,270,448 Dollar 25.1% By: /s/ XXXXXXX X. XXXXXXXXXX
Ordinary Shares ________________________
Name: Xxxxxxx X. XxXxxxxxxx
Its: Director
12,827 Sterling 25.6% By: /s/ XXXXXX XXXXXXXXX
Ordinary Shares ____________________
Name: Xxxxxx Xxxxxxxxx
Its: Director
No. of Dollar/Sterling % of the Total PHILDREW VENTURES FOURTH FUND
Shares of Company Amount of (LP 4906)
Stock Outstanding Shares
of Company Stock By: Canven (CI) Limited,
---------------------- ------------------ Managing General
Partner
2,963,508 Dollar 17.2%
Ordinary Shares By: /s/ XXXXXXX X. XXXXXXXXXX
_________________________
Name: Xxxxxxx X. XxXxxxxxxx
Its: Director
8,890 Sterling 17.8% By: /s/ XXXXXX XXXXXXXXX
Ordinary Shares ____________________
Name: Xxxxxx Xxxxxxxxx
Its: Director
No. of Dollar/Sterling % of the Total PHILDREW VENTURES FOURTH
Shares of Company Amount of (LP4708)
Stock Outstanding Shares
of Company Stock By: Canven (CI) Limited,
---------------------- ------------------ Managing General
Partner
774,175 Dollar 4.6%
Ordinary Shares By: /s/ XXXXXXX X. XXXXXXXXXX
_________________________
Name: Xxxxxxx X. XxXxxxxxxx
Its: Director
2,338 Sterling 4.7%
Ordinary Shares By: /s/ XXXXXX XXXXXXXXX
____________________
Name: Xxxxxx Xxxxxxxxx
Its: Director
No. of Dollar/Sterling % of the Total PHILDREW VENTURES FOURTH
Fund Amount of (LP 4978)
Shares of Company Outstanding Shares
Stock of Company Stock By: Canven (CI) Limited,
---------------------- ------------------ Managing General
Partner
316,329 Dollar 1.9%
Ordinary Shares By: /s/ XXXXXXX X. XXXXXXXXXX
_________________________
Name: Xxxxxxx X. XxXxxxxxxx
Its: Director
945 Sterling 1.9% By: /s/ XXXXXX XXXXXXXXX
Ordinary Shares ____________________
Name: Xxxxxx Xxxxxxxxx
Its: Director
No. of Dollar/Sterling % of the Total XXXXXX FINANCIAL INC.
Shares of Company Amount of
Stock Outstanding Shares By: ILLEGIBLE
of Company Stock _________
---------------------- ------------------ Its: Senior Vice President
100,000 Dollar .59%
Ordinary Shares
No. of Dollar/Sterling % of the Total
Shares of Company Amount of
Stock Outstanding Shares /s/ J. XXXXXXX XXXXX
of Company Stock _____________________
---------------------- ------------------ J. XXXXXXX XXXXX
160,000 Dollar .94%
46
In consideration of Dura Automotive Systems (U.K.) Ltd. ("BUYER")
entering into the Stock Purchase Agreement, dated the date hereof, among
Buyer and the Sellers ("SELLERS") specified therein (the "AGREEMENT"), the
undersigned hereby irrevocably and unconditionally guarantees to Sellers the
full and prompt payment and performance of each and every obligation of Buyer
under the Agreement in accordance with its terms (including, without
limitation, the provisions of Section 8 and 11.7) as when such obligations
are due. Nothwithstanding the foregoing, it is expressly understood and
agreed that the undersigned shall be able to assert each and every right,
claim and defense that Buyer has to the payment and performance of such
obligations. This guarantee shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to any choice or
conflict of law provision or rule that would cause the application of the
laws of any jurisdiction other that the State of New York.
Dated: April 8 , 1998 DURA OPERATING CORP.
By: /s/ XXXXX XXXXX
_______________
Name: Xxxxx Xxxxx
Its: Vice President
