AGREEMENT AND PLAN OF MERGER
by and among
XXXXXXX & XXXXXX CORPORATION,
XXXXXXX & XXXXXX PRODUCTS CO.,
JAII ACQUISITION CO.,
XXXXX XxXXXXXX,
XXXX FABRICS CORPORATION
and
XXXX AUTOMOTIVE INDUSTRIES, INC.
Dated as of August 17, 2001
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
1.1 Definitions..........................................................1
ARTICLE II
THE MERGER
2.1 The Merger..........................................................10
2.2 The Closing.........................................................10
2.3 Effective Time......................................................10
2.4 Certificate of Incorporation and Bylaws.............................10
2.5 Directors and Officers of the Surviving Corporation.................11
ARTICLE III
CONVERSION AND EXCHANGE OF SHARES
3.1 Conversion of Shares................................................11
3.2 Surrender and Payment...............................................11
3.3 Repayment of Debt Repayment Amount..................................12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
SELLER AND THE COMPANY
4.1 Due Incorporation...................................................12
4.2 Due Authorization...................................................12
4.3 Consents and Approvals; Authority Relative to This Agreement........13
4.4 Capitalization of the Company.......................................13
4.5 Financial Statements; Undisclosed Liabilities; Other Documents......14
4.6 No Material Adverse Effects; No Material Adverse Change.............14
4.7 Title to Properties; Restructuring..................................16
4.8 Condition and Sufficiency of Assets.................................17
4.9 Real Property.......................................................17
4.10 Personal Property...................................................18
4.11 Inventory...........................................................18
4.12 Accounts Receivable; Engineering and Development....................18
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4.13 Intellectual Property...............................................18
4.14 Contracts; No Default or Violation..................................19
4.15 Permits.............................................................21
4.16 Insurance...........................................................21
4.17 Employee Benefit Plans; ERISA.......................................22
4.18 Employment and Labor Matters........................................24
4.19 Capital Improvements................................................25
4.20 Taxes...............................................................25
4.21 Product Claims......................................................26
4.22 Environmental Matters...............................................26
4.23 Litigation..........................................................27
4.24 No Conflict of Interest.............................................28
4.25 Bank Accounts.......................................................28
4.26 Additional Representations and Warranties by Seller.................28
4.27 Brokers.............................................................29
4.28 Imposition of Certain Liability.....................................29
4.29 Customers and Suppliers.............................................29
4.30 Company Disclosure Schedule.........................................29
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT, PRODUCTS AND MERGER SUB
5.1 Existence and Power.................................................30
5.2 Due Authorization...................................................30
5.3 Consents and Approvals; Authority Relative to This Agreement........30
5.4 No Violation of Other Instruments or Laws...........................30
5.5 Merger Consideration................................................30
5.6 Parent Disclosure Documents.........................................31
5.7 Brokers.............................................................31
ARTICLE VI
COVENANTS
6.1 Implementing Agreement..............................................31
6.2 Access to Information and Facilities................................31
6.3 Consents and Approvals..............................................32
6.4 Retention of Certain Employees......................................32
6.5 Supplemental Information............................................33
6.6 Use of Name.........................................................33
6.7 Termination of Certain Agreements...................................33
6.8 Confidentiality.....................................................33
6.9 Publicity...........................................................34
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6.10 Preservation of Business............................................34
6.11 Tax Matters.........................................................36
6.12 Maintenance of Insurance............................................40
6.13 Non-Compete.........................................................40
6.14 Non-Disparagement...................................................41
6.15 Personnel Matters...................................................41
6.16 Company Financial Statements........................................44
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
7.1 Non-Compete Agreements..............................................45
7.2 Actions or Proceedings..............................................45
7.3 New York Stock Exchange.............................................45
7.4 Refinancing of Seller's Loan........................................45
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT, PRODUCTS AND MERGER SUB
8.1 Warranties True as of Both Present Date and Closing Date............46
8.2 Compliance with Agreements and Covenants............................46
8.3 Consents and Approvals..............................................46
8.4 Stockholders Agreement..............................................46
8.5 Financial Statements................................................46
8.6 Documents...........................................................46
8.7 No Indebtedness; Working Capital....................................47
8.8 Additional Agreements...............................................47
8.9 Consummation of WAD Asset Purchase..................................47
8.10 No Material Adverse Change..........................................47
8.11 Consummation of Restructuring.......................................48
8.12 Consents and Estoppels..............................................48
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXXXX,
SELLER AND THE COMPANY
9.1 Warranties True as of Both Present Date and Closing Date............48
9.2 Compliance with Agreements and Covenants............................48
9.3 Documents...........................................................48
9.4 Registration Rights Agreement; Stockholders Agreement...............49
9.5 Consents and Approvals..............................................49
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9.6 Consummation of WAD Asset Purchase..................................49
9.7 Additional Agreements...............................................49
ARTICLE X
CLOSING
10.1 Deliveries by Seller and the Company................................49
10.2 Deliveries by Parent, Products and Merger Sub.......................50
ARTICLE XI
TERMINATION
11.1 Termination.........................................................51
11.2 Effect of Termination...............................................51
ARTICLE XII
INDEMNIFICATION
12.1 Survival............................................................52
12.2 Indemnification by Seller...........................................52
12.3 Indemnification by Products.........................................52
12.4 Claims..............................................................54
12.5 Notice of Third Party Claims; Assumption of Defense.................54
12.6 Settlement or Compromise............................................55
12.7 Failure of Indemnifying Person to Act...............................55
12.8 Limitations on Indemnification......................................55
12.9 Assignment of Claims................................................56
12.10 Exclusive Remedies..................................................56
ARTICLE XIII
MISCELLANEOUS
13.1 Expenses............................................................56
13.2 Amendment...........................................................56
13.3 Notices.............................................................56
13.4 Waivers.............................................................58
13.5 Counterparts........................................................58
13.6 Headings............................................................58
13.7 Interpretation......................................................58
13.8 Applicable Law......................................................58
13.9 Jurisdiction; Waiver of Jury Trial..................................58
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13.10 Assignment..........................................................59
13.11 No Third Party Beneficiaries........................................59
13.12 Further Assurances..................................................59
13.13 Severability........................................................59
13.14 Remedies Cumulative.................................................59
13.15 Entire Understanding................................................59
13.16 Company Disclosure Schedule.........................................59
EXHIBITS
Exhibit A Form of Non-Compete Agreement
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Stockholders Agreement
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER is made as of August 17, 2001, by and
among Xxxxxxx & Xxxxxx Corporation, a Delaware corporation ("Parent"); Xxxxxxx &
Xxxxxx Products Co., a Delaware corporation ("Products"); JAII Acquisition Co.,
a Delaware corporation, and a wholly-owned Subsidiary of Parent ("Merger Sub");
Xxxxx XxXxxxxx ("XxXxxxxx"); Xxxx Fabrics Corporation, a Delaware corporation
("Seller"); and Xxxx Automotive Industries, Inc., a Delaware corporation (the
"Company").
WHEREAS, Seller owns beneficially and of record all of the issued and
outstanding capital stock of the Company (the capital stock of the Company is
hereinafter referred to as the "Shares");
WHEREAS, on the terms and subject to the conditions contained herein, the
board of directors of Seller has approved the merger (the "Merger") of Merger
Sub with and into the Company with the Company being the Surviving Corporation
(as defined);
WHEREAS, on the terms and subject to the conditions contained herein, the
board of directors of the Company has approved the Merger of Merger Sub with and
into the Company with the Company being the Surviving Corporation;
WHEREAS, on the terms and subject to the conditions contained herein, the
board of directors of each of Parent, Products and Merger Sub has approved the
Merger of Merger Sub with and into the Company with the Company being the
Surviving Corporation;
WHEREAS, XxXxxxxx is a substantial indirect beneficial owner of the Company
and each of Parent, Products and Merger Sub wish to gain assurances that
XxXxxxxx will not compete with the Automotive Business (as defined below in
connection with Section 6.13) or make any statements that disparage any of
Parent, Products, Merger Sub or the Company or any of their present or future
Subsidiaries or Affiliates; and
WHEREAS, it is intended that, for federal income Tax purposes, the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Code and that this Agreement shall be, and hereby is, adopted as a plan of
reorganization for purposes of Section 368 of the Code;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
agreements and warranties herein contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Unless otherwise defined in this Agreement, the following
terms shall have the meanings herein ascribed to such terms:
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"Accredited Investor" shall have the meaning provided in Rule 501(a) under
Regulation D.
"Acquisition" shall have the meaning set forth in Section 6.17.
"Affiliate" shall mean, with respect to any specified Person: (1) any other
Person which, directly or indirectly, owns or controls, is under common
ownership or control with, or is owned or controlled by, such specified Person;
and (2) any immediate family member of the specified Person or any of the
foregoing Persons referred to in clause (1) who is an individual.
"Agreement" shall mean this Agreement and Plan of Merger, including all
exhibits and schedules hereto, as amended from time to time.
"Automotive Business" shall mean (i) except with respect to Section 6.13,
the business of manufacturing, finishing and selling automotive fabrics as
conducted by Seller and the Company as of the date hereof and as of the Closing
Date and (ii) with respect to Section 6.13, the business of manufacturing,
finishing and selling automotive fabrics as conducted by Seller and the Company
as of the date hereof and as of the Closing Date and as conducted by Parent and
its Subsidiaries at any time while XxXxxxxx is a member of the board of
directors of Parent or any Subsidiary of Parent.
"Automotive Business Employees" shall have the meaning set forth in Section
6.15(a).
"Benefits Transition Period" shall have the meaning set forth in Section
6.15 (g).
"B Investors" shall mean Xxxxxxx X. Xxxxxx, Xxxxxxx X. XxXxxxxxx and Jens
Hohnel.
"Business Day" shall mean a day other than Saturday, Sunday or any other
day on which commercial banks in New York, New York are authorized or required
by Law to be closed for business.
"CERCLA" shall have the meaning set forth in Section 4.22(d).
"Certificate of Merger" shall have the meaning set forth in Section 2.3.
"Closing" shall have the meaning set forth in Section 2.2.
"Closing Date" shall have the meaning set forth in Section 2.2.
"COBRA" shall have the meaning set forth in Section 4.17(m).
"COBRA Coverage" shall have the meaning set forth in Section 6.15(b)(iii).
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
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"Common Stock" shall mean the shares of common stock of Parent, par value
$0.01 per share.
"Company" shall have the meaning set forth in the recitals to this
Agreement.
"Company Disclosure Schedule" shall have the meaning set forth in Article
IV.
"Company Financial Statements" shall have the meaning set forth in Section
6.16.
"Company Intellectual Property" shall mean any and all Intellectual
Property owned by the Company.
"Confidential Information" shall mean, with respect to any Person, all
nonpublic technical, proprietary, commercial, financial and other information
(irrespective of the form of such information) owned by or concerning such
Person and its Subsidiaries and their respective businesses and operations.
"Confidentiality Agreement" shall have the meaning set forth in Section
6.8.
"Continuing Benefits" shall have the meaning set forth in Section 6.15(g).
"Continuing Employees" shall have the meaning set forth in Section 6.15(a).
"Contract" shall mean any contract, lease, license (other than a license
which is a Permit or Environmental Permit), commitment, understanding, sales
order, purchase order, agreement, indenture, mortgage, note, bond, right,
warrant, instrument or plan, whether written or oral.
"Debt Repayment Amount" shall have the meaning set forth in Section 3.3.
"DGCL" shall have the meaning set forth in Section 2.1.
"Dollars" or numbers preceded by the symbol "$" shall mean amounts in
United States Dollars.
"Effective Time" shall have the meaning set forth in Section 2.3.
"El Paso Business" shall mean the business currently engaged in by each of
SW Foam, L.P., a Delaware limited partnership, and Shawmut Southwest L.P., a
Delaware limited partnership.
"Employee Benefit Plans" shall have the meaning set forth in Section
4.17(a).
"End Date" shall have the meaning set forth in Section 11.1(b)(i).
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"Environmental Claim" shall mean any written notice, claim, demand, action,
suit, complaint, proceeding or final communication by any Governmental Authority
or Person alleging liability or potential liability arising out of, relating to,
based on or resulting from (i) the presence, discharge, emission, release or
threatened release of any Hazardous Material at any location, whether or not
owned, leased or operated by the Company, or (ii) circumstances forming the
basis of any violation or alleged violation of any Environmental Law or
Environmental Permit. Environmental Claim shall not include claims that were
made in the past and which have been resolved leaving the Company without
further liability, contingent or otherwise.
"Environmental Laws" shall mean the common law and all applicable, federal,
state, local and foreign statutes, rules, regulations, ordinances, and orders
and decrees of any Governmental Authority, relating in any manner to
contamination, pollution or protection of human health or the environment, or
occupational safety and health.
"Environmental Permits" shall mean all permits, licenses, registrations and
other governmental authorizations and approvals required for the Company, and
the operations of the Company's facilities, to conduct its business under
Environmental Laws.
"Environmental Reports" shall mean all applications, notifications,
reports, studies, assessments and audits that address any issue of site
assessment or noncompliance with, or liability under, any Environmental Law that
may affect the Company in any material respect.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning set forth in Section 4.17(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Excluded Assets" shall mean the assets that are or were used by Seller or
the Company in the Automotive Business, as conducted by Seller and the Company
prior to and as of the Closing Date, that are not, as of the date hereof, assets
of the Company, as set forth on Schedule 4.7(b) of the Company Disclosure
Schedule under the heading "Assets Not Transferred" and that the parties have
agreed are not part of the Automotive Business being transferred under this
Agreement.
"GAAP" shall mean U.S. generally accepted accounting principles at the time
in effect.
"Governmental Authority" shall mean the government of the United States or
any foreign country or any state or political subdivision thereof, and any
entity, body or authority exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, including
the PBGC and other quasi-governmental entities established to perform such
functions.
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"Hazardous Material" shall mean any chemical, material or substance defined
as or included in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "hazardous constituents", "restricted hazardous
materials", "extremely hazardous substances", "toxic substances",
"contaminants", "pollutants", "toxic pollutants", or words of similar meaning
and regulatory effect under any applicable Environmental Law, including, without
limitation, petroleum (including, without limitation, crude oil or any fraction
thereof) and asbestos.
"Heartland" shall mean Heartland Industrial Partners, L.P.
"Identified Terms" shall have the meaning set forth in Section 6.6.
"Indebtedness" of any Person shall mean (a) all indebtedness of such Person
for borrowed money or for the deferred purchase price of property or services
(other than current trade liabilities incurred in the ordinary course of
business), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all capital lease obligations
of such Person, (d) all obligations of such Person in respect of bankers'
acceptances issued or created for the account of such Person, (e) all
indebtedness of others secured by (or for which the holder of such indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
any property owned or acquired by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof, and (f) all
guarantees by such Person of indebtedness of others.
"Indemnified Person" shall mean the Person or Persons entitled to, or
claiming a right to, indemnification under Article XII.
"Indemnifying Person" shall mean the Person or Persons claimed by the
Indemnified Person to be obligated to provide indemnification under Article XII.
"Intellectual Property" shall mean any and all of the following that were
used in the Automotive Business as of the date of the Letter of Intent or
thereafter: trademarks, trade names, service marks, patents, copyrights
(including any registrations, applications, licenses or rights relating to any
of the foregoing), technology, trade secrets, inventions, know-how, designs,
computer programs, processes, and all other intangible assets, properties and
rights.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" and similar phrases such as "aware" and "known" shall mean,
whenever used to qualify a representation or warranty herein or in any Related
Agreement, the actual knowledge of Xxxxx XxXxxxxx, Chief Executive Officer of
Seller, Xxxxxx Xxxxx, Chief Financial Officer of Seller, Xxxx Xxxxxx, General
Counsel to Seller, Xxxxx Xxxxxxxxx, Executive Vice President and Chief Operating
Officer of the Company, Xxxx Xxxxxx, Vice President of Operations of Seller,
Xxxxxxx Xxxxx, Executive Vice President of Automotive Design of Seller, Xxxxxxx
Xxxxxxxx, Corporate Controller of Seller, or Xxxxx XxXxxxxx, in each case, after
reasonable inquiry of the individuals whom such Persons would ordinarily consult
with when investigating the type of matter to which the representation or
warranty relates in the ordinary course of performing their duties and
obligations to Seller.
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"Latest Balance Sheet" shall mean the audited consolidated balance sheet of
Seller, on a consolidated basis, dated as of June 30, 2000.
"Latest Balance Sheet Date" shall mean the date of the Latest Balance
Sheet.
"Law" shall mean any law, statute, regulation, ordinance, rule, order,
decree, judgment, consent decree, settlement agreement or governmental
requirement enacted, promulgated, entered into, agreed to or imposed by any
Governmental Authority.
"Letter of Intent" shall mean the letter agreement among XxXxxxxx, the
Company, Seller, Parent and Products dated April 17, 2001.
"Lenders" shall mean have the meaning set forth in Section 7.4.
"Liabilities" shall have the meaning set forth in Section 12.2(e).
"Lien" shall mean any mortgage, lien (except for any lien for Taxes not yet
due and payable), charge, restriction, pledge, assessment, security interest,
option, lease or sublease, claim, right of any third party, easement,
encroachment or encumbrance.
"Loss" or "Losses" shall mean any and all liabilities, losses, costs,
claims, damages (including out-of-pocket consequential damages), penalties and
expenses (including reasonable attorneys' fees and expenses and costs of
investigation and litigation). In the event any of the foregoing are
indemnifiable hereunder, the terms "Loss" and "Losses" shall include any and all
reasonable attorneys' fees and expenses and costs of investigation and
litigation incurred by the Indemnified Person in enforcing such indemnity.
"Main Street" shall mean Main Street Textiles, L.P., a Delaware limited
partnership, and its successors and assigns.
"Material Adverse Change" shall mean a change (or circumstance or event
involving a prospective change) in the business, operations, assets,
liabilities, results of operations, cash flows or condition (financial or
otherwise) of the Company or the Automotive Business that has a Material Adverse
Effect.
"Material Adverse Effect" shall mean with respect to a Person an effect or
circumstance that is or is reasonably likely to be materially adverse on either
(i) the business, operations, assets, liabilities, results of operations, cash
flows or condition (financial or otherwise) of such Person or, with respect to
the Company, the Automotive Business, or (ii) the ability of Seller, Parent or
such Person to consummate the Transactions. Notwithstanding the foregoing, each
of the parties hereto agrees that any such effect or circumstance that relates
to the matters contemplated by any Section of this Agreement that does not have
an effect upon the Company or Products that would reasonably be expected to
result in a claim, Loss or obligation of an amount greater than $100,000 shall
not constitute a Material Adverse Effect; provided, however, that in no event
shall an effect or circumstance that affects the national economy or the
automotive industry generally in substantially the manner and
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to substantially the extent that it affects the Automotive Business be deemed to
be a Material Adverse Effect even if the same would otherwise qualify as such.
"Material Contract" shall mean a Contract that provides for or that would
reasonably be expected to result in the relevant party thereto making payments
in excess of $25,000 per year, for at least one year, or that would otherwise be
reasonably expected to have a Material Adverse Effect if not performed by either
party to such Contract.
"XxXxxxxx" shall have the meaning set forth in the recitals to this
Agreement.
"Merger" shall have the meaning set forth in the recitals to this
Agreement.
"Merger Consideration" shall have the meaning set forth in Section 3.1(b).
"Merger Sub" shall have the meaning set forth in the recitals to this
Agreement.
"Non-Compete Agreement" shall mean each of the non-compete agreements by
and between Products and each of Xxxxx XxXxxxxx and Xxxxx Xxxxxxxx substantially
in the form attached hereto as Exhibit A.
"Non-Compete Period" shall have the meaning set forth in Section 6.13.
"Parent" shall have the meaning set forth in the recitals to this
Agreement.
"Parent Disclosure Documents" shall have the meaning set forth in Section
5.6.
"PBGC" shall have the meaning set forth in Section 4.17(f).
"Pension Plans" shall have the meaning set forth in Section 4.17(a).
"Permitted Liens" shall mean any easements, covenants, restrictions,
encroachments and similar encumbrances that do not materially interfere with,
and do not materially adversely affect, the value or the use of the Real
Property as used and improved as of the date of the Letter of Intent and as
currently used and improved. "Permitted Liens" shall also include the right of
the lessor in or to (i) any lease of assets or Real Property; (ii) any assets
that are subject to a lease where the existence of the lease or the fact that
the assets are leased is reflected in Schedule 1.2(P) of the Company Disclosure
Schedule; and (iii) other Liens that are reflected on Schedule 1.2(P) of the
Company Disclosure Schedule.
"Permits" shall have the meaning set forth in Section 4.15.
"Person" shall mean any individual, corporation, proprietorship, firm,
partnership, limited partnership, trust, association or other entity.
"Product" shall have the meaning set forth in Section 4.21.
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"Product Damage Claims" shall have the meaning set forth in Section
12.2(d).
"Product Warranty Claims" shall have the meaning set forth in Section
12.2(c).
"Products" shall have the meaning set forth in the recitals to this
Agreement.
"Products 401(k) Plan" shall have the meaning set forth in Section
6.15(c)(ii).
"Products Indemnified Parties" shall mean Products, Parent, Merger Sub and
each of their Affiliates (including, after the Closing, the Company and its
Subsidiaries), and their respective officers, directors, employees, members,
managers, agents and representatives; provided that in no event shall Seller be
deemed a Products Indemnified Party.
"Real Property" shall have the meaning set forth in Section 4.9.
"Registration Rights Agreement" shall mean the registration rights
agreement in the form attached hereto as Exhibit B to be entered into by and
among Parent, Heartland, Seller and the B Investors, if any, named therein.
"Regulation D" shall have the meaning set forth in Section 4.26(a).
"Related Agreement" shall mean any Contract that is or is to be entered
into at the Closing or otherwise pursuant to, or in connection with, this
Agreement, including the Non-Compete Agreements, the Registration Rights
Agreement, the Stockholders Agreement, the Supply Agreement and the Transition
Services Agreement.
"Restructuring" shall have the meaning set forth in Section 4.7(b).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall have the meaning set forth in the recitals to this
Agreement.
"Seller Financial Statements" shall mean all of the following: (i) the
audited consolidated financial statements of Seller as of June 30, 1999 and June
30, 2000, consisting of the consolidated balance sheets at such date and the
related consolidated statements of earnings and retained earnings and cash flows
for the year then ended and (ii) the unaudited consolidated financial statements
of Seller as of March 31, 2000 and March 31, 2001, consisting of the
consolidated balance sheets at each such date and the related consolidated
statements of earnings and retained earnings and cash flows for the nine-month
period then ended.
"Seller Indemnified Parties" shall mean Seller and each of its Affiliates
(including, prior to the Closing, the Company), and their respective officers,
directors, employees, members, managers, agents and representatives.
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"Seller's Defined Benefit Plan" shall have the meaning set forth in Section
6.15(c)(i).
"Seller's 401(k) Plan" shall have the meaning set forth in Section
6.15(c)(i).
"Seller's Loan" shall mean the debt of Seller, as guaranteed by its
Affiliates to the lenders pursuant to that certain Credit Agreement dated as of
July 15, 1997, as amended.
"Seller's Retirement Plans" shall have the meaning set forth in Section
6.15(c)(i).
"Shares" shall have the meaning set forth in the recitals to this
Agreement.
"Stockholders Agreement" shall mean the stockholders agreement in the form
attached hereto as Exhibit C by and among Parent, Heartland, Seller and the B
Investors, if any, named therein.
"Straddle Period" shall mean any taxable period beginning on or before, and
ending after, the Closing Date.
"Subsidiary" shall mean, with respect to a specified Person, any
corporation, partnership or other entity in which the specified Person owns or
controls, directly or indirectly, through one or more intermediaries, more than
50% of the stock or other interests having general voting power in the election
of directors or Persons performing similar functions.
"Supply Agreement" shall mean the Supply and Looms Agreement by and among
Seller, Main Street and Products in form and substance mutually satisfactory to
the parties.
"Surviving Corporation" shall have the meaning set forth in Section 2.1.
"Tax Benefits" shall mean the amount of any refund, credit or reduction in
otherwise required Tax payments, including any interest payable thereon,
actually received.
"Tax Indemnitee" shall have the meaning set forth in Section 6.11(k)(i).
"Tax Indemnitor" shall have the meaning set forth in Section 6.11(k)(i).
"Tax Return" shall mean any report, return or other information required to
be supplied to a Governmental Authority in connection with any Taxes.
"Taxes" shall mean all taxes, charges, fees, duties, levies or other
assessments, including income, gross receipts, net proceeds, ad valorem,
turnover, real and personal property (tangible and intangible), sales, use,
franchise, excise, value added, stamp, leasing, lease, user, transfer, fuel,
excess profits, occupational, interest equalization, windfall profits,
severance, employee's income withholding, other withholding, unemployment and
Social Security taxes, which are imposed
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by any Governmental Authority, and such term shall include any interest,
penalties or additions to tax attributable thereto.
"Transactions" shall mean the Merger and the other transactions
contemplated by the Related Agreements.
"Transition Services Agreement" shall mean the Transition Services
Agreement by and between Seller and Products in form and substance mutually
satisfactory to the parties.
"WAD" shall mean Western Avenue Dyers, L.P., a Delaware limited
partnership.
"WAD Purchase Agreement" shall mean the Asset Purchase Agreement dated as
of the date hereof by and among Products, WAD, Xxxxx XxXxxxxx, Xxxxx XxXxxxxx,
Xxxxx Xxxxxxxx and Xxxx Textiles LLC.
"Welfare Plans" shall have the meaning set forth in Section 4.17(a).
"Working Capital" shall mean at any time, (i) the consolidated trade
accounts receivable (less reserve for doubtful accounts) and product inventory
(less reserve for obsolescence) of the Company, as adjusted to reflect the
Restructuring, less (ii) the consolidated accounts payable and accrued current
liabilities not related to Indebtedness, automotive fabric quality claims
reserve and premium freight reserve of the Company, in each case calculated on a
basis consistent with the historical consolidated financial statements of Seller
previously delivered to Parent and Products.
ARTICLE II
THE MERGER
2.1 The Merger. On the terms and subject to the conditions of this
Agreement, at the Effective Time, Merger Sub shall be merged with and into the
Company, the separate corporate existence of Merger Sub shall thereupon cease,
and the Company shall be the surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation"). The Merger shall have
the effects specified in the Delaware General Corporation Law (the "DGCL").
2.2 The Closing. On the terms and subject to the conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at the
offices of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx as
promptly as practicable, but no later than two (2) Business Days following the
satisfaction or waiver of the conditions set forth in Articles VII, VIII and IX
(other than conditions which by their nature are to be satisfied at Closing, but
subject to those conditions) or at such other time, date or place as Products
and Seller may agree. The date on which the Closing occurs is hereinafter
referred to as the "Closing Date."
2.3 Effective Time. If all the conditions set forth in Articles VII, VIII
and IX shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article XI, the parties
hereto shall cause a Certificate of Merger meeting
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the requirements of Section 252 of the DGCL (a "Certificate of Merger") with
respect to the Merger to be properly executed and filed in accordance with such
Section on the Closing Date. The Merger shall become effective at the time of
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with the DGCL or at such later time which the parties
hereto shall have agreed upon in writing and designated in such filings as the
effective time of the Merger (the "Effective Time").
2.4 Certificate of Incorporation and Bylaws. The Certificate of
Incorporation and Bylaws of the Company as in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation and Bylaws of the
Surviving Corporation.
2.5 Directors and Officers of the Surviving Corporation. The directors and
officers of Merger Sub immediately prior to the Effective Time shall be the
directors and officers of the Surviving Corporation as of the Effective Time and
until their successors are duly appointed or elected in accordance with
applicable Law.
ARTICLE III
CONVERSION AND EXCHANGE OF SHARES
3.1 Conversion of Shares. (a) At the Effective Time by virtue of the Merger
and without any action on the part of the holder thereof:
(i) each Share held by the Company as treasury stock or owned by
Parent or any Subsidiary of Parent immediately prior to the Effective Time
shall be canceled, and no payment shall be made with respect thereto;
(ii) each share of common stock of Merger Sub outstanding immediately
prior to the Effective Time shall be converted into and become one share of
common stock of the Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation; and
(iii) the Shares outstanding immediately prior to the Effective Time
shall, except as otherwise provided in Section 3.1(a)(i) and subject to
Section 3.1(b), be converted into an aggregate of 12,760,000 shares of
Common Stock.
(b) All Common Stock issued as provided in Section 3.1(a)(iii) shall be of
the same class and shall have the same terms as the currently outstanding Common
Stock. The shares of Common Stock to be received as consideration pursuant to
the Merger with respect to Shares are referred to herein as the "Merger
Consideration." The number of shares of Common Stock received as the Merger
Consideration shall be adjusted to reflect fully the effect of any stock split,
reverse stock split, stock dividend, reorganization, recapitalization or any
like change with respect to the Common Stock occurring after the date hereof and
prior to the Effective Time.
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(c) From and after the Effective Time, all Shares converted in accordance
with Section 3.1(a)(iii) shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration. From and
after the Effective Time, all certificates representing the common stock of
Merger Sub shall be deemed for all purposes to represent the number of shares of
common stock of the Surviving Corporation into which they were converted in
accordance with Section 3.1(a)(ii).
3.2 Surrender and Payment. At the Effective Time, Seller shall receive the
Merger Consideration against surrender by Seller of the certificate(s)
representing the Shares.
3.3 Repayment of Debt Repayment Amount. On the Closing Date, Parent will
cause to be repaid the Debt Repayment Amount if required by the lenders of the
Seller's Loan. The "Debt Repayment Amount" shall mean the $90,000,000 (which
amount shall include all principal, premium, interest, fees, charges, costs,
expenses and other obligations, contingent or otherwise, relating thereto) for
which the Company has indemnified Seller pursuant to the Restructuring.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
SEllER AND THE COMPANY
Seller, the Company and XxXxxxxx (but as to XxXxxxxx only with respect to
those representations and warranties relating to XxXxxxxx) jointly and severally
represent and warrant to each of Parent, Products and Merger Sub that, except as
set forth in the corresponding section or subsection of the document entitled
the "Company Disclosure Schedule" (the "Company Disclosure Schedule"):
4.1 Due Incorporation. The Company is duly incorporated, validly existing
and in good standing under the Laws of the State of Delaware, with all requisite
power and authority to own, lease and operate its properties and to carry on its
businesses and operations as they are now being owned, leased, operated and
conducted. As of the date of this Agreement, the Company is licensed or
qualified to do business and is in good standing as a foreign corporation in
each of Massachusetts, Michigan and Texas and, as of the Closing Date, will be
licensed or qualified to do business and be in good standing as a foreign
corporation in each jurisdiction where the nature of the properties owned,
leased or operated by it and the businesses and operations transacted by it
require such licensing or qualification, except where the failure to be so
licensed or qualified would not have, individually or in the aggregate, a
Material Adverse Effect. The States set forth on the Company Disclosure Schedule
are the only jurisdictions in which the Company is, or will be as of the Closing
Date, organized, or licensed or qualified to do business. The Company has no
Subsidiaries and has no investment in and does not hold any other direct or
indirect economic, voting or management interest in any Person or directly or
beneficially own any security issued by any other Person. Accurate and complete
copies of (i) the Certificate of Incorporation and Bylaws of the Company as
currently in effect and (ii) the corporate books and records of the Company have
been delivered to Products.
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4.2 Due Authorization. Each of the Company and Seller has full corporate
power and authority to enter into this Agreement and the Related Agreements to
which it is a party and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by the Company and Seller of
this Agreement and the Related Agreements to which it is a party have been duly
and validly approved by the board of directors and stockholders of each of the
Company and Seller, and no other actions or proceedings on the part of the
Company or Seller are necessary to authorize this Agreement, the Related
Agreements to which it is a party or the transactions contemplated hereby and
thereby. Each of the Company and Seller has duly and validly executed and
delivered this Agreement and the Related Agreements to which it is a party. This
Agreement constitutes, and the Related Agreements of the Company and Seller
shall constitute (assuming, in each case, due execution and delivery by the
other parties thereto), legal, valid and binding obligations of each of the
Company, Seller and XxXxxxxx, as the case may be, in each case enforceable in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization or
similar Laws in effect which affect the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific remedies.
4.3 Consents and Approvals; Authority Relative to This Agreement. (a)
Schedule 4.3(a) of the Company Disclosure Schedule sets forth all the consents,
authorizations and approvals of, or filings and registrations with, any
Governmental Authority or any other Person not a party to this Agreement that
are necessary in connection with the execution, delivery and performance by the
Company or Seller of this Agreement or the Related Agreements to which it is a
party or the consummation of the transactions contemplated hereby or thereby and
identifies which of such consents, authorizations, approvals, filings and
registrations will be conditions to the obligations of Parent, Products and
Merger Sub under Section 8.3 hereof under the heading "Condition Consents" and
which are not conditions to the obligations of Parent, Products and Merger Sub
under the heading "Non-Condition Consents." The failure to obtain any such
consent, authorization, approval, filing and registration listed under the
heading "Non-Condition Consents" would not have, individually or in the
aggregate, a Material Adverse Effect.
(b) The execution, delivery and performance by the Company or Seller of
this Agreement and the Related Agreements to which it is a party do not and will
not: (i) violate any Law; (ii) violate or conflict with, result in a breach or
termination of, constitute a default or give any third party any additional
right (including a termination right) under, permit cancellation of, result in
the creation of any Lien upon any of the assets or properties of Seller or the
Company under, or result in or constitute a circumstance which, with or without
notice or lapse of time or both, would constitute any of the foregoing under,
any Material Contract to which Seller or the Company is a party or by which
Seller or the Company or any of their assets or properties are bound; (iii)
permit the acceleration of the maturity of any Indebtedness of the Company or
Indebtedness secured by its assets or properties; or (iv) violate or conflict
with any provision of any of, or cause the dissolution of Seller or the Company
pursuant to, the Certificate of Incorporation or Bylaws of Seller or the
Company.
4.4 Capitalization of the Company. (a) The authorized capital stock of the
Company consists of 20 shares of Class A Common Stock, $1 par value, and 2,980
shares of Class B Common Stock, $1 par value, of which 10 shares of Class A
Common Stock and 90 shares of Class B
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Common Stock have been duly authorized and validly issued in compliance with the
terms and conditions of the Certificate of Incorporation and Bylaws of the
Company and in compliance with all registration or qualification requirements
(or applicable exemptions therefrom) of all applicable federal and state
securities laws. The legal and beneficial and record ownership of the Shares is
accurately set forth on the Company Disclosure Schedule. The Shares are fully
paid and nonassessable and are not subject to preemptive rights. There are no
shares of capital stock of the Company currently reserved for issuance for any
purpose or upon the occurrence of any event or condition.
(b) Except as set forth in clause (a) there is no stock or other securities
(whether or not such securities have voting rights) of the Company issued or
outstanding or any subscriptions, options, warrants, puts, calls, rights,
convertible securities or other agreements or commitments of any character
obligating Seller, the Company or any of their respective Affiliates to issue,
transfer or sell, or cause the issuance, transfer or sale of, any stock or other
securities (whether or not such securities have voting rights) of the Company.
There are no outstanding contractual rights or obligations of any Person that
relate to the purchase, sale, issuance, repurchase, redemption, acquisition,
transfer, disposition, holding or voting of any stock or other securities of the
Company, or the management or operation of the Company, including rights of
first refusal, rights of first offer, "drag along" rights or "tag along" rights.
Accurate and complete copies of any agreement relating to any such arrangement
have previously been provided to Products. Except for Seller's rights as the
record and beneficial owner of the Shares, no Person has any right to
participate in, or receive any payment based (including payments pursuant to
this Agreement or any Related Agreement) on any amount relating to, or arising
in connection with, the revenue, income, value or net worth of the Company or
any component or portion thereof, or any current or former ownership of Shares,
or any current or former ownership of the Company or Seller, or any increase or
decrease in any of the foregoing.
(c) The Shares owned by Seller are owned free and clear of any and all
Liens.
4.5 Financial Statements; Undisclosed Liabilities; Other Documents. (a)
Accurate and complete copies of the Seller Financial Statements have previously
been provided to Products. The Seller Financial Statements consistently and
fairly present the consolidated financial position, assets and liabilities of
Seller as of the dates thereof and the consolidated revenues, expenses and
results of operations of Seller for the periods covered thereby, in each case in
accordance with GAAP. The Seller Financial Statements have been prepared in
accordance with the books and records of Seller. The Seller Financial Statements
do not reflect any transactions which are not bona fide transactions other than
sales between Seller and Seller's Affiliates and between Seller's Affiliates.
The Seller Financial Statements do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading.
(b) Except as reflected in the Latest Balance Sheet, the Company has no
liabilities, Indebtedness or obligations, whether accrued, absolute, contingent
or otherwise, whether due or to become due, other than accrued expenses incurred
in the ordinary course of business since the Latest Balance Sheet Date. At the
Effective Time, the Company will have no Indebtedness whatsoever and no
liability, Indebtedness or obligations, whether accrued, absolute, contingent or
otherwise,
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whether due or to become due, except for the Debt Repayment Amount. As of the
Effective Time, the Debt Repayment Amount will not exceed $90,000,000.
4.6 No Material Adverse Effects; No Material Adverse Change. Since the
Latest Balance Sheet Date, the Company and Seller have conducted the Automotive
Business in the ordinary course consistent with past practices of the Automotive
Business and the Company and Seller (with respect to the Automotive Business)
have not:
(a) suffered any Material Adverse Change (provided that for the
purpose of this Section 4.6(a), $250,000 in the aggregate shall be
substituted for $100,000 individually in the definition of "Material
Adverse Effect");
(b) suffered any damage, destruction or Loss to any of their assets or
properties (whether or not covered by insurance) that has had or would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect (provided that for the purpose of this Section
4.6(b), $250,000 in the aggregate shall be substituted for $100,000
individually in the definition of "Material Adverse Effect");
(c) taken any action or failed to take any action, or made any
expenditure or failed to make any expenditure, or entered into or
authorized any Material Contract or transaction, other than in the ordinary
course of business and consistent with past practice and other than
pursuant to the Restructuring;
(d) except for the Restructuring, sold, transferred, conveyed,
assigned or otherwise disposed of any material assets or properties related
to the Automotive Business (other than the Excluded Assets), except sales
of inventory in the ordinary course of business and consistent with past
practice;
(e) waived, released or canceled any claims against third parties or
debts owing to them, or any rights which have any value and which relate to
the Automotive Business, other than in the ordinary course of business and
consistent with past practice pursuant to Contracts which are not Material
Contracts with Persons that are not Affiliates of Seller;
(f) made any changes in their accounting systems, policies, principles
or practices related to the Automotive Business;
(g) except for the transfer from Seller to the Company of the property
and other assets comprising the Automotive Business in connection with the
Restructuring, entered into, authorized or permitted any transaction with
Seller or any Affiliate of Seller from the Latest Balance Sheet Date
through to the Closing Date;
(h) authorized for issuance, issued, sold, delivered or agreed or
committed to issue, sell or deliver (whether through the issuance or
granting of options, warrants, convertible or exchangeable securities,
commitments, subscriptions, rights to purchase or otherwise) any
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Shares or any other securities of the Company, or amended any of the terms
of any Shares or such other securities;
(i) split, combined or reclassified any Shares (or any other
securities of the Company), declared, set aside or paid any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of any Shares (or any other securities of the Company),
or redeemed or otherwise acquired any Shares (or any other securities of
the Company);
(j) other than pursuant to the Restructuring, with respect to the
Company, made any borrowings, incurred any Indebtedness, or assumed,
guaranteed, endorsed (except for the negotiation or collection of
negotiable instruments in transactions in the ordinary course of business
and consistent with past practice) or otherwise become liable (whether
directly, indirectly or contingently) for the obligations or Indebtedness
of any other Person, or made any payment or repayment in respect of any
obligations or Indebtedness (other than accrued expenses in the ordinary
course of business and consistent with past practice);
(k) with respect to the Company, made any loans, advances or capital
contributions to, or investments in, any other Person;
(l) entered into, adopted, amended or terminated any bonus, profit
sharing, compensation, termination, stock option, stock appreciation right,
restricted stock, performance unit, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreements,
trusts, plans, funds or other arrangements for the benefit or welfare of
the Continuing Employees, or increased in any manner the compensation or
fringe benefits of any Continuing Employee or paid any benefit not required
by any existing plan and arrangement or entered into any contract,
agreement, commitment or arrangement to do any of the foregoing;
(m) except in connection with the Restructuring, acquired or leased
any assets outside the ordinary course of business or any assets which are
material to the Company or made any property subject to any Lien other than
a Permitted Lien;
(n) except in connection with the Restructuring, authorized or made
any capital expenditures which individually or in the aggregate are in
excess of $100,000;
(o) made any Tax election or settled or compromised any federal,
state, local or foreign Tax liability, or waived or extended the statute of
limitations in respect of any such Taxes;
(p) paid any amount, performed any obligation or agreed to pay any
amount or perform any obligation, in settlement or compromise of any suits
or claims of liability against the Company or any of its officers, members,
managers, employees or agents; or
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(q) except in connection with the Restructuring, terminated, modified,
amended or otherwise altered or changed any of the terms or provisions of
any Material Contract.
4.7 Title to Properties; Restructuring. (a) Other than those assets,
properties and rights which are Excluded Assets or which have been acquired or
disposed of in the ordinary course of business and consistent with past
practice, the Company has, or at and as of the Closing Date will have, good and
marketable title to, and is or will be, as the case may be, the lawful owner of,
all of the tangible and intangible assets, properties and rights used in the
Automotive Business during the year ended December 31, 2000, and thereafter, in
all cases free and clear of all Liens other than Permitted Liens.
(b) Prior to the Closing Date, Seller will, and will cause each of its
Affiliates (other than Main Street and WAD) to, transfer and assign to the
Company all of the respective properties and assets owned by it (other than
those assets and properties that are the Excluded Assets or that have been
disposed of in the ordinary course of business and consistent with past
practices) that are used in the Automotive Business as conducted by it during
the year ended December 31, 2000, and thereafter, and those liabilities
associated with such assets as set forth on the Company Disclosure Schedule (the
"Restructuring"). The Company Disclosure Schedule sets forth a complete and
accurate description of each such transfer undertaken or to be undertaken prior
to the Closing Date in connection with the Restructuring. Included in the
transfers which constitute the Restructuring are all operating and capital
leases of equipment (other than those operating and capital leases of equipment
which are Excluded Assets) used in the Automotive Business but only to the
extent that at least twelve months of the related operating or capital lease, as
the case may be, expense have been reflected in Seller's consolidated statement
of earnings for the year ended December 31, 2000.
4.8 Condition and Sufficiency of Assets. The Company owns or leases, or at
and as of the Effective Time will own or lease, all assets and rights (other
than those assets and rights which are Excluded Assets) used for the continued
conduct of the Company's business and operations as conducted during the year
ended December 31, 2000, and thereafter (including, without limitation, those
assets used for the continued conduct of the Automotive Business). All of the
tangible assets, properties and rights of the Company or which are used in the
Automotive Business, whether real or personal, owned or leased (with respect to
leased property, during the term of lease therefor), have been well maintained
and are in good operating condition and repair (with the exception of normal
wear and tear), and are free from defects other than such minor defects as do
not interfere with the intended use thereof in the conduct of normal operations
or adversely affect the resale value thereof.
4.9 Real Property. The Company Disclosure Schedule sets forth an accurate
and complete list of all real property owned or leased (as lessor or lessee) by
the Company or used in the Automotive Business (other than the real property
located at 00-00 Xxxxxxx Xxxxxx in Lowell, Massachusetts and in Hickory, North
Carolina, which were used by Seller in the Automotive Business conducted by
Seller for itself and for the Company but which are Excluded Assets) and sets
forth in the case of owned real property, the address and owner of each parcel
and in the case of leased real property, the landlord and tenant for such lease.
Accurate and complete copies of each deed and lease re-
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lated to such real property have previously been provided to Products. With
respect to the real property used in the business and operations of the
Automotive Business (the "Real Property"):
(a) the activities carried on by Seller or any of its Subsidiaries in
all buildings, plants, facilities, installations, fixtures and other
structures or improvements included as part of, or located on or at, the
Real Property, and the buildings, plants, facilities, installations,
fixtures and other structures or improvements themselves, are not in
violation of, or in conflict with, any applicable zoning, building,
environmental or health regulations or ordinance or any other similar Law;
or
(b) neither Seller nor any of its Subsidiaries has used, deposited,
stored or located at, on, under or beneath any Real Property or portion
thereof any Hazardous Material, including, without limitation any asbestos,
asbestos-containing materials, PCB compounds or other pollutants or
contaminants, except as would not reasonably be expected to give rise to a
material liability of the Company.
4.10 Personal Property. The Company Disclosure Schedule sets forth an
accurate and complete list of all of the tangible personal property owned by the
Company or used in the Automotive Business (other than the Excluded Assets)
having an original acquisition cost of $10,000 or more for each such item or
group of related or similar items. The Company Disclosure Schedule also sets
forth all Contracts that are leases of personal property binding upon the
Company or any of its assets or properties, and all items of personal property
covered thereby. All of such tangible personal property is presently utilized by
the Company or in the Automotive Business in the ordinary course of business.
4.11 Inventory. Section 4.11 of the Company Disclosure Schedule sets forth
an itemized list of all inventories of the Company pro forma for the
Restructuring as of June 30, 2001 and all reserves in connection therewith as of
such date; and all such inventories of the Company are of good, usable and
merchantable quality subject to such reserves. The net value of such inventories
does not include the value of any obsolete, irregular or discontinued items.
Since June 30, 2001, no inventory items have been sold or disposed of except
through sales in the ordinary course of business and at gross margins consistent
with past practice.
4.12 Accounts Receivable; Engineering and Development. (a) All accounts,
notes receivable and other receivables (other than receivables collected since
the Latest Balance Sheet Date) reflected on the Latest Balance Sheet were, and
all accounts and notes receivable arising from or otherwise relating to the
business of the Company as of the Closing Date will be, valid, genuine and fully
collectible in the aggregate amount thereof, subject to normal and customary
trade discounts, less any reserves for doubtful accounts and other allowances
recorded on the Latest Balance Sheet or established in the ordinary course
thereafter. All accounts, notes receivable and other receivables arising out of
or relating to the business and operations of the Company as of the Latest
Balance Sheet Date were included in the Latest Balance Sheet in accordance with
GAAP.
(b) The Company has no capitalized engineering and development expenses.
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4.13 Intellectual Property. The Company Disclosure Schedule sets forth an
accurate and complete list of all the Company Intellectual Property and all
Intellectual Property used by the Company in the conduct of its business and
operations as of the date hereof and all Intellectual Property used in
connection with the Automotive Business (including the identity of the licensee
thereof). With respect to such Intellectual Property and such Company
Intellectual Property:
(a) all of the Company Intellectual Property is owned by the Company
free and clear of all Liens, and is not subject to any license, royalty or
other agreement, and the Company has not granted any license or agreed to
pay or receive any royalty in respect of any Company Intellectual Property
and all applicable fees relating thereto have been paid timely;
(b) except for the Company Intellectual Property, all of the
Intellectual Property used by the Company or in the Automotive Business is
the subject of a valid license, and all royalties and other fees to be paid
by the Company with respect to such licenses are set forth on the Company
Disclosure Schedule;
(c) no Intellectual Property has been or is the subject of any pending
or, to the Knowledge of Seller, threatened litigation or claim of
infringement or misappropriation in the United States or any foreign
country, and the Company owns or possesses adequate rights for the
remainder of the normal term of protection under Law of such Company
Intellectual Property to preclude any infringement;
(d) to the Knowledge of Seller, no Person is misappropriating or
infringing the rights of the Company with respect to the Intellectual
Property;
(e) to the Knowledge of Seller, no party to any license or royalty
agreement to which the Company is a party is in breach or default, and no
written notice of termination has been given or is threatened;
(f) to the Knowledge of Seller, the Automotive Business as now
conducted by Seller and the Company does not infringe on or misappropriate
any intellectual property or confidential or proprietary rights of any
other Person in the United States or in any foreign country in which the
Company has operated prior to the Closing Date, and the Company has not
received any notice contesting its right to use any Intellectual Property;
and
(g) the Company owns or possesses adequate rights in and to all
Intellectual Property necessary to conduct its business and operations
(including, without limitation, the Automotive Business) as presently
conducted.
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4.14 Contracts; No Default or Violations. (a) The Company Disclosure
Schedule sets forth an accurate and complete list of all the Contracts of the
following types to which the Company is a party or by which it is bound, or to
which any of the Company's assets or properties or the Automotive Business is
subject:
(i) any collective bargaining agreement, as well as any document
modifying, terminating or extending such agreement and any letters of
understanding or side agreements with respect to such agreement, in each
case whether oral or written;
(ii) any Material Contract with any Continuing Employee or any of its
Affiliates, or any Contract or other arrangement of any kind with Seller or
any Affiliate of Seller;
(iii) any Material Contract with a sales representative,
manufacturer's representative, promoter, producer, sponsor, distributor,
dealer, broker, sales agency, advertising agency or other Person engaged in
sales, distributing or promotional activities, or any Material Contract to
act as one of the foregoing on behalf of any Person; any Contract of any
nature which involves the payment or series of payments or receipt of cash
or other property, an unperformed commitment, or goods or services, or any
combination thereof having a value in excess of $25,000; any Contract
pursuant to which the Company has made or will make loans or advances, or
has or will have incurred debts or become a guarantor or surety or pledged
its credit on or otherwise become responsible with respect to any
undertaking of another (except for the negotiation or collection of
negotiable instruments in transactions in the ordinary course of business);
(iv) any indenture, credit agreement, loan agreement, note, mortgage,
security agreement, lease of Real Property or personal property, loan
commitment or other Contract or financing statements relating to
Indebtedness, the borrowing of funds, an extension of credit or financing;
(v) any Contract involving a partnership, joint venture or other
cooperative undertaking in which the Company is a partner, joint venturer
or the like;
(vi) any Contract involving any restrictions with respect to the
geographical area of operations or scope or type of business of the Company
or any Continuing Employee;
(vii) any power of attorney or agency agreement or arrangement with
any Person pursuant to which such Person is granted the authority to act
for, or on behalf of, the Company, or the Company is granted the authority
to act for, or on behalf of, any Person;
(viii) any Material Contract for which the full performance thereof
may extend beyond sixty (60) days from the Closing Date;
(ix) any Material Contract (other than this Agreement and the Related
Agreements) not made in the ordinary course of business which is to be
performed in whole or in part at or after the Closing Date;
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(x) any Contract (other than this Agreement and the Related
Agreements), whether or not fully performed, relating to any acquisition or
disposition of the Company or any predecessor in interest to the Company,
or any acquisition or disposition of all or substantially all of the assets
of the Company, or any acquisition or disposition of any Subsidiary,
division or line of business or any other acquisition or disposition of
property or assets comprising the Automotive Business;
(xi) any Material Contract containing an option to purchase or sell
any property, real or personal, tangible or intangible, or containing any
right of first refusal to acquire or sell any such property;
(xii) any Material Contract involving the licensing of any
Intellectual Property from any third party and any Contract involving the
licensing of Company Intellectual Property by the Company to any third
party; and
(xiii) any Contract not specified above that is a Material Contract.
(b) Seller or the Company has delivered or made available to Products
accurate and complete copies of each Contract listed on the Company Disclosure
Schedule, and the Company Disclosure Schedule contains a written description of
each oral arrangement of the kind listed. (i) All such Contracts and
arrangements between the Company, on the one hand, and the Company's Affiliates
or Seller or any Affiliate of Seller, on the other hand, are on terms that are
no less favorable to the Company than the terms that could have been obtained as
of the date of such Contract from an unrelated third party; (ii) all such
Contracts are valid and enforceable obligations of the Company and, to the
Knowledge of Seller, each other party thereto and are not subject to termination
as a result of the Transactions provided that required consents to or approvals
of the Merger listed on Schedule 4.3(b) of the Company Disclosure Schedule are
received; and (iii) neither Seller nor the Company has received any notice of
default or termination (or threatened termination) with respect to any such
Contract.
(c) The Company has not breached any provision of, nor is in default under
the terms of, its Certificate of Incorporation or Bylaws (or other applicable
organizational documents) or any Contract to which it is a party or under which
it has any rights or by which it or any of its assets or properties is bound,
and, to the Knowledge of Seller, no other party to any such Contract has
breached such Contract or is in default (with or without notice or the passage
of time, or both) thereunder.
(d) The Company is, and Seller and its other Subsidiaries in the conduct of
the Automotive Business are, in compliance with, and no violation exists under,
any and all applicable Laws except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(e) No written notice from any Governmental Authority has been received by
the Company or Seller or any of its other Subsidiaries in the context of the
Automotive Business, claiming any violation, of any Law (including any building,
zoning or other ordinance), which claimed
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violation, and any related liability (contingent or otherwise) has not been
corrected prior to the date of this Agreement, or requiring any work,
construction or expenditure, or asserting any Tax, assessment or penalty.
4.15 Permits. The Company Disclosure Schedule sets forth an accurate and
complete list of all licenses, certificates, permits, franchises, rights, code
approvals and private product approvals (together, the "Permits"), other than
Permits that are Excluded Assets, that are held by the Company or that relate to
the Automotive Business and are held by Seller or any of its other Subsidiaries.
At and as of the Effective Time, the Company will hold all Permits, whether
federal, state, local or foreign, that are necessary for the lawful operation of
the businesses of the Company as presently conducted (including, without
limitation, in connection with the Automotive Business), except where the
failure to hold or maintain any such Permit would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
4.16 Insurance. (a) The Company Disclosure Schedule sets forth an accurate
and complete list of all policies of fire, liability, workers' compensation,
title and other forms of insurance owned, held by or applicable to the Company
(or its assets or business), and Seller or the Company has previously delivered
to Products an accurate and complete copy of all such policies, including all
occurrence-based policies applicable to the Company (or its assets or business)
for all periods prior to the Closing Date. All such policies are in full force
and effect, all premiums with respect thereto covering all periods up to and
including the Closing Date have been paid, and no notice of cancellation or
termination has been received with respect to any such policy, except with
respect to any such cancellation or termination that would not reasonably be
expected to have a Material Adverse Effect. Such policies are sufficient for
compliance with all requirements of Law and compliance with all Material
Contracts to which Seller or the Company is a party and which relate to the
property or assets of the Company or the Automotive Business, and are valid,
outstanding and enforceable policies. Such insurance policies provide types and
amounts of insurance customarily obtained by businesses similar to the business
of the Company (including, without limitation, with the Automotive Business).
Neither Seller nor the Company has been refused any insurance with respect to
the assets or operations of the Company or the Automotive Business, and their
coverage has not been limited by any insurance carrier to which any of them has
applied for any such insurance or with which any of them has carried insurance
during the last three (3) years.
(b) The Company Disclosure Schedule sets forth an accurate and complete
list of all claims which have been made by Seller or the Company in the last
three (3) years under any workers' compensation, general liability, property or
other insurance policy applicable to the Company or any of its properties or the
Automotive Business. There are no pending or, to the Knowledge of Seller,
threatened claims under any insurance policy. Such claim information includes
all available information with respect to each accident, loss, or other event,
including (i) the identity of the claimant; (ii) the date of the occurrence;
(iii) the status as of the report date; and (iv) the amounts paid or expected to
be paid or recovered.
4.17 Employee Benefit Plans; ERISA. (a) The Company Disclosure Schedule
sets forth an accurate and complete list of all "employee pension benefit plans"
as defined in Section
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3(2) of ERISA ("Pension Plans"), "welfare benefit plans" as defined in Section
3(1) of ERISA ("Welfare Plans") and stock bonus, stock option, restricted stock,
stock appreciation right, stock purchase, bonus, incentive, deferred
compensation, severance and vacation plans, employment or consulting agreements,
and all other employee benefit plans, programs, policies or arrangements,
covering Automotive Business Employees (or former employees), maintained or
contributed to by the Company or any of its ERISA Affiliates (as hereinafter
defined) on behalf of Automotive Business Employees, or to which the Company
contributes or is obligated to make payments thereunder (collectively, the
"Employee Benefit Plans"). For purposes of this Agreement, "ERISA Affiliate"
shall mean any person (as defined in Section 3(9) of ERISA) that is or has been
a member of any group of persons described in Section 414(b), (c), (m), (o) or
(t) of the Code including the Company.
(b) The Company and each of the Pension Plans and Welfare Plans are in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other applicable Laws in connection with the Employee Benefit Plans.
(c) All contributions to, and payments from, the Pension Plans that are
required to have been made in accordance with the Pension Plans have been timely
made.
(d) Any Pension Plans intended to qualify under Section 401 of the Code
have been determined by the IRS to be so qualified and no event has occurred and
no condition exists with respect to the form or operation of such Pension Plans
that would cause the loss of such qualification or exemption or the imposition
of any material liability, penalty or Tax under ERISA or the Code.
(e) Each Pension Plan that is not qualified under Code Section 401(a) or
403(a) is exempt from Part 2, 3 and 4 of Title I of ERISA as an unfunded plan
that is maintained primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees, pursuant to
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. No assets of the Company is
allocated to or held in a "rabbi trust" or similar funding vehicle.
(f) There are (i) no investigations pending by any governmental entity
(including the Pension Benefit Guaranty Corporation (the "PBGC")) involving the
Pension Plans or Welfare Plans, and (ii) no pending or, to the Knowledge of
Seller, threatened claims (other than routine claims for benefits), suits or
proceedings against any Pension Plan or Welfare Plan, against the assets of any
of the trusts under any Pension Plan or Welfare Plan or against any fiduciary of
any Pension Plan or Welfare Plan with respect to the operation of such plan or
asserting any rights or claims to benefits under any Pension Plan or against the
assets of any trust under such plan, nor, to the Knowledge of Seller, are there
any facts that would give rise to any material liability.
(g) None of the Company or any Automotive Business Employee, nor any
trustee, administrator, other fiduciary or any other "party in interest" or
"disqualified person" with respect to the Pension Plans or Welfare Plans, has
engaged in a "prohibited transaction" (as such term is defined in Section 4975
of the Code or Section 406 of ERISA) that could result in a material tax or
penalty on the Company under Section 4975 of the Code or Section 502(i) of
ERISA.
-24-
(h) With respect to any employee benefit pension plan subject to Section
412 of the Code or Section 302 of ERISA maintained by the Company or an ERISA
Affiliate with respect to the Automotive Business Employees: (i) all
contributions required to be made by the Company or any ERISA Affiliate under
Section 302 of ERISA and Section 412 of the Code have been timely made, (ii)
there has been no application for or waiver of the minimum funding standards
imposed by Section 412 of the Code, and (iii) no such plan has incurred an
"accumulated funding deficiency" within the meaning of Section 412(a) of the
Code as of the end of the most recently completed plan year.
(i) No employee benefit pension plan subject to Title IV of ERISA
maintained by the Company or an ERISA Affiliate has been terminated or has been
the subject of a "reportable event" (as defined in Section 4043 of ERISA and the
regulations thereunder) for which the thirty (30) day notice requirement has not
been waived by the PBGC.
(j) Neither the Company nor any ERISA Affiliate has incurred, or would
reasonably be expected to incur, liability under Title IV of ERISA with respect
to the Employee Benefit Plans.
(k) No Pension Plan is a "multiemployer plan" as defined in Section 3(37)
of ERISA.
(l) With respect to each of the Employee Benefit Plans, true, correct and
complete copies of the following documents have been made available to Products:
(i) the plan document and any related trust agreement, including amendments
thereto, (ii) any current summary plan descriptions and other material
communications to participants relating to the Employee Benefit Plans, (iii) the
most recent Forms 5500, if applicable, (iv) the most recent IRS determination
letter, if applicable, and (v) the most recent actuarial report or valuation
with respect to each Pension Plan subject to Title IV of ERISA.
(m) None of the Welfare Plans maintained by the Company with respect to the
Automotive Business Employees provide for continuing benefits or coverage for
any participant or any beneficiary of a participant following termination of
employment, except as may be required under Section 4980B of the Code and Part 6
of Subtitle B of Title I of ERISA ("COBRA"), or except at the expense of the
participant or the participant's beneficiary. The Company and any ERISA
Affiliates which maintain a "group health plan" within the meaning of Section
5000(b)(1) of the Code have complied in all material respects with the COBRA
notice and continuation requirements.
(n) No liability under any Pension Plan or Welfare Plan has been funded nor
has any such obligation been satisfied with the purchase of a contract from an
insurance company as to which the Company has received notice that such
insurance company is in rehabilitation or a comparable proceeding.
(o) As of the Closing, the Company and any entity with which the Company
could be considered a single employer under 29 U.S.C. Section 2101(a)(1) or
under any relevant case law, has not incurred any liability or obligation under
the Worker Adjustment and Retraining Notification Act, as it may be amended from
time to time.
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(p) Except pursuant to Section 6.15(c) hereof, the consummation of the
transactions contemplated by this Agreement will not result in an increase in
the amount of compensation or benefits or accelerate the vesting or timing of
payment of any benefits or compensation payable to or in respect of any employee
of the Company.
(q) The consummation of the transactions contemplated by this Agreement
will not result in or satisfy a condition to the payment of compensation that
would, in combination with any other payment, result in an "excess parachute
payment" within the meaning of Section 280G(b) of the Code.
(r) The Company does not maintain or contribute to any plan, program,
policy, arrangement or agreement with respect to employees (or former employees)
employed outside the United States.
4.18 Employment and Labor Matters. (a) The Company has no employment
contract or consulting agreement currently in effect that is not terminable at
will (other than agreements with the sole purpose of providing for the
confidentiality of proprietary information or assignment of inventions). The
Company Disclosure Schedule sets forth an accurate and complete list of all
Automotive Business Employees and their respective positions.
(b) Neither Seller nor any of its Subsidiaries (i) has ever been or is now
subject to a union organizing effort with respect to Automotive Business
Employees, (ii) is subject to any collective bargaining agreement with respect
to any of the Automotive Business Employees, (iii) is currently negotiating any
collective bargaining agreement, mid-term bargaining agreement, effects
bargaining agreement or plant closure agreement with respect to any of the
Automotive Business Employees, (iv) is subject to any other contract, written or
oral, with any trade or labor union, employees' association or similar
organization with respect to Automotive Business Employees, or (v) has current
labor disputes relating to the Automotive Business Employees. Seller and its
Subsidiaries have good labor relations and, to the Knowledge of Seller, there
are no facts indicating that the consummation of the transactions contemplated
hereby will have a Material Adverse Effect on such labor relations, and, to the
Knowledge of Seller, no Continuing Employee intends to leave its employ as of
the date of this Agreement.
(c) Seller and each of its Subsidiaries is in compliance with all Contracts
relating to employment, employment practices, wages, hours and terms and
conditions of employment of the Automotive Business Employees. Seller and each
of its Subsidiaries is in compliance with all applicable Laws with respect to
employment and employment practices, terms and conditions of employment, wages,
hours of work and occupational safety and health.
4.19 Capital Improvements. The Company Disclosure Schedule sets forth an
accurate and complete list of all capital improvements or purchases or other
capital expenditures of the Company that have not been completed prior to the
date hereof, and also sets forth the cost and expense reasonably estimated to
complete such work and purchases.
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4.20 Taxes. (a) All federal, state, local and foreign income, corporation
and other Tax Returns have been timely filed by or for Seller or the Company or
are subject to a valid extension of the filing date for all periods through and
including the Closing Date as required by applicable Law. All Taxes shown as due
on all such Tax Returns and other filings, and all other Taxes of such entities,
have been timely paid. Each such Tax Return and filing is accurate and complete
in all material respects. The Company Disclosure Schedule sets forth an accurate
and complete list of such Tax Returns filed by the Company at any time after
January 1, 1998; a copy of each such Tax Return has previously been provided to
Products. Neither Seller nor the Company currently has or will have any
additional liability for Taxes with respect to any Tax Return or other filing
heretofore filed or which was required by Law to be filed, other than (i) as
reflected as liabilities on the Seller Financial Statements as of the Latest
Balance Sheet; or (ii) since the Latest Balance Sheet Date, as have arisen in
the ordinary course of business consistent with past practice.
(b) No material Tax Return of Seller or the Company is under audit or
examination by any taxing authority, and no written notice of such an audit or
examination has been received by Seller or the Company. The Company Disclosure
Schedule sets forth an accurate and complete list of all Tax audits of Seller or
the Company completed at any time after January 1, 1998 and an accurate and
complete description in reasonable detail of any Tax audit or Tax claim with
respect to Seller or the Company that was initiated but not completed in that
time. Each material deficiency resulting from any audit or examination relating
to Taxes by any taxing authority has been paid, except for deficiencies being
contested in good faith and described on the Company Disclosure Schedule.
(c) All Taxes that Seller or the Company is required by Law to withhold or
collect, including sales and use taxes, and amounts required to be withheld for
Taxes of Automotive Business Employees and other withholding taxes, have been
duly withheld or collected and, to the extent required, have been paid over to
the proper Governmental Authorities or are held in separate bank accounts for
such purpose. All information returns required to be filed by Seller or the
Company prior to the date hereof have been filed (and prior to the Closing Date
will have been filed), and all statements required to be furnished to payees by
Seller or the Company prior to the date hereof have been furnished (and prior to
the Closing Date will have been furnished) to such payees, and the information
set forth on such information returns and statements is accurate and complete in
all material respects. The Company Disclosure Schedule sets forth an accurate
and complete description in reasonable detail of any Tax consulting services
provided to or for the benefit of the Company at any time since January 1, 1998.
The Company has engaged no independent contractors.
(d) Seller is not a "foreign person" as defined in Section 1445(f)(3) of
the Code.
4.21 Product Claims. The Company Disclosure Schedule sets forth an accurate
and complete list of all notices, demands, claims, actions, notices of violation
or investigation or classes of claims or lawsuits involving any product
manufactured, produced, distributed or sold by or on behalf of the Automotive
Business (a "Product") that are pending or, to the Knowledge of Seller,
threatened by or on behalf of any Governmental Authority or any direct or
indirect purchaser of any Product resulting from an alleged defect in design,
manufacture, materials or workmanship of any
-27-
Product, or any alleged failure to warn or from any breach of express or implied
specifications or warranties or representations. There has not been, nor is
there under consideration or investigation by Seller or the Company, any recall,
rework, retrofit or post-sale warning concerning any Product or, to the
Knowledge of Seller, any recall conducted by or on behalf of any entity
involving any Product.
4.22 Environmental Matters. (a) (i) Seller and the Company are in
compliance in all material respects with all Environmental Laws applicable to
the properties, assets and businesses of the Company and the Automotive Business
and possess and comply in all material respects with all Environmental Permits
required under such Environmental Laws, and (ii) there are no present or past
events, conditions or circumstances, practices or plans that have been asserted
in writing to have violated any Environmental Law and have not been corrected,
and any related liability (contingent or otherwise) resolved, prior to the date
of this Agreement or that would reasonably be expected to materially increase
the burden on the Company of complying with Environmental Laws or of obtaining,
renewing or complying with all Environmental Permits required under
Environmental Laws in order to conduct the business of the Company and the
Automotive Business as currently conducted;
(b) (i) Neither Seller nor the Company has received any Environmental Claim
and (ii) there is no pending or, to the Knowledge of Seller, threatened
Environmental Claim against Seller or the Company or any Environmental Claim
pending or, to the Knowledge of Seller, threatened against any entity for which
the Company may be liable;
(c) There are no Hazardous Materials or other conditions at, under or
emanating from any property or facility owned, leased or operated by Seller in
connection with the Automotive Business or by the Company now or in the past
that would reasonably be expected to give rise to a material Environmental Claim
against or material liability of the Company;
(d) (i) No property owned, leased or operated by Seller in connection with
the Automotive Business or by the Company is (A) listed or proposed for listing
on the National Priorities List promulgated under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
("CERCLA") or (B) listed on the Comprehensive Environmental Response,
Compensation, and Liability Information System promulgated under CERCLA or (C)
listed on any comparable list promulgated or published by any Governmental
Authority (including, without limitation, any such list relating to gasoline or
petroleum or oil), and (ii) no Lien has been recorded under any Environmental
Law with respect to any property, facility or asset owned, leased or operated by
Seller in connection with the Automotive Business or by the Company;
(e) The Company has not assumed, contractually or by operation of Law, any
liabilities or obligations of any third party under any Environmental Law;
(f) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and the exercise by Parent and Products of
rights to own and operate the business of the Company as currently conducted (i)
will not affect the validity or require the transfer of any Environmental
Permits held by the Company under any Environmental Law and
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(ii) will not require any notification, disclosure, registration, reporting,
filing or investigatory, remedial, removal or other response action under any
Environmental Law; and
(g) The Company Disclosure Schedule sets forth an accurate and complete
list of all Environmental Reports in the possession or control of Seller or the
Company which relate to the Company or the Automotive Business. A copy of each
such Environmental Report has previously been provided or made available to
Products.
4.23 Litigation. (a) There are no actions, suits, claims, notices of
potential claims, requests for accommodation, arbitrations, regulatory
proceedings or other litigation, proceedings or governmental investigations
pending or, to the Knowledge of Seller, threatened against or affecting the
Automotive Business or the Company, or any of its officers, directors,
employees, managers, or agents in their capacity as such, or any of its
properties, rights, assets or businesses, and there are no facts or
circumstances which would reasonably be expected to give rise to any of the
foregoing. Any proceeding pending or, to the Knowledge of Seller, threatened
against the Automotive Business or the Company is fully covered by insurance
policies (or other indemnification agreements with third parties) and is being
defended by the insurers (or such third parties), subject to such deductibles as
are set forth in the Company Disclosure Schedule. The Company is not subject to
any order, judgment, decree, injunction, stipulation or consent order of or with
any court or other Governmental Authority. The Company has not entered into any
agreement to settle or compromise any proceeding pending or threatened against
it which has involved any obligation other than the payment of money or for
which it has any continuing obligation.
(b) There are no claims, actions, suits, proceedings or investigations
pending or, to the Knowledge of Seller, threatened by or against the Automotive
Business or the Company, any of its officers, directors, employees, managers or
agents or Seller with respect to this Agreement or the Related Agreements, or in
connection with the transactions contemplated hereby or thereby, and Seller has
no reason to believe there is a valid basis for any such claim, action, suit,
proceeding or investigation.
4.24 No Conflict of Interest. Neither Seller nor any of its Affiliates has
or claims to have any direct or indirect interest in any tangible or intangible
property, rights or assets (other than the Excluded Assets) used in the business
of the Company (including, without limitation, the Automotive Business), except
in the case of Seller as record and beneficial owner of the Shares.
4.25 Bank Accounts. The Company Disclosure Schedule sets forth a complete
and accurate list of the names and locations of each bank or other financial
institution at which the Company has an account (giving the account numbers) or
safe deposit box and the names of all Persons authorized to draw thereon or have
access thereto, and the names of all Persons, if any, now holding powers of
attorney or comparable delegation of authority from the Company and a summary
statement thereof.
4.26 Additional Representations and Warranties by Seller. (a) Seller hereby
acknowledges that Parent and Products each intend the offer and issuance of the
Common Stock repre-
-29-
senting the Merger Consideration to Seller to be exempt from registration under
the Securities Act and applicable state securities laws by virtue of: (i) the
status of Seller as an Accredited Investor; and (ii) Regulation D promulgated
under Section 4(2) of the Securities Act ("Regulation D").
(b) Seller hereby represents and warrants that:
(i) it is an Accredited Investor;
(ii) it shall acquire the Common Stock for its own account and not
with a view to or for sale in connection with any "sale," "offer for sale,"
"offer to sell," "offer" or "distribution" thereof within the meaning of
the Securities Act;
(iii) it has sufficient knowledge and experience in financial, tax and
business matters to enable it to evaluate the merits and risks of
investment in the Common Stock; and it has the ability to bear the economic
risk of acquiring the Common Stock; and
(iv) it has been supplied with, or had access to, information to which
a reasonable investor would attach significance in making an investment
decision to acquire the Common Stock; and it has had an opportunity to ask
questions of, and receive information and answers from, Parent and Products
concerning Parent, Products and the Common Stock, and to assess and
evaluate any information supplied to Seller. All questions concerning
Parent, Products and the Common Stock have been answered and all such
information has been provided to the full satisfaction of Seller.
(c) Seller hereby acknowledges that:
(i) this Agreement, the Related Agreements and the transactions
contemplated hereby and thereby involve complex tax and legal consequences
for Seller, and Seller is relying solely on the advice of its own tax and
legal advisors to evaluate such consequences;
(ii) none of Parent, Products or Merger Sub has made (or shall be
deemed to have made) any representations or warranties concerning the tax
or legal consequences of such transaction to Seller;
(iii) the Common Stock is not, and, subject to the Registration Rights
Agreement, will not be, registered under the Securities Act or any state
securities laws and cannot be resold without registration thereunder or
exemption therefrom; and
(iv) the certificates representing the unregistered Common Stock to be
delivered at the Closing shall bear substantially the following legend:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold,
transferred, or otherwise disposed of in the absence of an effective
registration statement under
-30-
such Act or an opinion of counsel satisfactory to the Company to the
effect that such registration is not required."
4.27 Brokers. Neither Seller nor the Company has used any broker or finder
in connection with the transactions contemplated hereby, and none of Parent,
Products or Merger Sub or any Affiliate of Parent, Products or Merger Sub has or
shall have any liability or otherwise suffer or incur any Loss as a result of,
or in connection with, any brokerage or finder's fee or other commission of any
Person retained by Seller or the Company in connection with this Agreement, the
Related Agreements or any of the transactions contemplated hereby or thereby.
4.28 Imposition of Certain Liability. Neither Seller nor the Company has at
any time taken any action or failed to take any action as a result of which the
Company has lost or will lose limited liability associated with the status of
the Company as a corporation.
4.29 Customers and Suppliers. Since January 1, 2000, none of the top five
customers of or top ten suppliers (including subcontractors thereof) to the
Automotive Business or the Company, in each case measured by dollar volume for
the twelve months ended as of December 31, 2000, has (i) notified Seller or any
Subsidiary of Seller that it intends to discontinue its relationship with the
Company or the Automotive Business, (ii) notified Seller or any Subsidiary of
Seller that it intends to reduce its trading with or provision of supplies to
the Company or the Automotive Business, or (iii) materially changed the terms on
which it is prepared to purchase from, trade with or supply the Company or the
Automotive Business. The Company Disclosure Schedule sets forth an accurate and
complete list of each Material Contract with the customers and suppliers of the
Automotive Business or the Company. Copies of each such Material Contract and of
each standard business agreement (i.e., purchase orders, invoices and the like)
used in the Automotive Business or by the Company have previously been provided
or made available to Products.
4.30 Company Disclosure Schedule. Seller has previously provided or made
available, or caused the Company to provide or make available, to Products
accurate and complete copies of each document listed or referred to on the
Company Disclosure Schedule.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT, PRODUCTS AND MERGER SUB
Each of Parent, Products and Merger Sub jointly and severally represents
and warrants to Seller that:
5.1 Existence and Power. Each of Parent, Products and Merger Sub is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Delaware, with all requisite power and authority to own,
lease and operate its properties and to conduct its business and operations as
they are now being owned, leased, operated and conducted.
5.2 Due Authorization. Each of Parent, Products and Merger Sub has full
power and authority to enter into this Agreement and the Related Agreements to
which it is a party and to
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consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by each of Parent, Products and Merger Sub of this
Agreement and the Related Agreements to which it is a party have been duly and
validly approved by the board of directors of each of Parent, Products and
Merger Sub and by the stockholders of Merger Sub, and no other actions or
proceedings on the part of Parent, Products or Merger Sub are necessary to
authorize this Agreement, the Related Agreements and the transactions
contemplated hereby and thereby. Each of Parent, Products and Merger Sub has
duly and validly executed and delivered this Agreement and the Related
Agreements to which it is a party. This Agreement and each such Related
Agreement constitute (assuming, in each case, due execution and delivery by the
other parties thereto) legal, valid and binding obligations of Parent, Products
or Merger Sub, as the case may be, in each case enforceable in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws in
effect which affect the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies.
5.3 Consents and Approvals; Authority Relative to This Agreement. Except
for the approval of the listing on the New York Stock Exchange of the Common
Stock representing the Merger Consideration, no consent, authorization or
approval of, filing or registration with, or cooperation from, any Governmental
Authority or any other Person not a party to this Agreement is necessary in
connection with the execution, delivery and performance by Parent, Products or
Merger Sub of this Agreement or the Related Agreements to which it is a party or
the consummation of the transactions contemplated hereby or thereby.
5.4 No Violation of Other Instruments or Laws. The execution, delivery and
performance by each of Parent, Products and Merger Sub of this Agreement and the
Related Agreements to which it is a party do not and will not (a) violate,
breach or constitute any material event of default, or result in the
acceleration of any material obligation, under any Material Contract, order,
writ, injunction, arbitration award, judgment or decree to which Parent,
Products or Merger Sub is a party or by which it is bound; or (b) violate any
Law.
5.5 Merger Consideration. The shares of Common Stock that constitute the
Merger Consideration, when issued and delivered to Seller in accordance with the
terms and conditions of this Agreement, will be duly authorized, validly issued,
fully paid and non-assessable, free and clear of all Liens (other than Liens
arising out of Seller's ownership of such shares of Common Stock).
5.6 Parent Disclosure Documents. Parent has made available to Seller true,
correct and complete copies of its annual report on Form 10-K for the year ended
December 31, 2000, each quarterly report on Form 10-Q since that date and each
report on Form 8-K since that date, if any (collectively, the "Parent Disclosure
Documents"). Except as reflected in any subsequent amendment or supplement to a
Parent Disclosure Document, no Parent Disclosure Document at the date on which
such document was filed contained any misstatements of a material fact or
omitted to state a material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
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5.7 Brokers. None of Parent, Products or Merger Sub has used any broker or
finder in connection with the transactions contemplated hereby, and neither
Seller nor any Affiliate of Seller has or shall have any liability or otherwise
suffer or incur any Loss as a result of, or in connection with, any brokerage or
finder's fee or other commission of any Person retained by Parent, Products or
Merger Sub in connection with this Agreement, the Related Agreements, or any of
the transactions contemplated hereby or thereby.
ARTICLE VI
COVENANTS
Each party hereto covenants and agrees, to the extent applicable to such
party, that, except as set forth in the corresponding section or subsection of
the Company Disclosure Schedule:
6.1 Implementing Agreement. On the terms and subject to the conditions
hereof, from and after the date hereof, (a) each party hereto shall use its
commercially reasonable efforts (i) to take all action required of it to fulfill
its obligations under the terms of this Agreement and the Related Agreements to
which it is a party, and (ii) to facilitate the consummation of the transactions
contemplated hereby and thereby, and (b) no party hereto shall take or fail to
take any actions which would be reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
Seller hereby agrees that Seller shall not sell, transfer or otherwise dispose
of any Shares or xxxxx x Xxxx upon any Shares (and shall not agree to do the
foregoing). Each party hereto agrees that it shall not, directly or indirectly,
take any other action (or refrain from taking any other action) that would have
the effect of preventing or disabling such party's performance of its
obligations under this Agreement or the Related Agreements to which it is a
party.
6.2 Access to Information and Facilities. From and after the date hereof,
Seller shall give Products and Products' representatives reasonable access
during Seller's normal business hours to all of the facilities, properties,
books, Contracts, commitments and records of the Company and Seller that relate
to the Company or the Automotive Business, and shall be available to Products
and its representatives and shall give reasonable access to Products and its
representatives Seller's and Company's officers, managers and employees, as
Products and its representatives, in each case, shall from time to time
reasonably request. From and after the date hereof, Parent shall give Seller and
Seller's representatives access during normal business hours to all of the
facilities, properties, books, material Contracts, commitments and records of
Parent and its Subsidiaries for the purpose of confirming the accuracy in all
material respects of the Parent Disclosure Documents and shall be available to
Seller and its representatives and shall make the Parent's and its Subsidiaries'
officers, directors, managers and employees available to Seller and its
representatives as Seller and its representatives, in each case, shall from time
to time request for the purpose of confirming the accuracy in all material
respects of the Parent Disclosure Documents.
6.3 Consents and Approvals. (a) Each party hereto shall use its
commercially reasonable efforts to obtain all consents, approvals, certificates
and other documents required in connection with the performance by it of this
Agreement and the Related Agreements to which it is a
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party and the consummation of the transactions contemplated hereby and thereby,
including all consents and approvals referred to in the Company Disclosure
Schedule, other than as set forth below in Section 6.3 (b) and (c) hereof. Each
of the Company, Seller, Parent, Products and Merger Sub shall make all filings,
applications, statements and reports to all Governmental Authorities and other
Persons that are required to be made by it prior to the Closing Date by, or on
behalf of, any such party pursuant to any applicable Law or Contract in
connection with this Agreement and the Related Agreements, and the transactions
contemplated hereby and thereby. Parent shall use its commercially reasonable
efforts to obtain the consent of the New York Stock Exchange to list the Common
Stock constituting the Merger Consideration on such Exchange.
(b) If Seller, despite its reasonable best efforts, is unable to obtain any
consent, authorization or approval listed on Schedule 4.3(a) of the Company
Disclosure Schedule under the heading "Non-Condition Consents" with respect to
any Contract or Permit, Seller shall cause Products to receive the benefits of
such Contract or Permit, provided that Products shall, at Seller's option,
either reimburse Seller for reasonable out-of-pocket costs incurred by Seller or
its Affiliates providing Products the benefits of such Contract or Permit or pay
such costs directly promptly after, or when, as the case may be, such costs are
incurred or owing, as the case may be. Products' obligations to Seller with
respect to such Contracts shall be equivalent in all applicable respects to
Seller's obligations to the other party or parties to such Contracts.
(c) Notwithstanding anything herein to the contrary, and without limiting
the foregoing, the parties acknowledge that consent is being sought under the
Master Lease Agreement (the "CIT Lease"), dated December 21, 1999, between the
CIT Group/Equipment Financing, Inc., as lessor, and Seller, as lessee, to divide
the CIT Lease into two leases, one of which would cover assets of the Automotive
Business and one of which would cover assets not of the Automotive Business. The
parties agree to use reasonable best efforts to obtain prior to Closing CIT's
consent to the transactions contemplated by this Agreement and the Related
Agreements. If CIT's consent is not obtained prior to Closing and Products is
unable to obtain the benefits of the leases, Seller shall indemnify Products for
the loss of such benefits.
6.4 Retention of Certain Employees. Prior to the Closing Date, Seller shall
use its commercially reasonable efforts in cooperation with Products to bring
about each Continuing Employee's agreement to be or remain, as the case may be,
employed by the Company following the Closing Date. Seller shall promptly notify
Products whenever Seller becomes aware or reasonably believes that any
Continuing Employee intends to leave its employ.
6.5 Supplemental Information. From time to time after the date hereof, each
party hereto shall promptly disclose in writing to the other parties hereto any
matter hereafter arising which, if existing, occurring or known as of the date
hereof or the Closing Date, would have been required to be disclosed to such
other party or which would render inaccurate any of the representations,
warranties or statements of such party set forth in Article IV or V, as the case
may be. No information provided to a party pursuant to this Section 6.5 shall be
deemed to cure any breach of any representation, warranty or covenant made in
this Agreement.
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6.6 Use of Name. From and after the Closing Date, Products shall not use
and shall not cause or permit any of its Affiliates to use in any manner any of
Seller's trade names, trademarks or service marks which contain the term "Xxxx,"
"Xxxx Automotive" or "Xxxx Fabrics" (the "Identified Terms"). Notwithstanding
the foregoing, Products (1) may continue to use, until exhausted, the supplies
of stationery, invoices, order forms, packaging material and the like which are
on hand as of the Closing Date which bear the Identified Terms, provided that
Products shall use and shall cause the Company to use commercially reasonable
efforts to cover or otherwise obscure or delete any of such names or marks
containing the Identified Terms and (2) may use and operate the properties and
assets of the Company (including, without limitation, Real Property and all
buildings, facilities, fixtures and other improvements thereon, machinery,
equipment, trucks, cars and rolling stock) bearing signs or other forms of
identification which bear the Identified Terms for a period not to exceed one
hundred eighty (180) days from the Closing Date, during which time Products
shall use and shall cause the Company to use commercially reasonable efforts to
remove or replace any such signs or other forms of identification.
6.7 Termination of Certain Agreements. Seller shall, and shall cause its
Affiliates and the Company to, effective as of the Closing, without any cost to
the Company, terminate, rescind, cancel and render void and of no effect any and
all Contracts between the Company, on the one hand, and Seller or any of its
Affiliates (other than the Company), on the other hand, other than the Related
Agreements. Seller agrees that, effective as of the payment of the Debt
Repayment Amount under Section 3.3, all rights of Seller to indemnification by
the Company (whether by Contract, Bylaw, Law or otherwise) are hereby
terminated, void, of no effect and unenforceable by Seller.
6.8 Confidentiality. In addition to the obligation of the parties under
that certain Confidential Disclosure Agreement between Seller and Products dated
August 10 and 11, 1999 ("Confidentiality Agreement"), each party hereby agrees
that it shall hold in confidence, shall not disclose to any third party, and
shall not use for its own benefit or for the benefit of any other Person, any
Confidential Information, knowledge or data which has been or will be disclosed
pursuant to this Agreement or in connection with the Transactions by the other
party in any manner, including but not limited to, orally or in writing
concerning the business or affairs of (i) the Company, Parent or Products in the
case of Seller and its Affiliates and (ii) Seller, in the case of Parent,
Products or Merger Sub, in each case, except as required or permitted by this
Agreement or the Related Agreements to fulfill its obligations or exercise its
rights hereunder or thereunder. Access to any such Confidential Information,
knowledge or data of the disclosing party shall be limited to those officers,
employees, advisors and agents of the recipient who need to know it in
connection with the purposes specified above and who agree to be bound by
provisions similar to this Section 6.8.
The obligations of confidentiality, nondisclosure and nonuse in this
Section 6.8 or the Confidentiality Agreement shall not apply to Confidential
Information, knowledge or data which is or becomes generally available to the
public through no act in contravention of this Agreement; or to Confidential
Information, knowledge or data which is received by the recipient on a
non-confidential basis from a third party entitled to make disclosure thereof;
or, in the case of Parent, Products, Merger Sub and their Affiliates,
Confidential Information, knowledge or data relating to the business or af-
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fairs of the Company or the Automotive Business whether disclosed pursuant to
this Agreement or the Confidentiality Agreement.
If a party either reasonably determines that it is required to disclose any
Confidential Information, knowledge or data of the other party pursuant to
applicable law or receives any demand under lawful process from a court of
competent jurisdiction to disclose or provide Confidential Information,
knowledge or data of the other party that is subject to the confidentiality
provisions hereof, such party shall provide reasonable prior written notice of
the same to the other party and shall cooperate at the expense of the requesting
party in seeking any reasonable protective arrangements requested by such other
party. Subject to the foregoing, the party that receives such request may
thereafter disclose or provide Confidential Information, knowledge or data to
the extent required by such law or by lawful process.
The parties hereto agree that, upon the request of the disclosing party,
they shall immediately deliver to such disclosing party all papers, books,
manuals, lists, correspondence and documents (in electronic format or otherwise)
containing or relating to the Confidential Information, together with all copies
thereof unless ownership thereto has transferred pursuant to this Agreement. All
Confidential Information disclosed pursuant to this Agreement by any party shall
be and remain the property of the disclosing party unless ownership thereto has
transferred pursuant to this Agreement.
6.9 Publicity. Each of Seller, the Company, XxXxxxxx, Parent, Products and
Merger Sub agrees that no public release or announcement concerning this
Agreement and the transactions contemplated hereby shall be issued without the
prior consent of the other parties, except as such release or announcement may
be required by Law or the rules or regulations of any securities exchange;
provided that, prior to issuing any such release, the issuing party shall
provide each other party in interest with a reasonable opportunity to review
such release.
6.10 Preservation of Business. From and after the date hereof until the
Closing Date, except as required by this Agreement or any Related Agreement,
Seller shall operate the Automotive Business and shall cause the Company to
operate only in the ordinary and usual course of business and consistent with
past practice, and shall use its commercially reasonable efforts to (a) preserve
intact the present business organization and personnel of the Company and of the
Automotive Business; (b) preserve the goodwill and advantageous relationships of
the Company and the Automotive Business with customers, suppliers, independent
contractors, managers, employees and other Persons material to the operation of
such businesses; (c) preserve in full force and effect its Permits that are held
by the Company or are used in the Automotive Business; and (d) not permit any
action or omission that would cause any of the representations or warranties of
Seller or the Company contained herein to become inaccurate or any of the
covenants of Seller or the Company to be breached. Without limiting the
generality of the foregoing, from the date hereof until the Closing Date,
neither Seller (with respect to the Company or the Automotive Business) nor the
Company shall, without the prior written consent of Products, except as required
by this Agreement or any Related Agreement:
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(i) waive, release or cancel any claims against third parties or debts
owing to it, or any rights which have any value and which relate to the
Company or the Automotive Business, other than in the ordinary course of
business and consistent with past practice pursuant to Contracts which are
not Material Contracts with Persons that are not Affiliates of Seller;
(ii) make any changes in its accounting systems, policies, principles
or practices relating to the Company or the Automotive Business;
(iii) enter into, authorize or permit any transaction with Seller or
any Affiliate of Seller, other than in the ordinary course of business and
consistent with past practices;
(iv) authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of
options, warrants, convertible or exchangeable securities, commitments,
subscriptions, rights to purchase or otherwise) any Shares or any other
securities of the Company, or amend any of the terms of any Shares or such
other securities;
(v) split, combine or reclassify any Shares (or any other securities
of the Company), declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any Shares (or any other securities of the Company),
or redeem or otherwise acquire any Shares (or any other securities of the
Company);
(vi) make any borrowings, incur any Indebtedness or assume, guarantee,
endorse, other than in the ordinary course of business and consistent with
past practice, or otherwise become liable (whether directly, indirectly or
contingently) for the obligations or Indebtedness of any other Person, or
make any payment or repayment in respect of any obligations or
Indebtedness, other than in the ordinary course of business and consistent
with past practice;
(vii) make any loans, advances or capital contributions to, or
investments in, any other Person;
(viii) enter into, adopt, amend or terminate any bonus, profit
sharing, compensation, termination, stock option, stock appreciation right,
restricted stock, performance unit, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreements,
trusts, plans, funds or other arrangements for the benefit or welfare of
any director of the Company or any Continuing Employee or increase in any
manner the compensation or fringe benefits of any director of the Company
or any Continuing Employee or pay any benefit not required by any existing
plan and arrangement or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing;
(ix) sell, transfer or assign any of its properties or assets other
than the sale of inventory in the ordinary course of business and
consistent with past practice or acquire or lease any assets outside of the
ordinary course of business or any assets that are material to the Company
or the Automotive Business or make any property subject to any Lien
whatsoever;
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(x) authorize or make any capital expenditures of the Company or which
relate to the Automotive Business which individually or in the aggregate
are in excess of $100,000;
(xi) make any Tax election or settle or compromise any federal, state,
local or foreign Tax liability, or waive or extend the statute of
limitations in respect of any such Taxes;
(xii) pay any amount, perform any obligation or agree to pay any
amount or perform any obligation, in settlement or compromise of any suits
or claims of liability against the Company or any of its directors,
officers, employees or agents;
(xiii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) or repay or discharge any Indebtedness other than (a) as
required by the instruments evidencing the claims, liabilities, obligations
or Indebtedness and (b) the payments, discharges or satisfactions, in the
ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the Latest Balance Sheet or
subsequently incurred in the ordinary course of business and consistent
with past practice or collect, or accelerate the collection of, any amounts
owed (including accounts receivable) other than collection in the ordinary
course, in each case, which relate to or affect the Company or the
Automotive Business;
(xiv) terminate, modify, amend or otherwise alter or change any of the
terms or provisions of any Material Contract, or pay any amount not
required by Law or by any Material Contract;
(xv) agree to any repricing, giveback or discount pursuant to or in
connection with any Material Contract; or
(xvi) take any action, or refrain from taking any action, that would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
6.11 Tax Matters. (a) Any Tax Return required to be filed by Parent or
Products relating to any Straddle Period shall be submitted (with copies of any
relevant schedules, work papers and other documentation then available) to
Seller for its approval not less than 45 days prior to the due date for the
filing of such Tax Return, which approval shall not be unreasonably withheld or
delayed. Seller shall have the option of providing to Parent or Products at any
time at least 30 days prior to the due date, written instructions as to how
Seller desires any item for which it may be liable reflected on such Tax Return.
Parent shall cause the items for which Seller is liable hereunder to be
reflected in accordance with Seller's instructions (unless, in the opinion of
tax advisors to Parent, complying with Seller's instructions would possibly
subject Parent to any criminal penalty or to civil penalties under Sections 6662
through 6664 of the Code or similar provisions of applicable state, local or
foreign Law).
(b) Upon the written request of Parent setting forth in reasonable detail
the computation of the amounts owed, Seller shall pay to Parent, no later than
five (5) Business Days prior to
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the due date for the applicable Tax Return, the Taxes for which Seller is liable
pursuant to Section 6.11(d) and which are payable with any Tax Return to be
filed by Parent with respect to any Straddle Period.
(c) Within 90 days after the Closing Date, Seller shall prepare and provide
to Parent a package of Tax information materials, including schedules and work
papers, as needed, by Parent to enable Parent to prepare and file all Tax
Returns required to be prepared and filed by it pursuant to Section 6.11(d)(i).
Seller shall prepare such package in good faith in a manner consistent with past
practice.
(d) (i) To the extent permitted or required by Law or administrative
practice, (A) the taxable year of the Company which includes the Closing Date
shall be treated as closing on and including the Closing Date and,
notwithstanding the foregoing, (B) all transactions not in the ordinary course
of business occurring after the Closing Date shall be reported on Parent's
consolidated United States federal income Tax Return to the extent permitted by
Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) and shall be similarly
reported on other Tax Returns of Parent or its Affiliates.
(ii) In determining Seller's liability for Taxes pursuant to this
Agreement, Seller shall be credited with the amount of estimated Taxes paid by
or on behalf of the Company prior to the Closing. To the extent that Seller's
liability for Taxes for a taxable year or period is less than the amount of
estimated Taxes previously paid by Seller on behalf of the Company with respect
to all or a portion of such taxable year or period, Parent shall pay Seller the
difference within five (5) Business Days of the receipt of the Tax refund or in
the case of amounts credited against Tax, the filing of the Tax Return relating
to such Taxes, whichever is later.
(e) (i) Any Tax refund (including any interest in respect thereof) received
by Parent, and any amounts credited against Tax to which Parent or the Company
becomes entitled (including by way of any amended Tax Return other than any
carryback filing), that relate to any taxable period, or portion thereof, ending
on or before the Closing Date, shall be for the account of Seller and Parent
shall pay over to Seller any such refund or the amount of any such credit within
five days of receipt of such refund or credit. Parent shall pay Seller interest
at the rate prescribed under Section 6621(a)(1) of the Code, compounded daily,
on any amount not paid when due under this Section 6.11(e). For purposes of this
Section 6.11(e), where it is necessary to apportion a refund or credit between
Parent and Seller for a Straddle Period, such refund or credit shall be
apportioned between the period deemed to end at the close of the Closing Date
and the period deemed to begin at the beginning of the day following the Closing
Date on the basis of an interim closing of the books of Parent, except that
refunds or credits of Taxes imposed on a period basis shall be allocated on a
daily basis.
(ii) Parent shall cooperate in obtaining any material Tax refund that
Seller reasonably believes should be available, including through filing
appropriate forms with the applicable Governmental Authority.
(f) (i) If the examination of any federal, state, local or other Tax Return
of the Company for any taxable period ending on or before the Closing Date shall
result (by settlement or other-
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wise) in any adjustment which permits Parent to increase deductions, losses or
tax credits or decrease the income, gains or recapture of tax credits which
would otherwise (but for such adjustments) have been reported or taken into
account (including by way of any increase in basis) by Parent for one or more
periods ending after the Closing Date, Seller shall notify Parent and provide it
with adequate information so that Parent can reflect on its Tax Returns such
increases in deductions, losses or tax credits or decreases in income, gains or
recapture of tax credits. Parent shall pay to Seller, within 30 days of the
receipt of such Tax Benefits, the amount of any resulting Tax Benefits.
(ii) If the examination of any federal, state, local or other Tax Return of
Parent for any taxable period ending after the Closing Date shall result (by
settlement or otherwise) in any adjustment which permits Seller to increase
deductions, losses or tax credits or decrease the income, gains or recapture of
tax credits which would otherwise (but for such adjustments) have been reported
or taken into account (including by way of any increase in basis) by Seller for
one or more periods ending on or before the Closing Date, Parent shall notify
Seller and provide it with adequate information so that Seller can reflect on
its Tax Returns such increases in deductions, losses or tax credits or decreases
in income, gains or recapture of tax credits. Seller shall pay to Parent, within
30 days of the receipt of such information, the amount of any resulting Tax
Benefits.
(g) (i) Parent shall not take any action which Parent knows would (A)
increase Seller's liability for Taxes (including any liability of Seller to
indemnify Parent for Taxes pursuant to this Agreement) or (B) result in, or
change the character of, any income or gain that Seller must report on any Tax
Return.
(ii) Parent shall not amend, refile or otherwise modify any Tax Return
relating in whole or in part to the Company with respect to any taxable year or
period ending on or before the Closing Date (or with respect to any Straddle
Period) without the prior written consent of Seller, which consent shall not be
unreasonably withheld or delayed.
(h) After the Closing Date, each of Parent and Seller shall (and shall
cause their respective Affiliates to) (i) assist the other party in preparing
any Tax Returns which such other party is responsible for preparing and filing,
and (ii) cooperate fully in preparing for any audits of, or disputes with any
tax authority regarding any Tax to the extent such audit or dispute (y) relates
to or arises from the Transactions or the conduct of the business of the Company
or the Automotive Business or (z) would reasonably be expected to have an impact
on Seller or any of its Affiliates, in the case of an audit or dispute involving
Parent or any of its Affiliates, or Parent or any of its Affiliates, in the case
of an audit or dispute involving Seller or any of its Affiliates. Seller shall
not dispose of any Tax work papers, books or records relating to the Company
during the six (6) year period following the Closing Date, and thereafter, if
Parent provides notice of this requirement within six (6) months prior to the
end of the six (6) year period, shall give Parent reasonable written notice
before disposing of such items.
(i) Notwithstanding any other provision of this Agreement, Seller shall
indemnify each Products Indemnified Party from and against and in respect of any
and all Losses incurred by such Products Indemnified Party, which may be imposed
on, sustained, incurred or suffered by or
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assessed against such Products Indemnified Party, directly or indirectly, to the
extent relating to or arising out of any liability for (a) Taxes imposed on
Seller or the Company for any taxable year or period that ends on or before the
Closing Date and, with respect to any Straddle Period, the portion of such
Straddle Period deemed to end on and include the Closing Date, but only to the
extent such Taxes exceed the accrual or reserve for Taxes (excluding any reserve
for deferred Taxes established to reflect timing differences between book and
tax income) set forth on the Latest Balance Sheet and (b) Taxes otherwise
resulting from the Merger.
(j) Notwithstanding any other provision of this Agreement, Parent shall
indemnify each Seller Indemnified Party from and against and in respect of any
and all Losses incurred by such Seller Indemnified Party, directly or
indirectly, to the extent relating to or arising out of
(i) any liability for Taxes imposed on any of Parent or its
Subsidiaries for any taxable year or period that begins after the Closing
Date and, with respect to any Straddle Period, the portion of such Straddle
Period beginning the day after the Closing Date; and
(ii) any liability, or increase in a liability, for Taxes imposed on
such Seller Indemnified Party as a result of any failure by Parent or its
Subsidiaries to perform or comply with its obligations under this
Agreement.
(k) (i) Notice. After the Closing Date, Parent and Seller each shall notify
the other party in writing within 20 days of the notice of the commencement of
any Tax audit or administrative or judicial proceeding affecting the Taxes of
the Company, which, if determined adversely to the taxpayer (the "Tax
Indemnitee") or after the lapse of time, would be grounds for indemnification
under this Section 6.11 by the other party (the "Tax Indemnitor"). Such notice
shall contain factual information describing any asserted Tax liability in
reasonable detail and shall include copies of any notice or other document
received from any Tax authority in respect of any such asserted Tax liability.
If Parent or Seller fails to give the other party prompt notice of an asserted
Tax liability as required under this Agreement, then if such failure to give
prompt notice results in a detriment to the Tax Indemnitor, then any amount
which the Tax Indemnitor is otherwise required to pay pursuant to this Section
6.11 with respect to such liability shall be reduced by the amount of such
detriment.
(ii) Control of Contests Involving Pre-Closing Periods or Straddle Periods.
In the case of an audit or administrative or judicial proceeding involving any
asserted liability for Taxes relating to any taxable years or periods ending on
or before the Closing Date or relating to any Straddle Period, Seller shall have
the right, at its expense, to control the conduct of such audit or proceeding.
Parent may participate in the conduct of such audit or proceeding at its own
expense and, if such audit or proceeding would be reasonably expected to result
in an increase in Tax liability of the Company for which Parent or one of its
Affiliates would be liable, Seller shall not settle any such audit or proceeding
without the consent of Parent, which consent shall not be unreasonably withheld
or delayed.
(iii) Control of Contests Involving Post-Closing Periods. In the case of an
audit or administrative or judicial proceeding involving any asserted liability
for Taxes relating to any tax-
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able years or periods beginning after the Closing Date, Parent shall have the
right, at its expense, to control the conduct of such audit or proceeding.
6.12 Maintenance of Insurance. Seller shall and shall cause the Company to
continue to carry its existing insurance relating to the Company or the
Automotive Business through the Closing Date, and shall not allow any breach,
default, termination or cancellation of such insurance policies or agreements to
occur or exist.
6.13 Non-Compete. None of Seller or any of its present or future
Subsidiaries or Affiliates or XxXxxxxx or any of his present or future
Affiliates shall during the period beginning from the Closing Date and ending on
the later of the (i) fifth anniversary of the Closing Date and (ii) third
anniversary of the termination of the Supply Agreement (the "Non-Compete
Period"), directly or indirectly, on its or his own behalf, or on behalf of any
other Person:
(a) acquire or own in any manner any interest in any Person (other
than Parent or its Affiliates) that is engaged in the business of
manufacturing, finishing and selling automotive fabrics;
(b) engage, through or in connection with any Person (other than
Parent or its Affiliates) in the business of manufacturing, finishing and
selling automotive fabrics or compete in any way with the Automotive
Business;
(c) be employed in any capacity by, serve as an employee, agent or
officer or director of, serve as a consultant or advisor to, or otherwise
participate in the management or operation of, any Person (other than
Parent or its Affiliates) which engages in, or competes in any way with,
the business of manufacturing, finishing and selling automotive fabrics;
(d) solicit, entice or induce any employee, agent, officer or director
of Parent, Products or the Company or any of their respective present or
future Subsidiaries or Affiliates to terminate his or her employment or
other relationship with Parent, Products or the Company or any of their
respective present or future Subsidiaries or Affiliates, as the case may
be; provided, however, that, with respect to any third party which is not
an Affiliate of XxXxxxxx and which is the successor to all or substantially
all of the assets of Seller, the application of this clause (d) shall be
limited to the individuals who are Continuing Employees;
(e) knowingly solicit, entice or induce any vendor or solicit, entice
or induce any customer, in each case, of Parent, Products or the Company or
any of their respective present or future Subsidiaries or Affiliates to
terminate or diminish its relationship with Parent, Products or the Company
or any of their respective present or future Subsidiaries or Affiliates, as
the case may be; or
(f) assist others engaging in the conduct described in the foregoing
clauses (a) through (e).
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Notwithstanding the foregoing, during the Non-Compete Period, (i) Main
Street may comply with its obligations under and enjoy the benefits of the
Supply Agreement and with the prior written consent of Products (which consent
shall not be unreasonably withheld or delayed) weave automotive fabric products
for customers identified to Products in reasonable detail, (ii) Seller and/or
XxXxxxxx and/or any of their respective Subsidiaries or Affiliates may continue
to own and operate the El Paso Business substantially in the manner that such
business is currently being conducted, (iii) Seller and XxXxxxxx and each of
their respective Subsidiaries and Affiliates may (A) own capital stock of
Parent, (B) own in the aggregate for all such Persons not in excess of five
percent (5%) of the outstanding equity interests of any other publicly traded
company that is engaged in the Automotive Business (provided that each shall
nonetheless remain subject to the restrictions described in clauses (b) through
(f), inclusive, above with respect to such investments in this clause (B)) and
(C) participate as investors in Heartland, (iv) Seller and its Affiliates may
make an investment in a Mexican fabrics weaving business provided that such
business shall not weave automotive fabric products for any Person other than
Parent and its Subsidiaries without the prior written consent of Products (which
consent shall not be unreasonably withheld), (v) XxXxxxxx may serve as a
director of or consultant to Parent, Products or the Company or any of their
respective Subsidiaries or Affiliates from time to time and (vi) The Xxxxxx Yarn
Company, L.P. and the Xxxxxxx Yarn Division of Mastercraft Fabrics LLC may
continue to produce, manufacture, market and sell yarn even if such yarn is sold
to or used by a competitor of Parent or any Affiliate of Parent and even if such
yarn is used in the automotive industry. For the avoidance of doubt, nothing in
this Section 6.13 shall prohibit any form of dyeing, other than package dyeing
yarn, and dyeing fabric, for use in the automotive industry.
6.14 Non-Disparagement. None of Seller or any of its Subsidiaries or
Affiliates or XxXxxxxx or any of his Affiliates shall at any time following the
date of this Agreement make any statements in writing or otherwise that
disparage the reputation or character of Parent, Products, the Company or any of
their respective present or future Subsidiaries, Affiliates or divisions or any
of their respective directors, officers, employees or stockholders at any time
for any reason whatsoever, except that nothing in this Section 6.14 shall
prohibit XxXxxxxx or Seller or any of its directors, officers, employees or
stockholders from giving truthful testimony on any litigation or administrative
proceedings either between XxXxxxxx or Seller on the one hand and either Parent
or Products on the other hand, or in connection with which XxXxxxxx or Seller or
such director, officer, employee or stockholder is required by law to give
testimony.
6.15 Personnel Matters.
(a) Employees and Employee Benefit Plans. (i) Subject to Section 6.15(d),
effective as of the Closing, Products will, or will cause one of its
Subsidiaries or Affiliates to, offer employment to each active employee of the
Automotive Business (including, without limitation, employees taking advantage
of the Family and Medical Leave Act of 1993 but excluding inactive employees of
the Automotive Business who are not actively employed on the Closing Date due to
a short-term disability or other illness or injury and who within six months
after the Closing Date become eligible under the Seller's applicable long-term
disability plans without an intervening return to active employment, and
excluding former employees of the Automotive Business who, as of the Closing
Date are on a long-term disability leave) ("Automotive Business Employees") of
Seller iden-
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tified on the Company Disclosure Schedule as potential Continuing Employees
(such identified Employees of Seller who accept employment with Products of any
of its Subsidiaries as of the Closing Date, the "Continuing Employees").
(ii) Products agrees that, under any employee benefit plan made available
or established after the Closing Date, Continuing Employees will receive credit
for their years of service with Seller or any of its Affiliates prior to the
Closing Date in determining eligibility and vesting thereunder, and in
determining the amount of benefits under any applicable sick leave, vacation or
severance plan. Products will, or will cause one of its Subsidiaries or
Affiliates to, cover Continuing Employees as of the end of the Benefits
Transition Period under a group health plan and waive any preexisting condition
limitations applicable to Continuing Employees under any group health plan made
available to Continuing Employees to the extent that a Continuing Employee's
condition would not have operated as a preexisting condition limitation under
any applicable group health plan of or sponsored by Seller or any of its
Affiliates prior to the Closing Date, and Products will, or will cause one of
its Subsidiaries or Affiliates to, take all action necessary to ensure that
Continuing Employees are given full credit for all co-payments and deductibles
incurred under any group health plan for the plan year that includes the end of
the Benefits Transition Period.
(b) Assumption of Obligations. (i) Except as set forth in Section 6.15(g),
effective as of the Closing, Products will, or will cause one of its
Subsidiaries or Affiliates to, assume and be solely responsible for all
liabilities and obligations relating to termination (actual or constructive) of
employment by Products or any of its Subsidiaries or Affiliates of any
Continuing Employee after the Closing Date. Seller will retain and be solely
responsible for all liabilities and obligations relating to termination (actual
or constructive) of employment of any Automotive Business Employee (or other
employee of the Seller, Subsidiary or Affiliate) occurring on or prior to the
Closing Date (including those employees deemed terminated because they are not
required to be rehired by Products or its Subsidiary or Affiliate under Section
6.15(a)), and Products will have no liability with respect thereto.
(ii) Effective as of the Closing, Products will, or will cause one of its
Subsidiaries or Affiliates to, assume and be solely responsible for all
liabilities and obligations of Seller with respect to Continuing Employees for
accrued wages, vacation or sick pay, but only to the extent taken into account
in the determination of Working Capital at the Closing Date (including any
claims for such benefits incurred but not reported).
(iii) Products shall have sole responsibility, liability and obligation to
provide Continuing Employees and their qualified beneficiaries with continuation
coverage (within the meaning of Section 4980B(f)(2) of the Code) under each
Employee Benefit Plan that is a group health plan ("COBRA Coverage"), and any
liability or obligation relating to such coverage, with respect to qualifying
events (within the meaning of Section 4980(f)(3) of the Code) that occur after
the Closing Date.
(c) Retirement Plans. (i) As of the Closing, Seller will cause Continuing
Employees to be fully vested in their accrued benefits under the Xxxx Fabrics
Profit Sharing Retirement
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and Personal Savings Plan ("Seller's 401(k) Plan") and the Xxxx Fabrics Factory
Hourly and Office Employee's Pension Plan and Trust ("Seller's Defined Benefit
Plan," and collectively, "Seller's Retirement Plans"). Neither Products nor any
of its Subsidiaries or Affiliates will assume any liabilities or obligations
with respect to the Seller's Retirement Plans (except as provided in clause
(ii)(B) below), which will be retained by Seller, or with respect to any claims
made with respect to benefits allegedly payable thereunder.
(ii) As soon as practicable after the Closing and following (A) delivery by
Products to Seller of a favorable IRS determination letter regarding a defined
contribution plan of Products ("Products' 401(k) Plan") or an opinion,
reasonably satisfactory to Seller, of Products' counsel to the effect that the
terms of the Products' 401(k) Plan and its related trust qualify, as to form,
under Section 401(a) and Section 501(a) of the Code, and (B) delivery by Seller
to Products of a favorable IRS determination letter regarding Seller's 401(k)
Plan or an opinion, reasonably satisfactory to Products, of Seller's counsel to
the effect that the terms of Seller's 401(k) Plan and its related trust qualify,
as to form, under Section 401(a) and Section 501(a) of the Code, Seller shall
cause the trustee of Seller's 401(k) Plan to transfer all of the assets and
liabilities thereof attributable to Continuing Employees. Unless otherwise
agreed by Seller and Products, the assets to be transferred shall be cash and
promissory notes for loans made to Continuing Employees.
(d) Employment Termination and Plan Amendments. Subject to Products'
obligations under Contracts by which the Company or the Automotive Business is
bound, no provision of this Section 6.15 will limit Products' or any of its
Subsidiaries' or Affiliates' right and authority to discontinue, suspend or
modify the employment of any Continuing Employee or benefits provided to any or
all Continuing Employees after the Closing.
(e) Cease Participation in Seller's Plans. Effective as of the end of the
Benefits Transition Period, Continuing Employees shall cease active
participation in all Continuing Benefits. Effective as of the Closing Date,
Continuing Employees shall cease active participation in all Employee Benefit
Plans.
(f) Welfare Plans. Effective as of the end of the Benefits Transition
Period, Products or the Company shall maintain group welfare plans as defined in
Section 3(1) of ERISA for the benefit of Continuing Employees and their
dependents and beneficiaries. Subject to Section 6.15(g) below, Seller shall
retain responsibility for all medical or dental services incurred on or prior to
the end of the Benefits Transition Period and Products and the Company shall
retain responsibility for claims incurred after the end of the Benefits
Transition Period. For purposes of the preceding sentence, a claim shall be
deemed to have been incurred on the date on which medical or other treatment or
service was rendered and not the date of inception of the related illness or
injury or the date of submission of a claim related thereto; provided that in
the case of a claim involving hospitalization, all expenses incurred during a
continuous hospital stay shall be deemed to be one claim and shall be deemed to
have been incurred on the first day of such hospital stay.
(g) Benefits Transition Period. Seller shall continue to make available
during the Benefits Transition Period (as defined below) to Continuing Employees
the medical, dental, life in-
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surance, disability, cafeteria and flexible spending account plans (but not
Seller's 401(k) Plan) provided by Seller or its Affiliates and available to
Continuing Employees immediately prior to the Closing Date (the "Continuing
Benefits"). The Benefits Transition Period shall commence on the Closing Date
and end on the earlier of a date specified by Products or December 31, 2001.
Products shall pay to Seller, or any administrative representative of Seller,
all premium rates, plan contributions and other costs payable for the Continuing
Benefits with respect to Continuing Employees during the Benefits Transition
Period, plus any third party administrative service fees directly related to
such premiums, costs or contributions incurred by Seller in connection with the
Continuing Benefits for Continuing Employees during the Benefits Transition
Period.
(h) Inactive or Former Employees. Seller shall continue to be responsible
in accordance with its applicable plans for all disability income benefits, and
other applicable benefits, payable to inactive employees or former employees of
the Company who are not Continuing Employees.
(i) Employee Information. Each of Seller and Products will provide the
other, in a timely manner, any information with respect to any Automotive
Business Employee's or former employee's employment with and compensation from
Seller, any of its Affiliates or Products or any of its Subsidiaries or
Affiliates, as the case may be, or rights of benefits under any employee benefit
plan or arrangement which the other party hereto may reasonably request.
(j) W-2 Matters. Pursuant to the alternate procedure described by Revenue
Procedure 96-60, the Company will assume Seller's entire obligation to furnish
Forms W-2 for the year ending December 31, 2001 to Continuing Employees. Seller
will provide the Company the information not available to the Company and
relating to periods ending on the Closing Date necessary for the Company to
prepare and distribute Forms W-2 to Continuing Employees for the year ending
December 31, 2001, which Forms W-2 will include all remuneration earned by
Continuing Employees from Seller, the Company and Products during the year
ending December 31, 2001, and the Company will prepare and distribute such
Forms. Seller will indemnify, defend and hold harmless Products and the Company
against any fines or penalties to the extent resulting from Seller's provision
of incorrect information pursuant to this Section 6.15(j).
(k) VEBA. Neither Products nor any of its Subsidiaries or Affiliates will
assume any liabilities or obligations with respect to the Xxxx Fabrics voluntary
employees' beneficiary association ("VEBA").
(l) Employee Confidentiality Agreements. Seller covenants that it will not
at any time waive any provision of any confidentiality or similar agreement
between Seller and any employee of Seller insofar as such provision relates to
the Automotive Business.
6.16 Company Financial Statements. Seller shall prepare, in cooperation
with Parent and deliver to Products, (i) by August 31, 2001 audited consolidated
financial statements of the Company, the Automotive Business and WAD for each of
the three fiscal years of the Company and WAD ended June 30, 2001, 2000 and
1999; (ii) if determined subsequent to August 31, 2001 to be
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necessary or advisable then as soon as practical after such determination, an
unaudited statement of financial position for the interim period ended September
30, 2001 and unaudited statements of income and cash flows for the interim
period ended September 30, 2001 and the corresponding period in 2000, in each
case prepared in accordance with GAAP consistently applied for the periods
presented and with the accounting requirements and the published rules and
regulations of the SEC applicable to a registration statement relating to an
offering of debt securities; and to comply with the requirements of Form 8-K
under the Exchange Act (as reasonably determined by Parent) (the "Company
Financial Statements"); and (iii) shall in connection therewith cause its
independent accountants to deliver an unqualified audit report with respect to
the audited consolidated financial statements included in the Company Financial
Statements prepared in accordance with the accounting requirements and the
published rules and regulations of the SEC applicable to a registration
statement relating to an offering of debt securities.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
The obligations of Parent, Products, Merger Sub, Seller, the Company and
XxXxxxxx to consummate the Transactions are subject to the satisfaction of the
following conditions:
7.1 Non-Compete Agreements. Each of Xxxxx XxXxxxxx and Xxxxx Xxxxxxxx shall
have entered into a Non-Compete Agreement with Products, and each such agreement
shall be in full force and effect.
7.2 Actions or Proceedings. No action or proceeding by any Governmental
Authority or other Person shall have been instituted or threatened, and no event
or circumstance shall have occurred, (a) that would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect (provided that
for the purpose of this Section 7.2, $250,000 as an aggregate shall be
substituted for $100,000 individually in the definition of "Material Adverse
Effect") on the business, operations, assets, liabilities, results of
operations, cash flows, condition (financial or otherwise) of the Company or
Parent of Products (together with their consolidated Subsidiaries); or (b) that
would reasonably be expected to result in the enjoining, restraining or
prohibition of, or result in substantial damages in respect of, any provision of
this Agreement or the Related Agreements or the consummation of the Transactions
or the effective operation of any material portion of the business of the
Company or Parent or Products or any integration of any operations of the
Company with those of Products and its Affiliates.
7.3 New York Stock Exchange. The Common Stock representing the Merger
Consideration shall have been approved for listing on the New York Stock
Exchange, subject only to official notice of issuance.
7.4 Refinancing of Seller's Loan. Seller shall have entered into an
amendment of Seller's Loan, in form and substance satisfactory to Seller and
Products, with the lenders thereunder (the "Lenders"), pursuant to which the
Lenders shall have agreed that, upon repayment of a stated
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amount of the Indebtedness owed the Lenders, the Lenders will release any and
all Liens held by the Lenders against (i) the Shares and (ii) the assets of the
Automotive Business other than the Excluded Assets, and will release the Company
from its obligations as a guarantor of the Indebtedness.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT, PRODUCTS and merger sub
The obligations of Parent, Products and Merger Sub to consummate the
Transactions are subject to the waiver or satisfaction of the following
conditions:
8.1 Warranties True as of Both Present Date and Closing Date. The
representations and warranties of Seller, the Company and XxXxxxxx contained
herein shall have been accurate and complete on and as of the date hereof, and
shall also be accurate and complete on and as of the Closing Date (as updated
pursuant to Section 6.5), except for representations and warranties that are
made as of a specific date, which shall be accurate and complete as of such
date, and provided that each of the representations and warranties contained in
Article IV that are qualified or limited by the term "Material Adverse Effect"
or "material" or phrases of like import shall be read without giving effect to
such qualification or limitation, but provided, further, that, this Section 8.1
will be deemed to be satisfied unless any breaches of the representations and
warranties contained in Article IV would reasonably be expected, individually or
in the aggregate, to result in a (i) Material Adverse Effect (provided that, for
the purpose of this Section 8.1, $250,000 in the aggregate shall be substituted
for $100,000 individually in the definition of "Material Adverse Effect") or
(ii) default or event of default under any material debt instrument of Parent or
its Subsidiaries as a result thereof.
8.2 Compliance with Agreements and Covenants. Seller, the Company and
XxXxxxxx shall have performed and complied in all material respects with all of
their respective covenants, obligations and agreements contained in this
Agreement and the Related Agreements to be performed and complied with by them
on or prior to the Closing Date.
8.3 Consents and Approvals. The Company shall have furnished written
evidence satisfactory to Products that all consents, approvals and filings (a)
required for the consummation of the Transactions or the ownership and operation
by Products of the Company and the Automotive Business (taking into account that
the Excluded Assets are not part of the Automotive Business) and (b) that are
set forth on Schedule 4.3(a) under the heading "Condition Consents" have been
obtained, or have been made, as the case may be.
8.4 Stockholders Agreement. Seller shall have entered into the Stockholders
Agreement, and such agreement shall be in full force and effect.
8.5 Financial Statements. The Company shall have furnished to Products the
Company Financial Statements no later than August 31, 2001.
8.6 Documents. Products shall have received each agreement, document and
item specified in Section 10.1.
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8.7 No Indebtedness; Working Capital. The Company shall have no
liabilities, Indebtedness or obligations, whether accrued, absolute, contingent
or otherwise, except for (i) Indebtedness in respect of the Debt Repayment
Amount, (ii) trade payables and other ordinary course current liabilities of the
Company relating to the Automotive Business, (iii) leases of assets transferred
to the Company in connection with the Restructuring and as disclosed in the
Company Disclosure Schedules, (iv) the lease of the Company's Auburn Hills,
Michigan offices, (v) the lease of the Company's facilities at 000 Xxxxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx (which lease should be in form and substance
acceptable to Products) and (vi) those liabilities, Indebtedness and obligations
that are set forth in the Company Disclosure Schedule. The Company shall have
Working Capital at Closing which, taking into consideration current sales
levels, is substantially consistent with the amount of Working Capital that
would have been maintained for such sales levels under the historic methods of
computation of appropriate Working Capital of the Automotive Business. At the
time of Closing, the Company shall be released from all obligations under
Seller's Loan, whether contingent or otherwise, in excess of the Debt Repayment
Amount. At the time of Closing, the Debt Repayment Amount shall not exceed
$90,000,000 (inclusive of all principal, premium, interest, fees, charges, cost,
expenses and other obligations, contingent or otherwise, relating thereto).
All notices and other conditions under Seller's Loan or otherwise
applicable to Seller which must be met in order to permit Products to repay the
Debt Repayment Amount and extinguish all liabilities and commitments in respect
of such Indebtedness and secure all necessary releases from the creditors in
respect thereof reasonably satisfactory to Seller and Products shall have been
made or obtained. All commitments for any other Indebtedness of the Company
(including letters of credit) shall have been terminated. No default or event of
default shall have occurred and be continuing under any material debt instrument
of Products and its Subsidiaries (it being understood that should any such
failure result in a default or event of default under any material debt
instrument of Parent or its Subsidiaries in connection with the consummation of
the Transactions, Parent, Product and Seller will be required to collectively
use reasonable best efforts to resolve the problem in a manner which permits
financing of the Transactions as contemplated).
8.8 Additional Agreements. Seller shall have delivered to Products each of:
(a) the Supply Agreement; and
(b) the Transition Services Agreement;
duly executed by Seller and/or each Affiliate of Seller to the extent a party
thereto and each such agreement shall be in full force and effect.
8.9 Consummation of WAD Asset Purchase. The consummation of the purchase by
Products of all of the assets of WAD as contemplated by the WAD Purchase
Agreement shall have occurred or shall occur contemporaneously with the Closing.
8.10 No Material Adverse Change. No Material Adverse Change shall have
occurred since the Latest Balance Sheet Date, and no event shall have occurred
which, in the reasonable judgment of Products, would reasonably be expected to
have, individually or in the aggregate, a Ma-
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terial Adverse Effect (provided, that for the purpose of this Section 8.10,
$250,000 in the aggregate shall be substituted for $100,000 individually in the
definition of "Material Adverse Effect").
8.11 Consummation of Restructuring. The Restructuring shall have been fully
consummated on the terms and in the manner contemplated by this Agreement.
8.12 Consents and Estoppels. Products shall have received consents from the
lessor of each lease of Real Property which would otherwise be terminable as a
result of the Transactions. Products shall also have received estoppel
certificates addressed to Products from the lessor of each such lease, dated
within 30 days of the Closing Date, identifying the lease documents and any
amendments thereto, stating that the lease is in full force and effect and, to
the best knowledge of the lessor, that the tenant is not in default under the
lease and no event has occurred that, with notice or lapse of time or both,
would constitute a default by the tenant under the lease and containing any
other information reasonably requested by Products.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXXXX,
SEllER AND THE COMPANY
The obligations of XxXxxxxx, Seller and the Company to consummate the
Transactions are subject to the waiver or satisfaction of the following
conditions:
9.1 Warranties True as of Both Present Date and Closing Date. The
representations and warranties of Parent, Products and Merger Sub contained
herein shall have been accurate and complete on and as of the date hereof, and
shall also be accurate and complete on and as of the Closing Date, except for
representations and warranties that are made as of a specific date, which shall
be accurate and complete as of such date, and provided that each of the
representations and warranties contained in Article V that are qualified or
limited by the term "Material Adverse Effect" or "material" or phrases of like
import shall be read without giving effect to such qualification or limitation,
but provided, further, that, this Section 9.1 will be deemed to be satisfied
unless any breaches of the representations and warranties contained in Article V
would reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect (provided that, for purposes of this Section 9.1,
$250,000 shall be substituted for $100,000 in the definition of "Material
Adverse Effect").
9.2 Compliance with Agreements and Covenants. Each of Parent, Products and
Merger Sub shall have performed and complied in all material respects with all
of its covenants, obligations and agreements contained in this Agreement and the
Related Agreements to be performed and complied with by it on or prior to the
Closing Date.
9.3 Documents. Seller shall have received all of the agreements, documents
and items specified in Section 10.2.
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9.4 Registration Rights Agreement; Stockholders Agreement. Parent and
Heartland shall have entered into the Registration Rights Agreement and the
Stockholders Agreement, and each such agreement shall be in full force and
effect.
9.5 Consents and Approvals. Products shall have furnished written evidence
satisfactory to Seller that all consents and approvals of its stockholders,
board of directors and third parties required for the consummation of the
transactions contemplated hereby have been obtained, and all required filings
with the New York Stock Exchange have been made.
9.6 Consummation of WAD Asset Purchase. The consummation of the sale by WAD
of all of the assets of WAD as contemplated by the WAD Purchase Agreement shall
have occurred or shall occur contemporaneously with the Closing.
9.7 Additional Agreements. Products shall have delivered to Seller each of:
(a) the Supply Agreement; and
(b) the Transition Services Agreement;
duly executed by Products and/or each Affiliate of Products to the extent a
party thereto and each such agreement shall be in full force and effect.
ARTICLE X
CLOSING
10.1 Deliveries by Seller and the Company. At the Closing, in addition to
any other documents or agreements required under this Agreement, Seller shall
deliver to Parent, Products and Merger Sub, as appropriate, the following:
(a) A receipt for the Merger Consideration;
(b) A written statement from each Person holding a Lien, other than a
Permitted Lien, upon any of the assets of the Company or upon any Shares,
and each creditor of the Company with respect to any Indebtedness, other
than the obligation to indemnify Seller for the amount equal to the Debt
Repayment Amount, confirming the repayment of such Indebtedness and the
release of the Company as of the Closing Date of (i) any such Lien; and
(ii) all obligations under any and all Contracts relating thereto;
(c) A certificate dated the Closing Date of Seller certifying as to
the matters set forth in Section 8.1 and Section 8.2, and attached to such
certificate shall be a written statement of all matters that shall have
been disclosed pursuant to Section 6.5;
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(d) A certificate of the Secretary of the Company certifying board of
directors and stockholder resolutions of the Company approving and
authorizing the execution, delivery and performance of this Agreement and
the Related Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby (together with an incumbency
and signature certificate regarding the officer(s) signing on behalf of the
Company);
(e) A certified copy of the Stock Register of the Company as of the
Closing Date, reflecting that Seller is the registered owner of all of the
issued and outstanding Shares, certified by the Secretary of the Company or
equivalent Person;
(f) The Certificate of Incorporation of the Company certified by the
Secretary of State of the State of Delaware (dated as of a recent date),
and Bylaws of the Company, certified by the Secretary of the Company (dated
as of the Closing Date);
(g) A Certificate of Good Standing for the Company from the State of
Delaware (dated as of a recent date); and
(h) the Certificate of Merger, duly executed by the Company.
10.2 Deliveries by Parent, Products and Merger Sub. At the Closing, in
addition to any other documents, consideration and agreements required under
this Agreement:
(a) Merger Sub shall deliver to Seller the Merger Consideration;
(b) Parent, Products and Merger Sub shall deliver to Seller one or
more certificates, dated the Closing Date, of an executive officer of each
of Parent, Products and Merger Sub certifying as to the matters set forth
in Section 9.1 and Section 9.2, and attached to such certificate shall be a
written statement of all matters that shall have been disclosed pursuant to
Section 6.5;
(c) Certificates of the Secretary of Parent, of Products and of Merger
Sub certifying board of directors and, as required by Law, stockholder
resolutions of such Person approving and authorizing the execution,
delivery and performance of this Agreement and the Related Agreements to
which it is a party and the consummation of the transactions contemplated
hereby or thereby (together with an incumbency and signature certificate
regarding the officer(s) signing on behalf of the each such Person);
(d) The Certificate of Incorporation of Merger Sub certified by the
Secretary of State of the State of Delaware (dated as of a recent date),
and Bylaws of Merger Sub, certified by the Secretary of the Company (dated
as of the Closing Date);
(e) A Certificate of Good Standing for Merger Sub from the State of
Delaware (dated as of a recent date); and
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(f) The Certificate of Merger, duly executed by Merger Sub.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated at any time, on or prior
to the Closing Date:
(a) by mutual written consent of Seller, on the one hand, and Parent,
on the other hand;
(b) by either Seller or Parent, Products and Merger Sub, if:
(i) the Closing has not occurred on or before September 30, 2001
(the "End Date"), provided that the right to terminate this Agreement
pursuant to this Section 11.1(b)(i) shall not be available to any
party whose breach of any provision of this Agreement results in the
failure of the Closing to occur by that time;
(ii) there shall be any Law that makes consummation of the
Closing illegal or otherwise prohibited or any judgment, injunction,
order or decree of any Governmental Authority having competent
jurisdiction enjoining Seller or the Company or Products from
consummating the Closing is entered and such judgment, injunction,
order or decree shall have become final and nonappealable; or
(iii) the WAD Purchase Agreement shall have been terminated in
accordance with its terms;
(c) by Products, Parent and Merger Sub, if there shall have been a
material breach of any covenant, representation or warranty of Seller, the
Company or XxXxxxxx hereunder, and such breach is incapable of being
remedied by the End Date or shall not have been remedied within ten (10)
Business Days after receipt by Seller of a written notice from Parent or
Products specifying the breach and requesting such be remedied (but in any
event prior to the End Date); or
(d) by Seller, if there shall have been a material breach of any
covenant, representation or warranty of Parent, Products or Merger Sub
hereunder, and such breach is incapable of being remedied by the End Date
or shall not have been remedied within ten (10) Business Days after receipt
by Parent, Products or Merger Sub of written notice from Seller specifying
the breach and requesting such be remedied (but in any event prior to the
End Date).
11.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 11.1, all obligations of the parties hereunder shall terminate, except
for the obligations set forth in Sections 6.8, 6.9, 11.1 and this Section 11.2
and Articles I, XII and XIII (other than Section 13.12),
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which shall survive the termination of this Agreement, and except that no such
termination shall relieve any party from liability for any prior knowing or
willful breach of this Agreement.
ARTICLE XII
INDEMNIFICATION
12.1 Survival. The representations and warranties of the parties hereto
contained herein shall not survive the Closing.
12.2 Indemnification by Seller. Seller agrees to indemnify each of the
Products Indemnified Parties against, and agrees to hold each of them harmless
from, any and all Losses incurred or suffered by it relating to, arising out of,
or in connection with, any of the following:
(a) any fraud or willful breach on the part of Seller or the Company
with respect to any provision of this Agreement or any Related Agreement or
any other document delivered at the Closing;
(b) any knowing or willful breach of, or failure by Seller or XxXxxxxx
to perform, any covenant or obligation of Seller or XxXxxxxx (x) set out or
contemplated in this Agreement or any document delivered at the Closing to
the extent it is to be performed following the Closing, or (y) described in
Section 6.1, 6.5, 6.6, 6.8, 6.9, 6.10, 6.13 or 6.14;
(c) alleged defects in design, manufacture, materials or workmanship,
or any alleged breach of express or implied specifications, warranties or
representations (other than the "in the field" defects or breaches covered
by the Transition Services Agreement) of any Product ("Product Warranty
Claims") sold prior to the Closing;
(d) alleged injury to individuals or alleged damage to property
resulting from any Product ("Product Damage Claims") sold prior to the
Closing; and
(e) all liabilities or obligations, whether accrued, absolute,
contingent or otherwise, whether due or to become due ("Liabilities"), of
Seller, except for (i) trade accounts payable, and other accounts payable,
incurred in the ordinary course of the Automotive Business and consistent
with past practice, (ii) Liabilities to Continuing Employees, (iii)
Liabilities under leases for leased assets of the Company at Closing , (iv)
other Contracts (including the membership of the Detroit golf club) of the
Company listed in the Company Disclosure Schedule as being Contracts of the
Company at Closing, (v) the Debt Repayment Amount; and (vi) Product
Warranty Claims and Product Damage Claims for any Product sold prior to the
Closing.
12.3 Indemnification by Products. Products agrees to indemnify each of the
Seller Indemnified Parties against, and agrees to hold each of them harmless
from, any and all Losses incurred or suffered by it relating to, or arising out
of, or in connection with, any of the following:
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(a) any fraud or willful breach on the part of Parent, Products or
Merger Sub with respect to any provision of this Agreement or of any other
document delivered at Closing;
(b) any knowing or willful breach of, or failure by Parent, Products
or Merger Sub to perform, any covenant or obligation of Parent, Products or
Merger Sub (x) set out or contemplated in this Agreement or any document
delivered at the Closing to the extent it is to be performed following the
Closing, or (y) described in Section 6.1, 6.8 or 6.9;
(c) any liability, obligation, cost or expense reasonably incurred
after the Closing by Seller or an Affiliate of Seller, as a result of
Seller or an Affiliate of Seller (i) continuing to guarantee after the
Closing any Contract listed in Schedule 4.3(a) of the Company Disclosure
Schedule under the heading "Non-Condition Consents" or (ii) continuing to
be a party to a Contract by operation of Section 6.3(b) or 6.3(c) hereof;
(d) (i) Product Warranty Claims and Product Damage Claims for any
Product sold after the Closing (ii) Product Warranty Claims for any Product
sold prior to the Closing and brought after the earlier of the third
anniversary of the shipment of the Product or the second anniversary of the
Closing, and (iii) Product Damage Claims for any Product sold prior to the
Closing and brought after the seventh anniversary of the Closing; and
(e) (i) Liabilities of Products and its Subsidiaries, (ii) trade
accounts payable, and other accounts payable relating to the assets of the
Company, incurred in the ordinary course of the Automotive Business and
consistent with past practice, (iii) Liabilities to Continuing Employees,
(iv) Liabilities under leases for leased assets of the Company at the
Closing, (v) Liabilities under other Contracts (including the membership of
the Detroit golf club) of the Company listed in the Company Disclosure
Schedule as being Contracts of the Company at Closing, and (vi) the Debt
Repayment Amount.
12.4 Claims. (a) The provisions of this Section shall be subject to Section
12.5. As soon as is reasonably practicable after becoming aware of a claim for
indemnification under this Agreement, the Indemnified Person shall promptly give
notice to the Indemnifying Person of such claim and the maximum amount (if
ascertainable) the Indemnified Person will be entitled to receive hereunder from
the Indemnifying Person; provided that the failure of the Indemnified Person to
give notice shall not relieve the Indemnifying Person of its obligations under
this Article XII except to the extent (if any) that the Indemnifying Person
shall have been prejudiced thereby. If the Indemnifying Person does not object
in writing to such indemnification claim within 30 calendar days of receiving
notice thereof, the Indemnified Person shall be entitled to recover promptly
from the Indemni-
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fying Person the amount of such claim (but such recovery shall not limit the
amount of any additional indemnification to which the Indemnified Person may be
entitled pursuant to Section 12.2 or Section 12.3), and no later objection by
the Indemnifying Person shall be permitted. If the Indemnifying Person agrees
that it has an indemnification obligation but objects that it is obligated to
pay only a lesser amount, the Indemnified Person shall nevertheless be entitled
to recover promptly from the Indemnifying Person the lesser amount, without
prejudice to the Indemnified Person's claim for the difference.
(b) The liability of the Indemnifying Person under this Article XII shall
be subject to reduction in an amount equal to the value of any: (i) net Tax
benefit realized by the Indemnified Person (by reason of a Tax deduction, basis
adjustment, shifting of income, credits and/or deductions, or otherwise from one
or more fiscal periods to another resulting, in each case, from any Loss
suffered by the Indemnified Person that forms the basis of the Indemnifying
Person's obligation hereunder), giving effect to any Tax liabilities of the
Indemnified Person arising as a result of any payments made by an Indemnifying
Person with respect to such claim for indemnification; and (ii) insurance
benefit realized by the Indemnified Person in connection with any Loss suffered
by such Person that forms the basis of the Indemnifying Person's obligation
hereunder.
12.5 Notice of Third Party Claims; Assumption of Defense. The Indemnified
Person shall give notice as promptly as is reasonably practicable to the
Indemnifying Person of the assertion of any claim, or the commencement of any
suit, action or proceeding, by any Person not a party hereto in respect of which
indemnity may be sought under this Agreement; provided that the failure of the
Indemnified Person to give notice shall not relieve the Indemnifying Person of
its obligations under this Article XII except to the extent (if any) that the
Indemnifying Person shall have been prejudiced thereby. The Indemnifying Person
may, at its own expense: (a) participate in the defense of any claim, suit,
action or proceeding; and (b) subject to Section 12.6, upon notice to the
Indemnified Person and the Indemnifying Person's delivering to the Indemnified
Person a written agreement that the Indemnified Person is entitled to
indemnification pursuant to Section 12.2 or Section 12.3 for all Losses arising
out of such claim, suit, action or proceeding and that the Indemnifying Person
shall be liable for the entire amount of any Loss, at any time during the course
of any such claim, suit, action or proceeding, assume the defense thereof;
provided, however, that: (i) the Indemnifying Person's counsel is reasonably
satisfactory to the Indemnified Person, and (ii) the Indemnifying Person shall
thereafter consult with the Indemnified Person upon the Indemnified Person's
reasonable request for such consultation from time to time with respect to such
claim, suit, action or proceeding. If the Indemnifying Person assumes such
defense, the Indemnified Person shall have the right (but not the duty) to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Person. If, however, the
Indemnified Person reasonably determines in its judgment that representation by
the Indemnifying Person's counsel of both the Indemnifying Person and the
Indemnified Person would present such counsel with a conflict of interest or if
the Indemnifying Person's counsel is otherwise not reasonably satisfactory to
the Indemnified Person, then such Indemnified Person may employ separate counsel
to represent or defend it in any such claim, action, suit or proceeding and the
Indemnifying Person shall pay the reasonable fees and disbursements of such
separate counsel. Whether or not the Indemnifying Person chooses to defend or
prosecute any such claim, suit, action or proceeding, all of the parties hereto
shall cooperate in the defense or prosecution thereof at the Indemnifying
Person's expense (except as set forth in Section 12.5).
12.6 Settlement or Compromise. Any settlement or compromise made or caused
to be made by the Indemnified Person or the Indemnifying Person, as the case may
be, of any claim,
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suit, action or proceeding of the kind referred to in Section 12.5 shall also be
binding upon the Indemnifying Person or the Indemnified Person, as the case may
be, in the same manner as if a final judgment or decree had been entered by a
court of competent jurisdiction in the amount of such settlement or compromise;
provided, however, that no obligation, restriction or Loss shall be imposed on
the Indemnified Person as a result of such settlement without its prior written
consent. The Indemnified Person will give the Indemnifying Person at least 30
days' notice of any proposed settlement or compromise of any claim, suit, action
or proceeding it is defending, during which time the Indemnifying Person may
reject such proposed settlement or compromise; provided, however, that from and
after such rejection, the Indemnifying Person shall be obligated to assume the
defense of and full and complete liability and responsibility for such claim,
suit, action or proceeding and any and all Losses in connection therewith in
excess of the amount of unindemnifiable Losses which the Indemnified Person
would have been obligated to pay under the proposed settlement or compromise.
12.7 Failure of Indemnifying Person to Act. In the event that the
Indemnifying Person does not elect to assume the defense of any claim, suit,
action or proceeding, then any failure of the Indemnified Person to defend or to
participate in the defense of any such claim, suit, action or proceeding or to
cause the same to be done, shall not relieve the Indemnifying Person of its
obligations hereunder.
12.8 Limitations on Indemnification. (a) No Indemnifying Person shall have
any obligation to indemnify any Indemnified Person from and against any Losses
until the aggregate Losses suffered by all Indemnified Persons exceed $100,000,
at which time the Indemnifying Person shall be liable to the Indemnified Persons
for the entire amount of all aggregate Losses suffered by all Indemnified
Persons. The foregoing limitation shall not apply to any Losses suffered by the
Indemnified Parties with respect to Taxes pursuant to Section 6.11 or the
indemnification pursuant to Sections 12.2(e), 12.3(c), 12.3(d) and 12.3(e).
(b) No claim for indemnification pursuant to Sections 12.2(a) or (b) (other
than with respect to Sections 6.8, 6.13 or 6.14) or Sections 12.3(a) or (b)
(other than with respect to Section 6.8) shall be brought after the second
anniversary of the Closing. No claim for indemnification pursuant to Section
12.2(c) shall be brought after the earlier of the third anniversary of the
shipping of the Product or the second anniversary of the Closing. No claim for
indemnification pursuant to Section 12.2(d) shall be brought after the seventh
anniversary of the Closing. Any claim for indemnification with respect to Taxes
pursuant to Section 6.11 may only be made prior to thirty (30) Business Days
following the expiration of the related statute of limitations.
(c) In no event shall the aggregate liability of the Indemnifying Person to
the Indemnified Persons arising under this Article XII exceed $25,000,000
(taking into account the liability of the Indemnifying Person under the WAD
Purchase Agreement).
12.9 Assignment of Claims. The parties agree that, upon assumption by the
Indemnifying Person of the obligation to indemnify, the Indemnified Person will
assign to the Indemnifying Person any and all claims, causes of action and
demands of whatever kind and nature which the
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Indemnified Person may have against any person, firm or other entity giving rise
to the indemnified Loss, and will reasonably cooperate in any efforts to recover
from such person or entity.
12.10 Exclusive Remedies. This Article XII provides the exclusive remedy
for any misrepresentation, breach of warranty or covenant or other claim arising
out of this Agreement or the transaction contemplated by it. Each party shall
use reasonable efforts to mitigate any Losses.
ARTICLE XIII
MISCEllANEOUS
13.1 Expenses. Each party hereto shall bear its own costs and expenses
(including the fees and disbursements of legal counsel, investment bankers and
accountants) with respect to the transactions contemplated hereby; provided,
however, that no later than the Closing, Products shall pay, or reimburse Xxxx,
an aggregate of $250,000 for the filing fee and related legal expenses in
connection with the pre-merger notification form previously filed and for its
other expenses in connection with the Transactions. Seller shall pay all sales,
use, stamp, transfer, service, recording, real estate and like taxes or fees, if
any, imposed by any Governmental Authority in connection with the conversion of
the Shares in the Merger.
13.2 Amendment. This Agreement may be amended, modified or supplemented
only by a written instrument signed by Parent, Products, Merger Sub, the
Company, Seller and XxXxxxxx.
13.3 Notices. Any notice, request, instruction or other document to be
given hereunder by a party hereto shall be in writing and shall be deemed to
have been given: (a) when received if given in person or by courier or a courier
service; (b) on the date of transmission if sent by telex, facsimile or other
wire transmission; or (c) three (3) Business Days after being deposited in the
U.S. mail, certified or registered mail, postage prepaid:
If to Seller, the Company (prior to the Closing) or XxXxxxxx, addressed as
follows:
c/o Xxxx Fabrics Corporation
100 Vesper Executive Park
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx XxXxxxxx, CEO
Facsimile No.: (000) 000-0000
with a copy to:
Goulston & Storrs, A Professional Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
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If to Parent, Products or Merger Sub, addressed as follows:
c/x Xxxxxxx & Xxxxxx Corporation
0000 Xxx Xxxx Xxxxx
Xxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, CEO
Facsimile No.: (000) 000-0000
and for notices pursuant to Section 6.4 hereof:
Xxxxxxx & Xxxxxx Corporation
0000 Xxx Xxxx Xxxxx
Xxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx
Facsimile No.: (000) 000-0000
and in each case
Attention: Xxxxxx X. Xxxxxxx, General Counsel
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: W. Xxxxxx Xxxxx
Xxxxxxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
13.4 Waivers. The failure of a party hereto at any time or times to require
performance of any provision hereof shall in no manner affect its right at a
later time to enforce the same. No waiver by a party of any condition or of any
breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.
13.5 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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13.6 Headings. The headings preceding the text of articles and sections
included in this Agreement and the headings to schedules attached to this
Agreement are for convenience only and shall not be deemed part of this
Agreement or be given any effect in interpreting this Agreement.
13.7 Interpretation. Unless otherwise indicated, words describing the
singular number shall include the plural and vice versa, and words denoting each
gender shall include the other gender and words denoting natural persons shall
include corporations and partnerships and vice versa. The use of the terms
"including" or "includes" shall in all cases herein mean "including, without
limitation" or "includes, without limitation," respectively. Unless otherwise
indicated, references to articles, sections, subsections or schedules shall
refer to those portions of this Agreement. Consummation of the transactions
contemplated herein shall not be deemed a waiver of a breach of or inaccuracy in
any representation, warranty or covenant or of any party's rights and remedies
with regard thereto. No specific representation, warranty or covenant contained
herein shall limit the generality or applicability of a more general
representation, warranty or covenant contained herein. A breach of or inaccuracy
in any representation, warranty or covenant shall not be affected by the fact
that any more general or less general representation, warranty or covenant was
not also breached or inaccurate.
13.8 Applicable Law. The validity, construction and effect of this
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware, without giving effect to the principles of
conflicts of law of such State.
13.9 Jurisdiction; Waiver of Jury Trial. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the Related Agreements shall be brought in
any United States federal or state court sitting in the State of Delaware, and
each of the parties hereby consents to the jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by Law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum. Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 13.3 shall be deemed effective service of
process on such party. Each party hereto hereby irrevocably waives any and all
right to trial by jury in any legal proceeding arising out of or related to this
Agreement or the Related Agreements.
13.10 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that no assignment of any rights or obligations shall be made
by Seller or XxXxxxxx without the written consent of Products, Parent and Merger
Sub or by Products, Parent or Merger Sub without the written consent of Seller,
except that each of Products, Parent, Merger Sub and Seller may assign its
rights hereunder without such consent to any of its Affiliates.
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13.11 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and, to the extent provided herein, their
respective Affiliates, directors, officers, employees, stockholders, managers,
agents and representatives, and no provision of this Agreement shall be deemed
to confer upon other third parties any remedy, claim, liability, reimbursement,
cause of action or other right.
13.12 Further Assurances. Upon the reasonable request of Products, Seller,
the Company and XxXxxxxx shall on and after the Closing Date execute and deliver
to Products such other documents, releases, assignments and other instruments as
may be required to effectuate completely the Merger, and to otherwise carry out
the purposes of this Agreement. Upon the reasonable request of Seller, Products,
Parent and Merger Sub shall on and after the Closing Date execute and deliver to
Seller such other documents, releases, assignments and other instruments as may
be required to effectuate completely the Merger, and to otherwise carry out the
purposes of this Agreement.
13.13 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions shall not be affected thereby, and there shall be deemed
substituted for the provision at issue a valid, legal and enforceable provision
as similar as possible to the provision at issue.
13.14 Remedies Cumulative. The remedies provided in this Agreement shall be
cumulative and shall not preclude the assertion or exercise of any other rights
or remedies available by Law, in equity or otherwise.
13.15 Entire Understanding. This Agreement, together with the exhibits and
schedules hereto, the Related Agreements and the Confidentiality Agreement, set
forth the entire agreement and understanding of the parties hereto and supersede
any and all prior agreements, arrangements and understandings among the parties
hereto.
13.16 Company Disclosure Schedule. Seller, XxXxxxxx and Products agree that
it shall be a condition of Closing for them to agree on a mutually acceptable
Company Disclosure Schedule prior to August 24, 2001.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
XXXXXXX & XXXXXX CORPORATION
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Senior Vice President and
General Counsel and Secretary
XXXXXXX & XXXXXX PRODUCTS CO.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxx
Title:
JAII ACQUISITION CO.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxx
Title:
XXXX FABRICS CORPORATION
By: /s/ Xxxxx XxXxxxxx
---------------------------------------
Name: Xxxxx XxXxxxxx
Title: Chief Executive Officer
XXXX AUTOMOTIVE INDUSTRIES, INC.
By: /s/ Xxxxx XxXxxxxx
---------------------------------------
Name: Xxxxx XxXxxxxx
Title: President
XXXXX XxXXXXXX
/s/ Xxxxx XxXxxxxx
--------------------------------------------
